The Delaware Court of Chancery has issued Guidelines to Help Lawyers Practicing before the Court. Chancery Court Guidelines.pdf This guidance may be particularly helpful to attorneys unfamiliar with the level of civility expected of the Delaware Bar. The guidelines also include advice on "best practice, which are informative even for seasoned practioners. Here are some excerpts from the new guidelines:

• All cellphones and PDAs are strictly prohibited in the courtroom, even if silenced. Failure to comply with this rule may result in confiscation of the device and/or sanctions.
• Plans for the use of technology during a hearing or trial should be made approximately one week before the proceeding.
• Where Delaware attorneys are acting as local counsel, letters to the Court from lead counsel should not be forwarded to the Court under a cover letter saying, in substance, "Here is a letter from my co-counsel."
• Letters to the Court should be short. If a letter exceeds 5 pages, double-spaced, counsel should consider whether a motion is more appropriate. Submissions of up to 15 pages may be filed as speaking motions. Submissions longer than 15 pages should be submitted as motions with supporting briefs.
• Parties should include in their standard interrogatories a request that the other party(ies) identify prospective trial witnesses. If a party fails to include such an interrogatory, the Court will not look favorably on complaints of unfairness when counsel is unable to depose all trial witnesses before the close of discovery.
• Answers should repeat the allegations of the Complaint and then set forth the response below, mirroring the practice used in discovery responses.
• The Court takes issue with parties (1) aggressively denying basic facts without a good faith basis to do so, and (2) reciting a laundry list of affirmative defenses without consideration of the applicability of each defense to the case.

Delaware Court of Chancery Guidelines

Delaware’s Workplace Fraud Act , passed in July 2009, currently prohibits employers in the construction services industry from misclassifying employees as independent contractors. An employer who misclassifies its employees—intentionally or unintentionally—may be subject to civil penalties of up to $5,000 per misclassified employee; restitution obligations; stop-work orders; debarment from public contracts; and civil suit by the aggrieve employee(s).

Two bills currently under consideration by the Delaware General Assembly would amend and expand the Workplace Fraud Act. House Bill 221 would significantly expand the scope of the Act to cover all employers in the State. It would also make individual business owners jointly and severally liable with the business entity for any violation of the Act. House Bill 222 would allow the Department of Labor to publish a list of employers who had been found to have violated the Act.

Both Bills are currently in committee, and have not yet been put to a vote. It is unclear whether the bills have sufficient support to be passed by the General Assembly. But one thing is clear—passage of the bills would greatly impact Delaware employers using independent contractors!

These proposed amendments may reflect new enforcement efforts by the U.S. Department of Labor, seeking to put an end to employer practices of misclassification of employees as independent contractors in violation of the Fair Labor Standards Act and federal tax law.

Medical-marijuana laws have been blazing a trail across the U.S. since California’s passage of Proposition 215 in 1996.  This year, the Delaware General Assembly began experimenting with marijuana legislation.  With the passage of Senate Bill 17 (“S.B. 17”), on May 11, 2011, which was signed by Governor Markell immediately, Delaware joined the 15 other states and the District of Columbia that have bills legalizing marijuana for medicinal purposes.

S.B. 17 shares many common elements with medicinal marijuana legislation across the country.  But there are some key differences that could have a major impact on Delaware employers.  Essentially, S.B. 17 decriminalizes marijuana under state law in certain limited circumstances. Delawareans with certain specific debilitating medical conditions and who have received certification of a physician, must apply for a state-issued medical marijuana card.  Cardholders are permitted to possess no more than 6 ounces of marijuana and are not permitted to grow their own.

Cardholders will be able to legally purchase marijuana at state-licensed non-profit dispensaries known as “compassion centers."  There will be only one state licensed dispensary in each county.  The Delaware Department of Health and Social Services, which will administer the registrations for patients, caregivers, and compassion centers, has until July 1, 2012, to develop the regulations needed to implement the new law.

Unlike many other states' medicinal-marijuana laws, S.B. 17 contains provisions that apply directly to employers. Specifically, although the bill prohibits cardholders from using medicinal marijuana at work, it also bars discrimination against them in hiring, termination, or other terms and conditions of employment. The new law also makes it clear that positive drug tests can’t serve as a basis for discipline of a cardholder unless the person “used, possessed, or was impaired by marijuana” at work during normal working hours.

This point is further clarified by a subsequent provision in the law, which states that cardholders “shall not be considered to be under the influence of marijuana solely because of the presence of metabolites or components of marijuana that appear in insufficient concentration to cause impairment” in a drug test.  Regardless of the the passage of S.B. 17, it is important to note that marijuana use remains illegal under the federal Controlled Substances Act.

Continue reading . . .

The Delaware Attorney General’s Office is seeking to appeal the Third Circuit’s ruling that Delaware’s labor apprentice law violated the commerce clause. That decision upheld an opinion in April 2010 by Judge Sue L. Robinson of the U.S. District Court for the District of Delaware that the state’s failure to recognize out-of-state registered apprentices under Delaware's Prevailing Wage Law discriminated against out-of-state contractors by effectively forcing them to pay higher wages to apprentices than in-state competitors were required to pay. After the Third Circuit’s ruling, Tri-M sought more than $190,000 in attorney’s fees and costs from the State, but that petition was stayed by the District Court while the State petitions the United States Supreme Court to review the Third Circuit’s ruling.

Last night, Governor Markell signed Delaware's civil union bill into law. The new law will go  into effect on January 1, 2012. 

See our prior posts regarding how the new law will affect Delaware employers:

Civil Unions: Federal Tax and Benefit Implications

Same-Sex Civil Unions Recognized in Delaware

Delaware Legislature Considers Same-Sex Civil Unions

The Delaware House of Representatives voted yesterday in favor of Senate Bill 30, a bill that would create same-sex civil unions in Delaware, and recognize civil unions performed in other states. The bill also changes all sections of the Delaware Code where marriage is mentioned, by requiring that the word “marriage” be read to mean “marriage or civil union.” 

Senate Bill 30 was approved by the Delaware Senate on April 7, and Governor Markell has already declared that he will sign the bill into law “as soon as a suitable time and place are arranged.” The law will take effect on January 1, 2012.

The new law raises several questions for employers.  For example, the law cannot, and does not, alter federal non-recognition of civil unions. So how will the new law impact employers?

Right to Employment Benefits

As we have previously indicated, the most significant impact of Senate Bill 30 is likely to be on employment benefits. When the law takes effect, employers will be required to provide partners in a civil union with the same benefits that they provide to partners in a marriage. The Act would not cover those currently not protected by the Delaware Discrimination in Employment Act (DDEA): (a) employers with less than 4 employees; or (b) religious corporations with respect to discrimination based on sexual orientation

Equality of Benefits

Employers should also be aware that equality of benefits is a two-way street. Many employers previously offered employment benefits to unmarried same-sex partners, but not to unmarried heterosexual partners. Now that same-sex couples have access to civil unions that are substantively identical to marriage, employers may be open to claims of reverse discrimination if they continue to offer benefits to same-sex partners who have not entered into a civil union, but do not offer the same benefits to unmarried heterosexual partners.

Employers should also be careful to impose the same requirements for receipt of benefits upon same sex civil union partners as they do upon married partners. While it is perfectly acceptable to ask an employee to verify his or her marital status before extending benefits, the same requests should be made of both same-sex and heterosexual partners. If you do not require a copy of a marriage certificate to establish benefits, you should not require a copy of a civil union certificate.

Discrimination Protection

As we have previously reported, the DDEA already protects Delaware employees from discrimination on the basis of sexual orientation. Keep in mind that homosexual individuals who may not have previously chosen to disclose that fact may, as a result of the new law, disclose that information so that their partner may enjoy benefits. Therefore, employers may possibly have knowledge of an employee’s protected class they might not otherwise have had – and should proceed cautiously with any adverse employment actions, particularly ones that may follow closely on the heels of such disclosure.

This post was authored by Adria B. Martinelli and Lauren Moak.  Adria will be speaking about the implications of Delaware's Civil Union and Equality Act of 2011 at our upcoming Annual Employment Law Seminar on May 11, 2011. 

I reported last week that the Delaware Senate was considering a bill that would recognize civil unions.  The Wilmington News Journal reports that the State Senate voted to approve the Civil Union and Equality Act of 2011 yesterday.  The House is expected to vote on the legislation on Thursday, April 15, so stay tuned. 

The Third Circuit has upheld a ruling in April 2010 by Judge Sue L. Robinson of the U.S. District Court for the District of Delaware that the state’s failure to recognize out-of-state registered apprentices under Delaware's Prevailing Wage Law violates the commerce clause of the U.S. Constitution. The court ruled that Delaware discriminated against out-of-state contractors by effectively forcing them to pay higher wages to apprentices than in-state competitors were required to pay.

The Third Circuit ruled that the lower court correctly found that Delaware's refusal to recognize out-of-state registered apprentices facially discriminated against out-of-state contractors without advancing a legitimate state interest. The case is Tri-M Group LLC v. Sharp.

Tri-M filed suit in September 2006 alleging the Delaware Department of Labor had put it at a competitive disadvantage for public works projects by allowing in-state contractors “to pay reduced wages to their apprentices while denying out-of-state contractors the same right.” Tri-M was registered with Pennsylvania’s federally approved apprenticeship council but was not eligible for Delaware’s program, which requires sponsors to maintain a permanent place of business in Delaware.

In the summer of 2006, while Tri-M was performing electrical work at a construction project in Milford, Del., officials with the Delaware Department of Labor found the company had violated labor laws by failing to pay its apprentices their full wages.

Tri-M made adjustments, and the DDOL determined it was in compliance. Soon after, the company launched a legal challenge to the measures.

On appeal, the DDOL argued unsuccessfully that the challenged procurement scheme — including the permanent place of business requirement — does not discriminate against interstate commerce, and that the contested apprentice program regulations were explicitly authorized by Congress and approved by the U.S. Department of Labor. The Third Circuit disagreed and affirmed the District Court’s decision.

Delaware's General Assembly will consider a new bill that would permit civil unions for same-sex couples. The Civil Union and Equality Act of 2011 was introduced by Sen. Sokola & Sorenson and Reps. George & Schooley. 

A civil union would be parallel, but not equal to, marriage – which would remain reserved for heterosexual couples. Parties to a civil union will bear the same responsibilities and enjoy the same rights and protections, to the extent possible, as exist for married spouses.

The Act removes the criminal penalties under Delaware law for marrying a same-sex spouse in another jurisdiction, and recognizes those marriages as well as similar legal relationships entered into outside of Delaware as civil unions, not as marriages. For example, if a same-sex couple gets married in Vermont and moves to Delaware, their Vermont marriage would be recognized as a civil union in Delaware, not as a marriage

The Act cannot, and does not, alter federal non-recognition of civil unions.

If passed, what will this mean for Delaware employers?

First, employers generally will be required to make whatever employee benefits that are offered to a married spouse available to a spouse in a civil union.  The Act would not cover those currently not protected by Delaware’s discriminations laws: (a) employers with less than 4 employees, or (b) religious corporations with respect to discrimination based on sexual orientation.

Second, private employers offering health and retirement benefits that are subject to ERISA — a federal law — may not be required to offer such benefits to a spouse in a civil union.  This is because the federal Defense of Marriage Act (“DOMA”) defines “marriage” as only between a man and a woman, and a “spouse” as only a person of the opposite sex, for purposes of federal law, and ERISA preempts inconsistent state law. However, the present commitment to enforce DOMA remains an open question.

On February 23, 2011, Attorney General Eric Holder announced that the Justice Department would cease legal defense of the Act's Section 3 at the direction of President Barack Obama, who had reached a conclusion that Section 3 was unconstitutional. However, Congress may defend the law in court in place of the administration, and on March 4, 2011, Speaker of the House John Boehner announced he was taking steps to defend Section 3 in place of the Department of Justice. Given the uncertain state of current law, employers will need to stay tuned as to the current position of the administration if or when Delaware’s bill passes to best assess how to handle the conflicts between state and federal law on this issue.

Third, employers who currently offer benefits for same-sex partners will want to consider changing its policy so that benefits are only offered for same-sex partners who have entered into a civil union. This is because if you offer benefits only to homosexual partners who have not entered into a civil union, but do not offer those same benefits to unmarried heterosexual partners, you face potential exposure to a sexual orientation discrimination lawsuit under Delaware law.

The Third Circuit Court of Appeals (which covers Delaware) recently issued a reassuring decision for employers. In the case, the Court affirmed dismissal of racial discrimination and retaliation claims where there were no overt racial statements made by supervisors and the employer addressed all allegations promptly and in a manner reasonably calculated to prevent further harassment.

Facts of the Case

Janeka Peace-Wickham, who was African-American, was hired as a manager in the Café at the Delaware Memorial Bridge facility of the Delaware River and Bay Authority (DRBA). Her position was that of a "working supervisor" and she was expected to fill in as needed with cooking, cashiering, and serving. Shortly after she began employment, she got into a heated argument with a Caucasian co-worker, which resulted in both of them filing claims of racial harassment against the other. Peace alleged that some of the Café customers (primarily DRBA employees) made racially inappropriate remarks. She claimed to overhear one customer remark to another when she was not happy the way her meal was prepared, "back in the day, down South, blacks would have been hung for things like this."

Another customer remarked to Peace that the Café had "changed" since Peace's arrival, and Peace took this to be motivated by racial animus because the previous supervisor was caucasian. Peace also alleged that a customer had balled up receipts and thrown them at her. Following the departure of the Café Supervisor, who was also African-American, someone posted a sign at the Café which said "Free At Last , Free At Last, Thank God Almighty, Free at Last," which Peace took to be directed at her because she was the only African-American employed at the Café at that time.

Served up with a healthy dose of complaints

A mere three months into her employment, Peace complained of harassment from the Caucasian co-worker, and things only got worse from there. She routinely complained of understaffing in the Café and about how she was treated by customers as well as fellow employees in the Café. By the time she was done she'd filed numerous internal complaints, two charges of discrimination with the Delaware Department of Labor, and claimed that her rejection for a promotion was the result of her race and the fact she'd filed charges.

The Proof is In the Pudding, or Remedial Measures

The Court ruled that the DRBA was not liable for discrimination or retaliation. It noted that the record was devoid of any overtly discriminatory statements or conduct by her supervisors. While such conduct was not required to show intentional discrimination, the presence or absence of such conduct proves helpful in determining the motives of the decisionmakers. Here, the Court said the fact that Peace could not point to any overtly discriminatory conduct on the part of her supervisors lent further support to the conclusion that supervisors could not be held directly responsible for any hostile environment that may have existed.

Most importantly, however, the Court found that the DRBA took appropriate remedial steps in response to allegations of discrimination once it became aware of them. In response to Peace's complaints that it took to long to investigate and conclude her initial harassment claim, the DRBA revised its investigation procedures. It also posted anti-harassment signs and instituted diversity and harassment training for all employees. While the DRBA did take longer to investigate Peace's complaint than her co-worker's, it addressed the issue immediately by separating the two employees. The Court held that these measures fell "comfortably within the realm of legally adequate legal measures."

The Court further stated that it was "unwilling to step into the shoes of DRBA management, as suggested by Peace-Wickham, and make highly particularized judgments as to whether the DRBA should have docked pay, demoted, or withdrawn certain fringe benefits instead of following the course of action chosen here."

Bottom Line

Employers can take comfort that as long as it takes steps "reasonably calculated to end the harassment" once it becomes aware of allegations, it will not be liable for a hostile work environment. Diversity and harassment training, in particular, were compelling to the Court in this case.

The Delaware Wage Payment and Collection Act ("DWPCA"), is the state equivalent of the federal Fair Labor Standards Act ("FLSA"). Both the Delaware statute and the FLSA provide for individual liability for unpaid wages. In other words, an individual can be sued personally if he knowingly permitted a violation of the wage statute.  19 Del. C. Sec. 1101(b) states:

The officers of a corporation and any agents having the management thereof who knowingly permit the corporation to violate this chapter shall be deemed to be the employers of the employees of the corporation.

The Delaware Court of Common Pleas was recently asked to interpret the definition of "employer," for the purposes of individual liability, leading to an interesting and potentially important result. 

In Chasnov v. Brady, No. CPU4-09-8966 (Del. CCP Mar. 23, 2010), the Delaware Department of Labor sued two lawyers on behalf of their former law partner, Chasnov.  Chasnov was ordered to step down as a member of their law firm by the Office of Disciplinary Counsel but he continued to practice with the firm.  He alleged that he was not paid the full amount of fees he was owed.

The Department of Labor brought the suit on Chasanov's behalf to recover the fees he claimed were due. The suit was brought only against the two partners--not against the law firm--based on the provision of the statute cited above.

The partner-defendants moved to dismiss the suit on the ground that the Wage Payment Act does not impose individual liability on members and managers of an LLC.  Instead, they argued, the Wage Payment Act creates liability only for officers and agents of a corporation who knowingly permit the corporation to violate the Act. An LLC is not the same as a corporation and, therefore, members and managers of an LLC cannot be held individually liable for unpaid wages under state law.

The Court agreed with the defendants' argument, finding that the members and managers of a Limited Liability cannot be held personally liable under the state Wage Payment Act.

This is an important decision for employers in Delaware--especially those who operate an entity other than a corporation.  The decision supports a very narrow interpretation of who can be an "employer" for the purposes of individual liability under the Delaware Wage Payment Collection Act--a definition more narrow than the definition of "employer" under the federal Fair Labor Standards Act.

Delaware Department of Labor (DDOL) Office of Anti-Discrimination recently released its fiscal-year statistics relating to the charges filed and resolved in FY2009.  I posted previously about the stats, including some (hopefully) helpful charts that show the trends over time. 

Since the statistics were released, I've had some time to process the data and focus more on what is most relevant to Delaware employers. 

Charges, Charges, Charges

If you are an employer who received a Notice of Charge of Discrimination for the first time in 2009, you are not alone. There were more charges filed with the DDOL last year than any other year for which the statistics are published. In FY2009, the DDOL accepted 728 charges—an increase of nearly 20% over FY2008.

Retaliation Claims Continue to Reign as Enemy #1

It may not come as a surprise that the most-often filed charge was a retaliation charge. Charges of discrimination alleging retaliation constituted more than 70% of the charges filed last year. One reason for such a high number is that retaliation is often added as a second allegation in charges alleging other types of discrimination. Also, once a charge has been filed, it can be amended to add other claims. So, if an employee files a charge alleging gender discrimination and is subsequently terminated, she is likely to amend her charge with an additional charge of retaliation.

The increase in the number of charges filed that contain a retaliation claim is staggering. In FY2008, approximately 30% of all charges filed with the DDOL contained a retaliation claim—even less in FY2005-2007. Those numbers went up by 130% over the last fiscal year. It is fair to say that retaliation claims are, by any measure, an employer’s number one biggest threat in the context of discrimination claims.

Race- and gender-based claims enjoyed equal growth over last year—both accounting for an additional 40% of all claims filed. After retaliation, race (56.9%), and gender (46.4%) discrimination ranked as the second and third most commonly filed claims.

Defining “Success”—Reasonable Cause Findings Issued in FY2009

There is some good news for employers among these statistics. Overall, there number of reasonable cause findings issued by the DDOL remains small. On average, only 1.5% of all claims filed resulted in a cause finding. The DDOL’s long investigation periods, though, may skew these numbers. Because the average processing time for a charge is nearly a year, the reasonable-cause findings issued in FY2009 were likely issued for charges filed in FY2008.

The most successful claims in FY2009 were those based on age—reasonable cause was found in just less than 4% of all age claims filed. National origin was the second-most successful, with reasonable cause findings issued in 2.5% of those claims.

No reasonable cause findings were issued in three types of claims: (1) gender discrimination claims filed by males; (2) Asian-race claims; and (3) religious-discrimination claims.

Looking Ahead

The lesson to be learned from this data for Delaware employers is this:

The increased likelihood that your organization will be named in a charge means that you must be ever diligent in documenting the events of the workplace and being on high alert for potential issues as they arise and, especially, when dealing with an employee who complains of discrimination or harassment (formally or informally).

Also see:

2009 Stats on Delaware Charges of Discrimination

As you may know, our little blog was named 1 of the top 100 law blogs by the American Bar Association. We are so honored to have been chosen!  We're in the "Geo" (as in "geographic-specific") category with 9 other excellent legal blogs.   And, until tomorrow at 5 p.m., you can cast your vote for us as the best in our category--an honor we'd be thrilled to have.

To vote, you'll have to register with the ABA Journal.com site but it takes just a minute to sign up. All you'll need to provide is an e-mail and a password.

Click here to register to vote. 

Click here to see the list of all 100 blogs.

So please, take a minute or two and get registered and vote for our blog.  And then pass this e-mail along to your friends, family, local postman, kid that cuts your grass, or anyone else with Internet access.

Thank you, thank you, and thank you again!!

Delaware attorney and blogger Francis G. X. Pileggi of the always popular Delaware Corporate and Commercial Litigation Blog has posted an outstanding discussion with Delaware Supreme Court Chief Justice Myron Steele. 

It's well worth stopping by Francis' excellent blog to read the insightful commentary of the Chief Justice. 

Have you ever wanted to carry the entire Delaware code in your pocket? Have there been times you’d wished you’d had Title 19, Delaware’s labor statutes available when you’re not at your computer or near a law library?  Well, if you are the owner of an Apple iPhone, now you can.  The entire Delaware code is now available as an app via the iTunes store for just $19.95.  That’s insanely inexpensive compared to the price of the multi-volume book set you’d have to buy to get the Code in print.  The app gives users access to the full Code in a searchable format, making it easy to find that obscure cite in a flash.

Of course, law firms have been very reluctant to the adaptation of the iPhone, so many lawyers who have iPhones also have to lug around a Blackberry to check their work e-mails.  Still, a Blackberry is substantially less bulky than a couple of shelves worth of hard-bound legal books. Oh, what will technology give us lawyers next?

In case you’re not yet an iPhone user, you can always search the Delaware Code for free online, made available on the State of Delaware’s website.