November Legal Update

TRENDS

Privacy Jeopardized by Outsourcing

Congress has several laws to protect personally identifiable information from identity theft, medical misuse, etc., etc. Hospitals, vendors, schools and employers in the United States take pains and have liability for breaches of confidentiality information laws. However, much of this is being jeopardized by outsourcing of IT matters to other countries. Our critical data is being sent to, and managed in, India, Brazil, China, the Phillippines, Romania, Russia and other places which have little or no controls on, or interest in privacy protection. According to a Congressional Staff Report, the countries with the worst records are the most attractive to U.S. corporations due to the cheapest labor costs. (Canada and Japan have better security than the U.S., but also have higher wage scales.) Workers in low wage countries now have full access to our Social Security numbers, credit histories, finances, medical information, employment records, family data and more. Identity theft is on the increase. The U.S. has few laws or regulations which cover electronic security and confidentiality outside its borders.

Wired for Health Care Quality Act may decrease privacy protections. In 2005, the U.S. Senate passed the WHCQA; now it is under consideration in the House. The law portends to “standardize” the rules and create a government coordinator for Health Information Technology. It all sounds positive, but many privacy advocates who have read the provisions believe that the bill reduces patient privacy protection. It preempts (cancels out) many state laws which give greater protection of medical insurance and care records of patients and employees. It could enable employers and insurance companies to more easily misuse information to screen people and discriminate in health insurance. Further, preemption of tougher state confidentiality laws may enable companies to more easily out-source data processing to “offshore” sites where there is even less regulation. Congress cloaks so many things under the rubric of “national security,” especially in an election year. Then it quietly may be enabling people in other countries to access information which should be most secure.

Loose Lips. In spite of all the focus on electronic security, people are still the big leak. Results of security testing done during Compliance Awareness Week at a number of hospitals revealed that the most frequent breaches of confidentiality were staff talking too loudly about patients’ medical details in the hallways, at the nursing station, or talking off the job about the people they treated during the work day. The same is true in most workplaces. Employees breach confidentiality of all sorts through careless talk.

LITIGATION

Privacy

Union violates the Drivers Privacy Protection Act (DPPA). A union violated the federal DPPA, 18 U.S. Code §2721 et seq., when its organizing agents wrote down license plate numbers in the company parking lot, then used them to obtain employees’ names and addresses from a state licensing agency. The union then used the information to contact employees for organizing purposes. The DPPA prohibits obtaining personal information from motor vehicle records for any purpose outside of the 14 exceptions listed in the Act. Union organizing is not one of the 14 exceptions. Pickles v. UNITE (E.D. Pa., 2006).

Among the allowed uses of license information is insurance rate setting, employer’s record checks for commercial drivers, and any information search authorized by the license holder. This last use allows employers to review the driving records of anyone who drives for the company. A good practice would be to get the signed consent on the application forms, at the start of employment, or at the time the information is needed.

Alcohol Enforcement/Off-the-Job Use of a Legal Product

Last chance agreement is valid. An employee signed a “last chance” agreement after a positive test. He agreed not to consume drugs or alcohol at any time. The company discovered he consumed beer off the job and fired him. (He consumed some of the beer several hours before coming to work.) The Wisconsin Labor Industry Review Commission awarded unemployment compensation, finding the off-the-job conduct did not show sufficient disregard for the employer’s interest. However, the Court of Appeals reversed, ruling that because the employee worked with equipment, the last chance/no off-duty use provision had a reasonable relation to the employer’s concern for safety.

One-Two Punch. A plaintiff who wins a state agency discrimination case can then file in federal court for extra damages. Many states limit damages to reinstatement, back pay and/or injunctions. There are no extra punitive and compensatory damages. In Nestor v. Pratt and Whitney (2nd Cir., 2006), the court ruled that the plaintiff can get those extras by filing a follow-up action in federal court. So the state EEO case may just be round one. The advantage to plaintiffs is that state agencies are cheaper, quicker and more likely to rule in favor of a plaintiff than federal courts. So it is easier to get the liability ruling from the state, then go for “the gravy” in federal court.

Pattern of hiring illegal immigrants depressed wages of other workers and can violate racketeering laws. Employees of Mohawk Carpets have standing to sue the company under the Federal Racketeer Influenced and Corrupt Organizations Act (RICO). There was evidence that the company’s pattern of hiring illegals was designed to depress wages of workers overall, and did have that result. RICO carries civil punitive and compensatory damages and can include personal liability for individual actions. Williams v. Mohawk Industries, Inc. (11th Cir., 2006).

Sex in the fire station—agreement not to sue. A fire fighter confessed that he and other city employees used a fire station for numerous sexual encounters with other city employees and non-employees over a five-year period. Because he came forward with the information, he was given a demotion instead of discharge, but had to sign a release agreement waiving his rights to challenge the demotion. He had both union and legal representation. Later, he changed his mind and tried to sue under the First Amendment (being punished for having raised a matter of public concern) and for sex discrimination. He claimed he signed the release “under duress.” However, the court dismissed the case, holding that the release had been signed after consulting with representatives and was valid. Littrell v. City of Kansas (8th Cir., 2006).

Target’s recruiting is suspect. A federal court found sufficient evidence for a trial on racial discrimination in recruiting by Target stores in Waukesha County, Wisconsin. There was sufficient evidence that when a manager became aware that applicants were African American (through an address in a “black area” or telephone contact), he cancelled interviews. At the same time, a White “tester” was quickly offered an interview. Further, the applications of the African Americans were destroyed, contrary to the requirements for keeping applicant data, creating an appearance of a bad faith effort to cover up discrimination. At least one of the applicants appeared to be far more qualified than White applicants who were hired. EEOC v. Target Corp. (7th Cir., 2006).

White officers retaliated against for complaining about racism toward Black colleagues. A federal court has allowed three White police officers to proceed to trial. They raised concerns that their White sergeant “exacerbated discord” between White and Black officers. The White officers had good working relations with their African American co-workers and allege the sergeant was discriminating in treatment of Black officers, and tried to destroy the comradery between officers of different races. After the White officers complained to the EEOC, the sergeant allegedly told them he would make their work “a living nightmare.” They described a litany of overtly unfair treatment, and eventual discharge. The evidence was sufficient for the court to deny summary judgment and order a trial. Moore v. City of Philadelphia (3rd Cir., 2006).

Leave with pay during investigation is not an “adverse action.” An African American employee was placed on leave with pay during investigation after his ex-girlfriend reported him for using a work vehicle to purchase and transport drugs. The investigation evidence indicated the girlfriend’s charges were not credible. The District Attorney also dropped all criminal charges. The employee was recalled to work. The employee then filed a race discrimination case. The court dismissed, ruling that suspension with pay is not an “adverse action” sufficient to create a Title VII action; therefore, there was no reason to even hear evidence as to why the employee believed the paid suspension was somehow based on his race. Joseph v. Leavitt (2nd Cir., 2006).

Transition between managers is crucial for reasonable accommodation. Often a manager will implement a wonderfully successful accommodation which allows a disabled employee to perform very well. Then the manager moves on. A new manager arrives, without any information about the disability, the history and the details of the accommodation. Floundering in the dark, the new supervisor manages to derail the accommodation, eliminate the good performance and generate a discrimination case. In EEOC v. Starbucks Coffee Co. (W.D. Wash., 2006), the allegations are that two prior store managers had accommodated a worker with attention deficit and bipolar disorders by giving her more time to learn new products, more patient and repeated communications, and switching off to different duties when she was in high stress. The accommodation worked so well that she went from part time to full time and was considered a “very valuable worker.” A new manager came in, without sufficient information. He allegedly became frustrated with the employee’s slowness at learning new products and procedures, berated her in front of other workers, and eliminated the existing accommodations because of unawareness of the history of why they had been put in place, and how well they worked. The employee was soon discharged. The EEOC is suing on behalf of the employee.

Direct threat. A mail clerk’s worsening visual disability resulted in three workplace injuries to herself. When placed on involuntary leave, she sued under the Rehabilitation Act. The court found sufficient evidence that the clerk posed a “direct threat” to her own safety, which could not be eliminated by a reasonable accommodation, and the employer’s action was justified. Prior to the involuntary leave, the clerk had been accommodated by several equipment adjustments and job duty changes due to the declining vision, and when her condition further worsened, there were no other duty changes possible. Clayborne v. U.S. Postal Service (D. DC, 2006).

Restraint of light duty to Workers Compensation wins case. An employer’s policy limiting light duty to short terms for those recovering from a workers compensation injury won dismissal of an ADA case. There was no obligation to create a light duty position for a disabled employee who could no longer perform the duties of his regular job since the employer did not have permanent light duty jobs and no practice of giving permanent light duty jobs to non-disabled people. Shaw v. Chamberlain Mfg. Corp. (M.D. Pa., 2006). [For more information and suggested policy language, request the article Light Duty and the ADA by Bob Gregg, Boardman Law Firm.] Be aware that under Wisconsin law, a light duty assignment of several months can create a claim that a “permanent” job has been created.

Another court weighs in—obesity not a disability, absent other causation. In the continuing sea-saw of whether obesity is a disability under the ADA, the 6th Circuit Federal Court has decided that one must have an underlying psychological or medical condition which causes the obesity in order to qualify. This is the same as rulings on the other end of the spectrum; bulimia is a psychological condition which qualifies as a disability, and its effect is emaciation. Just emaciation on its own does not qualify. So, if obesity is a “symptom” or “effect” of something else which is a diagnosed medical or mental condition, then it may be an ADA disability. In EEOC v. Watkins Motor Line, Inc. (6th Cir., 2006), there was no evidence of such an underlying condition, and the court dismissed the case. There is an ongoing split of opinions in the federal and state courts as to whether obesity itself is an ADA disability. Clarification is probably years away and may become a political issue for Congress to address as more Americans get larger.

FMLA leave may result in reduced bonus. If a bonus is based on hours worked, then the time taken for FMLA can be used to reduce the bonus. Sommer v. Vanguard Group (3rd Cir., 2006). This is a confusing area since other sorts of bonuses cannot be reduced due to FMLA usage. Though FMLA has been in effect for over a decade, this issue is still being sorted out by the courts.