Steven H. Schwartz & Associates, P.L.C.

Genetic Information

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The recently enacted federal Genetic Information Nondiscrimination Act of 2008 ("GINA") will become effective November 21, 2009. GINA will broadly prohibit discrimination on the basis of genetic information in employment and health insurance. GINA will also amend the Fair Labor Standards Act concerning child labor, increasing penalties for such violations.

GINA will likewise amend existing statutes, including Title VII of the Civil Rights Act, Health Insurance Portability and Accountability Act ("HIPAA"), the Employee Retirement Income Security Act ("ERISA"), and the Internal Revenue Code. The term "Genetic Information" will include an individual's genetic tests, the genetic tests of the individual's family members, and the manifestation of a disease or disorder in a family member. A "Family Member" is defined to include an individual's spouse or dependent child by birth or adoption, and certain other relatives of such individual, individual's spouse or dependent child.

The enforcement scheme and penalties for violation will be similar to the existing amended statutes. Additional guidance from the enforcing agencies will be forth coming.

Realizing the Promise of Arbitration

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In the mid-1990's, alternative dispute resolution, particularly arbitration, was considered by many plaintiff and defense attorneys to be the answer to costly, lengthy litigation. Courts embraced the concept of arbitration and found ways to encourage parties to submit to arbitration, especially in low dollar claims or in highly technical, complex disputes. Arbitration was promised to be faster, more rational and considerably less expensive than traditional litigation. For the plaintiff, it promised a guarantee of a "day in court" and avoidance of summary disposition. For the defendant, it promised a fair hearing conducted by an experienced, independent attorney, rather than a jury which might be more disposed to rule based on sympathy rather than evidence.

Ten years later, has the bloom come off the rose? Many attorneys shy away from arbitration for various reasons. Some arbitration groups charge substantial fees, without regard to the amount of the administrative support required. Some defense lawyers worry that the arbitrator will merely "split the baby", rather than rule for one side or the other. Other attorneys complain that arbitration is no more expeditious than litigation, citing to experiences where arbitrators required detailed pre-hearing orders that must adhere to the Federal Rules of Civil Procedure, or allowed unbridled discovery or gave consideration to motions for summary disposition based upon technical defenses.

These types of problems may be avoided by a comprehensive arbitration agreement which would return arbitration back to its intended objectives. While no means exhaustive, the following is a checklist of issues that plaintiffs and defense attorneys could consider before an arbitrator is selected, or when corporate counsel drafts an agreement with an arbitration clause. If these items are included in the arbitration submission, the arbitrator is bound to follow these requirements and not impose his own sense of "industrial justice":

Will depositions be allowed? If so, how many?
Will interrogatories be allowed? If so, what is the limit?
How long will discovery be permitted?
What is the penalty if a party is non-compliant during discovery?
How long from the initial filing of the arbitration claim until an arbitrator must issue a decision?
If the arbitrator makes an error of law, does the losing party have the right to appeal?
Will a transcript be required? If so, who pays for the transcript?
Is there a default mechanism if one party does not attend the hearing or file an appearance?
Is there a default mechanism if one party does not pay the arbitrator's fee?
Is the arbitrator required to write a "reasoned" opinion, describing the rationale for his decision?

Parties can take control of the arbitration process to ensure that it provides a fair, expeditious process. The best way to ensure such a process is to prepare a detailed arbitration agreement that specifically defines the arbitrator's authority on these matters. By following this approach, attorneys and parties would realize the advantages of arbitration over traditional litigation.

Amendments to the FMLA

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The President has recently signed the National Defense Authorization Act (Fiscal year 2008) which includes provisions amending the Family and Medical Leave Act to provide (1) up to six months of leave for family members caring for military veterans injured while on active duty in the Armed Forces and (2) 12 weeks of leave to family members of armed services personnel called up to active duty under certain circumstances.

The amendments cover leaves to care for members of the Armed Forces, including the National Guard or Reserves, who have suffered a serious injury or illness in the line of duty while on active duty, that may render the members medically unfit to perform the duties of their office, grade, rank, or rating. It applies broadly to servicemembers who are undergoing medical treatment, recuperation, or therapy, are in outpatient status, or otherwise are on the temporary disability retired list, for a serious injury or illness. For this type of leave, the legislation expands the definition of covered employee to include the "next of kin," or nearest blood relative, of a covered servicemember.

The final legislation also contains a provision providing up to 12 weeks of leave because of any "qualifying exigency" arising out of the fact that a covered employee's spouse, child or parent is on or has been called to active duty in the Armed Forces. This provision provides 12 weeks of leave to the immediate family of servicemembers called to active duty and complements state family military leave laws that provide for shorter duration of leave or only cover spouses of servicemembers.

Employers should amend their FMLA policies to provide employees with notice of these new leave entitlements.

SUPREME COURT CLARIFIES STATUTE OF LIMITATIONS IN PAY DISCRIMINATION CLAIMS

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In its May 29, 2007 decision in Ledbetter v. Goodyear Tire & Rubber Co., the Supreme Court ruled that pay discrimination claims are not actionable when the discriminatory pay decision occurred before the 180 day (or 300 days in states with deferral agencies) statutory charge-filing period, despite the effects of such decision still being prevalent within the statutory time frame.

In this case Ledbetter charged that Goodyear gave her lower raises than men during 1980's based on her gender. In the 1990's she was given raises equal to or greater than men, but this never allowed for her salary to become equal to her male counterparts. Ledbetter filed a charge with the EEOC on March 25, 1998.

The Supreme Court held that, "[b]ecause the later effects of past discrimination do not restart the clock for filing an EEOC charge, Ledbetter's claim is untimely." The Court also found important the idea that the discriminatory intent is the trigger behind the EEOC charging period. While Ledbetter's pay reflected the past discriminatory acts, it did not have a discriminatory intent. Therefore, a new charging period did not begin with each receipt of pay from Goodyear.

Six Things to Look for In Your Next Employment Contract

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Employees often view the terms of their employment only in dollars and cents. While getting the highest compensation for what you bring to the table in knowledge, skills and ability is important, often the terms of the employment agreement may add to the value of an offer or, conversely, make it less appealing or even hazardous to your career. This article will explain some of the common aspects of employment agreements and hopefully dispel some common myths employees have in regard to the terms of their employment.

Contracts come in different versions. For executives and key personnel, some contracts are comprehensive, multi-page documents labeled "employment agreement" or a similar name. Other agreements are in the form of an offer letter. For salespersons, the contract may be in the form of a sales commission or non-compete agreement.

At Will vs. Just cause Employment

A common erroneous belief some employees have is that they cannot be terminated from a job unless they perform inadequately. This is simply not true. Employment in Michigan and other states is presumed to be "at will" unless the parties agree that its not. This means that the employee and employer can end the employment relationship for any reason or no reason at all, without any advance notice. Because of a series of cases that occurred in the 1980's and 1990's, employers zealously protect their employment "at will" rights in employment contracts. Therefore, if you see such language in an employment agreement, you are, generally speaking, not being offered a promise of employment forever.

On the other hand, the "just cause employment" relationship offers the employee some job protection, promising the employee a job as long as the employee adequately performs or as long as it is economically feasible for the employer. However, this must be agreed upon by the parties and is rarely offered outside of the unionized workforce.

Non-compete Agreements

Employers frequently require employees to enter into agreements limiting the employee's ability to work for a competitor, operate a competing business and solicit employees or current or prospective clients within a certain amount of time after departing the employer's business. Courts will enforce non-compete agreements that they find to be reasonable.

Non-compete agreements require reasonableness of the agreement in four respects. The agreement must 1) protect the employer's reasonable competitive business interest, 2) be reasonable in duration, 3) be reasonable in the geographical area in which it restrains competition and 4) be reasonable as to the type of employment or line of business prohibited.

Generally speaking, a reasonable non-compete agreement will be just restrictive enough to protect an employer's legitimate business interests while allowing the employee to earn a living. Employees must be particularly careful in their consideration of these agreements because they can effectively block the employee from working in a specific business for a substantial amount of time, generally a term of several years.

Sales Formulas/Closed Sales

For the commission-based employee, the sales formula is probably one of the most important terms of the employment contract. In light of this, it is surprising how often employees waive parts of their commission simply by failing to closely analyze and monitor the payment of their commissions. Employees are often owed substantial commissions because of the "life of the part" doctrine. The basics of this doctrine are that, where the employee finds a prospective client who begins ordering a particular item, the employee is to receive a commission based on the sale of that item for as long as the client orders it from the employer, even after the employee leaves employment. An exception to this is a written "closed sales" agreement. Under this exception, the employment agreement/sales formula contains language that limits the employees' commissions to sales which are closed on the date of employee termination.

Assignment of Inventions

The "assignment of invention" clause is common in the scientific, academic and creative fields of employment. These agreements should be limited in scope to the employee's field of practice and should be limited to the duration of employment with the employer. Beyond the scope of the assignment, employers may have the right to any invention created with their materials or while on employer's time (i.e., on the clock).

Limitation of Employment-Based Lawsuits

There are two basic, but powerful, limitations employers generally place on employment-based lawsuits. First, employers sometimes place a contractual limitation of the time in which to sue for events that occurred during employment. Courts have enforced time limits as little as six months. Under this agreement, events occurring beyond the six-month limitation would be barred.

Second, some employers prefer that all claims against them be placed in the forum of arbitration and, therefore, place binding arbitration language in the employment agreement. Employers disagree as to whether this is preferable. Some believe that arbitrators "split the baby" and, in the process, disobey the law. Others simply prefer to avoid costly litigation and/or possible class-action suits. In either event, both of these limitations could seriously hamper an aggrieved employee's lawsuit against the employer.

It is easy to understand how just a bit of tweaking of contract language can render an employment agreement more or less valuable to the employee. With this in mind, the employee should keep a vigilant eye out for the opportunity to negotiate and fine-tune the agreement to his or her liking and, if need be, consult an attorney.

Michigan Codifies Garrity Rights for Law Enforcement Officers

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On December 29, 2006, Michigan enacted M.C.L. 15.391, codifying the protection of involuntary statements made by law enforcement officers. Such protection has been in place since the Supreme Court's ruling in Garrity v. State of N.J., 385 U.S. 493 (1967). In Garrity, the Court ruled that public sector employees are in fact under duress and deprived of free choice when asked to either incriminate themselves or forfeit their jobs. Therefore, the use of such statements is prohibited in a subsequent criminal proceeding as involuntary self-incrimination.

The new Michigan law defines an "involuntary statement" as a statement made by the officer under threat of dismissal or other employment sanction. "Law enforcement officers" include emergency dispatch workers and local corrections officers. As in Garrity, involuntary statements may not be used against the officer in a criminal proceeding. Additionally, such statements are confidential and may not be disclosed without establishing one of the following: 1) officer written consent, 2) search warrant, subpoena, or court order, 3) collective bargaining or administrative or legal proceeding involving the officer's employment status or to defend the officer or law enforcement agency in a criminal proceeding, or 4) with limited use by legal counsel in a civil action against the officer or law enforcement agency.

Clarification of Garg and Evidence of Discrimination Occurring Outside the Statute of Limitations

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Prior to the 2005 decision of Garg v Macomb County Cmty Mental Health Servs, Michigan subscribed to the continuing violations theory of discriminatory acts. 472 Mich 263 (2005). This meant that aggrieved employees could file a claim for discriminatory or retaliatory acts that occurred beyond the three-year statute of limitations by showing them to be related to acts that occurred within the statute of limitations, so as to create a pattern of harassment. The Court in Garg ruled that continuing violations theory no longer exists under Michigan law but left open whether acts falling outside the statute of limitations may be used as background in support of claims made within the statute of limitations.

In Ramanathan v Wayne State Univ Bd of Governors, WL 28416 (Mich Ct App, 2007) the Michigan Court of Appeals recently held that, absent clear guidance from the Supreme Court, the admissibility of these past acts as evidence is subject to the discretion of the trial court under the rules of evidence (e.g. relevance, overly prejudicial). Therefore, how an employer treated employees and employee complaints in the past could be critical in a lawsuit concerning current work conditions.

Sixth Circuit Encourages En Banc Review of Arbitration Timeliness Disputes

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It has been a long-standing judicial precedent that the courts' jurisdiction in determining the arbitrability of arbitration agreements in a collective bargaining agreement is limited to determining whether the dispute is on its face governed by the contract. In other words, courts, not arbitrators, determine if the dispute is to be settled through arbitration. Arbitrators are to make the determination of procedural arbitrability (e.g. whether the parties have complied with procedural requirements under the agreement).

However, in the 6^th Circuit Court of Appeals, this rule has been slightly altered by the Court's ruling in General Drivers, Warehousemen and Helpers, Local Union 89 v. Moog Louisville Warehouse. In Moog a timeliness clause in the agreement contained the language: [I]f the Union fails to notify the Company [...] within 15 calendar days after the Company gives its answer in writing [...] then the Union shall be conclusively presumed to have accepted the Company's answer thereto and said grievance shall not thereafter be arbitrable. The Court found this language to, "clearly indicate that the particular grievance in dispute [was] excluded from arbitration."

Analogous time-bar language recently occurred in the case of Steelworkers v. Saint Gobain Ceramics & Plastics. The Court ruled that, while it felt Moog created a false dichotomy between express and non-express time-bars, it was bound by precedent to find that the grievance was not arbitrable. The Court went on to note that the 6^th Circuit is the only Court of Appeals to rule that time-bars are a question for the court in determining arbitrability and encouraged an en banc review of Moog so as to overturn it.

As a matter of policy, employers should have an express time-bar in their grievance procedures and closely follow the guidelines of the time-bar language.

Prescription Contraceptives

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The Michigan Civil Rights Commission recently issued a ruling that declares an employer may not exclude prescription contraceptive drugs from a health plan that covers other prescription drugs. The MCRC deems the selective exclusion of prescription contraceptives to be gender discrimination and to disproportionately affect women. It should be noted that the MCRC's rulings are not law, however, courts may rely on such rulings as persuasive in their determination of discrimination. The federal Equal Employment Opportunity Commission issued a similar ruling in the past, and some federal district courts did rely heavily on the EEOC's ruling in their opinions, which found that employers that exclude prescription contraceptives from their otherwise comprehensive drug plan discriminate on the basis of gender.

In order to comply with the MCRC's order, employers must provide for prescription contraceptives in their employer healthcare plan.

Michigan Minimum Wage Law

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The Michigan minimum hourly wage is to increase to $6.95 on October 1, 2006, to $7.15 beginning July 1, 2007, and to $7.40 beginning July 1, 2008. Because of interplay between the Federal Fair Labor Standards Act ("FLSA") and Michigan Wage & Hour Law, practitioners generally agreed that several classes of previously exempt status employees would be considered non-exempt, eligible for overtime, employees because of the minimum hourly wage amendments to the Michigan law.

However, recent legislation mostly avoids this outcome. The Governor has signed legislation that largely maintains the classes of exempt and non-exempt employees as they applied before the minimum wage increases; except for some classes of home health care providers, childcare providers, and agricultural workers.

While the amendment to the Michigan law relieves some employers of overtime responsibility, employers would be well advised to review their employees' exemption status under Michigan law.