Delaware Employment Law Blog

In McKenna v. City of Philadelphia, No. 09-3567 (3d Cir. Aug.17, 2011), the Third Circuit affirmed a jury award in favor of a fired Caucasian Philadelphia police officer, who claimed he had been retaliated against for complaining to his supervisor about racially discriminatory treatment of minority officers. The City claimed that even if the supervisor’s conduct was retaliatory, the City was insulated from liability because the termination decision was made by an independent Police Board of Inquiry (“PBI”) after a hearing.

In affirming the verdict, the court cited the recent “cat’s-paw” decision, Staub v. Proctor Hospital, 131 S.Ct. 1186 (2011), in which the U.S. Supreme Court held that, if an action by a biased supervisor is the proximate cause of a worker's termination, an employer can be held liable even if the supervisor did not make the ultimate decision. Since the supervisor in McKenna had testified at the PBI hearing, the Third Circuit concluded that the jury could reasonably have decided that the supervisor’s retaliatory animus bore a direct and substantial relation to the termination, and the PBI’s decision was not independent and was foreseeable.

The case has special significance for Delaware employers. Delaware recognizes the implied covenant of good faith and fair dealing, including a subcategory that is markedly similar to the cat’s paw theory. In Delaware, if an employee’s employment record is falsified or manipulated by a supervisor in order to bring about the employee’s termination, the employer can be held liable even if the employer is unaware of the supervisor’s animus.

Under the cat’s-paw theory, the supervisor’s animus is actionable only if related to one of the discrimination laws, as in McKenna, where the supervisor retaliated against complaints of race discrimination, in violation of Title VII. In Delaware, the basis of the supervisor’s animus is not so circumscribed. The action of the Delaware supervisor could arise from personal animosity unrelated to discrimination, but if the result is to create a false record in order to procure a termination, and the employer relies on the supervisor’s statements, the employer may be held liable under the implied covenant.

As more cases are decided under the cat’s paw theory, it seems likely that terminated Delaware employees will draw an analogy to the cat’s paw theory and it will become more difficult for employers to avoid liability under the implied covenant theory.

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.

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.

In an all too rare unanimous ruling (save for Justice Kagan, who recused herself), the U.S. Supreme Court has held that the anti-retaliation provision of Title VII extends to employees who are in the “zone of interest” with an employee who has filed a charge of discrimination. The facts and findings follow.

A female employee filed a charge of sex discrimination against her employer. A few weeks later, the employer fired the complainant's fiancee, who had also been a company employee. The fiance then filed a retaliation charge with the EEOC and a subsequent lawsuit. 

Justice Scalia, writing for the Court, held that a reprisal against a third party such as the fiancee was covered retaliation under Title VII.  The Supreme Court further held that the fiancee was an “aggrieved person,” who had standing to sue under Title VII.  Justice Scalia pointed out that the text of the anti-retaliation provision is broader than the substantive provision and that any person who comes within the “zone of interest” that the statute seeks to protect can file suit. The Court leaves it to future cases to determine how far this “zone of interest” extends. The case is Thompson v. North American Stainless, No. 09-291.

A law first proposed by the late Senator Ted Kennedy has been resurrected and introduced in the Senate by Bob Casey (D-Pa.) and Tom Harkin (D-Iowa). The law mirrors legislation introduced in the House of Representatives in March 2009 which, to date, has gone  nowhere. Premised on the purported need of employees to have more flexible work options, it authorizes an employee to request from an employer a change in the terms or conditions of the employee's employment if the request relates to: (1) the number of hours the employee is required to work; (2) the times when the employee is required to work; or   (3) where the employee is required to work.

The proposal does not require the employer to grant any requests, but does set forth employer duties with respect to such requests, and makes it unlawful for an employer to interfere with any rights provided to an employee under the Act. Under regulations to be promulgated by the Secretary of Labor, an employer would have to hold a meeting with the requesting employee and give the employee a written decision on the request, discussing the reason for any rejection and addressing a prescribed list of possible explanations. An employee would be entitled to request reconsideration and the employer would be required to provide a written response to that request as well. In short, it would create an unnecessary paperwork nightmare.

The proposed law also authorizes an employee to file a complaint with the Administrator of the Wage and Hour Division of the Employment Standards Administration of the Department of Labor for any alleged violations of rights, and provides for the investigation and assessment of civil penalties or the award of relief for alleged violations.

The timing of its introduction suggests that S. 3840  is a political ploy. In view of the current mood of the populace, passage of the legislation is, to put it mildly, a longshot.

Labor-law attorneys had quite a day. The U.S. Supreme Court, in an unexpected decision announced today, has held that the two members of the 5-person National Labor Relations Board (NLRB), who remained after the other members’ terms expired and Congress failed to act on proposed new members did not have the statutory authority to issue rulings. As a result, nearly 600 cases have been voided. The four strict constructionists on the Court were joined by departing Justice John Paul Stevens, who wrote the opinion. Justice Anthony Kennedy, usually a swing vote, wrote a dissenting opinion joined by the liberal wing of the Court. The decision is New Process Steel v. National Labor Relations Board (08-1457).

The case hinged on language in the NLRA stating that “three members of the Board shall, at all times, constitute a quorum of the Board.” Once the Board was reduced to three members, before the third member’s term expired, the three delegated authority to act to the remaining two persons. The Supreme Court majority concluded that the three member quorum requirement had to be maintained “at all times,” while the dissent asserted that the three members needed to be in existence only at the time they delegated authority to the remaining two.

The practical effect of the decision may be minimal, since the two NLRB members who issued the decisions, current Chairperson Wilma Liebman and former Chairperson Peter Schaumber, a Democrat former union lawyer and a Republican former management lawyer respectively, had to agree in each case, so the decisions were, likely, noncontroversial philosophically.

Federal Judge Sue L. Robinson, U.S. District Court for the District of Delaware, has issued an important decision affecting Delaware employers in a case captioned, Tri-M Group, LLC v. Sharp, C.A. No. 06-556-SLR (D. Del. Apr. 14, 2010).

Tri-M Group, LLC, a Pennsylvania electrical contractor, was the successful bidder on a Delaware state construction project. It used apprentices registered in Pennsylvania, and paid them the apprentice wage rates prescribed under the Delaware prevailing wage law. An investigator for the Delaware Department of Labor learned that the apprentices were not registered in Delaware. The contractor asked him how it could register its apprentices in Delaware and was told that the Delaware law requires sponsors of apprentice programs to maintain a permanent place of business in Delaware.

Even though Tri-M had maintained a construction trailer at AstraZeneca for some years, that was not considered to be a “permanent place of business.” The DDOL determined that the contractor was in violation of Delaware law and since the apprentices were not registered in Delaware, they had to be paid the higher journeyman’s rate. The contractor sued in Delaware District Court, contending that favoring in-state contractors by forcing others to pay higher rates violated the Commerce Clause of the U.S. Constitution.

Judge Robinson agreed. She pointed out that several states in the region, “in a contest of wills over apprentice recognition,” had adopted discriminatory statutes designed to retaliate against and disfavor out of state contractors. Delaware’s statute was particularly blatant, in that it “discriminates against out-of-state employers on its face.” Therefore, a heightened scrutiny standard applied and the requirement that an apprenticeship program maintain a permanent place of business in Delaware would be declared invalid unless the state could show that the requirement “advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.” The court concluded that the DDOL could adequately protect its apprentices without using discriminatory means, and granted Tri-M’s motion for summary judgment.

In Gross v. FBL Financial Services, Inc., the U.S. Supreme Court ruled that a plaintiff claiming a violation of the ADEA must do more than prove that age was "a motivating factor" in the adverse employment action. Rather, the plaintiff must prove that the action would not have occurred "but for" the employee's age, making ADEA cases harder for plaintiffs to win than other kinds of discrimination cases. Legislation to overturn the Gross case has been introduced and is pending in the Senate and House.

That proposal, called "The Protecting Older Workers Against Discrimination Act," would adopt the burden of proof currently used in mixed motive disparate treatment cases under Title VII. Under that approach, once a plaintiff proves that age was a "motivating factor" for the adverse action, he or she would win unless the employer proved by a preponderance of the evidence that the same decision would have been made if age had not been considered. 

At Young Conaway’s Annual Employment Law Seminar on April 28, we will discuss the prospects for passage of the POWADA and how it would affect the defense of ADEA cases.

After months of moribundity, the Employee Free Choice Act (“EFCA”) is showing signs of life. Or at least alternative means of imposing some of the major changes included in EFCA, such as greatly decreasing the time of an election campaign and limiting employers’ ability to actively participate in union elections, are being considered. It all depends on the possible confirmation of Craig Becker, whose nomination to the NLRB has been stalled in the Senate but was recently voted out of committee on a party line vote.

The theory goes that if Becker, who is currently Associate General Counsel of the SEIU, is confirmed by the full Senate, giving former union lawyers a 3-2 majority on the Board, strange (and bad) things may occur. Becker’s past published writings include such one-sided suggestions as excluding employers from participating in pre-election hearings to determine an appropriate bargaining unit, preventing employers from alleging that union campaign conduct coerced employees, and prohibiting employers from conducting mandatory meetings of employees at any time during the campaign (instead of only during the 24 hours before the election, as at present).

Given Becker’s extreme views, the theory goes, new NLRB Chairperson Wilma Liebman should have no trouble getting the majority of the Board to agree to embark on expanded rulemaking and in that fashion, impose many of the EFCA changes indirectly. Liebman has made no secret of her interest in having the Board expand its rulemaking activity, instead of limiting itself to ruling on cases presented to it.

For the first quarter of 2009, the Employee Free Choice Act (EFCA), was front page news, and the subject of scores of seminars, webinars and spirited discussions. Since then, it has virtually disappeared from view. Aside from a few rumors about possible Senatorial compromises, EFCA became a nonevent during the balance of 2009. As we move into 2010, an election year, will we see an effort to revive and enact EFCA in some form? I’m betting we will.

First of all, the current Congressional makeup is likely to be a high-water mark for union supporters that will recede after the November 2010 election. So it may be now or never for EFCA proponents. And now that the heavy lifting has been completed in the Senate on health care reform, and the economy has begun to stabilize, it seems like a more propitious time for President Obama and the Democrats in Congress to turn back to what was first on the unions’ wish list. Andy Stern, president of the SEIU and a regular White House visitor, has said recently that he expects Congress to take up EFCA in the first quarter of 2010. That sounds right.

The version of EFCA that is enacted will probably omit the card-check provision that caused the most angst among opponents. The unions may seek to retain the other major change, requiring interest arbitration of first contracts (after an unreasonably short period of negotiations.) Reducing the time for a union election to be conducted after a union files its petition will certainly remain in the final version. Some companies, anticipating EFCA’s passage, have begun regular union-avoidance training for all employees. Others have held training sessions for supervisors, who act as the early warning system for recognition of union organizing activity. Thoughtful employers who want to remain union-free should be considering their options and taking proactive steps in anticipation of the passage of EFCA in some form.