Employment Law Lookout

Happy Thanksgiving 2015

Posted in Uncategorized

Dear ELL readers:

Thanksgiving is one of my favorite holidays. Along with the feasting and festivities, the day encourages us to take the time to reflect on those things for which we are most grateful.  From small acts of kindness to awe-inspiring examples of wonder, Thanksgiving helps us become more conscious of our good fortune.  As we embark on the upcoming holiday season, we would like to take an opportunity to thank you all for sharing this journey with us.  Please know that we are grateful for our good fortune and thankful for the wonderful opportunities this year has provided to us all.

On behalf of the entire Employment Law Lookout blogging team, we wish you and your families a safe, happy and joyous Holiday Season.

Thank you – Erin Dougherty Foley

Exploding Consumer Web Accessibility Litigation: Remember, Employees Use The Web Too

Posted in Title III Access, Workplace Policies and Processes

By Kristina Launey

Seyfarth’s ADA Title III Specialty Team has reported extensively on the legal uncertainty surrounding the accessibility of businesses’ websites to individuals with disabilities.  Today it reports that businesses’ long wait for website accessibility regulatory guidance will continue, as the Department of Justice (DOJ) announced  last week that it will not issue any regulations for public accommodations websites until fiscal year 2018—eight years after it started the rulemaking process with an Advanced Notice of Proposed Rulemaking (ANPRM).

All the while, the DOJ and private plaintiffs continue to pressure businesses, through enforcement actions and lawsuits, to bring websites into conformance with a standard no law requires, citing the ADA’s general principle of “equal access”.  This puts businesses in an untenable position, as they struggle to prioritize what can often be considerable spend and business disruption to bring a website into conformance with this standard, against the multitude of other regulatory requirements with which the business must comply upon risk of violating established laws.  This external pressure has only increased of late—we have seen plaintiff’s lawyers initiate a virtual tsunami of demand letters and lawsuits against all manner of businesses (e.g., retailers, hotels, banks) alleging that their websites are not accessible to claimants with disabilities.  We have seen time and again businesses settle (most recently, as we had predicted, Scribd joined that club)—hence the dearth of case law in this area—quite simply (to the outside world; not so simple to the business’s interior decision-making) because it is less expensive to settle than to litigate in an uncertain legal landscape.  These enterprising litigants know this.

Why Should Employers (Who May or May Not Be Subject to Title III) Care? As an example, digital accessibility in employment has also made news lately: The Partnership on Employment and Accessible Technology (PEAT, funded by the Office of Disability Employment Policy in the U.S. Department of Labor) recently issued a report on its 2015 research findings, “eRecruiting & Accessibility: Is HR Technology Hurting Your Bottom Line?”, which sought to answer the question: What if top talent is falling through the cracks due to accessibility issues in eRecruiting, rather than a lack of qualifications?  PEAT researched the top HR technology companies offering these tools, and conducted one-on-one interviews with more than two dozen technology providers, employers, accessible technology consultants, disability advocates, and other experts in the business, disability, and accessibility fields.

From this, it identified the following as the top accessibility issues in this area:

  • (Lack of) Awareness – employers and technology providers tend to underestimate the need for accessible online job applications.
  • Compliance vs. usability mindset – the assumption that a website that complies with Section 508 of the Rehabilitation Act of 1973 (which requires that federal agencies make their electronic and information technology accessible to people with disabilities) meets the needs of all users, without regard to usability.
  • Technology, logistics, and cost – the belief that technical solutions for the most common accessibility issues already exist, but are expensive and difficult to implement.
  • Complexity – the failure of employers to consider accessibility challenges beyond the job application form itself, including processes related to job sourcing, pre-employment testing, and digital interviews; as well as how the application integrates with the overall corporate website (which may also have accessibility issues – see Title III discussion above).
  • Customization – built-in accessibility features are sometimes lost from off-the-shelf accessible products when vendors customize and install a tailor-made application.
  • Inadequate testing – technology providers and consultants suggested to PEAT that employers rarely tested their online job application software with actual users prior to launch.

After gathering this information from employers, IT providers, developers, and advocacy organizations, PEAT surveyed 427 people with varying disabilities (including vision, hearing, physical/motor, and cognitive/intellectual disabilities) about their experiences using eRecruiting tools. It found that 46% rated their last experience applying for a job online as “difficult to impossible.”  Of those, 9% were unable to complete the application and 24% required assistance from the employer.  Even after asking the employer for assistance, 58% were still unable to complete the application.  Of the 67% of survey respondents who were asked to complete pre-employment assessments or testing for a job opportunity, 22% were unable to complete testing and 19% required assistance. And, of the 50% of respondents who reported they used social media as part of their job search process; 40% experienced accessibility or usability issues, such as features they could not access at all or that were not user-friendly.

What’s the Problem? Top reported issues were:

  • Complex navigation
  • Timeout restrictions
  • Poor screen contrast
  • Confusing, poorly written, and inconsistent instructions
  • Fields that did not state an accepted format (such as date fields) and fields that were mislabeled or not labeled at all
  • Images that conveyed information, but did not have alternative text for individuals using screen readers
  • Applications and questionnaires that:
  • Relied on color, graphics, or text embedded with graphics to convey directions or important information
  • Could not be navigated with keystrokes and required mouse input
  • Had to be signed using a mouse
  • Videos or audio instructions that were not closed captioned
  • Inaccessible “CAPTCHAs“ (used to determine whether or not the user is human) with no audio option
  • Trouble uploading the necessary documents
  • No notice about use of pop-up windows, which are blocked by most browsers in many settings, such as libraries and employment centers
  • Lack of contact information for technical support
  • Lack of information on how to request an accommodation

Even if the risk of a consumer or employee lawsuit – or class action – were not enough motivation to develop an enterprise-wide digital accessibility plan, the report notes that these issues affect all applicants for employment, not just people with disabilities: “Think of closed captioning, curb cuts, and voice recognition — technologies initially created for people with disabilities and now used by everyone.”

To learn more about digital accessibility, the surge of ADA Title III litigation activity, and what your business can do to mitigate risk, visit our Team’s blog, www.adatitleiii.com, and join our Title III Team for a webinar on December 2, 2015:  Is Your Business the Subject of a Title III Lawsuit Yet?”.

ELL SCOTUS Series # 5 – MHN v. Zaborowski

Posted in Workplace Arbitration, Workplace Policies and Processes

In our final installment of the blog series that previews employment cases being heard by the Supreme Court, the Zaborowski case will allow the Court to opine on the enforceability of arbitration agreements that may have questionable (or “unconscionable”) terms. Read on for more.

Once Again SCOTUS Takes on the Enforceability of Arbitration Agreements

 By Anthony Califano

On October 1, 2015, the U.S. Supreme Court agreed to hear MHN Government Services, Inc. v. Zaborowski, an appeal from a Ninth Circuit decision refusing to compel arbitration in a wage case.

The Holdings Below. Zaborowski contracted with MHN to provide counseling services to military personnel and their families.  At the beginning of their work relationship, Zaborowski signed an agreement to arbitrate claims against MHN.  That agreement contained a severability clause, which required the striking of any term in the agreement that a court deemed unenforceable while enforcing the remaining terms.  Claiming that MHN misclassified him and other consultants as “independent contractors,” rather than “employees,” Zaborowski filed suit in the Northern District of California seeking alleged overtime wages.  In response, MHN filed a motion to compel Zaborowski to arbitrate his claims.

In its ruling, the District Court held that the following terms in the arbitration agreement were unconscionable: (1) shortening the period for filing a claim; (2) giving MHN control over selection of an arbitrator; (3) awarding attorneys’ fees and costs to the prevailing or “substantially prevailing party”; (4) requiring Zaborowski to pay a $2,600 arbitration filing fee; and (5) waiving the potential recovery of punitive damages. Despite the severability clause and the “strong presumption in favor of arbitration” under the Federal Arbitration Act (“FAA”), the District Court refused to modify and enforce the arbitration agreement and instead nullified it.  The District Court reasoned that it could not fix the arbitration agreement “without being required to assume the role of contract author rather than interpreter.”  Under California state law, the District Court held that a trial court has the discretion to conclude that an arbitration agreement containing “multiple unlawful provisions” is “permeated by an unlawful purpose” and therefore unenforceable in its entirety.

The Ninth Circuit affirmed on appeal. Noting that it “may have reached a different conclusion,” the Ninth Circuit majority opinion nevertheless held that, under California law, the District Court did not abuse its discretion by refusing to sever the many unconscionable terms from the arbitration agreement and enforce the rest.

In a noteworthy dissent, Judge Gould disagreed, finding that the District Court should have severed the unconscionable terms and otherwise enforced the arbitration agreement. Relying on the Supreme Court’s 2011 decision in AT&T Mobility LLC v. Concepcion, Judge Gould opined that the FAA preempts California state law establishing that an arbitration agreement is unenforceable if it contains multiple unconscionable provisions.  In Judge Gould’s view, Concepcion created “a presumption in favor of severance” if an arbitration agreement can be enforced after severing the unconscionable terms.  To demonstrate that modification and enforcement should have occurred here, Judge Gould included in his dissent an actual redlined version of Zaborowski’s arbitration agreement, which provided a visual demonstration of the ease with which the allegedly unconscionable terms could have been stricken and the rest of the arbitration agreement enforced.

Why This Case Matters.  If the Supreme Court reverses the Ninth Circuit’s decision, companies may find it easier to enforce arbitration agreements containing provisions that are deemed unconscionable under state contract law.  A reversal of the Ninth Circuit’s decision would be consistent with Supreme Court precedent regarding the enforceability of arbitration agreements.  But, regardless of the outcome, this case is important because the Supreme Court’s decision may provide direction to trial courts across the country regarding the circumstances under which they should and should not enforce arbitration agreements.

What Employers Can Do To Be Proactive.  This case highlights to companies the importance of having arbitration agreements that can withstand judicial scrutiny if and when attacked.  Companies that are considering the implementation of arbitration agreements should do so with this in mind, and with an eye toward recent developments in this area of the law.  As for companies with existing arbitration agreements, it is never too late.  Companies can always evaluate the strengths and vulnerabilities of their arbitration agreements and, if appropriate, make changes that are not only consistent with developing law, but also business needs and goals.

Stay Tuned… This case is not yet scheduled for oral argument, but that scheduling is expected relatively soon. Keep an eye out here for follow-up blog posts containing insights from oral argument and the Supreme Court’s ultimate decision.

If you would like more information regarding this article, please contact the author or your Seyfarth attorney.

It’s the PITs! Employer Guide to Forklift Liability in the Workplace

Posted in OSHA Compliance, OSHA Litigation, Workplace Policies and Processes

By Mark A. Lies, II and Patrick D. Joyce

Take a look around you. There’s a good chance you work at a facility that uses a Powered Industrial Truck (PIT).

OSHA defines a PIT as “any mobile power-propelled truck used to carry, push, pull, lift, stack or tier materials.” Most people think of PITs as forklifts.  Though forklifts come in many shapes and sizes, they are all regulated under OSHA’s PIT standard, 29 CFR § 1910.178. PITs also include manlifts, scissor lifts, boom lifts and motorized hand trucks.  Though this article will often refer to forklifts, the requirements apply to all PITs.  Earth moving and over the road haulage trucks are not included in the definition of PIT. Equipment that was designed to move earth but has been modified to accept forks are also not included.

Forklifts present many potential hazards: a pedestrian can be struck by a forklift; a load can fall off a forklift onto a person or the operator; the forklift can fall off a ledge or tip if driven on an uneven surface; a forklift can fall between a loading dock and a truck trailer. Frequently, an accident involving a forklift results in serious injury or a fatality.  To address these hazards, OSHA sets out a comprehensive set of standards for training, maintenance, and operation of forklifts.  OSHA also requires initial certification and recertification of forklift drivers every three years.  If forklift certifications or maintenance records are falsified, OSHA has a history of seeking criminal sanctions to enforce its standards.

This article will briefly outline OSHA’s requirements for use of forklifts in the workplace and will discuss a case where an employer falsified forklift maintenance records, resulting in criminal sanctions.


OSHA’s Powered Industrial Trucks Standard requires that “The employer shall ensure that each powered industrial truck operator is competent to operate a powered industrial truck safely…” The Standard also requires that operators receive training in the topics which are applicable to the safe operation of the truck in the employer’s workplace. Employees must be trained separately for each different type of forklift they will be using, but they do not need to complete separate training for the same type of forklift made by a different manufacturer.

The Standard further requires an employer to develop a written program to train all employees who will be required and authorized to operate forklifts as to the hazards of such equipment. Employers must conduct classroom-type training and actually observe the employee operating the equipment under the physical conditions at the workplace, such as aisles, ramps, and loading docks.  The employer must provide a certificate stating the employee has completed the training.  The employee must be retrained and recertified every three years, at a minimum, or after an accident or “near miss” which resulted from an unsafe act.

If contract or temporary workers who are not employed by the host employer are required to operate forklifts, the host employer must take steps to assure that these individuals are properly trained before they are permitted to operate forklifts at the facility. At a minimum, the host employer is responsible for the safety of its own employees. If the operation of forklifts could endanger the host employer’s employees, the host employer would be obligated to prevent such danger by satisfying itself that all forklift operators have been properly trained. This does not mean that a host employer is required to train forklift drivers who are not its employees. It must, however, ensure that such individuals have been trained in accordance with the PIT standard before they are permitted to operate forklifts at its workplace.

Because OSHA takes training requirements so seriously, it is a good practice that all contract and temporary employees be trained and certified by the host employer before being allowed to operate a forklift, even if they received training and certification from another employer. In addition, the host employer should obtain the training and certification documentation from the contract or temporary staffing service company to confirm that it exists and is current if it intends to rely upon it and before allowing the contract or temporary worker to operate the PIT.

The PIT Standard does not specify how long training certifications must be retained after the initial certification or the recertification required every three years or after a “near miss”. Some employers retain the training certifications for the duration of employment for each employee.

If OSHA can establish that training was not provided or that the employees did not understand it because the training is in writing and the employee is illiterate or the training was conducted verbally in a language the employee could not understand, the agency may claim that the certifications are false, resulting in citations or potential criminal liability for the individual who signed the certification as well as the employer.


OSHA prohibits operation of forklifts if they are not in safe operating condition. It is recommended that employers conduct an inspection of each forklift at the beginning of each shift and after any maintenance has been done or an accident has occurred.  At a minimum, forklifts are required to be inspected daily.  While not required, the employer should consider developing and using a written daily checklist to confirm that the operator conducted the daily PIT inspection.  The checklists should be reviewed periodically to assure that they are being utilized.  In addition, is a best practice to maintain inspection and maintenance records for at least the duration of the time they own the specific forklift.  For a detailed inspection checklist for a PIT see OSHA’s checklist.

The PIT Standard lists a number of conditions under which a forklift must be removed from service. If the operator notes these conditions while driving, the operator must stop, park the vehicle and get assistance:

  • If the forklift is not in safe operating condition.
  • If the forklift emits hazardous sparks or flames from the exhaust system.
  • If the temperature of any part of any forklift is found to be in excess of its normal operating temperature.
  • If the forklift has a leak in the fuel system.

(Source: https://www.osha.gov/SLTC/etools/pit/operations/servicing.html)

If there is a question regarding the safe operation of a forklift, the vehicle must be immediately removed from service until it can be thoroughly inspected and any repairs are made. Similar to falsification of employee training certifications, any falsification of inspection or maintenance records can result in citation by OSHA and possible criminal liability.

The employer must also consider whether the forklift is properly rated to be operated in certain workplace environments, for example, is it rated to operate in an area where flammable or combustible materials are being utilized or stored, to insure that the forklift does not create a source of ignition for flammable or combustible materials.


As employers should know, there is a duty to enforce compliance with the PIT regulation with discipline for violations, including unsafe operation, failure to inspect, etc. This discipline needs to be in writing in order to remove a non-compliant operator and also to be able to establish the unavoidable employee misconduct defense to a citation. Finally, the employer must monitor whether an operator is fit to operate a PIT because of physical conditions, including vision, hearing and motor skills if there is objective evidence that these conditions are rendering the operator unfit to operate the equipment in a safe manner. In making this determination, the employer must consider the requirements of the Americans with Disabilities Act regarding assessment of the operator’s ability to perform the essential functions of the job.

In addition, the employer needs to be observant as to whether the operator is impaired by drugs or alcohol. This can be done by training supervisors on the objective signs of drug or alcohol impairment including speech, coordination, bodily odors, etc. If they are observed, the operator should be taken out of service and the employer should consider sending the employee to be tested for drugs or alcohol. Further, if there has been an accident involving personal injury or property damage, the employer should consider a post-accident drug and alcohol test. In either event, the employer should consider establishing a written drug and alcohol testing policy to be able to ensure that the operator is not impaired and creating a safety hazard.


As previously mentioned, OSHA will seek criminal prosecution if an employer falsifies employee training certifications, inspection records, or maintenance records. In United States v. Atlantic States Cast Iron Pipe Company, No. 03-852, 2007 WL 2282514 (D.N.J. Aug. 2, 2007) aff’d sub nom. United States v. Maury, 695 F.3d 227 (3d Cir. 2012), the conviction of an employer on multiple criminal counts involving EPA and OSHA violations demonstrates how an employer can be exposed to this liability for a conspiracy to defraud OSHA during an inspection.

In Atlantic States, the employer was indicted for defrauding OSHA by altering existing conditions at the employer’s foundry to conceal safety hazards to which employees were exposed.  In March 2000, an employee died after he was run over by the employer’s forklift.  In the indictment, the government charged that the employer ignored hazards involving forklifts, including brake problems and allowing untrained employees to operate the forklifts.

In addition, after the fatality, the employer took action to deliberately conceal what had occurred from OSHA (perhaps to avoid OSHA citations). The concealment was alleged to include:

repairing the forklift brakes after the accident but shortly before OSHA commenced its inspection (after a workplace fatality OSHA must be notified within eight (8) hours and the accident scene cannot be disturbed until the OSHA inspector has an opportunity to commence the inspection and releases the scene).

Conducting a demonstration of the forklift for the compliance officer that was misleading (since the brakes had been surreptitiously repaired after the accident but before the inspector arrived).

Instructing employees to provide false information to the inspector as to how the fatality occurred.

Creating a false written inspection report after the accident which indicated that the forklift had been inspected prior to the accident and was in “perfect operating condition.”

As a result of its inspection, OSHA identified employees who were willing to testify against the employer as to the foregoing actions, resulting in felony convictions. It is important to note that if the employer had not engaged in these post-accident wrongdoings and OSHA had decided to proceed with its limited criminal prosecution authority under the Act, the employer’s liability would have likely been limited to a misdemeanor; the concealment resulted in much greater liability than the underlying violation.


The Powered Industrial Truck Standard is not the most complex or the longest of the OSHA Standards. However, the requirements contained in the PIT standard are often the subject of OSHA Citations and can expose an employer to potential criminal liability if they are not followed.  If your company owns a forklift, or any other type of PIT, take a look at your program to ensure all of OSHA’s requirements are satisfied: training and certification of employees, inspection and maintenance of PITs, and accurate recordkeeping.  OSHA is not shy about making sure employers follow the PIT Standard; stay one step ahead of OSHA and make sure you are following the rules.



Progress, But Also Perpetuated Errors, In The EEOC’s Proposed GINA Rule Regarding Wellness Program Incentives

Posted in EEOC, Workplace Policies and Processes

By Paul Kehoe and Larry Lorber

Last month, the Equal Employment Opportunity Commission (“EEOC”) issued a Notice of Proposed Rulemaking addressing wellness program incentives under the Genetic Information Nondiscrimination Act (“GINA Proposed Rule”) in the Federal Register (here).  This NRPM comes on the heels of the EEOC’s proposed rule covering wellness program incentives under the Americans with Disabilities Act (“ADA Proposed Rule”) released last April and discussed here.  The EEOC received about 340 substantive comments from the ADA Proposed Rule, and one of many major concerns from the regulated community was the EEOC’s piecemeal approach to addressing wellness program incentives because it ignored spousal incentives.  This proposal attempts to fill that gap.  However, the GINA Proposed Rule still ignores the primary concerns of the regulated community — that the EEOC is effectively usurping the regulations issued by the Departments of Labor, Health and Human Services, and Treasury (the “Tri-Agency Regulations”) by establishing a parallel — and more onerous — regulatory scheme related to wellness program incentives.

The new proposal does represent an improvement over the ADA Proposed Rule on wellness programs in that the 30% incentive is calculated based on the total cost of the employee’s chosen coverage, but the devil is in the details.  For example, the proposed apportionment provision permits a total incentive of $4,200 for a plan that costs $14,000, but only where the allocation to the employee is $1,800 if the single coverage plan costs $6,000 and $2,400 to the spouse and/or other dependents.  This mechanism ignores practical reality because many employers design wellness programs by providing an equal incentive for employees and spouses.  As such, this requirement is inconsistent with the Tri-Agency Regulations.

In addition, the EEOC continues to assert that it has the authority to define what a “reasonably designed” wellness program is.  Congress and the Administration have already defined the term in the Affordable Care Act (“ACA”) and the Tri-Agency Regulations.  Introducing a “similar” definition means that the EEOC intends to adopt a different standard than the one previously adopted by Congress in the ACA or the Departments of Labor, Treasury and HHS in the Tri-Agency Regulations.  Moreover, by importing the “reasonable design” requirement from “health-contingent wellness program,” the GINA Proposed Rule (again as in the ADA Proposed Rule) imputes the burdens previously associated only with health-contingent wellness programs to all wellness programs, which exceeds what is required under the ACA and the Tri-Agency Regulations.

While this rule, if promulgated, would provide some clarity for employers, it would, in conjunction with the ADA Proposed Rule, establish a parallel – and more onerous – compliance scheme than the scheme set forth in the Tri-Agency Regulations issued by agencies with the necessary authority and expertise.  Ultimately, because more onerous regulations always establish the baseline when authority is diffused among various authorities and agencies, these EEOC regulations would become the de facto law of the land, usurping the Tri-Agency regulations and establish more roadblocks for employers to provide incentives to their workforces and their families.  The comment period will be open for sixty days until December 29, 2015.


Honoring Our Veterans: The Employers Guide To Military-Veteran Employees

Posted in EEOC, Employment Law Lookout, Workplace Arbitration, Workplace Policies and Processes

By Adam Smiley and Samuel Sverdlov

Veterans Day, which initially was conceived as a day to commemorate the end of World War I, has evolved into an annual celebration to honor those who have served in the U.S. Armed Forces.

On Veterans Day we self-reflect on the sacrifices of those who served our country, and express our appreciation to them.  Veterans Day is also an opportunity for employers to self-reflect on their own policies and practices for military veterans.  In honor of this holiday we will remind employers of some of their fundamental obligations to military veterans.

  • Employers should always be aware of their obligations under the Uniformed Services Employment and Reemployment Act (“USERRA”), which both protects the job rights of individuals who “voluntarily or involuntarily leave employment positions to undertake military service of certain types of service in the National Disaster Medical System” and “prohibits employers from discriminating against past and present members of the uniformed services, and applicants to the uniformed services.” This legislation covers ALL employers, and gives employees a nearly absolute right to take a leave of absence for military service.  Upon returning from USERRA leave, employees are entitled to job restoration under a complicated reemployment scheme called the “escalator principle.” Under this principle, “each returning service member [must] be reemployed in the position the person would have occupied with reasonable certainty if the person had remained continuously employed, with full seniority.”
  • The Family and Medical Leave Act (“FMLA”), another federal statute, contains Military Family leave provisions that were added to the FMLA in 2008. These provisions cover “Qualifying Exigency Leave,” which cover “any qualifying exigency…arising out of the fact that the spouse, or a son, daughter, or parent of the employee is on active duty (or has been notified of an impending call or order to active duty) in the Armed Forces in support of a contingency operation,” and “Military Caregiver Leave,” which permits up to 26 workweeks of unpaid leave during a single 12-month period to care for an injured or seriously ill servicemember of veteran.
  • In addition to USERRA and the FMLA, which are federal statutes, a number of states, such as California and Illinois, have laws protecting employees who are or were members of the armed forces. Aside from knowing and abiding by the applicable state law, it may be advisable for employers to address their military leave obligations in the employee handbook.
  • Veterans suffering from a disability will likely be protected under the Americans with Disabilities Act (“ADA”), especially related to PTSD. According to the EEOC, “it is illegal for an employer to refuse to hire a veteran because[he or she] has PTSD, because [he or she] was previously diagnosed with PTSD, or because the employer assumes [he or she] has PTSD.”  Employers are also limited under the ADA in the type of medical information they can obtain in regard to veteran disabilities.  Finally, absent undue hardship, disabled military veteran applicants and employees are entitled to “reasonable accommodation to apply for jobs, to perform their jobs, and to enjoy equal benefits and privileges of employment.”

So with heartfelt gratitude we thank all who have served in any and all lines of duty for our country and wish everyone a safe and happy Veterans’ Day.

If you have any questions regarding USERRA or an employer’s obligations to members of the armed forces please contact the authors or your Seyfarth attorney.



ELL SCOTUS Series # 4 – Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan

Posted in ERISA, Workplace Policies and Processes

In the fourth installment of articles looking at the employment law cases being heard by the US Supreme Court this fall term, Montanile addresses issues near and dear to every employer’s heart – ERISA plans and the reimbursement/recoupment of plan funds.  For those readers who manage and worry about these plans and issues, read on!

Supreme Court To Decide What is Required for Equitable Tracing

By James Goodfellow

On November 9, the Supreme Court will hear arguments in the Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan matter, which is up on appeal from the Eleventh Circuit. Montanile involves equitable tracing, and the question before the Court is limited solely to whether an ERISA fiduciary must identify a particular fund that is in a participant’s possession and control at the time that a fiduciary seeks to recover an alleged overpayment of benefits.

For something that seems complicated, the facts of Montanile are quite common.  The dispute arose when the ERISA plan paid the plaintiff’s medical expenses after the plaintiff was injured in a car accident. As the result of a separate personal injury lawsuit, the plaintiff received a settlement from the other driver, and the plan sought from the settlement funds reimbursement of plan medical expenses.  For the uninitiated, many ERISA plans enable the plans to recover reimbursement as the plan did here.

Practical problems arise, however, because often times, participants are not in possession of the money paid by the plan, and overpaid benefits can be significant. As such, the plaintiff in Montanile argued that in order to assert an overpayment claim, the plan needed to assert the claim against the very money that it paid to him.  The plan disagreed, stating that all it needed to do is identify that it paid the participant money, and the amount of that money that it paid. Put another way, the parties’ dispute is akin to one person loaning another person $20 by way of giving that person a $20 bill. The participant’s contention is that the plan can only seeks recover of the specific $20 bill loaned. The plan’s contention is that $20 is $20, and so long as it can show that it paid $20, it is entitled to recover $20. The Eleventh Circuit agreed with the plan.

Affirmance of the Eleventh Circuit’s decision would represent a practical solution to a common problem faced by fiduciaries and plans who attempt to recover from non-fiduciary plan participants or service providers asserting a right to plan benefits based on assignment. Often times, overpaid funds have been spent by the recipients.  And, query how a plan could equitably trace money paid by check or by wire, as so often is the case in this day and age. Additionally, should the Supreme Court reverse, non-fiduciary recipients of plan funds would be provided with a perverse incentive to spend plan money immediately upon receipt so as to avoid any repayment obligations set forth by plan terms.

Left for another day is whether the summary plan description is a plan document. The Supreme Court’s decision in Cigna Corp. v. Amara has left this open, and in Montanile, the plan’s authority to recover overpayments was found solely in the SPD.  This often is a critical question in benefits litigation that could have been addressed in Montanile.


ELL SCOTUS Series # 3 – Tyson Foods Inc. v. Bouaphakeo

Posted in Class Action Avoidance, FLSA, OSHA Compliance, Wage & Hour Compliance

In our third installment of articles looking at the employment law cases being heard by the US Supreme Court this fall term, Tyson Foods Inc. v. Bouaphakeo will have importance in both the wage & hour and class action litigation worlds. “Donning and Doffing “ – who knew!

 Another Watershed Moment for Class Actions?  SCOTUS to
Address Limits on Statistical Proof In Class and Collective Actions

 By Michael Kopp

In a case that is certain to provide an important sequel to the Dukes decision, the Supreme Court will hear argument next week on Tyson Foods Inc. v. Bouaphakeo, to address (1) the use of statistical averaging in class actions to prove liability and damages, and (2) whether courts may certify a class that includes individuals with no injury.

Tyson Foods is important because it will likely set further markers on how far the court’s prohibitions against statistical modelling extend, and more significantly, how these concepts apply to collective actions under the Fair Labor Standards Act. For this reason, employers’ eyes are on Tyson Foods, as the Supreme Court has not previously addressed how Dukes’ analysis applies to collective actions under the FLSA, and whether the FLSA’s “similarly situated” standard differs from Rule 23(b).

The road to the Supremes.  Tyson Foods reached the Supreme Court by way of a divided Eighth Circuit opinion affirming a $5.8 million verdict on an off-the-clock class wage claim. Plaintiffs claimed that Tyson’s Iowa meat processing facility had not paid over 3000 plant workers for the time they spent changing in and out of their work gear and walking to and from the production line.  The district court found there was a common question as to whether the challenged time was compensable, and certified the case as a collective action as to the FLSA claim, and as Rule 23 class action as to the state law wage and hour claims.

Tyson unsuccessfully attempted to decertify the class, and argued neither liability nor damages were “capable of classwide resolution … in one stroke,” as required by Dukes.  Tyson pointed to variations in the type and amount of equipment worn by employees in the hundreds of classifications at issue, and highlighted the disparities in the routines and amount of time employees spent on these tasks. Unpersuaded, the district court permitted a nine-day jury trial on the class claims, where plaintiffs used a statistical model to calculate the “average” time employees spent on the donning, doffing and walking activities at issue.  These average activity times were then extrapolated to the class members.  Although plaintiffs’ expert conceded that the actual times for these activities varied considerably – and over 200 class members suffered no injury at all – the jury nonetheless awarded a lump sum verdict, to be divided among all class members.

Divided approaches to Dukes.  The divided Eighth Circuit panel’s majority opinion and dissent highlight the inconsistent approaches lower courts have taken in interpreting Dukes. The panel majority found that there was a common question concerning whether the activities were compensable under the FLSA and state law, and that plaintiffs had “prove[n] liability for the class as a whole, using employee time records to establish individual damages.”

The dissent took the majority to task for ignoring the considerable differences in donning and doffing times, employee routes to their work stations, the amount of time Tyson allotted for such activities, shortened time shifts, “and a myriad of other relevant factors.” Using statistical models to gloss over those differences violated Dukes’ requirement that the action generate “common answers apt to drive the resolution of the litigation.”  Moreover, the dissent highlighted the critical problem with the majority’s distinction between the classwide liability determination and the individual damages analysis.  Unlike other class claims, establishing a violation in wage and hour actions generally turns upon and “includes the measure of a class member’s individual damages.”  In other words, an employer is only liable to an individual if the employee has actually suffered an injury, such as the compensable loss of overtime.  For that reason, a verdict that “result[s] in a single-sum, class-wide verdict from which each class member, damaged or not, will receive” compensation, is fundamentally inconsistent with Dukes’ prohibition against “trial by formula.”

Why This Case Matters.  First, the Supreme Court will have the opportunity to clarify the extent of Dukes limitations on the use of statistical techniques to establish damages and liability.  Second, the case has particular significance in the wage and hour context, because it provides the opportunity for the Supreme Court to weigh in for the first time as to whether the standards for certifying a Rule 23(b) class action apply to collective FLSA actions, and whether the FLSA’s “similarly situated” standard alters the analysis.  Third, the case provides the opportunity for the court to address Tyson Food’s constitutional argument that an award of monetary damages to uninjured class members is impermissible.  This is particularly critical, as it is a common feature for wage and hour actions to include class members with no identifiable actual wage loss or injury.

Stay Tuned … This case is set for oral argument on Tuesday, November 10, so be on the lookout for a follow up blog post here when a decision is reached.

If you would like more information regarding this article, please contact the author or your Seyfarth attorney.

ELL SCOTUS SERIES: # 2 – Spokeo, Inc. v. Robins

Posted in Fair Credit Reporting Act

In the second periodic installment of the Employment Law Lookout Blog Team’s analysis of employment law (and related) case being heard by the United States Supreme Court this term, read on for our take on Spokeo Inv. v. Robins.

Plaintiffs Without Injuries?  SCOTUS To Hear Arguments Whether
Plaintiffs Need to Show Concrete Harm To Establish
Injury-in-Fact for Article III Standing

By Pamela Q. Devata and Robert T. Szyba

On April 27, 2015, the U.S. Supreme Court granted cert in Spokeo, Inc. v. Robins, a case brought under the Fair Credit Reporting Act (“FCRA”) where the Ninth Circuit held that the “violation of a statutory right is usually a sufficient injury in fact to confer standing” and that “a plaintiff can suffer a violation of the statutory right without suffering actual damages.”

The plaintiff, Thomas Robins, filed a putative class action against Spokeo, Inc., which is an online people search platform that organizes information about people into comprehensive profiles. Robins sued the company for allegedly violating the FCRA by presenting inaccurate information about him on the Internet—he accused the company of over-reporting his earnings and education level, and reporting that he was married with children, even though he was not married and had no children.  He argued this information might have a negative impact on his employment prospects, but did not allege any actual harm.  With no actual damages, Robins sued to recover only statutory damages.  In the Ninth Circuit’s view, that was enough for to confer standing under Article III.

The question that the Supreme Court took up: Does a plaintiff who suffers no concrete harm, but who instead alleges only a statutory violation, have standing under Article III to bring a claim on behalf of himself or a class of individuals?

Leading Up To Spokeo.  This case follows in the footsteps of the Supreme Court’s 2013 decision in Clapper v. Amnesty Int’l USA, where a group of attorneys and human rights, labor, legal, and media organizations sued seeking a permanent injunction to stop surveillance permitted by the FISA Amendments Act of 2008.  In the 5-4 decision, Justice Alito wrote that under Article III, threatened injury must be at least “certainly impending.”  Possible future injuries were not enough.  But Clapper left the question of actual harm open… until now.

The Circuits.  The Circuits are split.  For example, the Ninth Circuit, in Spokeo, found actual harm was not needed if a plaintiff could point to a violation of a statutory right.  This comported with the Sixth Circuit’s view (Beaudry v. TeleCheck Services, Inc.), and the Fifth and Seventh have also shown their support (Mabary v. Home Town Bank and Remijas v. Neiman Marcus Group, LLC, respectively).  The Second, Third, and Fourth Circuits have generally disagreed: Kendall v. Employees Retirement Plan of Avon Prods. (2d Cir.); Doe v. National Board of Medical Examiners (3d Cir.); David v. Alphin (4th Cir.).

Why This Case Matters.  The Supreme Court’s decision may have a significant impact on congressional power as well as the future of consumer, workplace, and other class actions.  The question formally presented is rooted in separation of powers issues between Congress and the federal judiciary, in that it may limit Congress’ ability to create a statutory right of action without a requirement of actual harm in order to recover.  However, the Court may opt to narrow the question to:  Can plaintiffs sue for the violation of a statute when they can show no actual injury or harm that they have suffered?

The Court’s answer in the negative could discourage the current wave of consumer, workplace, and other class actions seeking millions in statutory damages. On the other hand, a decision allowing individual and class claims to go forward alleging only statutory damages without injury in fact would likely have the opposite outcome, resulting in claims based on alleged violations of statutory requirements, brought by individuals who suffered no adverse consequence of the identified possible violation.

Stay Tuned… Oral argument is set for Monday, November 2, 2015 — a follow up blog post will follow here when we have a decision.

If you would like more information regarding this article, please contact the author or your Seyfarth attorney.

Eighth Circuit Rejects OSHA’s Attempt to Expand the Scope of its Machine Guarding Standard

Posted in OSHA Litigation

By Brent I. Clark, James L. Curtis, Adam R. Young, and Craig B. Simonsen

iStock_000003352393_LargeIn a review of an Occupational Safety & Health Review Commission (OSHRC) decision, the U.S. Court of Appeals for the Eighth Circuit ruled this week to vacate a $490,000 penalty for failure to employ machine guards to prevent the ejection of a workpiece in a catastrophic breakdown of a lathe. Perez v. Loren Cook Company, No. 13-1310, __ F.3rd __ (8th Cir. October 13, 2015).

In its decision, the Court agreed with the OSHRC and its Administrative Law Judge (ALJ), which concluded that 29 CFR § 1910.212(a)(1) focuses on “point-of-contact risks and risks associated with the routine operation of lathes, such as flakes and sparks,” but the rule does not contemplate the catastrophic failure of a lathe that would result in a workpiece being thrown out of the lathe. The ALJ vacated the Occupational Safety & Health Administration’s (OSHA’s) citation issued against Loren Cook Company, and the OSHRC adopted the unmodified recommendation of the ALJ. Disagreeing, the Secretary of Labor petitioned the Court for review of the OSHRC order arguing that the Court should defer to OSHA’s interpretation of the standard. The Court denied the Secretary’s petition for review and affirmed the OSHRC’s order.

In its discussion, the Court noted that “we generally afford substantial deference to the Secretary’s interpretation of his own regulations.” “But deference to the Secretary’s interpretation is only appropriate when both the interpretation itself and the manner in which the Secretary announces the interpretation are reasonable.” The Court relied on and cited to Martin v. Occupational Safety & Health Review Comm’n, 499 U.S. 144, 157-58 (1991). The Court cited Supreme Court precedent that deference to an Agency’s interpretation is inappropriate when the interpretation is “‘plainly erroneous or inconsistent with the regulation.’” Auer v. Robbins, 519 U.S. 452, 461 (1997) (quoting Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 359 (1989)). Also, deference is inappropriate “when there is reason to suspect that the Agency’s interpretation ‘does not reflect the agency’s fair and considered judgment on the matter in question.’” Christopher v. SmithKline Beecham Corp., 132 S. Ct. 2156, 2166 (2012) (quoting Auer, 519 U.S. at 462).

The Court noted that in Perez v. Loren Cook Company, OSHA’s position conflicted with prior interpretations, and evidenced a position as nothing more than a litigating position, or using the interpretation as “a post hoc rationalization for a prior action.”

The Court also had its own precedent for parameters under which it should afford an Agency’s interpretation deference:

[D]eference is due when an agency has developed its interpretation contemporaneously with the regulation, when the agency has consistently applied the regulation over time, and when the agency’s interpretation is the result of thorough and reasoned consideration.” Solis v. Summit Contractors, Inc., 558 F.3d 815, 823 (8th Cir. 2009) (quoting Advanta USA, Inc. v. Chao, 350 F.3d 726, 728 (8th Cir. 2003)).

As such, the Court concluded that having determined that the Secretary’s interpretation of section 1910.212(a)(1) was not entitled to deference, and found that the section did not cover the conduct for which the Secretary cited Loren Cook.

OSHA Compliance Safety and Health Officers (CSHOs) and Area Directors often apply their own interpretations of the OSHA standards. This Eighth Circuit decision is a clear reminder that there are limits to OSHA’s ability to adopt new interpretations of its standards.