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The Pivotal Law Blog

Impending U.S. Supreme Court Decision Could Dramatically Effect Employer-Employment Relationship

Posted Wednesday, October 4, 2017 by McKean J. Evans

On October 2, 2017, the U.S. Supreme Court heard argument in three consolidated cases that could significantly alter employment law nationwide. The three cases, Epic Systems Corp. v. Lewis, Ernst & Young LLP v. Morris, and National Labor Relations Board v. Murphy Oil USA, Inc., require the Supreme Court to decide whether employers can force employees to give up their right to sue their employer in court and instead agree to resolve legal disputes in private arbitration. Private arbitration differs from the court system in several important ways. Among other things, individuals’ right to obtain information from the other party is significantly limited, there is virtually no right to an appeal, and individuals cannot proceed as a group in a class or collective action.

Arbitration agreements have gained notoriety in recent years. While the Federal Arbitration Act permitted arbitration agreements since 1925, arbitration was traditionally only used between business entities with relatively equal bargaining power, not between large companies and individuals or small business. That changed with the Supreme Court’s 2011 ruling AT&T Mobility v. Concepcion, which broadly upheld business’ rights to include arbitration agreements in boilerplate “take-it-or-leave-it” contracts offered to individual consumers or small business who lacked the bargaining power to to negotiate. After the Concepcion decision, arbitration agreements became increasingly common in everyday consumer contracts. A 2015 New York Times investigation found consumers were required to agree to forego the court system in favor of private arbitration in industries as varied as credit cards, online dating, telecommunications, health care and education. A report to Congress by the federal Consumer Financial Protection Bureau found that “[t]ens of millions of consumers” were subject to arbitration clauses through their use of financial products or services.

In the three cases currently before the Supreme Court, Epic Systems, Ernst & Young and Murphy Oil each required their employees to sign arbitration agreements as a condition of employment. Each arbitration agreement required the employee to resolve any disputes individually rather than collectively, for instance, through a class action. The workers argued their arbitration agreements violated the federal National Labor Relations Act (“NLRA”), which protects employees’ right to act collectively to challenge their employer.

The Justices’ questions at oral argument underscored the importance of the Court’s decision in the three cases. Justice Stephen Breyer noted that the NLRA right to collective employment action was a key part of employment reforms undertaken in the 1940’s, and that a ruling allowing employers to require employees to arbitrate disputes individually risked “undermining and changing radically” the labor laws that are the “entire heart of the New Deal.” Justice Ginsburg opined that arbitration seemed inconsistent with the NLRA’s purpose of putting employees on equal footing with their employer. On the other hand, Chief Justice John Roberts observed that a decision striking down the arbitration agreements in these cases would invalidate similar employment agreements covering 25 million people, a step some justices seemed reluctant to take.

Now that the case has been argued, a decision is likely sometime in the coming months.

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Employee Terminated For Falsely Reporting Aircraft Safety Inspections Is Ineligible For Unemployment

Posted Thursday, September 28, 2017 by McKean J. Evans

In its September 25, 2017 published decision in Cuesta v. State, No. 75405-0-I, the Court of Appeals ruled an employee who was terminated for falsely marking aircraft components as inspected was ineligible for unemployment benefits.

Jose Cuesta was discharged from Boeing after failing to physically inspect parts he had approved and verified as inspected. Cuesta’s duties included physically inspecting fabricated airplane parts after they were manufactured to ensure the components’ integrity and performance before they were installed on commercial aircraft. The job was vital to the safety of passengers traveling on aircraft manufactured by Boeing.

Cuesta’s supervisor observed Cuesta failed to adequately inspect parts, including marking airplane wing holes as inspected when the wing holes had not yet been drilled. When confronted, Cuesta explained that he was very busy because the plant was short-staffed and he was distracted by threatening notes from his coworkers because he did not support the Seattle Seahawks. As a result of this discovery, Boeing disassembled the partially assembled aircraft to inspect its component parts Cuesta had previously marked as inspected in order to avoid what the court termed “the potentially catastrophic consequences of faulty inspections.”

Boeing’s workplace rules prohibited “falsifying of acceptance or approval of work, such as stamping work complete with the knowledge work wasn’t completed or done.” Cuesta was aware that he was never “to approve or sign off on work without performing the inspection.” Accordingly, Boeing discharged Cuesta.

Cuesta then applied for unemployment benefits. His application was ultimately denied on the basis that Cuesta’s discharge disqualified him from benefits. On appeal to the Court of Appeals, Cuesta argued that he was not discharged for misconduct.

Washington’s Employment Security Act provides compensation to individuals who are unemployed “through no fault of their own.” RCW 50.01.010. Individuals are disqualified from employment benefits if they are discharged for work-related misconduct. However, simply because an employee was discharged for cause does not necessarily mean that the employee’s actions constitute misconduct sufficient to disqualify them for unemployment benefits.

In Cuesta’s case, the court emphasized that Cuesta’s duties in inspecting aircraft components were critical to the safety of passengers traveling on Boeing aircraft. The court disagreed with Cuesta that his actions were merely “inefficiency, unsatisfactory conduct, or failure to perform well,” such as typographical errors or failing to properly record legal documents, which do not constitute misconduct sufficient to deprive a worker of unemployment benefits. Rather, the court noted Cuesta had eight years’ experience as an inspector and lacked any reason to fail to perform his duties satisfactorily. The court concluded:Cuesta was aware of the gravity of his job, knew that his inspection was to ensure the safety of the flying public, and was aware that he must never approve or sign off on work without performing the inspection…Even if Cuesta had been confused by the assignment, there is no evidence that he requested assistance from his manager, who was in the area, in order to ensure that he was properly performing this essential function. Cuesta’s conduct was intentional and in substantial disregard of Boeing’s interest in keeping passengers on its aircraft safe.

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Ninth Circuit Rules for Insured in ERISA Employee Benefits Dispute Under Federal Agency Law

Posted Thursday, September 21, 2017 by McKean J. Evans

The Ninth Circuit Court of Appeals recently ruled in favor of an insured in a dispute over coverage under an ERISA-governed benefits plan. In Salyers v. MetLife, Case No 15-56371 (September 20, 2017), the court applied the federal common law of agency to find that the employer’s actions waived the insurer’s right to deny coverage.

Susan Salyers bought a $250,000 life insurance policy on her husband through an employer-sponsored plan. After Salyers’ husband died, the insurer (MetLife) paid out only $30,000 because Salyers had not submitted evidence of insurability with her coverage election, as required under the ERISA-governed benefits plan. The court ruled that MetLife waived its right to deny coverage based on the evidence of insurability requirement because it did not ask Salyers for a statement of health, even as it accepted her premiums for $250,000 in coverage.

Importantly, the court held that, under the federal common law of agency, the knowledge and conduct of Salyers’ employer could be attributed to MetLife. The court found Salyers’ employer knew or should have known that Salyers’ coverage election required evidence of insurability, because the employer’s system showed $250,000 in coverage. Despite having not received evidence of insurability from Salyers, her employer deducted premiums from Salyers’ paycheck, in amounts corresponding to $250,000 in coverage, and sent Salyers a letter confirming $250,000 in coverage. These actions were so inconsistent with an intent to enforce the evidence of insurability requirement that they gave Salyers a reasonable relief that Metlife had relinquished its right to deny coverage under that requirement.

The court remanded the case to the trial court with instructions to enter judgment in favor of Salyers for the amount of the $250,000 policy that remained unpaid.

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The Paradoxical Issue of Treating Children of Parents with Domestic Violence Protection Orders

Posted Wednesday, September 20, 2017 by Pivotal Law Group

The litigation of Domestic Violence Protection Orders are an important role that the Court plays. These are the most protective (non-criminal) orders that a person can obtain. These orders assists victims of domestic violence in breaking the cycle, and allowing them separation and safety.

A somewhat paradoxical issue that has come up in the past has been how to treat the children of a couple that is the subject of these orders. There are a few child-specific rules. For instance, if an order includes a child-in-common of the parties, the order may not be issued for more than one year (RCW 26.50.060(2)).

One thing that has always been problematic with respect to children, however, has been the application of the very definition of domestic violence to them when seeking to have them protected under the order. RCW 26.50.010(3) sets out the definition of domestic violence, which reads, “(a) Physical harm, bodily injury, assault, or the infliction of fear of imminent physical harm, bodily injury or assault, between family or household members; (b) sexual assault of one family or household member by another; or (c) stalking as defined in RCW 9A.46.110 of one family or household member by another family or household member.”

While there are certainly instances where this definition is met for a child, there are also many times that the child is merely exposed to the violence, and has been previously omitted from the orders for that reason. In my experience, this has something of a chilling effect for victims who are afraid that their children will not be adequately protected in this process.

In June 2017, the Washington Supreme Court addressed this issue in Rodriguez v. Zavala. In a relatively rare unanimous opinion, the Court ruled that, “We conclude that exposure to domestic violence constitutes harm under the DVPA and qualifies as domestic violence under chapter 26.50 RCW.”

This case will have the effect of removing the ambiguity of whether the Court should or should not include a child on a protection order, and it will hopefully remove some of the fear that people seeking protection orders may experience as to whether or not their children will be protected if they make the decision to start this process.

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Federal EEOC Sues Employers over Pregnancy Discrimination

Posted Wednesday, September 13, 2017 by McKean J. Evans

Three recent lawsuits show the federal Equal Employment Opportunity Commission (“EEOC”) is taking a hard look at suspected pregnancy discrimination. Since late August, the EEOC has sued three employers claiming they discriminated against pregnant employees in violation of federal law.

Title VII of the federal Civil Rights Act prohibits workplace discrimination, including on the basis of gender. The Pregnancy Discrimination Act extends Title VII’s prohibition of sex discrimination to include discrimination based on pregnancy. It requires employers to treat women affected by pregnancy the same as persons of similar ability who are not affected by pregnancy. Two years ago, the U.S. Supreme Court interpreted this rule broadly to mean that an employer discriminates based on pregnancy when it refuses the employee an accommodation (such as light duty work) that the employer gives to non-pregnant employees. See Young v. United Parcel Serv., Inc., 135 S. Ct. 1338, 1350, 191 L. Ed. 2d 279 (2015). Washington State’s Law against Discrimination similarly prohibits employers from discriminating on the basis of pregnancy.

The EEOC’s recent lawsuits accuse three employers of unlawful pregnancy discrimination. The EEOC seeks back pay, compensatory damages, punitive damages and injunctive relief.

In the first case, the EEOC alleges a California dietary supplement company had a policy of routinely discharging employees if it learned the employee became pregnant. The EEOC learned of the practice after a worker complained, stating she was fired ten days after informing the company she was pregnant.

In the second case, the EEOC accuses a Wisconsin home health care firm of refusing to accommodate a pregnant worker with light-duty work. The lawsuit claims that the company routinely offered light-duty assignments to injured workers, but refused to extend the same accommodation to pregnant workers.

The final case accuses a Los Angeles restaurant and night club of firing an employee because of her pregnancy. The EEOC claims the restaurant, upon learning the employee was pregnant, cut the employee’s hours and refused to let her return to work after giving birth.

This recent action shows the EEOC considers pregnancy discrimination an enforcement priority.

“Pregnancy discrimination continues to be a persistent problem, even though it has been against federal law for nearly 40 years,” said one EEOC lawyer. “Employers should be cognizant of their obligations under the law to maintain a workplace free of discrimination against employees who are expectant mothers.”If you have questions regarding federal or Washington protections for pregnant employees, call Pivotal Law Group today for a free consultation.

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