By Samson R. Elsbernd and Kelli M. Kennaday, Esq.
Discrimination in the workplace has been prohibited since at least 1964. In addition to prohibiting discrimination, the Civil Rights Act of 1964 also prohibits retaliation against employees who “oppose” unlawful employment practices. Over the years, there has been surprisingly little guidance from the courts on what constitutes “opposition” to discrimination or harassment sufficient to trigger those protections. It has generally been understood that someone who complains that they are the victim of discrimination or harassment is protected by the anti-retaliation provisions of those laws. On January 26, 2009, however, a unanimous United States Supreme Court extended the protections of those laws to employees who report discrimination or harassment of others during an employer’s internal investigation.
Employees who disclose unlawful employment practices when asked may not be retaliated against by their employer.
In Crawford v. Metropolitan Government of Nashville and Davidson County, Tennessee, the local government investigated rumors of sexual harassment made against its employee relations director. A supervisor asked Ms. Crawford if she had seen “inappropriate behavior” by the employee relations director and Ms. Crawford shared several instances of such behavior. Ultimately, the employer did not take action against the employee relations director. However, it fired three employees who had disclosed inappropriate conduct when asked about it during the investigation, including Ms. Crawford. The employer claimed Ms. Crawford was fired for embezzlement; Ms. Crawford claimed she was fired in retaliation for reporting the sexual harassment. The lower courts did not allow Ms. Crawford’s case to proceed, finding that she did not “oppose” an unlawful employment practice because she had not made an actual complaint about it. Rather, she had simply disclosed what she had seen when asked. The Supreme Court reversed, finding that the anti-retaliation provisions of Title VII protect not only employees who make an initial complaint or report of unlawful employment practices, but also employees who have “taken no action at all […] beyond disclosing it” when asked.
The Supreme Court stated that any other outcome would result in a “freakish” rule that protected employees who reported discrimination on their own, but not those who reported it after they were asked about it by a supervisor. Such a rule would discourage employees from cooperating with employers during internal investigations. The Court rejected the argument that its rule would discourage employers from conducting internal investigations. Under the Court’s previous decisions, employers have a defense to harassment and discrimination claims when no tangible employment action is taken if the employer “exercised reasonable care to prevent and correct promptly” any discriminatory conduct and “the plaintiff employee unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer or to avoid harm otherwise.” Thus, the Court concluded, employers always have good reason to conduct an investigation into allegations of unlawful employment practices in the workplace.
How broad is the Supreme Court’s Interpretation of “Opposition” to Unlawful Employment Practices?
The language of the Supreme Court’s opinion in Crawford suggests that courts will interpret the term “opposition” within the anti-retaliation laws very broadly. The Supreme Court noted that when employees share their belief that the employer has committed harassment or discrimination, the employee has “virtually always” opposed an unlawful employment practice. The exceptions, noted the court, will be the “eccentric cases.” Even more troublingly, the Court specifically stated that it was not deciding whether “opposition” includes silent opposition to unlawful employment practices. An example of “silent opposition” would be when an employee disapproves of an unlawful employment practice but never shares that disapproval with her employer. While stating that it was not deciding the issue, the Court suggested that “opposition” might include silent opposition. In giving an example of what does not constitute opposition, the Court referenced an employee who thinks a supervisor’s racist joke is hilarious. The Court found that such an employee would not be covered by the anti-retaliation laws because that employee did not oppose an unlawful employment practice.
Lessons from Crawford
As always, if you are considering terminating an employee, it is important to review the employee’s history to determine whether he falls within a protected classification. An employee who has participated in a workplace investigation now should be included in the category of a protected class. The termination of an employee in a protected classification is a high risk termination and you should make sure that the reason for the termination decision is absolutely unrelated to the protected activity, is well documented and, if possible, was not made or influenced by the employee who was the subject of the investigation.
In this tough economic climate, many employers are being forced to consider rather unpleasant ways to reduce costs. Some of those methods include laying off non-critical employees, furloughs (requiring employees to take unpaid periodic time off) or RIFs (mass layoffs). While all of these strategies have obvious downfalls, including decreased morale, increased unemployment compensation premiums and possible litigation, employers also need to be aware of the various legal requirements that apply when these tools are used. Making matters even more confusing, the new economic stimulus plan has placed increased burdens on employers when employees are terminated. If you are considering a layoff, furlough or RIF, do not forget these important rules.
FINAL PAY RULES
If you let an employee go as part of a layoff or RIF, you must provide their final pay on their last day of work. The final paycheck must include all earned unpaid wages and benefits, including accrued time off. Commissions and bonuses must also be paid on the employee’s final day if the employer is capable of calculating the amount of the commission or bonus on that day. If the employer is not able to calculate the amount of the commission or bonus (for example, if the employer has not yet received payment on the sale), then the employer must pay the commission or bonus as soon as it is able to make that calculation. If you fail to provide a terminated employee with her final pay on the last day of work, the employee is entitled to a waiting time penalty for each day the final paycheck is late, for up to thirty days. Final pay rules do not apply to furloughs unless the furlough spans more than one pay period.
FURLOUGHS AND REDUCED HOUR SCHEDULES
Many employers are choosing to furlough employees for short periods in order to save money now, while retaining employees for the anticipated recovery. If you are considering furloughing employees, be aware of potential issues with respect to exempt employees.
You may furlough non-exempt employee by asking them to take off one or more days per pay period without pay. In that case, you simply don’t pay the employee for the time the employee does not work. For exempt employees, however, the situation is much more complicated. You are required to pay an exempt employee an entire week’s salary for each week in which the employee performs any work. Thus, you may not ask an exempt employee to take off a Friday and pay that employee 4/5 of his salary without jeopardizing the employee’s exempt status. However, you can furlough an exempt employee without pay for an entire workweek.
You may also reduce the normal schedule of a non-exempt employee to save costs. In that situation, you would change the non-exempt employee’s normal work schedule to a reduced hour schedule (i.e. thirty-two hours per week versus forty hours per week). Again, the exempt employee would only be paid for the hours worked. For exempt employees, however, you may not reduce the employee’s weekly salary based on a reduction in the amount of time worked during the week. Accordingly, you may not use a reduced hour schedule for exempt employees in order to reduce their pay.
If you decide to furlough employees or impose a reduced hour schedule, you must also decide whether to allow affected employees to use their accrued time off. That decision is up to you. For exempt employees, however, you can require the use of accrued time off in order to satisfy the requirement that an exempt employee be paid for a full week in which they perform any work. In this example, you could require an exempt employee to take every other Friday off and to use accrued PTO to be paid for that day. While this will not result in any immediate cost savings, it will get the PTO off your books. Of course, if the exempt employees does not have enough accrued PTO to cover that day, you must still pay the employee for the full week.
RIFS, WARN ACT NOTICES AND SEVERANCE AGREEMENTS
If you are doing a large scale RIF (defined as an unemployment loss at a single site of employment for fifty or more employees during any thirty day period), you are required to provide WARN Act Notices to all affected employees and to the EDD, the Local Workforce Investment Board and the chief elected official of each city or county government within which the RIF occurs. You must provide these notices sixty days prior to the RIF date. A failure to meet these requirements can result in liability to the affected employees for the difference between sixty days and the amount of notice actually provided. Penalties may also be assessed.
If you offer your RIF’d employees a severance package as part of their termination, there are also additional requirements for obtaining a valid release from those employees. Employees included in a RIF must be provided with forty-five days in which to consider a release agreement. The employees must also be informed in writing as to any class, unit or group of individuals covered by the program pursuant to which the release agreement is being offered, any eligibility factors for the program, any time limits for applying for it and the job titles and ages of all individuals eligible or selected for the program within the portion of the employer’s organization from which eligible employees were chosen, as well as the ages of all individuals in the same unit who were not eligible or selected for the program. Release agreements that do not comply with these requirements are invalid as to age discrimination claims.
NEW COBRA RESPONSIBILITIES
The recent economic stimulus bill imposes additional COBRA requirements on employers when an employee is terminated, whether as part of a RIF or an individual termination. When you terminate an employee, you must now provide them with a notification that they are eligible for subsidized COBRA benefits. As an employer, you may be responsible for paying the subsidy to the provider but may seek reimbursement by deducting the subsidy from your payroll taxes.
In addition to notifying employees who are currently being terminated of their COBRA subsidy rights, employers must also notify employees who involuntarily lost their jobs as far back as September 1, 2008 of their right to subsidized COBRA benefits, even if those employees did not initially sign up for COBRA. Those employees now have a second chance to sign up for subsidized COBRA benefits.
If you are contemplating a layoff, furlough or RIF, make sure you understand your obligations under the various state and federal laws that apply. Otherwise, your attempt to save money may actually cost you money.
Craig Carnes, a Wilke Fleury associate, was recently elected to serve on the board of directors for TEAM (Teaching Everyone Animals Matter). TEAM is a Sacramento based non-profit corporation formed to help Sacramento Animal Care and Regulation reduce the number of healthy, adoptable, and unredeemed animals who arrive at the Sacramento County animal shelter each year. TEAM works to accomplish its mission by sponsoring community-wide adoption events, spay and neuter education events, a special medical needs program for shelter animals, and public awareness events focusing on responsible animal ownership. To learn more about TEAM please visit http://www.sacanimalshelter.org/.