Hello, Old Friend: Tennessee Legislature Reinstates McDonnell Douglas Burden Shifting

A new law recently passed by the Tennessee legislature and sent to the Governor for his signature will reinstate the framework for analyzing discrimination and retaliation claims that had been in place for thirty-seven years, but was tossed out by the Tennessee Supreme Court last September.

In 1973, the United States Supreme Court adopted a “burden-shifting” analysis for evaluating claims of racial discrimination claims under Title VII. The burden-shifting analysis was labeled “McDonnell Douglas burden shifting” after the name of the Supreme Court decision that established it. In the years following the Supreme Court’s decision, all federal courts and state courts in nearly every state adopted the McDonnell Douglas burden shifting analysis for all types of discrimination claims under Title VII, other federal laws such as the ADA, ADEA, and state anti-discrimination laws. This analysis was widely accepted and used in nearly every discrimination case for over 35 years – so much so that it rolls off the tongue of every employment lawyer like the pledge of allegiance.

Last September, the Tennessee Supreme Court discarded the McDonnell Douglas burden shifting analysis for common law retaliation claims -- and in all probability, also for all discrimination and statutory retaliation claims in state court. The Court held that the burden shifting analysis adopted by the United States Supreme Court was inconsistent with Tennessee’s standard for summary judgment. (You can read the Supreme Court's opinion here and our post about the case here). In one fell swoop, the Supreme Court fundamentally altered the analysis for claims of discrimination and retaliation in Tennessee state courts. The decision had the practical effect of making it more difficult for employers to obtain summary judgment dismissing meritless claims of discrimination and retaliation.

In its latest session, the legislature reacted by passing a bill that adds new sections to the Tennessee Human Rights Act and the provisions related to retaliation claims. The new sections explicitly reject and legislatively overrule the Supreme Court’s decision, and “establish the McDonnell Douglas framework as the appropriate and legally required framework for the consideration of evidence offered during all stages of the proceedings in employment discrimination and retaliation cases.”

The new statutes bring Tennessee law back in line with federal law and the law of a vast majority of the states. Importantly, the new statutes will eliminate uncertainty that would have resulted from a sea change in the law and will provide a more predictable standard for employers to obtain summary judgment dismissing frivolous discrimination and retaliation claims.

A copy of the bill can be found at http://www.capitol.tn.gov/Bills/107/Bill/SB0940.pdf

Legislature Resuscitates Summary Judgment in Tennessee

Thanks to a new Tennessee law, it will be a little easier for parties, including employers, to obtain summary judgment in cases filed on or after July 1, 2011. A bill recently passed by the legislature and awaiting the Governor’s signature reverses the effects of a Tennessee Supreme Court decision that nearly made summary judgment obsolete and pushed more cases to trial (or settlement).

Summary judgment is a procedural device that allows the judge to dispose of cases prior to trial where there trial is unnecessary because the facts are not disputed and the plaintiff’s claims are legally insufficient. Summary judgment is a tool that employers commonly used to have meritless discrimination, harassment, and retaliation claims dismissed without having to undergo the expense and uncertainty of that accompanies a trial.

(You can read about the cases which led to this legislation here  and here.)

With the passage of House Bill No. 1358/Senate Bill No. 1114, the Tennessee legislature has not only reversed the effects of the Hannan decision, but it has required Tennessee courts to apply the same summary judgment procedure as is applied in federal courts. The operative language of the statute states that the moving party shall be entitled to summary judgment if it “[d]emonstrates to the court that the nonmoving party's evidence is insufficient to establish an essential element of the nonmoving party's claim.” The legislature clearly intended to revive summary judgment as a useful procedural device to weed out the cases that do not deserve to go to trial.

It remains to be seen how courts will interpret this law and whether courts will still feel reluctant to grant summary judgment. From the employer’s standpoint, however, this is a welcome change in the law. It will reduce the risk that meritless lawsuits go further in the process than they should, or that employers feel extorted to settle on unfavorable terms simply to avoid the costs of litigating the case.

USCIS' I-9 Central is open for business

USCIS announced that it has a newly-launched I-9 headquarters aimed at making employer compliance with work authorization more accessible and easier. Dubbed I-9 Central, press release notes that this is yet another step by USCIS to provide "employment-related enhancements" for the business world.

With USCIS working toward making compliance "easier," it would not be a stretch to think that the expectations of compliance will increase as well. For more information about I-9 audits, check out these previous blog posts.

New Tennessee Law Prohibits Maintenance of Membership Clauses in Labor Agreements

On May 5, 2001, Tennessee Governor Bill Haslam signed a new law making it unlawful for employers and unions to include a “maintenance of membership” clause in their collective bargaining agreement. A maintenance of membership clause requires those employees who are members of the union to continue their union membership (i.e., keep paying dues to the union) until the collective bargaining agreement expires. Only then can the employee withdraw from the Union. Tennessee’s new law makes such arrangements illegal in the future, but does not affect existing contracts. Going forward, an employee’s right to withdraw from the union cannot be restricted by contract between the company and the union. Legislators who supported the new law felt that such clauses were inconsistent with the state’s right to work laws and that “employees should be permitted to decide for themselves whether or not to join or financially support a union.” Additionally, it also appears that the law may prohibit an employee from entering into an agreement with a union that would restrict the employee’s right to withdraw from union membership. It would seem this law would have an impact on bargaining table conduct as well as membership agreements between a union and employees/membership in the union.

The bill signed by the governor can be found at: http://state.tn.us/sos/acts/107/pub/pc0178.pdf

Is your workers' comp carrier also verifying your employees' eligibility to work?

Some insurance companies may be denying payment of benefits on the basis that unauthorized workers should not have been employed in the first place and thus are not eligible to be returned to work (or receive payments for the difference in wages for light duty work versus the employee's regular position). How does the company know that the worker is unauthorized? Well, some may be running the Social Security Numbers of your employees through either E-Verify or the Social Security Number Verification Service. [An aside:  neither program authorizes its use for that purpose, and the SSNVS handbook specifically prohibits third parties, i.e., someone other than the employer, from using it to take action that might be deemed adverse to the employee.]

This can create several issues for employers. First, an employer could have some liability to the employee if the employer knows that the SSN is being used for an improper purpose. Second, if the carrier makes the employer aware that the SSN was returned as mismatched or that the carrier has reason to believe the employee is not authorized to work, the employer must determine what steps it wishes to take to further verify employment eligibility. If it doesn't take any steps, it runs the risk of being considered "on notice" that a potentially unauthorized worker is in its employ.

Employers should consider periodically informing the carriers that any information provided is to be used for its authorized and intended purpose only. Taking it a step further, employers could also provide a statement to the carrier that the SSN is not to be used for any unauthorized purpose, including specifically any attempts to determine the work eligibility status of the employee.

In the FYI category--Tennessee's workers' compensation statutes provide that unauthorized workers are still eligible to receive certain benefits. The law places a limit on the amount of those benefits that can be awarded versus what would be available to an authorized employee. [See T.C.A. 50-6-241(e)(1)]

Need evidence for a Wage & Hour Lawsuit? There's an app for that.

The United States Department of Labor announced yesterday that it has developed an “app” for smartphones that is designed to help employees keep track of their hours worked and calculate their wages and overtime pay. This free app is available for download on the DOL’s webpage. According to Secretary of Labor Hilda Solis, “This app will help empower workers to understand and stand up for their rights when employers have denied their hard-earned pay."

This is a development that employers should be aware of and pay attention to. The DOL’s app is really a convenient way for employees to collect evidence to support a wage and hour complaint and/or lawsuit. In fact, the DOL has practically admitted this. In a news release, the DOL stated that “This new technology is significant because, instead of relying on their employers' records, workers now can keep their own records. This information could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records.” In other words, the DOL would rely on employees’ records where the employer has not maintained accurate records of the hours an employee has worked. Even for those employees who are not as tech savvy, the DOL has developed a printable work hours calendar for employees to use to track rate of pay, work start and stop times, and arrival and departure times

It is easy to imagine a situation where an employee’s records using a smartphone app or paper calendar are different from the employer’s records, and create a conflict as to how much the employee is owed. To lessen the threat of a successful wage and hour lawsuit based on the employee’s independent records, some employers may choose to require employees sign time sheets and pay stubs to verify that the employer’s record of the employee’s hours and wages are accurate. In light of the DOL’s announcement, now is a good time for employers to ensure that they have properly classified employees as exempt or non-exempt, are paying employees properly for all time worked, and are maintaining accurate records related to employees pay.

When on the phone means on the clock

I remember the days before smartphones, when I could only access my e-mail remotely from a laptop. I yearned for one of those cool little phones that would let me immediately respond without the need for lugging around my laptop, opening a VPN connection and logging on. And now I have it--check that: I've had it for several years. And I find that I now yearn for those times when I can power down the cool little phone and disconnect from work. But that's about all I need to worry with as an exempt employee.

What about those employees who are non-exempt and have those cool little phones with remote e-mail access? They, too, may have the longing to disconnect and not do work. Employers should have that desire for the non-exempt employees as well. Otherwise, employers could be facing unpaid time claims (including overtime claims) for time spent by non-exempt employees checking their work e-mail accounts.

Even in situations where the smartphone is the non-exempt employee's personal phone and not company-issued, the employer can still have liability for time spent on the smartphone performing work-related tasks. If the employee uses it to do work on the company's behalf, that is compensable time under the Fair Labor Standards Act (that whole "suffer or permitted to work" thing).

So, what to do? Here are a couple of thoughts:

• check your e-mail use/electronic communications policy to ensure that you have advised employees that they have no expectation of privacy in their company e-mail accounts--regardless of how the accounts are accessed
• update your timekeeping policy, e-mail policy, etc. to prohibit unauthorized time worked after hours, and remind employees that any work which might result in overtime should be approved first
• most e-mail programs have a setting that allows you to schedule when particular messages will be delivered. Train your supervisors how to use that setting so that e-mails which are being sent to non-exempt employees are delivered during normal working hours
• prohibit employees (exempt and non-exempt alike) from having remote access to the e-mail accounts without prior permission (which gives you some control over who has the ability to check e-mail during off hours)
• remind non-exempt employees that they are to record ALL time worked, including those seemingly small, incremental periods during off hours when they are accessing e-mail remotely
• perform overtime/timekeeping audits periodically; this will also help you discover any patterns in e-mail usage that you can then use to better control remote access
• if you find an employee has violated your policies and established expectations, counsel the employee on the appropriate conduct.

If you haven't updated your electronic communications policy recently, or your timekeeping/overtime policy, now is a great time to do that. It provides you with a forum to remind employees of the company's expectations.