February 2019 – Vol. 21, No. 2
The Employer E-Letter: Labor and Employment Law News
from the Duluth, Minnesota law firm of
Hanft Fride, A Professional Association.
Co-Editors, Scott A. Witty, saw@hanftlaw.com and Richard R. Burns, rrb@hanftlaw.com, or 218.722.4766. Please feel free to forward this e-mail or share it with others. If there are other topics of interest to you or any other suggestions concerning this newsletter, please let us know.
STILL TIME TO REGISTER!
25th ANNUAL EMPLOYMENT AND LABOR LAW SEMINAR
WEDNESDAY, MARCH 6, 2019
GREAT LAKES BALLROOM, HOLIDAY INN DOWNTOWN, DULUTH
We are planning another interesting and informative day for seminar attendees. Contact Lynn Lach at lml@hanftlaw.com or 218.529-2419 with questions.
Register Online – https://hanftlaw.com/seminar/
The topics that will be covered at this year’s seminar include:
- Restrictive Covenants
- The NLRB: A Year in Review
- What You Need to Know About Minnesota Workers’ Compensation
- Garnishments & Income Withholdings
- Interns 101
- Employment Background Checks
- Duluth’s New Paid Leave Ordinance
This Month’s Topics:
- Seventh Circuit Says adea Does Not apply to Applicants
- SHANNON MILLER, THE REST OF THE STORY
- Firing an Employee for Medical Marijuana Use Pursuant to a Blanket Ban May Result in a Successful Discrimination Claim
- Entrepreneurial Opportunity and Independent Contractor Analysis
- Tip Of The Month
Seventh Circuit Says adea Does Not apply to Applicants
In a 9-3 en banc decision (one presented to all judges of the circuit), the Seventh Circuit Court of Appeals (which includes Wisconsin) held that an unsuccessful job applicant has no rights under the Age Discrimination Employment Act (ADEA). The Court suggested that the plain text of the Act covers discrimination against employees, not outside applicants for employment. The employer in this case appealed a prior determination that the applicant had been discriminated against in the hiring process, pointing to the job description stating a maximum of seven years of experience. In the en banc decision, the majority said: “The construction is clear from Congress’s use of language telling us that the provision covers ‘any individual’ deprived of an employment opportunity because such conduct ‘adversely affects his status as an employee…’ ” The majority also looked at “ordinary principles of grammatical construction” as being supportive of their conclusion. A dissenting judge, however, looked at the language of the statute and came to the opposite conclusion, believing that Congress intended to include applicants. Kleber v. CareFusion Corp., Case No. 17-1206 (7th Cir. 2019)
SHANNON MILLER, THE REST OF THE STORY
As most people may be aware, the former head coach of Women’s Hockey at the University of Minnesota-Duluth was awarded $744,830 in back pay and benefits and $3,000,000 in other past damages after a jury trial relating to her termination of employment at UMD. She then moved for reinstatement or, in the alternative, front pay on her Title IX claim. The issue of front pay is an issue that needs to be considered in many cases, and we have not previously discussed it in detail.
Reinstatement is the preferred remedy in this type of case, but the court has discretion to choose between the equitable remedies of reinstatement and front pay and may rely on the jury’s findings on the issues. When determining the appropriate amount of front pay courts should consider (i) the plaintiff’s age; (ii) the length of the plaintiff’s employment with the defendant; (iii) the likelihood that the plaintiff’s employment would have continued absent the unlawful conduct; (iv) the length of time it will take the plaintiff to secure comparable employment; (v) the plaintiff’s work and life expectancy; (vi) whether the plaintiff was an at-will employee; (vii) the length of the time other employees typically hold the position; and (viii) the plaintiff’s ability to work. Ogden v. Wax Works, Inc., 29 Fed. Supp. 2d, 1003, 1014-15 (ND Iowa 1998).
As reinstatement was not practicable, Miller argued for front pay through retirement, but this argument was dismissed because of her being a highly paid employee with an individually negotiated contract. The Court, however, did recognize that UMD’s back pay award was not sufficient by itself to compensate Miller for lost wages and benefits. In evaluating front pay, the Court looked beyond the two-year contract Miller was seeking, understanding she was not seeking a longer contract because she needed time to improve the team and put her in a position for the next round of negotiations. At one time she also suggested she intended to retire from coaching in two years, and that representation would have made UMD question her commitment to the job and make it less likely they would have locked her into a long-term contract. The Court noted she would have had to win a lot in order to get a long-term contract. The Court found her calculation of losses through June 2020 (five years) reasonable, even though one might question her assumed rate of pay increase or the assumed amount of estimated mitigation. If the Court was looking at longer periods, they likely would have looked more closely at the calculations. The Court awarded front pay in the amount of $414,713, as well as future benefits in the amount of $46,565, a total of more than $461,000. Miller v. Board of Regents of the University of Minnesota, No. 15-CV-3740 (D. Minn. 2019).
Firing an Employee for Medical Marijuana Use Pursuant to a Blanket Ban May Result in a Successful Discrimination Claim
A federal court in the District of Arizona recently held that an employer may be subject to a discrimination claim when it terminates an employee who holds a medical marijuana card, solely due to a positive drug test. The employee was fired from her position at a Walmart store because she failed a drug test that was administered in connection with a worker’s compensation claim. The employee had a medical marijuana card and had used marijuana to assist with sleep issues. Walmart dismissed the employee under a blanket policy that prohibited employees from being impaired by illegal drugs during a shift. Walmart’s decision was found to constitute impermissible discrimination under Arizona law, which requires an employer show that the employee used, possessed, or was impaired by illegal substances at work. Walmart was unable to make any showing that the employee used, possessed, or was impaired at work, and thus the Court determined as a matter of law that Walmart had discriminated against the employee. This case highlights the need for employers to carefully craft policies concerning drug use and consider disciplinary action, including dismissals, based on drug use in light of legalization of marijuana for various purposes in a growing number of states. Employers should take particular care to keep abreast of developments, including state specific legislation, that protects medical marijuana users. Merely relying on the fact that marijuana is a Schedule I controlled substance at the federal level when developing drug use and testing policies may be a one way ticket to a discrimination suit. Whitmire v. Wal-Mart Stores, Inc., Civ No. 3:17-cv-08108 (D. Ariz. Feb. 7, 2018)
Entrepreneurial Opportunity and Independent Contractor Analysis
In SuperShuttle DFW, Inc., the NLRB had an opportunity review the factors for determining whether a worker is an employee or independent contractor. Since a Supreme Court decision 50 years ago, courts have revisited and refined the proper application of the seven primary factors. The seven factors can be summarized as follows: (i) whether services are an integral part of the principal’s business; (ii) length of the relationship; (iii) investment in facilities and equipment; (iv) the nature and degree of control by the principal; (v) opportunity for profit or loss; (vi) the amount of admission of judgment or foresight in open market competition with others required for success; and (vii) whether it is truly an independent business organization. Entrepreneurial opportunity, like employer control, is a principle to help evaluate the overall significance of the agency factors. In general, common-law factors in support of workers’ entrepreneurial opportunity indicate independent contractor status; while factors that support employer control indicate employee status.
The current Board suggested the previous Board’s 2011 decision in FedEx did more than merely “refine” the common-law independent contractor test, but rather fundamentally shifted the independent contractor analysis for implicit policy-based reasons to one of economic realities. This revision greatly diminished the significance of entrepreneurial opportunity and selectively overemphasized significance of the “right of control” factors relevant to economic dependency. Properly understood, entrepreneurial opportunity is not an independent common-law factor, not a “super factor” or an “overriding consideration” or a “shortline formula” or a “trump card”. Rather, entrepreneurial opportunity, like employer control, is a principle through which to evaluate the overall effects of the common-law factors on a contractor’s independence to pursue economic gain. Its relative significance will vary with each case.
In SuperShuttle, the drivers/franchisees were determined to be independent contractors. “Franchisee’s ownership (or lease) and control of their vans, the principle instrumentality of their work, the nearly complete control franchisees exercise over their daily work schedules and working conditions, and the method of payment where franchisees pay a monthly fee and keep all fares they collect, all weigh strongly in favor of independent contractor status. Moreover, these three factors provide franchisees with significant entrepreneurial opportunity and control over how much money they make each month. Further, we emphasize again that the shared-ride industry is an extension of the taxi cab industry, and that in taxi cab cases, the Board has particularly focused on the company’s control over the manner and means by which the drivers conduct their business and ”the relationship between the company’s compensation and the amount of fares collected.” SuperShuttle DFW, Inc. and Amalgamated Transit Union 1338, Case No. 16-RC-010963 (January 2019).
TIP OF THE MONTH: It is important for employers and human resources departments to train and remind managers that they too must report any harassment or bias incidents they observe or learn about in the course of a workday. There are legal defenses to liability in cases where the employer (which includes all management employees) had no knowledge of incidents of harassment or discrimination and the employee allegedly subjected to the harassment or discrimination failed to follow the complaint process provided in the employee handbook. This defense does not apply, however, where a management employee was aware or should have been aware of the alleged incidents and failed to notify the human resources office. This is less likely to occur where managers are properly trained and frequently reminded to report any such incidents.
Hanft Fride’s business and trial lawyers are located at 1000 U.S. Bank Place, in Duluth, Minnesota. Visit our website at www.hanftlaw.com for general information on the firm and our attorneys. Our employment lawyers include Tom Torgerson, Rob Merritt and Scott Witty. Richard Burns is now of Counsel.
The information provided in this E-letter is general in nature and should not be used as a substitute for professional services and advice. The communication and receipt of this information is not intended to create an attorney-client relationship. Readers should consult with their legal counsel before taking any action on matters covered in this E‑letter.
To subscribe or unsubscribe to Employer E-Letter, e-mail your request to lml@hanftlaw.com or call Scott Witty at 218.722.4766.
Copyright 2019 by Hanft Fride, P.A. All rights reserved. Hanft Fride, A Professional Association, 1000 U.S. Bank Place, 130 W. Superior Street, Duluth, MN 55802. Phone 218.722.4766; Fax 218.529.2401.