Compassionless Court Kicks Marijuana Claim

By Michael P. Stafford

Marijuana is back in the news here in Delaware. Our state’s first Compassion Center is set to open later this month and legislation decriminalizing the sacred herb has been signed into law by Governor Jack Markell.  medical marijuana_3

Delaware is by no means unique-it is part of a national trend towards decriminalization and even legalization occurring at the state level across the nation. However, as far as the federal government is concerned, marijuana remains illegal. Essentially, America is becoming a veritable patchwork quilt of differing, and inconsistent approaches-a situation that is creating headaches for employers, particularly those with national or multi-state operations, striving for consistency and uniformity in their drug policies.

A recent case from Colorado, Coats v. Dish Network, LLC, illustrates the conundrums employers now face.

Brandon Coats, a quadriplegic who suffered from painful muscle spasms as a result of his condition, began working for Dish Network as a telephone customer service representative in 2007. Subsequently, in 2009, he obtained a Colorado license to use medical marijuana. The next year, a random drug test revealed the presence of THC metabolites in his system, and his employment was terminated in accordance with Dish Networks drug policy. Significantly, there was no allegation that Coats ever used, or even possessed, marijuana in the workplace.

Coats sued Dish Network, relying on a Colorado statute that prohibits employers from discharging employees for “lawful activities” outside the workplace. In Coats’ view, Dish Network was prohibited from penalizing him for smoking medicinal marijuana lawfully under Colorado law during his free time. Dish Network disagreed, and argued that Colorado law didn’t apply because smoking marijuana was still unlawful under federal law.

Surprisingly, the Colorado Supreme Court agreed with Dish Network, concluding that the term “lawful activities” wasn’t restricted to those permitted under Colorado law but instead also encompassed federal law. As a result, because marijuana use remains illegal under federal law it could not be a “lawful activity,” and Dish Network was free to fire him based on the results of the drug test.

Obviously, the decision isn’t directly applicable to Delaware- we don’t have an analogous provision to Colorado’s “lawful activities” statute in our law and medicinal marijuana cardholders are protected directly in other ways. For example, under Delaware law although employers are not required to permit cardholders to possess, use, or be under the influence of marijuana in the workplace, a cardholder “shall not be considered to be under the influence of marijuana solely because” a drug test reveals “the presence of metabolites or components of marijuana” in their system. As a result under Delaware law, the mere presence of THC in Coats’ system would not have been a lawful basis for terminating his employment; Dish Network would have also had to demonstrate that he was “under the influence”- a tricky proposition for employers given the lack of agreement on generally accepted standards for measuring marijuana impairment.

Coats v. Dish Network, LLC, 303 P.3d 147 (Colo. Ct. App. 2013).

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3d Cir. Rules on FMLA Definition of Overnight Stay

By William W. Bowser

Under the Family and Medical Leave Act, an eligible employee can take up to 12 weeks of protected leave for his or her own “serious health condition.” A “serious health condition” is defined by Department of Labor’s regulations as one “that involves inpatient care … or continuing treatment by a health care provider.” While many FMLA cases have focused on the meaning of “continuing treatment,” the definition of “inpatient care” has seen little review. A recent decision by the Third Circuit Court of Appeals, which covers Delaware, recently focused on the issue.

Jeff Bonkowski worked for Oberg Industries as a wirecut operator and machinist. During a meeting with his supervisors on November 14, 2011, Bonkowski began to experience shortness of breath. His supervisors gave him permission to go home and he clocked out at 5:18 p.m. Shortly after 11 p.m., Bonkowski’s wife drove him to the hospital. Although he arrived at the hospital before midnight, he was not admitted into the hospital until shortly after midnight on November 15th. As we will see, these few minutes would be very important.

Bonkowski underwent comprehensive tests and was sent home on evening of the November 15– after staying in the hospital for about 14 hours. Oberg terminated him because he had walked off the job on November 14 and his absence on November 15. Bonkowski filed suit under the FMLA claiming that his absence from work on November 15th was a qualifying absence under the FMLA protecting him from discharge.

The District Court for the Western District of Pennsylvania threw out his case. It found that Bonkowski didn’t have a “serious health condition” because he did not receive “inpatient care.” It pointed to the definition of “inpatient care” contained in the DOL’s regulations which requires an “overnight stay in a hospital….” The District Court ruled that in order to have an “overnight stay,” Bonkowski would have to be admitted before sunset on one day and discharged after sunrise the following day. Since Bonkowski was not admitted until after midnight on November 15 and discharged the same day, he did not have an overnight stay.

Bonkowski appealed to the Third Circuit. While the Third Circuit rejected the “sunset-sunrise” rule used by the District Court but still ruled in favor of Oberg. It ruled that an “overnight stay” means a stay in for a substantial period of time from one calendar day to the next day measured from the time of admission to the time of discharge. Since Bonkowski was admitted after midnight on November 14, his stay did not constitute an “overnight stay.” Without such a stay, he could not have received “in patient care” and could not have a “serious health condition.”

The Third Circuit rejected the “sunrise-sunset” rule because the required time in the hospital would vary depending on the season of the year and geographic location. It also rejected Bonkowski’s claim that time spent at the hospital before actual admission should count because the “calendar day” rule would provide a bright line criterion for employers and employees alike.

Conclusion

In sum, Bonkowski FMLA claim was erased because of a few minutes waiting at the hospital. While the result may seem harsh, the rules does, at least, provide an somewhat understandable standard. This case does not resolve what a “substantial” time in the hospital means. In other words, will a stay just before midnight to just after midnight qualify? If not, just how many hours will be required? Stay tuned.

Bonkowski v. Oberg Industries, No. 14-1239 (3d Cir. May 22, 2015)

Guidance for Employers from Abercrombie

By Barry M. Willoughby

At our recent Annual Seminar, we discussed, EEOC v. Abercrombie & Fitch Stores, Inc., an action involving alleged religious discrimination in connection with a refusal to hire that was then pending before the U.S. Supreme Court.  Attendees at the seminar will recall that the case involved an applicant for employment at Abercrombie who was turned down based on the Company’s “look policy,” because she wore a head scarf.  Although the interview for this position did not involve any discussion of whether the applicant wore the scarf for religious reasons, and/or whether she would require an accommodation to allow her to wear the scarf while at work, the EEOC investigation established that the company’s representatives believed that the applicant was wearing the scarf for religious reasons and refused to hire her on that basis.

On June 1, 2015, as we predicted, the Court issued its Opinion finding that the employer had indeed violated Title VII’s prohibition against religious discrimination.  Significantly, the Court ruled that actual knowledge of the employee’s need for a religious accommodation is not required.  Instead, the Court found that the test is whether the employer’s decision was, in fact, motivated by illegal discrimination under Title VII.

Analysis and Recommendations

The Supreme Court decision correctly focuses on the question whether an employer’s adverse action was motivated by illegal discrimination rather than its knowledge of the applicants protected status.  While knowledge, unsubstantiated or otherwise, of an applicant’s protected status will continue to be an important element of proof, the ultimate question in determining whether illegal adverse action has occurred is the employer’s actual motivation for its decision.  As the Court noted, knowledge alone will not be a basis for liability, if, in fact, the employer’s actual motive was not discriminatory.  On the other hand, an employer who is in fact motivated to discriminate based on unsubstantiated facts or suspicion, is nevertheless liable under Title VII.

We recommend that employers make sure that their decision makers understand that a decision motivated by illegal considerations will lead to liability regardless of their knowledge of the applicant’s protected status. We suggest that employers who are confronted with a potential religious accommodation issue directly address the issue with the applicant to determine whether an accommodation is necessary.

Following the familiar approach for addressing need for an accommodation of a disability is a good guide. If, as in Abercrombie, there is an obvious reason to believe that a religious accommodation may be necessary, the employer should affirmatively raise the issue and engage in the “interactive process” for determining whether an accommodation is required. If, on the other hand, there is no apparent reason for the employer to believe that an accommodation is necessary, the employer need not raise the issue.

Delaware Chancery Ct. Finds No Privilege for Email Sent from Work Account

Does an employee who communicates with his lawyer from a company email account waive the attorney-client privilege with respect to those communications?  The answer is not terribly well settled-not in Delaware and not in most jurisdictions.  But a recent decision by the Delaware Court of Chancery gives Delaware employers and litigants a pretty good idea of the analysis to be applied.

The case, In re Information Management Services, is an unusual type of derivative litigation in that it involves two families, each suing the other for breaches of fiduciary duty.  Two of the company’s senior executives, who were alleged to have mismanaged the company in violation of their fiduciary duties, sent emails to their personal lawyers from their company-issued email accounts.  During discovery, the executives refused to produce the emails, claiming them to be protected by the attorney-client privilege.  The plaintiffs sought to compel production of the emails.

The court adopted the four-factor test first enumerated in In re Asia Global Crossing, Ltd. (Bankr. S.D.N.Y. 2005), and applied it to determine whether the executives had a reasonable expectation of privacy in the contents of the emails that they sought to protect.  The court determined that the executives did not have a reasonable expectation of privacy in the contents of the emails because the company’s policy expressly warned that employee emails were “open to access” the company’s staff.  The policy permitted personal use of the company’s computers “after hours” but warned that, if an employee wanted to keep files private, the files should be saved offline.  Thus, the policy was key in ensuring the company can now access emails between the executives and their counsel.

There are a few particularly notable points in the decision that are worth mention. 

First, Delaware law generally provides great deference to the attorney-client privilege.  Usually, the privilege is considered very difficult to waive.  By contrast, this case suggests that a company policy is sufficient to overcome that otherwise difficult hurdle.  The court goes so far as to say that a policy that prohibits all personal use would likely be sufficient to waive the privilege without any further analysis.

Second, the court seemed to place a high burden on the executives. Vice Chancellor Laster recognized that the executives wrote in the subject lines of the emails, “Subject to Attorney Client Privilege” but concluded that the failure to use webmail (such as G-Mail or Yahoo!) or encryption rendered the communications not confidential.  The court wrote that there could be no reasonable expectation of privacy because:

a third party to the communication had the right to access [the] emails when [the executives] communicated using their work accounts.

The “third party” in this case was the company and its IT staff. But the holding raises questions of whether use of a service such as Dropbox, which, by its terms of service, expressly notifies users of its right to access the contents of any account, would also waive the privilege.  In that case, a third party has the right to access contents so, in accordance with the court’s decision, there could be no reasonable expectation of privacy and, therefore, no privilege.

The decision is very well researched and contains a stockpile of case citations and references for those who may be interested in the subject matter.  And even for those who may not be interested in the macro view of this area of the law, there is one key lesson to take away-Delaware employers should carefully review their policies to ensure that the language clearly warns employees that the company reserves the right to monitor, access, and/or review all emails sent or received from a company email account.  Now, the question of whether a personal, web-based email account, accessed via the company’s servers, would be subject to the same analysis is an even trickier one and one that we’ll save for a later date. 

In re Info. Mgmt. Servs., Inc., No. 8168-VCL (Del. Ch. Sept. 5, 2013).

The Immediate Impact of the DOMA Ruling for Delaware Employers

Delaware began issuing marriage licenses to gay couples on July 1, 2013, less than a week after the U.S. Supreme Court’s decision striking down the Defense of Marriage Act (DOMA). Delaware will no longer perform civil unions pursuant to the Civil Union Equality Act, which was passed into law in 2010. Couples who entered into a civil union prior to July 1 may convert their civil union into a legally recognized marriage or wait until July 1, 2014, when all remaining civil unions will be automatically converted.

The Court’s DOMA ruling is expected to affect an estimated 1,138 federal benefits, rights, and privileges. For Delaware employers, the impact is potentially significant. Delaware employers must now extend all federal benefits to gay married couples that were previously made available to straight married couples. The impact also is immediate. Unlike with new legislation, there will be no delay between the Court’s ruling and an employer’s obligation to extend benefits.

Although the Supreme Court’s decision will impact who is eligible for benefits, the procedures remain unchanged. For example, the process for requesting and reviewing FMLA leave, COBRA coverage, and other federally mandated benefits of employment will not change.

One step employers should consider is possible adjustments to tax and health-insurance forms. Spouses that could not previously “claim” one another on federal tax forms may need to submit new IRS Form W-4s. In addition, if your company offers ERISA-covered health-insurance plans and did not previously extend benefits to gay couples, those plans will now be open to the enrollment of gay spouses. This means that, if your company offers health insurance coverage to the straight spouses of its employees, the same benefits must now be extended to gay spouses. In addition, gay spouses will now be the primary beneficiary on all 401(k) plans.

In the end, Delaware employers are likely in a better position to adapt to the Supreme Court’s decision, since benefits have been extended under State law since January 1, 2012. Employers should keep in mind that the same benefits must be extended and the same processes will still apply to same-sex married couples. In the event that you think it may be necessary to deviate from this rule of thumb for some unusual circumstances, consider consulting legal counsel before doing so.

U.S.S.C. Clarifies the Applicable Standard for Retaliation Claims

In United Texas Southwestern Medical Center v. Nassar, the Supreme Court ruled that the anti-retaliation provision of Title VII requires “but-for” causation. In other words, an unlawful reason has to be the reason for the adverse employment action. The Supreme Court had previously ruled that this type of “but-for” causation also is required in cases alleging age discrimination.

It does not, however, apply to cases of discrimination brought pursuant to Title VII. In those cases, the unlawful reason need only be a reason. There may be other, lawful reasons, but if an unlawful reason plays a part in the decision, then the decision is unlawful.

Here’s how it plays out.  Let’s say that I go to work for a new law firm. My new boss doesn’t think that women lawyers are worth much. He also really hates my nose ring (despite how lovely and not at all offensive it looks in person). Based on those two prejudices, he decides to not put me up for a promotion.

If I sued for gender discrimination under Title VII, I could meet my burden by showing that I did not get the promotion because of I’m a woman-even if he also decided not to promote me because of the nose piercing. That’s a mixed motive and that’s sufficient to establish a discrimination claim under Title VII.

The burden is different, however, if I had brought the claim as an age-as opposed to gender-claim. If I had alleged that he had not promoted me because of my age and he had argued that it was only a little about it my age but most it was because of my nose ring, I’d lose.

And the same analysis now officially applies to retaliation claims under Title VII. An employee will not be able to succeed in a retaliation claim by arguing that her supervisor harbors a bias against, for example, women. Instead, that bias must be the reason for the retaliatory act.

All that being said, here’s the real deal. This is another decision by the Supreme Court this term that affects the burden of persuasion in employment lawsuits. The Nassar decision, like Vance, is a true victory for employers in defending against meritless lawsuits brought current and former employees.

You Are Not the Boss of Me

The U.S. Supreme Court issued two important employment-law decisions this week and, surprising to many of us, both came out in favor of employers. Both cases will have significant impact on employment lawsuits but one of the two is of of particular interest to me because it has been an issue I’ve faced in prior cases of my own.

In Vance v. Ball State University, the Supreme Court was asked to decide what it means to be an employee’s “supervisor” for purposes of Title VII.  In short, the Court held that an individual can be considered to be a supervisor only if he or she has been empowered by the employer to take “tangible employment action” against the employee who claims to have been harassed. 

And what, exactly, is a “tangible employment action,” you ask?  Basically, it means the power to effectuate significant change in the victim’s employment status.  So the power to hire, fire, demote, etc., is the power to effectuate a tangible employment action.  If the individual does not have the authority to fire, transfer, or demote the victim, then the individual is not considered to be the victim’s supervisor.

Now, why does this matter?  In harassment cases, the law provides for an affirmative defense in certain cases.  By “affirmative defense,” I mean that, even if harassment did occur, the employer still will not be held liable if the defense is found to apply.  Which means that the affirmative defense is absolutely critical for an employer facing a harassment claim.

But the defense does have its limits. And one of them is when a supervisor is the alleged harasser.  If the employee was harassed by a supervisor and the harassment resulted in a tangible employment action, then the defense is not available.  So, in any case involving allegations of unlawful harassment, the employer will want to show that the alleged harasser was not the victim’s supervisor.

And that’s why the definition of a “supervisor” is so important. Prior to the Vance decision, the employee is free to argue that the individual was his or her supervisor based on any number of factors.  I had a case in which the plaintiff-employee claimed that the alleged harasser was her supervisor.  The employer disputed this, contending that the individual did not have the power to hire, fire, demote, or otherwise take any tangible employment action against the employee.  In response, the employee argued that the individual trained the employee.

Without the precedent to support our argument on what defines a supervisor, we were left only with “common-sense” arguments.  And, maybe it’s just me but “common sense” doesn’t get me very far with the court on most days.  Generally speaking, judges prefer to see a legal citation at the end of the sentence instead of a footnote that says, “Well, obviously.”

So although I do think that the Court’s opinion is one that derives a great deal of its holding from common sense, I am no less excited about it.