Posted on January 28th, 2009 by Chad De Groot | 1 Comment »
Filed under: ., Employee Benefits, HR Issues | 
On Monday, the Supreme Court unanimously ruled that a plan administrator must act in accordance with plan documents in determining who is a proper beneficiary under a plan even though that beneficiary previously waived his/her rights to a benefit under the plan via divorce decree.
Kennedy v. Plan Administrator for DuPont Savings and Investment Plan has a fact pattern that is quite common in the HR realm, and a decision that should be heeded by all plan administrators. Mr. Kennedy was a participant in the DuPont Savings and Investment Plan. Under the plan, Liv Kennedy, his wife at the time, was named beneficiary. The two were later divorced and under the divorce decree Liv waived her rights as beneficiary under the plan. Mr. Kennedy, however, never changed his beneficiary designation under the plan prior to his death. Following his death, Mr. Kennedy’s daughter, as executrix of his estate, requested that the assets of his account under the plan be distributed to the estate. The plan administrator, however, relying on the plan documents and the beneficiary designation thereunder, paid the benefits to Liv.
The Court held that because a plan administrator has a duty, in accordance with Section 404(a)(1)(D) of ERISA (29 U.S.C. 1104 for you labor people), to administer a benefits plan in accordance with the plan documents, and the plan documents, or Mr. Kennedy’s beneficiary designation, named Liv as his beneficiary, the plan administrator was acting in accordance with the plan documents when it distributed Mr. Kennedy’s assets to Liv, even though they had divorced.
Although the outcome seems unfair, it is a necessary one to ensure consistent plan interpretation and operation. Mr. Kennedy had every opportunity to change that beneficiary designation. Although the divorce decree may have led him to believe that the beneficiary designation would be voided, the onus of determining proper beneficiaries cannot be put on the plan administrator. To do so would require every plan administrator to shoulder the additional burden of determining a deceased participant’s intent irrespective of his beneficiary designation.
Posted on January 26th, 2009 by Tim Eavenson | No Comments »
Filed under: ., Discrimination, HR Issues |
The Supreme Court issued (another!) unanimous decision today, holding that Title VII of the Civil Rights Act prohibits retaliation against employees who participate in internal investigations of discrimination.
The opinion should help both employees and businesses by settling what “opposing” discrimination means in plain, unambiguous language.
[UPDATE: Paul Mollica, of Daily Developments in EEO Law, points out that not everything is so settled:
One issue not resolved by this case ... is whether and how employees must manifest a reasonable belief that they are complaining about a prohibited activity under Title VII. Here, Ms. Crawford was specifically asked by the employer about harassment, and volunteered facts that few reasonable people would dispute constitute some kind of hostile work environment. But where the behavior is fuzzier, employees will continue to run into the argument that the conduct they "opposed" -- though possibly offensive -- did not violate Title VII at all, such as the notorious Jordan v. Alternative Resources Corp., 458 F.3d 332, 98 FEP 1400 (4th Cir. 2006) (racial comment by a co-worker -- "They should put those two black monkeys in a cage with a bunch of black apes and let the apes f**k them" -- not harassment). This area will require some fine-tuning in the future.
Fine tuning, indeed.]
Actually, the case, Crawford v. Metro. Gov’t. of Nashville & Davidson Cty., 06-1595, would never have made it this far if the antiretaliation rules hadn’t been so odd in the first place.
The Backstory
The School District in Nashville and Davidson County, Tennessee was investigating its employee relations director for sexual harrassment.* During the investigation, an HR employee questioned Vicky Crawford about any “inappropriate behavior” she’d witnessed. Crawford had worked for the District for 30 years.
Crawford answered the question, as summarized by Justice Souter:
[O]nce, Hughes [the Employee Relations Director] had answered her greeting, “‘Hey, Dr. Hughes, what’s up?,’” by grabbing his crotch and saying “‘[Y]ou know what’s up’”; he had repeatedly “‘put his crotch up to [her] window’”…
and did some other things that won’t be restated here. Suffice it to say that rarely has the word “crotch” been used so recurrently in a Supreme Court decision. Two other employees recalled similar incidents.
The District acted on all of this information by issuing the Director a formal, verbal reprimand. Then it fired Crawford and the other two employees for allegedly embezzling money.
Crawford filed a charge against the District, claiming that it retaliated against her for participating in the investigation. (Go figure.)
The Law
Title VII’s antiretaliation provision makes it unlawful “to discriminate against any … employee[] … because he has opposed any practice made unlawful” by the statute. Crawford figured that since her comments about the Employee Relations Director got her fired (allegedly – the embezzlement thing never really panned out), she had a valid retaliation case under this section of the law.
But the federal district court told her she was wrong, and the Sixth Circuit Court of Appeals agreed. Their reasoning was that Title VII’s antiretaliation provision didn’t apply to employees who simply participate in an investigation that was initiated by someone else. According to the Sixth Circuit, the opposition clause, at it’s called, “demands active, consistent “opposing” activities….”
In other words, if you tell your boss about discrimination, he can’t fire you for it, but if he asks you about discrimination, and you tell him what you know, all bets are off.
Sound crazy? The Supreme Court thought so. Writing for a unanimous Court, Justice Souter noted that people passively opposed slavery, as they do capital punishment today. He then said:
There is, then, no reason to doubt that a person can “oppose” by responding to someone else’s question just as surely as by provoking the discussion, and nothing in the statute requires a freakish rule protecting an employee who reports discrimination on her own behalf but not one who reports the same discrimination in the same words when her boss asks a question.
That’s right. Freakish. All nine Supreme Court justices agreed to calling the rule “freakish.” And Justice Souter wasn’t done. Later, the admonishment continued:
We find it hard to see why the Sixth Circuit’s rule would not itself largely undermine … the statute’s “primary objective” of “avoid[ing] harm” to employees. If it were clear law that an employee who reported discrimination in answering an employer’s questions could be penalized with no remedy, prudent employees would have good reason to keep quiet about Title VII offenses…
Analysis
So who won? Well, Vicky Crawford, obviously (though she still has to try her case – this was an appeal of summary judgment). But the opinion’s straightforward explanation of what “oppose” means should really help everyone – employees and employers alike.
I know at first blush, a unanimous decision publicly chastizing an appellate circuit for reducing workers rights seems like a loss for employers. But let’s face it – a simple reading of Title VII shows how off base the Sixth Circuit’s reasonsing has been – how can “oppose” be a terminological separator of those who bring a claim and those who participate in another claim? That’s the kind of ridiculousness Congress would have to spell out in the statute itself.
But the Supreme Court’s broad view of the opposition clause leaves little room for anyone to misread the statute, or take a case to trial because the law in their circuit is ambiguous at best. It will require employers to be more careful about validly terminating people who have recently brought discrimination claims, but that’s a pretty small number of situations on the whole. For those cases where a person was wrongfully retaliated against, the Court’s decision will keep cases out of court by laying such a clear explanation on the table that an employer’s attorney will know early on whether to settle or not.
It’s also important to note that, while the Court’s strong language is partially directed at the Sixth Circuit, this case would not have ever gotten this far had the District’s actions not been so egregious in the first place.
Accusing a 30-year employee of embezzlement, and firing her and her two colleagues while retaining “Dr. Hughes” (who I suspect must have received his “Doctor” title from “the Todd“…) is just bad, bad business. And these bad business decisions at least partially led to the Court’s pointed language, which now leaves little room for employers to maneuver in court. This should serve as a cautionary tale for every HR exec during their next conversation with their employment counsel. I know I’d bring it up.
My last point on why this is good for business in the long run: people who perform pelvic thrusts at coworkers’ windows are are hardly ever good employees. Encouraging others to report them will only help the company’s bottom line. The Court cited an article which concluded that fear of retaliation is the number one limiter of employees’ willingness to bring claims. So the Court’s opinion should give employers more chances to investigate charges that will eventually lead to a more productive company.
No? Not buying it? Well, it was worth a shot. Honestly, unlike much of employment law, anti-discrimination statutes should probably be followed broadly just because it’s the right thing to do.
*[Ed. Note: Look, if your "Employee Relations Director" is being investigated for sexual harrassment, you have bigger problems than losing a procedural Title VII case before the Supreme Court.]
Posted on January 23rd, 2009 by Tim Eavenson | No Comments »
Filed under: ., Labor Law |
The Supreme Court has issued a decision about the rights of non-union employees in unionized jobs.
See, even if a bargaining unit chooses to be represented by a union, individual employees have the right (usually) to not be in the union. But the Court decided long ago that unions can collect “service fees” from these employees to cover the expense of representing them.
Since then, there have been numerous fights over just what service fees can cover. The prevailing rule has been that service fees must be “necessarily or reasonably incurred for the purpose of performing the duties of an exclusive representative…dealing with the employer on labor-management issues.” Ellis v. Railway Clerks, 466 U.S. 435 (1984). In other words, service fees can be collected for negotiating the collective bargaining agreement or otherwise representing the workers with the employer, but they can’t be used for political purposes like fundraising or lobbying to which the workers might be opposed.
In a rare unanimous decision (a unanimous labor case? Is that possible?) the Court held in Locke v. Karass (07-610) that unions can collect service fees that go to the union’s national affiliate to help pay for national litigation.
In the case, Maine state employees argued that using service fees for national union litigation violated their 1st Amendment right of free association by requiring them to fund lawsuits that they didn’t believe were right.
Citing and extensively quoting its prior case law on service fees, the Supreme Court disagreed, saying
[U]nder our precedent the Constitution permits including [national litigation] in the local’s charge to nonmembers as long as (1) the subject matter of the (extra-local) litigation is of a kind that would be chargeable if the litigation were local, e.g. litigation appropriately related to collective bargaining rather than political activities, and (2) the litigation charge is reciprocal in nature, i.e., the contributing local reasonably expects other locals to contribute similarly to the national’s resources used for costs of similar litigation on behalf of the contributing local if and when it takes place.
Other than showing a textbook-worthy example of the difference between e.g. and i.e. (it would behoove most lawyers to pay attention to just that), the reasoning stands up for the most part. I will admit, I was skeptical of the union’s chances up until I read the opinion. But this makes sense: if the litigation advances the interests of the employee (part 1) and isn’t unfairly weighted against the local, such that other unions are receiving a greater benefit from the pooling (part 2), then paying for national litigation actually fits straight into the acceptable line of charges delineated by the Court’s prior rulings.
Indeed, the Court pointed out that in Ellis, which set the standard for what was or was not chargeable, it approved the union’s charge to cover the expense of a national convention. It said:
We can find no sound basis for holding that national social activities, national convention activities, and activities involvedin producing the nonpolitical portions of national union publications all are chargeable but national litigation activities are not.
This language is a suprising, stark statement from a unanimous Supreme Court.
Usually 9-0 decisions are either easy or vague. Chalk this one up to the first column, I guess.
