DOL Proposed Overtime Regulations That Increase the Salary Threshold

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Employers should take note that the U.S. Department of Labor has at long last issued proposed rules regarding “white collar” exemptions from federal overtime requirements.  Currently, the exemptions may apply if certain duties tests are met and the employee is paid on a salary basis of at least $455 per week, which comes out to $23,660 annually, assuming that some work is performed in each of the 52 weeks in the year.  The proposed regulations would raise the salary threshold to $679 per week, which comes out to $35,308 annually. 

The proposed rules would replace the Obama-era rule that set the threshold salary amount to over $57,000.  A federal court permanently enjoined enforcement of that rule.  The proposed rules mark the first effort by the Trump administration to address the white collar exemptions.

The proposed rules do not address the duties tests, but do address a few other issues.  First, the salary threshold for highly compensated employees would be raised from $100,000 to $147,414, higher than the $134,004 threshold that the Obama era regulations tried to set.

Second, employees would be able to credit non-discretionary bonuses and incentive payments (e.g., commissions) toward the minimum salary level.

Third, the salary threshold would be revisited every four years.

If adopted, the final rules would go into effect in January 2020 and would result in an estimated 1,000,000 employees losing exempt status and thus becoming entitled to overtime. The Department of Labor set a 60-day comment period to give interested parties a chance to be heard on the proposed rules.  The final rules will be issued at some point after that.  Employers should pay close attention to the progress of the proposed rules because, if adopted, they will need to determine whether to increase salaries to meet the threshold or reclassify employees as non-exempt.

Keep in mind that many states have different, sometimes more favorable, salary threshold requirements.  Where there is a difference between state and federal law on wage and hour issues, the provision most favorable to the employee must be applied.

Employee Not Covered by the FMLA Gets Day in Court Due to Employer Representations

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The United States District Court for the Western District of Wisconsin recently held that an employer’s misleading statements to an employee regarding the federal Family and Medical Leave Act (FMLA) can lead to liability even if the employee is not eligible for FMLA leave.  Reif v. Assisted Living by Hillcrest LLC d/b/a Brillion West Haven.  In Reif, plaintiff Angel Reif notified her employer’s HR coordinator on January 9, 2018 that she would need surgery and that she wanted to schedule it after she became FMLA eligible.  The coordinator told Reif that Reif would be eligible for leave on January 25, 2018.  Accordingly, Reif scheduled surgery for January 31, 2018, six days after her eligibility date.  When Reif reported the date of the surgery to the coordinator, the coordinator told Reif that she should schedule surgery as soon as possible—before she was FMLA-eligible—and that the coordinator would “work” with Reif so that her FMLA leave would be approved.  The coordinator assured Reif that Reif’s job would be waiting for her when she was ready to return to work.  Based on the coordinator’s representations, Reif moved up the surgery date to a date that was eight days before her FMLA eligibility date and applied for FMLA leave. 

Despite the coordinator’s promises, the coordinator sent a letter to Reif, dated two days after the surgery, stating that the company was denying Reif’s FMLA leave request because Reif did not meet FMLA eligibility requirements.  Just eight days after her surgery, Reif informed her employer that she was able to return to work with some restrictions.  Two weeks later, the employer informed Reif that it had filled her position. 

Reif sued for interference with her FMLA rights.  Her employer asked the court to dismiss the case on the ground that Reif was not eligible for FMLA leave.  The court refused to do so, explaining that “it would be fundamentally unfair to allow an employer to force an employee to begin a non-emergency medical leave less than two weeks before she would become eligible under the FMLA, assure her that she would receive leave and her job would be waiting for her when she returned, and then fire her for taking an unauthorized leave.”  In essence, because Reif relied on her employer’s representations to her detriment, the employer would be precluded from arguing lack of eligibility. 

Reif is a reminder to employers that statements promising benefits can bind the employers even if circumstances exist where an employee would otherwise not be entitled to receipt of the benefit.  FMLA policies and procedures should be carefully constructed and scrupulously followed. 

NLRB Revises Independent Contractor Standard

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On January 25, 2019, the National Labor Relations Board (the Board) issued a decision revising the standard for determining whether a worker is an independent contractor for the purposes of the National Labor Relations Act (NLRA).  SuperShuttle DFW, Inc. and Amalgamated Transit Union Local 1338, Case 16-RC-010963 [link].  The determination is important because only those workers who are employees—and not independent contractors—have rights under the NLRA. 

In SuperShuttle, the Board overruled a 2014 decision and returned to the use of the common law test to determine independent contractor status.  That test includes consideration of: 

  • The extent of control the employer may exercise over the details of the work;
  • Whether the worker is engaged in a distinct occupation or business;
  • The kind of occupation and whether the work is usually done under the direction of the employer or by a specialist without supervision;
  • The skill required in the occupation;
  • Whether the employer or the worker supplies the instrumentalities, tools and the place of work for the work to be done;
  • The length of time for which the worker is employed;
  • The method of payment—whether by the time or by the job;
  • Whether the work is a regular part of the business of the employer;
  • Whether the parties believe they are creating an independent contractor relationship;
  • Whether the employer is or is not in business.

The Board also made it clear that entrepreneurial opportunity—the worker’s opportunity for profit and loss—will be used as an overarching interpretive device in considering whether a worker is an independent contractor under the common law test.  As the majority of the Board explained, “[w]here a qualitative evaluation of common-law factors shows significant opportunity for economic gain (and, concomitantly, significant risk of loss), the Board is likely to find an independent contractor relationship.”

The Board then applied this revised test to the facts before it.  In SuperShuttle, a union filed a petition seeking to represent the SuperShuttle van drivers who transported passengers to and from area airports.  Each of the drivers had signed a franchise agreement with SuperShuttle that required the driver to pay a flat, one-time initial fee and then a flat weekly fee thereafter to maintain the franchise.  On these facts, the Board determined that the van drivers were in fact independent contractors.  The most significant factors were:

  • The drivers were required to provide their own vehicles and cover all costs of vehicle operation and maintenance;
  • The drivers were able to accept or decline trips booked by passengers;
  • The drivers paid a weekly franchise fee unconnected to the amount of the fares they collected and;
  • The drivers’ earnings were determined by how much they chose to work, how well the managed their expenses and how well they managed the process through which they selected fares.

The standard, of course, is fact-intensive and is applied on a case-by-case basis.  Nonetheless, the decision in SuperShuttle gives some guidance as to how the standard may be applied in the future. 

Employers should keep in mind that SuperShuttle articulates the standard applied by the Board with respect to independent contractor status under the NLRA.  Different laws, for example, unemployment and workers’ compensation laws, may have different standards that must be used to determine whether a worker is an independent contractor or an employee subject to that particular law.

Employers’ Obligations When Using Third Parties to Conduct Background Checks

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An employer’s use of third-parties to conduct employment background checks on prospective and existing employees triggers numerous obligations under the federal Fair Credit Reporting Act (FCRA).  The following is a brief overview of the primary employer obligations before, during, and after conducting a background check through third-party investigators.

Covered Entities and Reports

The FCRA applies to “consumer reporting agencies,” which covers nearly all third-party investigators and most employment background reports, called “consumer reports,” the investigators produce.  Consumer reports include, but are not limited to, credit reports, criminal history reports and driving records obtained from a consumer reporting agency. 

Pre-Background Check Obligations

Employers that want to obtain a consumer report for any employment purpose must first provide applicants and employees with a written disclosure stating their intent to obtain a consumer report and must receive written authorization from the applicant or employee before obtaining the consumer report.  The disclosure and authorization of rights must be all be stand-alone documents and may not be part of the employment application or any other document.  Neither of these documents should include notification or authorization required by any applicable state law—those should be placed in a separate document, consistent with the applicable law. 

Post-Background Check/Pre-Adverse Action Obligations

After receiving a consumer report from a consumer reporting agency, if an employer is considering adverse action based on information in a consumer report, the employer must provide the applicant or employee with a copy of the consumer report, a “pre-adverse action” letter explaining that the employer is considering taking adverse employment action based on information in the report and a written “summary of rights” under the FCRA prior to taking any adverse employment action.  The U.S. Bureau of Consumer Financial Protection regulates the content that must be included in the summary of rights and can be found here.  Employers should always ensure their written summary of rights is up-to-date by checking online for any updates.  

Although the FCRA does not specify the amount of time an employer must give an applicant or employee to correct information in the consumer report, five business days or more is considered appropriate. 

Adverse Action Obligations

If an employer does take adverse employment action, it must then provide notice to the applicant or employee and provide him or her with certain information required by statute, including another copy of the summary of rights.  The notice need not be provided in writing, but best practice is to do so for documentation purposes in the event of litigation. 

Violation of the FCRA

In the event of a willful violation of the FCRA, an applicant or employee is entitled to seek damages of $100 to $1,000 per violation, punitive damages, and attorneys’ fees.  If the violation occurred as a result of negligence, the applicant or employee is entitled to sue for any actual damages, plus attorneys’ fees.

State Laws

Some states have requirements in addition to those set forth in the FCRA.

The Bottom Line

This overview generally describes some of the key employer obligations under the FCRA, and is not intended as a detailed guide.  Employers should consult with legal counsel before implementing a background check program that calls for the background check to be performed by a third party. 

Seventh Circuit Limits Job Seekers’ Age Claim Rights Under Federal Law

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The federal Age Discrimination in Employment Act (ADEA) prohibits two kinds of discrimination: discrimination based on the status of being 40 years or older (disparate treatment) and discrimination based on application of a practice, criteria or classification which, while age-neutral on its face, disproportionately affects individuals who are 40+ years old (disparate impact). It is clear that both applicants and employees can bring disparate treatment claims under the ADEA. It is also now clear that, at least for employers located in the U.S. Court of Appeals for the Seventh Circuit (which includes Wisconsin, Indiana and Illinois), only employees—not applicants—can bring disparate impact claims. Kleber v. CareFusion Corporation[JM1] , No. 17-1206 (7th Cir. Jan. 23, 2019) (en banc).

In Kleber, defendant CareFusion sought applicants for an in-house counsel position who had between three and seven years of experience. Plaintiff Dale Kleber, who was 58 and had more than seven years of experience, applied for the job. When he lost out to a 29-year-old applicant, he brought a disparate impact claim under the ADEA, alleging that the selection criteria disproportionately affected individuals 40+ years old.  A panel of the Seventh Circuit agreed with Kleber, holding that the ADEA did permit disparate impact claims by applicants. The full Seventh Circuit then reheard the case and a majority ruled that, to the contrary, the statute does not permit such claims. The court rested its conclusion on the plain language of the statute. Its holding is consistent with that of the only other circuit to address the issue. See Villarreal v. R.J. Reynolds Tobacco Co., 839 F.3d 958 (11th Cir. 2016).

The court’s ruling in Kleber is useful to employers facing a disparate impact claim brought in federal court by a job applicant. It does not, however, give employers free reign in designing criteria, classification and standards for job applicants. Many states, such as Wisconsin, do permit applicants who are 40+ years old to bring disparate impact age bias claims under state law. Employers should check the laws in their state(s) when developing hiring criteria.

 

U.S. Supreme Court Holds Employers May Require Individual Arbitration of Employment Disputes

Published by Jeffrey A. Mandell, Meg Vergeront on | Permalink

In a case that began in Verona, Wisconsin, the U.S. Supreme Court held earlier this week that the National Labor Relations Act (“NLRA”) does not prohibit employment agreements requiring arbitration of grievances on an individual basis. See Epic Systems Corp. v. Lewis, No. 16-285 (May 21, 2018). Epic Systems extends a string of cases over the past decade upholding arbitration requirements over various challenges. See, e.g., Stolt-Nielsen; Concepcion; Oxford Health Plans; Italian Colors.

The Federal Arbitration Act (“FAA”) generally requires enforcement of arbitration agreements—even those that prohibit participation in class actions by mandating arbitration on an individual basis. Epic Systems resolves a split among the federal appellate courts about whether contracts mandating individual arbitration of employment disputes violate the NLRA. After the National Labor Relations Board (“NLRB”) ruled in 2012 that that such contracts are inconsistent with the NLRA, the Sixth, Seventh, and Ninth Circuit Courts of Appeal followed suit, either deferring to the NLRB’s determination or independently reasoning to the same conclusion. The Second, Fifth, and Eighth Circuits, on the other hand, found such contracts enforceable.

Advocates for Lewis and other employees challenging individual arbitration agreements argued that class action waivers were unenforceable under the FAA’s “saving clause,” which prohibits enforcement of arbitration agreements that violate federal law. They argued that arbitration agreements prohibiting collective legal action violate section 7 of the NLRA, which allows workers “to bargain collectively . . . and to engage in other concerted activities for the purpose of . . . other mutual aid or protection.” 29 U.S.C. § 157. Alternatively, they suggested that even if the FAA’s “saving clause” does not apply, the NLRA “overrides” the FAA and makes individual arbitration requirements unlawful.

Advocates for employers, on the other hand, asserted that the NLRA and FAA do not conflict, arguing that neither the text nor the underlying purpose of the NLRA prohibit class action waivers. Alternatively, even if the NLRA and FAA did conflict, the employers argued that the FAA should control because it is the more specific statute, Congress had a history of specifically overriding the FAA only with express, clear language, and because “the enforceability of class waivers forms the core of the FAA, while such waivers are at most a peripheral concern of the NLRA.”

Decision

In a 5-4 decision written by Justice Neil Gorsuch, the Court rejected the employees’ arguments. First, the majority held the FAA’s “saving clause” was inapplicable. “[D]efenses that apply only to arbitration” do not trigger the “saving clause,” which “permits agreements to arbitrate to be invalidated by generally applicable contract defenses, such as fraud, duress, or unconscionability.” Epic Systems, slip op. at 7 (internal quotation marks omitted). Given that the central challenge to the agreements was over “(only) the individualized nature” of the mandated arbitration procedure, not to the underlying validity of the provision requiring arbitration, the Court found the FAA’s “saving clause” did not apply. Id.

Second, the Court refused to view the NLRA as conflicting with and “overriding” the FAA. Longstanding precedent places a heavy burden on parties who argue that two federal statutes conflict and cannot be harmonized. See id. at 10. The majority found no “clearly expressed congressional intention” that the NLRA override the FAA regarding arbitration agreements, in contrast to examples where Congress unambiguously created statutory exceptions to the FAA’s general policy of enforcing arbitration agreements. Id. (quoting Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 533 (1995)). And it found no reason to defer to the NLRB’s statutory interpretation when that would impair the application of the FAA, which is beyond the NLRB’s subject matter expertise. See id. at 19–21.

Dissent

Justice Ruth Bader Ginsburg, writing for herself and three other Justices, dissented, calling the decision “egregiously wrong.” Id. at 2 (Ginsburg, J., dissenting). The dissent argues that the NLRA protects more than just traditional collective bargaining. This is consistent with Justice Stephen Breyer’s comment during oral argument that the NLRA represents “the entire heart of the New Deal.” Focusing on the phrase “other concerted activities for the purpose of . . . mutual aid and protection,” the dissent posits that the NLRA contemplates and protects the “right to engage in collective employment litigation.” Id. at 9 (Ginsburg, J., dissenting). It criticizes the majority’s reasoning in concluding that the NLRA did not protect collective employment litigation, pointing out the majority relied heavily on a canon of statutory interpretation, which it argues is appropriate only where congressional intent is unclear. See id. at 12 (Ginsburg, J., dissenting). Finding a clear congressional mandate to protect employees’ rights to act collectively, the dissent argues that resorting to canons of interpretation was improper and that the Court erred in construing the application of the NLRA so narrowly.

Take Away

Epic Systems Corp. v. Lewis makes clear that the NLRA does not invalidate collective legal action waivers in employment arbitration agreements, presenting employers with an even wider array of options when creating and implementing employee agreements. It also underscores that only in exceptional cases will another federal law invalidate an agreement to arbitrate. Combined with the Supreme Court’s other recent arbitration decisions, Epic Systems further cements the enforceability of arbitration requirements, even when the parties to such agreements lack equal bargaining power. Congress may revisit the policy decisions underlying the FAA, see id. at 6, 25 (Op. of the Court); id. at 2 (Ginsburg, J., dissenting), but unless and until that happens, employers have broad power to limit employees’ options in redressing complaints about the conditions of their employment.

Law Clerk Collin Weyers assisted with researching and writing this post.

WI Supreme Court Concludes Non-Compete Statute Applies to Non-Solicitation of Employees Agreement

Published by Paul W. Schwarzenbart on | Permalink

In Manitowoc Co. v. Lanning, 2018 WI 6, decided January 19, 2018, a 5-2 majority of the Wisconsin Supreme Court concluded that a non-solicitation of employees agreement (“NSE”) can be subject to scrutiny under Wis. Stat. § 103.465. Under the statute, enacted in 1957, any covenant by an employee “not to compete” with a former employer upon termination of employment is void in toto if the agreement imposes an unreasonable restraint in any respect. However, the divided opinions strongly suggest that the court is narrowing its view of the statute’s scope.

The lead opinion, authored by Justice Shirley Abrahamson and joined in by Justice Anne Walsh Bradley, trod a familiar path in non-compete cases. It frames two issues for review. One, was the NSE a “covenant … not to compete”? Two, if so, was any part of the NSE unreasonably broad, resulting in the entire covenant being void.

The lead opinion has little difficulty answering both questions in the affirmative. In doing so, it cites past precedents applying the statute to many restrictions other than an express agreement by an employee to refrain from future employment with a competitor. The lead opinion quotes Tatge v. Chambers & Owen, Inc., 219 Wis. 2d 99, 112, 579 N.W.2d 217 (1998), for the proposition that “it would be an exercise in semantics to overlook § 103.465 merely because [a provision] of the agreement is not labeled a ‘covenant not to compete,’” adding that the statute “has been applied to agreements viewed as restraints of trade.” 2018 WI 6, ¶ 5.

While the concurring opinion, authored by Justice Rebecca Grassl Bradley, and joined in by Justices Michael Gableman and Daniel Kelly, agreed that the NSE at issue in the case was subject to the statute, it strongly disagrees with the lead opinion’s analysis. The concurring opinion first criticizes the lead opinion for unduly relying on the court’s own case law interpreting the statute and failing to undertake a “textual analysis” of the statute. 2018 WI 6, ¶ 65.The concurring opinion states that in “abandoning this process, the lead opinion risks reading into Wis. Stat. § 103.465 imagined words derived from the court’s perception of the legislature's unspoken policies and purpose.” Id., ¶ 66.

What “imagined words”? Specifically, the concurring opinion focuses on the lead opinion’s reference to the NSE as a “restraint of trade” and its focus on the impact of the NSE on parties other than the employee and the employer. 2018 WI 6, ¶¶ 75, 76. This latter flaw, according to the concurring opinion, led the court to err in Heyde Cos., Inc. v. Dove Healthcare, LLC, 2002 WI 131, 258 Wis. 2d 28, 654 N.W.2d 830, by applying the statute to invalidate a “no hire” agreement between two employers, an agreement to which no employee was a party. The concurring opinion states flatly that Heyde “should be overruled as unsound in principle because its analysis is patently wrong,” and it then devotes significant analysis to explaining exactly why. Id., ¶¶ 78-81.

But despite its disagreement with the lead opinion’s view of the statute and its reliance on precedents applying the statute expansively, the concurring opinion reaches the same result in this case. It agrees the NSE was a “covenant … not to compete” because it restrained the employee, Lanning, from “engag[ing] in a particular form of competition,” i.e., “soliciting, inducing, or encouraging any Manitowoc employee from accepting employment with any Manitowoc competitor, thereby limiting Lanning in performing certain work—namely, recruitment for his new employer, a competitor of Manitowoc’s.” 2018 WI 6, ¶ 72. It rejects the analysis of the dissenting opinion, authored by Chief Justice Patience Roggensack and joined in by Justice Annette Kingsland Ziegler, as “internally contradictory,” in that it concluded the NSE was not a covenant not to compete under a strict reading of the statute, while at the same time stating that “the former employer will become a less effective competitor” due to the NSE not being enforceable.” Id., ¶ 74.

Once the lead and concurring opinions arrive at the conclusion that the NSE was subject to the statute, the outcome is clear. This NSE was afflicted by sins familiar to any attorney who has tried to enforce such agreements within the scope of the statute. It prohibited Lanning from soliciting “any” employee in any position with the company without regard to geographical location or personal familiarity with Lanning. 2018 WI 6, ¶¶ 46, 47, 56, 62. The lead opinion explicitly rejected Manitowoc’s argument that the statute should be applied on a “sliding scale” basis, with lesser scrutiny being given to an NSE because it was “less onerous” than a traditional not compete.” Id., ¶¶ 51-54. The concurring opinion made no reference to this argument, and presumably rejected it as contrary to its textual analysis of the statute.

So what can be drawn from this decision? Three thoughts:

First, an NSE can be treated as a non-compete subject to Wis. Stat. § 103.465, although the concurring opinion cautioned that “not every NSE provision necessarily falls under the purview of that statute.” 2018 WI 6, ¶ 65. The concurring opinion, however, makes no suggestions as to what circumstances might lead to the conclusion that a particular NSE is beyond the statute’s reach.

Second, given that the dissent joined with the concurrence in criticizing the lead opinion’s description of the statute as directed to “restraints of trade,” it appears there is a strong majority support on the court to overrule the Heyde Cos. case and it is likely only a matter of time before the court expressly does so.

Third, again, with the concurrence and the dissent in agreement that attention must focus on the text of the statute rather than expansive past precedents, it is reasonable to assume that, in future cases, employers will argue that Lanning favors a narrower, more textually focused application of the statute.

Court Distinguishes Employers Ability to Recoup Draws on Commission

Published by Meg Vergeront, Olivia M. Pietrantoni on | Permalink

The Sixth Circuit Court of Appeals recently issued a decision holding that hhgregg Inc.’s practice of paying at least minimum wage to commissioned employees when earned commissions fell short of minimum wage during a given pay period, and then later deducting that amount if the employee made more than minimum wage in the future, did not violate the Fair Labor Standards Act (FLSA). Stein v. HHGregg, Inc., 873 F.3d 523 (6th Cir. 2017). The Sixth Circuit’s jurisdiction extends to Tennessee, Kentucky, Michigan, and Ohio. Wisconsin businesses are not directly affected by the outcome of this case, but the circuit’s decision is informative.

Background

Hhgregg’s retail employees are paid on commission. If the employees do not sell enough products to meet minimum-wage requirements in a given week, then hhgregg advances a “draw” to the employees to bring their wages up to minimum wage. If an employee later makes more than minimum-wage in a work week, then hhgregg will deduct the amount of previous draws from the employee’s paycheck. Current and former employees sued hhgregg claiming that the recoupment of draw advances from later paychecks violated the FLSA. Specifically, the plaintiffs argued that hhgregg’s policy violated the requirement that minimum wage be paid “finally and unconditionally or ‘free and clear.’” 29 C.F.R. § 531.35. That is, the employees claimed that this scheme resulted in an unlawful “kick back” of wages.

The Court’s Decision

The court concluded that recouping draws from later paychecks does not constitute an unlawful kick-back. The court explained that the regulations prohibit employers from demanding that employees return wages already delivered. However, the court held that hhgregg’s practice did not violate the anti-kick back FLSA regulations because hhgregg employees keep all draws received from the company in the paycheck in which the draw is received. If and when the employee makes more than minimum wage, hhgregg deducts draws from wages before they are delivered to the employee. Therefore, hhgregg was not receiving a kick-back from delivered wages, and thus did not violate the regulations.

Employer Take-Away

Stein v. Hhgregg provides helpful insight for Wisconsin employers who have commissioned employees. Wisconsin employers may wish to review their policies in light of this decision and consult with legal counsel.

Multi-Month Medical Leave Not A Reasonable Accommodation Under the ADA

Published by Meg Vergeront on | Permalink

The Court of Appeals for the Seventh Circuit recently held in Severson v. Heartland Woodcraft, Inc., 2017 U.S. App. LEXIS 181197*, 872 F.3d 476 (7th Cir. 2017) that a leave for medical purposes of two months or more is not a reasonable accommodation under the federal Americans with Disabilities Act (ADA).  In so doing, however, the Court left open the possibility that shorter or intermittent leaves might be, under appropriate circumstances.    

In Severson, the plaintiff took the full 12-week allotment of medical leave under the federal Family and Medical Leave Act (FMLA) due to back pain.  During his leave, he scheduled back surgery for day his FMLA leave expired.  Severson told the employer that he would not be able to work for two-to-three months after the surgery and requested non-FMLA medical leave for the recovery time.  The employer denied the request, given that Severson would be unable to perform any part of his job for several months.    

The court held that the employer’s decision did not violate the ADA.  The ADA, the court explained, is an anti-discrimination statute, not a medical-leave entitlement.  Id. at *3.  According to the court, the ADA is designed to prevent discrimination against a “qualified” individual, defined as a person who, “with or without reasonable accommodation, can perform the essential functions of the employment position.”  Id.  Thus, protection under the ADA is “expressly limited to those measures that will enable the employee to work.  An employee who needs long-term medical leave cannot work and thus is not a ‘qualified individual’ under the ADA.”  Id. (citing Byrne v. Avon Prods., Inc., 328 F.3d 379, 381 (7th Cir. 2003)).  Based on these considerations, the court determined that Severson was not a qualified individual under the ADA because the requested accommodation—a leave of two-to-three months—would not allow him to perform the essential duties of his job and thus was not reasonable.   

Employer Takeaway

Severson provides definitive guidance to employers in the Seventh Circuit with respect to employee requests for medical leave for two or more months, but only if the leave is not mandated by a medical leave statute like the federal FMLA or any state law counterparts.  While Severson also suggests that even a leave of more than a couple of weeks may not be a reasonable accommodation, employers should still proceed with caution in responding to requests for leave of less than two months because the reasonableness of the leave will turn on the particular circumstances of each request.  Employers also should keep in mind that Severson does not permit employers to deny extended leave mandated by another statute.  In such cases, of course, employers must provide the leave whether or not it would be considered a reasonable accommodation under the ADA. 

For additional guidance or questions related to employers’ responsibilities under the ADA, contact Meg Vergeront at (608) 256-0226.    

Seventh Circuit Expands Title VII Coverage to Include Sexual Orientation Claims

Published by Meg Vergeront on | Permalink

The Court of Appeals for the Seventh Circuit recently held in Hively v. Ivy Tech Community College, 853 F.3d 339 (7th Cir. 2017), that Title VII of the Civil Rights Act of 1964 prohibits discrimination on the basis of sexual orientation. In doing so, it overruled its own longstanding precedent and put itself in conflict with most other circuits.

The plaintiff in Hively was a former part-time professor at Ivy Tech Community College. She filed a suit under Title VII, claiming that Ivy Tech denied her application for full-time employment, and ultimately declined to renew her part-time contract, because she was openly gay. Title VII makes it unlawful for private sector and state and local government employers with at least 15 employees to discriminate on the basis of, among other things, a person’s sex. 42 U.S.C. § 2000e-2(a). Title VII does not list sexual orientation as a protected classification.

At the time Hively filed her suit, the Equal Employment Opportunity Commission (EEOC) and a majority of the federal appellate circuits were at odds as to whether Title VII’s prohibition on sex discrimination should be expended to reach sexual orientation discrimination. The EEOC took—and still takes—the position that Title VII should be read to include sexual orientation as a protected classification. At the time of the suit, however, 10 of the 12 federal appellate geographic circuits, including the Seventh Circuit, had ruled to the contrary. Relying on Seventh Circuit precedent, the district court granted Ivy Tech’s motion to dismiss Hively’s sexual orientation discrimination claim. Hively appealed.

A three-judge panel of the Seventh Circuit noted that the line between a gender non-conformity claim—a claim that is covered by Title VII—and a sexual orientation claim is hard to discern. Hively v. Ivy Tech Cmty. Coll., 830 F.3d 698 (7th Cir. 2016). Ultimately, however, the court followed precedent. It upheld the district court’s dismissal on the ground that Title VII does not apply to sexual orientation discrimination claims. Id. at 718.

The panel’s ruling, however, was not the final word. The Seventh Circuit elected to rehear the case en banc, meaning that all eleven judges on the court would rehear it. After consideration, the court rejected its prior rulings. Hively, 853 F.3d 339. Specifically, the court concluded that Hively’s claim was no different from successful gender non-conformity claims brought by women  who alleged discrimination resulted from their “failure to conform to the female stereotype (at least as understood in a place such as modern America, which views heterosexuality as the norm and other forms of sexuality as exceptional).” It explained that the line between a gender nonconformity claim and one based on sexual orientation “does not exist at all.” Thus, the court concluded that Title VII’s prohibition on sex discrimination included discrimination claims based on sexual orientation. The court, however, did not determine the merits of Hively’s claim, but sent the case back to the district court for further proceedings consistent with its ruling.

Given the split among circuits, it is likely that Congress or the Supreme Court will step in to address the issue. Stay tuned.

If you have questions on this case or on other employment related matters, contact Meg Vergeront at (608) 256-0226.

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