Suits In The WorkPlace

Whistle blowing while you work

    The main problem is that the law is not well developed and SOX claims can vary wildly in terms of validity.  One area of dispute is the "reasonableness" of the belief by a plaintiff that the conduct being reported constitutes a SOX violation.  To state a claim, SOX does not require that the employee's belief be correct, but only "reasonable."  The plaintiff's bar is arguing that reasonableness is in the eye of the beholder and that if an employee believes he's looking at a potential SEC or SOX violation, then that should be enough.  The danger, of course, is that such a broad definition of reasonableness effectively makes employees the definers of their own litigation, an almost impossible standard for an employer to defend against.

     Adverse employment action under SOX is also a problem because it is clear that the concept is broader than it is under Title VII.  Specifically, an adverse action under SOX could be considered to be any act that might diminish the likelihood of an employee’s reporting bad behavior.  Obviously, this could include everything from outright termination to suggestive raises of an eyebrow during the course of an interview.  Again, an almost impossible standard for the average employer to meet.

     Finally, even though the Sarbanes-Oxley process typically begins with the Department of Labor, the quick move to federal court that is available under SOX opens up a variety of pressure points against a publicly traded employer.  Not the least of these is that copies of SOX complaints are routinely sent to the Securities and Exchange Commission and available to investors and stockholders.  Obviously, an insider claim that a company is engaging in fraud or other activity that might cause the shareholders concern can be a powerful weapon in forcing a settlment of these cases. 

     Any publicly held company that does not have a SOX whistle blowing compliance mechanism in place should move now to get one.  This situation will only get worse as these claims gain more notoriety, especially in the management classes of a business.

She Hit Me First: Escalation equals differentiation

    An unpublished 11th Circuit case, Gamboa v. American Airlines, does a nice job of pointing out the discretion allowed an employer in enforcing its disciplinary policies.  Two employees, a male and a female, got into what was described as an "altercation."  The airline had a witness statement indicating that the female, Gamboa, physically struck her coworker, but that he did not make contact with her.  The 11th Circuit affirmed the district court's summary judgment ruling, noting that although Gamboa disputed the witness statement, that was not enough to raise an issue of fact for summary judgment purposes.  To quote the court, "An employer who fires an employee under the mistaken but honest impression that the employee violated a work rule is not liable for discriminatory conduct."  In other words, it wasn't enough for Ms. Gamboa to dispute the version of facts that the employer received.  Instead she had to show that the employer itself did not believe the reason it gave for firing her and not her male coworker.  The distinction between the two -- the fact that she made physical contact and the coworker did not -- and the fact that the employer believed that distinction existed,  is a sufficient basis for the different discipline. 

Should I stay or should I go?: The FMLA notice battle just got a lot tougher

     The Family and Medical Leave Act is rapidly morphing into a statute that sets impossible standards for employers.  Witness a recent case out of the Northern District of Illinois, Lozano v. Kay Mfg. Co., No. 04 C 2784, March 28, 2006.

     Lozano worked for Kay for about three years before he was fired.  After his first year on the job, his performance deteriorated and he was placed formally on probation for six months, ending in January 2002.  His performance evaluation indicated he was performing "below expectations."  Lozano went to the hospital twice in January and February of 2002 and was diagnosed with a series of ailments including major depression, panic attacks and delirium tremens.  He missed a substantial amount of work that the employer covered with its short-term disability leave, noting that Lozano had a variety of psychiatric and physical health problems.

     When Lozano returned to work, he continued to have performance problems.  He was discharged following several more miscues.  During his termination meeting, he walked out of the room and retreated to the employee locker room where he curled up in a fetal position.  Unsurprisingly, he was then admitted to a psychiatric ward for treatment but when he was released, he sued Kay under the FMLA and claimed the company violated his rights by not offering him medical leave, instead of terminating him. 

     Kay, not surprisingly, moved for summary judgment and alleged that Lozano had never requested leave or given notice of his need for leave.  Following a recent 7th Circuit case involving psychiatric disability, the judge found that the employee "informed" his employer of his need for FMLA leave by advising the employer that he was undergoing psychiatric care in the months prior to his discharge.  The court noted that there might have been some report by the plaintiff that his mental condition was affecting his work, but Lozano never made a claim for FMLA leave.  The court then made the interesting distinction that, while a sudden change in behavior would provide notice of the need for FMLA leave (notwithstanding the fact that a sudden change of behavior could be the result of almost anything in addition to a medical condition, e.g., getting drunk, having a drug addition, undergoing marital difficulties, etc.) the gradual changing nature of Lozano’s performance difficulties created an issue of fact as to whether the employer actually had notice of an FMLA-qualifying medical condition. 

     What's an employer to do here?  Involuntarily place the employee on FMLA leave in lieu of termination?  Even when the employee fails to ask for FMLA leave, and insists on going back to work?  This ruling represents another expansion of liability under the FMLA in a case where the employer apparently just followed its normal disciplinary procedures.  What this case (and its predecessor in the 7th Circuit) means is that an employee who has notified an employer of a problematic health condition effectively makes herself unfireable, at least until the employer takes the additional steps of inquiring about her health status even if the employee herself does not link her health issues with performance problems.  That is a dangerous precedent for any employer.