The following case was highlighted in a recent edition of BNA’s Bulletin to Management.

Was Termination Retaliation for Workers’ Compensation Claim?

“You fired me for filing for workers’ comp,” complained employee Jennifer Lilly. “That’s illegal retaliation.”

“We let you go because of your poor work habits,” countered Human Resources Director Sylvia Potter. “Nothing more.”

Did the employer retaliate?

Facts: A worker at a door factory injured her back at work. Her doctor put her on light duty and referred her to a specialist. A few days later, the department supervisor gave the employee a step warning for substandard performance. Under company policy, an employee would be fired for receiving four step warnings within a certain time frame.
The employee’s doctor faxed more specific work restrictions to the company. Three days later, a supervisory assistant issued the employee another step warning for substandard work. Her doctor notified the workers’ comp insurer that the employee had a herniated disc with nerve root impingement.

Two days later, the employee’s supervisor sent an e-mail to a human resources official suggesting that the employee be assigned a list of dirty jobs, including cleaning the rest rooms, or be moved back to her previous, lower-paying job in another department. The worker reluctantly accepted the transfer, which also resulted in a loss of seniority.
There, her new supervisor questioned whether her work restrictions were necessary. He picked up the chair that she used—as directed by her doctor—for periodic rest breaks and threw it across the room.

The employee was injured again when a co-worker pushed a stack of doors onto her ankle. She twisted her knee at work weeks later, and her supervisor questioned whether she should continue working at the company in light of her “excessive” injuries.

The employee hired an attorney to help obtain workers’ comp benefits. Her supervisor issued her a third step warning for using the wrong machine. She then complained to the human resources department about her supervisor. Two weeks later, he gave her a fourth-step warning for substandard work, triggering her discharge.

A jury ruled in favor of her claim of wrongful discharge in violation of public policy and awarded her $25,000 for emotional distress, $50,000 in back pay, $150,000 in future pay, and $775,000 in punitive damages. The employer challenged the award, and the appeals court sent the case back to the trial court for reconsideration of damages. The trial court found in the employer’s favor.

Award: The Iowa Court of Appeals Oct. 12 reinstated the $1 million jury verdict for the employee (Holding v. Graham Mfg. Corp., Iowa Ct. App., No. 7-411/06-1729, 10/12/07).

Discussion: Reversing the lower court and upholding the earlier jury verdict, the appeals court said that “a reasonable juror could conclude [the employee] was disciplined under false pretenses because most, if not all, of the four step warnings for improper performance did not reflect any mistake on her behalf.”

Her first supervisor’s e-mail to human resources and a meeting to discuss workers’ compensation costs in his department “may be viewed as showing that she was demoted because of the expenses associated with her workers’ compensation benefits,” the court said. It also found that her new supervisor demonstrated “open hostility” toward her work-injury claims.

Pointers: Under workers’ compensation programs, injured employees usually receive benefits regardless of fault, that is, whether the employee, the employer, or a third party such as another employee caused the injury.

Employers cannot call or harass employees who file workers’ compensation claims to find out when they plan to return to work.

Most states require employers to work with an employee, the insurer, and the medical provider to attempt to return the employee to work.

If employers fail to follow the required workers’ comp procedures, they may be subject to penalties from their state.

There is one circumstance when an employer is permitted to terminate an employee on workers’ compensation leave. This is when the employee’s medical condition has been discussed with her physician and it has been determined she will not be released to return to work without job restrictions (e.g., the employee can no longer lift more than 10 pounds) and those job restrictions preclude her from performing the essential functions of her position.

If an employer wants to terminate an employee for fraudulently collecting workers’ compensation benefits when the employee is capable of working, its first call should be to the state workers’ compensation agency’s fraud department (for A Plus clients this call would go to Justin Rowley, VP Risk Management).

This case discussion illustrates the handling of a problem in employee relations. It is based on an actual court ruling, although the names and dialogue are fictitious.

Further discussion: An employee who has experienced a work place accident can be discharged if the employee tests positive for substance abuse. Even though the employee has tested positive for drug abuse the medical costs will still be covered by workers’ compensation insurance but the employee will not qualify for TTD – total temporary disability payments. Also, an employee who is terminated for testing positive for drug use subsequent to an on the job injury will not qualify for unemployment insurance benefits.

A Plus Benefits suggests that clients take the opportunity of discussing a possible discharge for any employee who is currently on leave or light duty due to a workers’ compensation covered injury with the Human Resources department.

Randall Barker is the VP of Human Resources for A Plus Benefits, Inc.

Read Randall’s previous HR update.

Here’s a question we hear from time to time:

Q – Can I require a doctor’s note from an employee who has taken time off for an illness?

A – Generally – Yes

EEOC Office of Legal Counsel staff members wrote the following informal discussion letter in response to an inquiry from a member of the public.

ADA: Disability-Related Inquiries and Medical Examinations of Employees

October 5, 2004

Dear:This responds to your July 30, 2004, letter to the Equal Employment Opportunity Commission (Commission) asking whether the Americans with Disabilities Act (ADA) permits an employer to require medical records from employees to justify their use of sick leave. Specifically, you state that a commercial airline recently began requesting pilots to provide all of their medical records to justify the use of sick leave even when, in some instances, the leave was taken more than one year prior to the employer’s request. Pilots who refuse to provide their records may be disciplined or fired for insubordination.

The ADA strictly limits the circumstances under which an employer may make disability-related inquiries or require medical examinations of employees. Generally, an employer only may ask questions or request medical documentation when it has a reasonable belief, based on objective evidence, that: (1) an employee’s ability to perform essential job functions will be impaired by a medical condition; or, (2) an employee will pose a direct threat due to a medical condition. See EEOC Enforcement Guidance on Disability-Related Inquiries and Medical Examinations of Employees Under the Americans with Disabilities Act (Guidance), July 26, 2000. (This Guidance can be found on our website at www.eeoc.gov. ) An employer also is entitled to know whether an employee’s absence or request for sick leave is due to legitimate medical reasons. An employer, therefore, may ask an employee to justify the use of sick leave by providing a doctor’s note or other explanation for the use of sick leave, as long as it has a policy of doing so for all employees. Id. at Question 15. An employer, however, may not ask for documentation unrelated to the use of sick leave (such as information about an illness or condition other than that for which sick leave was requested) or for more information than is necessary to justify the sick leave request. We believe that requiring all of an employee’s medical records to support a sick leave request will violate the ADA.Employers also may make disability-related inquiries or request medical documentation when an employee who has been on leave for a medical condition seeks to return to work, if the employer has a reasonable belief that the employee’s present ability to perform essential job functions will be impaired by a medical condition or that he or she will pose a direct threat because of a medical condition. Any inquiries or documentation, however, must be limited to what is needed to assess the employee’s ability to work. A request for medical records made a year or more after sick leave has been taken and after a pilot has resumed flying cannot be justified under this standard. The ADA strictly prohibits an employer from using an employee’s leave as a justification for making far-ranging disability-related inquiries or requiring unrelated medical documentation. Id. at Question 17.

I hope this information is helpful to you. This letter is an informal discussion of the issues you raised and does not constitute an official opinion of the EEOC. If you have any questions, please contact me or Joyce Walker-Jones at Joyce.Walker-Jones@eeoc.gov.)Sincerely,

HR Discussion – As the letter above points out it is acceptable to require that an employee bring a doctor’s note when the employee has used an illness as an excuse for missing work.

Perhaps the most important element of having a policy that requires a doctor’s note is consistency. The best way to be consistent is to establish a policy long before the business in required to consider how to handle this kind of situation.
Many businesses will not require a doctor’s note for a one or two day illness but will have a threshold of a 3 day illness requiring a doctor’s note before the employee can have the absence excused.

As the letter above points out, it is not a good idea to discharge and employee who refuses to bring a doctor’s note as required by your policy. However, you can still discipline the employee. The discipline in this case would be for an unexcused absence but not for refusing to bring the required note.

The attendance policy should be very clear, for example, within the attendance policy there could be a statement that advises employees that an absence of 3 or more days for an illness will be considered to be an unexcused absence if an employee does not bring a doctor’s note stating that the employee was too ill to work for the time missed by the employee. Don’t ask for a diagnosis – just a statement that the employee was seen by the doctor and that the doctor determined that the employee should stay home for X number of days. The policy should also state that an unexcused absence of three or more days is considered an infraction that requires a discharge from employment.

There is no magic number of days or number of infractions – each business needs to decide what is appropriate for their situation. However – be consistent. And when in doubt, please call the HR Dept at A Plus Benefits.

Next week we will re-visit some issues of doctor’s notes and FMLA.

Randall Barker is the VP of Human Resources for A Plus Benefits, Inc.

Read Randall’s previous HR Update.

A Vietnam veteran with post-traumatic stress disorder posed a threat to others and was properly terminated by the U.S. Postal Service, but USPS failed to explain why he was denied pay, leave, and disability retirement, the U.S. Court of Appeals for the Tenth Circuit ruled Aug. 30, remanding the case on those issues (Jarvis v. Potter, 10th Cir., No. 06-4090, 8/30/07).

On two occasions, Lanny Bart Jarvis struck and kicked a co-worker when she startled him, and he later struck another co-worker who shoved him in passing. He was able to restrain himself from striking his manager when she startled him.
Jarvis told the supervisor he had PTSD and asked that co-workers be told to announce themselves before approaching him.

When Jarvis was terminated after an investigation, he sued under the Rehabilitation Act in the U.S. District Court for the District of Utah, which ruled for USPS. That court found that the risk of violence could not be eliminated by a reasonable accommodation because the accommodation Jarvis sought—that co-workers announce themselves—would not eliminate the possibility that he might be startled accidentally. His request was not reasonable, the district court said, because it attempted to shift to co-workers the burden of preventing him from engaging in violence.

Qualification at Issue
“The postal service does not dispute on appeal that Mr. Jarvis is an individual with a disability,” the Tenth Circuit said. “The issue before us is whether he is ‘otherwise qualified,’ ” it said.

The Americans with Disabilities Act, which provides guidance in Rehabilitation Act cases, defines “qualified individual with a disability” as one who “with or without a reasonable accommodation, can perform the essential functions of the employment position,” the court said. “In other words, one who cannot perform the essential functions of the job, even with a reasonable accommodation, is not an ‘otherwise qualified’ individual,” the court said.

An Equal Employment Opportunity Commission regulation defines “direct threat” as a “significant risk of substantial harm to the health or safety of the individual or others that cannot be eliminated or reduced by reasonable accommodation,” the court said. The rule states that the factors at issue include the duration of the risk, the nature and severity of the potential harm, the likelihood that the potential harm will occur, and the imminence of the potential harm, it said.

“In our view, the record compels the conclusion that the postal service’s determination that Mr. Jarvis was a direct threat was an objectively reasonable decision,” the court found.

In addition to Jarvis’s three assaults on co-workers, evidence included a letter from Jarvis’s health-care provider stating that his PTSD was unlikely to dissipate and that he was a threat in the workplace. USPS also relied on Jarvis’s own statements that his PTSD was getting worse, that he could no longer stop at the first blow, and that, if he hit someone in the right place, the blow could be fatal, the court said.

“Based on this evidence, three of the four factors in the EEOC regulations—duration, imminence, and likelihood—were clearly met,” the court said. Jarvis’s “symptoms would last indefinitely, he could erupt at any moment if startled, and it was highly likely that someone would startle him, even if inadvertently.”

“The postal service was not required to ignore the risk of inadvertent startling,” the court said, affirming the district court’s dismissal of Jarvis’s discrimination claim.

However, with regard to Jarvis’s retaliation claims, the appeals court said USPS “has not explained why Mr. Jarvis was denied the opportunity to retire rather than be terminated or why he was denied pay and access to accrued vacation and sick leave while he was on administrative leave.” As a result, the court said, it was necessary to reverse the dismissal of those claims and send them back to the trial court for further proceedings.

Case #2 - Working With People - Off-Duty Conduct

In the electronic age, off-duty conduct is a growing concern for employers, with employees running controversial blogs and Web sites. While employers may be embarrassed by some off-duty behavior, attempts to curb it can be seen as an invasion of privacy.

Employee Terminated for Sex Web Site Featuring His Wife

“You can’t fire me for running that Web site,” Officer Daniel Savante insisted. “This is a free country and I can do what I like when I’m not on duty.”

“Oh no you can’t! Not when you damage our department’s reputation and make us a laughingstock in the whole community,” responded Chief Martin Dunning.

Was sex site a firing offense?

Facts: The employee, a police officer, began running a Web site in 2000 featuring sexually explicit photographs and videos of his wife. The Web site portrayed his wife in various sexual poses and activities.

In addition to running the Web site, the couple created CD-ROMs of their exploits and even held “barmeets” where fans of their Web site could meet them in person and have pictures taken with the couple. On the Web site, the employee’s face is rarely seen, although the site includes pictures of his face in photos taken at the barmeets.
Despite the notoriety of his Web site, the employee never informed the police department that he was running a sex business, although other members of the force knew about it, including another officer whom the employee had convinced to start his own online sex enterprise.

In 2001, news of the Web site reached department officials, who ordered the employee to cease all related activity. News of the Web site and the police department’s investigation also was reported by the press. The press coverage caused a strong reaction within the police force, and officers later testified that civilians taunted them with comments about the Web site. Officers also reported that as a result, morale was low.

The employee was ultimately dismissed, and a review board supported that decision. The employee sued, but the U.S. District Court for the District of Arizona sided with the employer.

Award: The employee failed to show that his First Amendment rights were violated, a divided U.S. Court of Appeals for the Ninth Circuit ruled Sept. 5 (Dible v. Chandler, 9th Cir., No. 05-16577, 9/5/07).

Discussion: In affirming the trial court, the Ninth Circuit relied on City of San Diego v. Roe, 543 U.S. 77 (2004)—which also involved a police officer and a sex business—in which the U.S. Supreme Court said that the speech may not be protected if it is detrimental to the employer even if the speech itself is unconnected to the employee’s work.

Describing the employee’s speech as “sleazy,” “vulgar,” and “indecent,” the Ninth Circuit said the police officer could not “help but undermine” respect for the police force by running a sex business and that nothing in the speech was an issue of public concern or value. The court added that the employee admitted his sole interest was not in conveying a message but instead in making money.

The Ninth Circuit (one of the most liberal and employee friendly) also dismissed the employee’s privacy and free association claims, suggesting that someone who displays and promotes his wife’s sex acts—while also sometimes participating—was on shaky ground when it came to making a privacy claim.

However, Judge William C. Canby Jr., in a concurrence agreeing only with the employee’s firing, said that although the employee’s behavior may be unpopular, it was not disruptive to the level necessary to justify violating his free speech rights.

“To apply [a] restriction to off-duty expression by a public employee, unrelated to his employment, is to reject the established principle that public employees may not be required to surrender their constitutional right of free speech as a condition of their employment,” Canby asserted.

Pointers: Employers should tread carefully when threatening action against employees for off-duty conduct—such as Web sites, blogs, romantic relationships, and criminal activity—even if there are not statutory protections for the workers, according to attorneys.

Employers generally have few statutory restrictions preventing them from taking action against employees for off-duty behavior. However, focusing on such behavior creates privacy concerns, lawyers assert.

The common law idea of employment at-will still dominates, and therefore employers can sanction employees for off-duty behavior, especially when the behavior damages the reputation of the employer.

Still, some employees have successfully challenged such actions by arguing invasion of privacy, wrongful discharge, or breach of contract.

Randall Barker is the VP of Human Resources for A Plus Benefits, Inc.

Read Randall’s previous HR update.

Noncompetition agreements are often overturned if they hinder an employee’s ability to earn a living. Employers should consider geographic or time limits in such pacts and make sure employees receive some consideration in exchange for agreeing not to compete.

Employee Went Straight to Work for Top Competitor
“That noncompete agreement isn’t worth the paper’s it’s printed on,” asserted salesman Jeremy Reynolds. “I’m not even selling in the same region.”

“That doesn’t matter. You signed an agreement not to go to work for our main competitor,” HR Director Roosevelt Cooper responded. “And we intend to hold you to it.”

Was the agreement unreasonable?

Facts: The employer manufactures valves, couplings, sprinkler heads, and other mechanical devices for use in a variety of industries. The employee worked for the company from 1998 until the end of 2006, primarily assigned to Ohio, West Virginia, and western Pennsylvania. In addition to working with clients, he also trained new sales representatives in various states.

When the employee joined the company, he signed a covenant not to compete with the employer. The agreement stipulated that he would not distribute the kinds of products the employer sold for 12 months within a 10-state geographical area or on behalf of nine specific competitors. He also agreed not to solicit the employer’s customers.

After leaving the company, the employee immediately began working as a sales representative for one of the named competitors, selling the same kinds of products he sold for his former employer, but not in his former region. Right after the employee joined the competitor, he and the competitor filed a declaratory judgment action against the former employer in federal court seeking a declaration that the covenant not to compete was invalid.

The former employer counterclaimed against both for breach of contract, misappropriation of trade secrets, tortious interference with contractual relations, and unfair competition, and then filed an almost identical lawsuit in a federal court in Pennsylvania. The cases were consolidated in the federal court in Pennsylvania.
The trial court found the noncompete pact was unreasonable and refused to grant the former employer’s request for a temporary restraining order to stop the employee. The former employer appealed.

Award: The trial court acted too quickly in finding the noncompetition agreement was unenforceable, given the complexity of the agreement, the U.S. Court of Appeals for the Third Circuit ruled Aug. 23 (Victaulic Co. v. Tieman, 3d Cir., No. 07-2088, 8/23/07).

Discussion: The Third Circuit said that the trial court’s rejection of the agreement lacked the necessary analysis to justify finding it was unenforceable. “At this stage, [the former employer] has asserted a legitimate interest in protecting its customer relationships,” the appeals court said.

The Third Circuit also found the geographic limitation in the covenant was not clearly unreasonable. “In this Information Age, a per se rule against broad geographic restrictions would seem hopelessly antiquated,” the court said.

“Whether a covenant not to compete is unreasonable is a holistic inquiry, particularly when the covenant is detailed and nuanced,” the court said. “It requires balancing the employer’s need to protect its investment and disclosures against the employee’s need to earn a living in his chosen field and the public interest, and then determining whether the covenant comes reasonably close to that balance.”

Pointers: Because noncompete agreements may limit an individual’s ability to practice a particular trade or profession, state laws and court rulings have placed some restrictions on the agreements, such as:

• Geographic limits. Noncompete agreements that prohibit former employees from practicing the same trade within the same geographic area served by their former employer are viewed more favorably by the courts than agreements that bar former employees from practicing the same trade anywhere.

• Time limits. Agreements that bar former employees from working for or establishing a competing business during a limited period after terminating employment are more likely to be enforced than agreements with no time limits.

• Consideration. Employees typically must receive something of value for signing away their rights. Making job offers contingent on signing a noncompete agreement is one form of consideration. However, some courts require proof that employees have received valuable training, education, or experience through their employment that is not available through other means.
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It is important to remember that a non-compete agreement is going to have a better chance of being enforced based on when the agreement was signed.

Agreements signed at the beginning of employment, at the time of a pay raise or promotion, or at the time an employee is offered additional training are going to be viewed as more enforceable as opposed to those that are signed at the end of the employment relationship. Organizations that secure an agreement to not compete at the end of the employment relationship are going to find it difficult to enforce the agreement unless the business can demonstrate that the “consideration” given to the departing employee was substantial – and would most likely require the payment of cash as opposed to other forms of consideration.

It’s also important to remember to remind employees of their agreements not to compete or any other written agreements for that matter. It is a good practice to notify each employee on a consistent basis, for example at the beginning of each new year, in writing of the existence of the agreement and the expectations of the business concerning the agreement(s).

It’s like my grand dad used to say…no sense in shutting the barn door after the horse has gotten out, and keep the darned door closed because the horse aint going to close it for you…

We hope the information provided in our HR Updates assists you with running a better business in less time. It is our goal to help you get back to business.

Randall Barker is the VP of Human Resources for A Plus Benefits, Inc.

Read Randall’s previous HR Update.

Todd could clearly tell that Louise was upset. “What’s up?” Todd asked. Louise responded, “You wouldn’t believe the conversation I just had with Johnnie, he claims we owe him more salary for the final week he worked for us. He has threatened to sue the company as well as me if we don’t pay him by the end of today’s business.”

Paul questioned, “Didn’t our accountant say that we didn’t have to pay him until the next payday?” “That’s what he told us” Louise said. She went on, “However, evidently that’s the rule if Johnnie would have quit, in this case we fired him so the time for paying final wages is different. I don’t know what to do, and I’m not sure how much we owe Johnnie if anything.”

Did the company owe Johnnie additional wages? Many states regulate payment of final paychecks. Final paycheck requirements tend to vary depending on whether the employee’s termination was voluntary or involuntary. When a worker is discharged involuntarily, the employer often is required to pay accrued wages immediately or within a few working days. An employee who separates from his or her employer voluntarily usually must be paid by the next regularly scheduled payday, although some states require payment on the employee’s last day if the employee gave advance notice of his or her resignation.

Salaried Exempt Employees – The Fair Labor Standards Act requires that an exempt employee must be paid his complete salary for any week wherein work has been performed. For example, if an exempt and salaried employee works two days of the workweek she must be paid her complete and total weekly salary.

Unless…the employee in question begins or ceases to work at some time during the pay period. For example, if Ted is an exempt salaried employee and is paid $1000.00 a week but begins employment on Wednesday, for his first week’s pay the company would owe him $600.00. If Mary (with a $1000.00 per week salary), an exempt and salaried employee is fired or quits on Tuesday, the company would owe her $400 for her final week’s work.

One of the few exceptions to the salary rule is when an employee begins or ends work during the work week.

Hourly Employees – Hourly employees must be paid for all hours that are worked within the final pay period. There are no exceptions for paying an hourly employee less for the hours works at the end of employment.

Many employers believe that it’s legal to pay a departing employee only minimum wage for the hours worked during the final period of employment. While this practice would not violate Federal law there are few if any States that would allow this kind of wage reduction for the employee’s final pay period.

Some states will be somewhat flexible with employers concerning the payment of final wages as long as the employer is behaving in a reasonable manner. However, other states will allow no wiggle room within their laws and are happy to severely punish employers who violate the states final wage payment laws.

Here is a short description of final wage payment rules for some states. Please call the HR Department at A Plus Benefits if you have any questions concerning your state’s final wage payment rules.

The payment of wages, most especially, final wages can be an emotional issue. The best advice that A Plus Benefits can give is to have an employee’s final paycheck in hand when the employee is notified of his termination. Of course, there are times when an employer does not have the luxury to plan for a termination, in this case, it’s best to notify A Plus Benefits the same day of the termination so a final paycheck can be mailed to the employee by the end of the business day.

If you are a Nevada employer, you will seldom if ever prevail against the Nevada Labor Commission if you do not pay a terminated employee immediately at the time of termination.

There is no reason for any client of A Plus Benefits to be confused on the issue of the payment of final wages. Please call the HR Department in advance of an employment termination so the payment of final wages can be discussed and to facilitate the preparation of the employee’s final pay.

As always, we appreciate your business. Our reason for being in business is to assist with making your business easier to run. It is our goal to provide you with timely and precise information…when we do that, our efforts….allow you to get back to business.

Randall Barker is the VP of Human Resources for A Plus Benefits, Inc.

Read Randall’s previous HR Update.