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Should attorneys’ ethical obligations bar them from bringing whistleblower claims?

September 16th, 2009  |  Cynthia L. Hackerott

>Should attorneys’ ethical obligations to their clients bar in-house counsel from bringing whistleblower claims against their employers? In Van Asdale v International Game Tech (2009 U.S. App. LEXIS 18037, August 13, 2009), the Ninth Circuit Court of Appeals found that the ethical obligations of two Illinois-licensed attorneys, who claimed that a gaming machine company fired them in retaliation for raising fraud claims related to a merger, did not prohibit them from bringing federal SOX whistleblower claims. The federal appellate court ruled that the Van Asdales, a husband and wife who both worked for the company, could bring their SOX claims – even though the Illinois Supreme Court, in Balla v Gambro, Inc (145 Ill. 2d 492, December 19, 1991), has held that in-house counsel cannot bring a state law retaliatory discharge tort claim.  

In Balla, the Illinois Supreme Court held that a corporation’s general counsel, who was terminated as a result of his efforts to prevent a shipment of misbranded and/or adulterated medical devices, could not bring a retaliatory discharge claim even though his discharge was in contravention of a clearly mandated public policy. The state supreme court reasoned that extending the tort of retaliatory discharge to in-house counsel would compromise the attorney-client relationship because employers might be less willing to be forthright and candid with their in-house counsel. Moreover, allowing the claim would not promote disclosure of the misconduct because the attorney was required under the state’s rules of professional conduct to report the employer’s intention to sell the misbranded and/or adulterated medical devices; thus, the public policy of protecting the lives and property of citizens was adequately safeguarded. Finally, the court reasoned that if the tort were extended to in-house counsel, “the employer/client would be forced to pay damages to its former in-house counsel to essentially mitigate the financial harm the attorney suffered for having to abide by [the Illinois] Rules of Professional Conduct,” which was “impermissible” because attorneys may “have to forego economic gains in order to protect the integrity of the legal profession.”

Citing Balla, the company that employed the Van Asdales asserted that allowing them to maintain their SOX claim would violate the attorneys’ obligations under the Illinois Rules of Professional Conduct. Rejecting this argument, the Ninth Circuit distinguished Balla, noting that the Illinois Supreme Court explained that it “base[d its] decision as much on the nature and purpose of the tort of retaliatory discharge, as on the effect on the attorney-client relationship that extending the tort would have.” Furthermore, the Ninth Circuit concluded that “federal courts in Illinois have uniformly declined to apply Balla to claims based on federal law.”  

The company then argued that, irrespective of the specific rules applicable to Illinois-licensed attorneys, the Van Asdales should not be permitted to maintain their SOX claim because doing so would require use of attorney-client privileged information. However, the Ninth Circuit determined that such concerns did not justify barring the Van Asdales’ SOX claims because nothing in statute indicates that in-house attorneys are not protected from retaliation “even though Congress plainly considered the role attorneys might play in reporting possible securities fraud.” In addition, it was unclear to what extent their suit required disclosure of confidential information and the trial court could use equitable measures to minimize the possibility of harmful disclosures, the federal appellate court observed. 

It seems that the federal nature of the SOX claim was a key distinction here. Securities laws are exclusively under the jurisdiction of the federal government, and, as the Ninth Circuit indicated, Congress “plainly considered” when enacting SOX that attorneys would be privy to information regarding possible securities fraud. That being the case, it appears Congress determined that any adverse impact on attorney-client communications did not outweigh its goal of encouraging disclosures related to securities fraud.


Less than half of Americans now approve of labor unions

September 14th, 2009  |  David Stephanides

>The results of Gallup’s annual Work and Education survey find organized labor taking a significant image hit over the past year. While 66% of Americans continue to believe unions are beneficial to their own members, a slight majority now say unions hurt the nation’s economy.

More broadly, fewer than half of Americans – 48%, an all-time low – approve of labor unions, down from 59% a year ago. The 48% of Americans now approving of unions represent the first sub-50% approval since Gallup first asked the question in 1936. The previous low was 55%, found in both 1979 and 1981. That first poll found 72% of Americans approving of unions and only 20% disapproving.

Gallup attributes the downslide to the economic recession, and the aftermath of major economic interventions by the government on behalf of two of the Big Three domestic auto companies. Results were based on telephone interviews with 1,010 national adults, aged 18 and older, conducted Aug. 6-9, 2009. Gallup released its poll on September 3.


Should the ADA certify service animals?

September 11th, 2009  |  Deborah Hammonds

>Service animals seem to be in the news a lot lately and the stories indicate either confusion about or an unwillingness to recognize what service animals are. It’s not simply a matter of what the service animal is–be it a dog, a miniature horse, a monkey, or a parrot. The questions are about the tasks being performed and whether the animal is truly a service animal.

For instance, an Illinois public school district was sued by the parents of an autistic child after the school district banned the child’s service dog from entering the classroom. A judge granted a preliminary injunction against the school district but the child will have to start school without the dog since the judge believed it would be unfair for the dog to start without further discussion between the parties. (No date was set for the dog to enter the classroom.)

The school district argued the dog was not a service dog and not part of the student’s Individual Education Plan (IEP). The school district claimed that, because of this, the district had not been able to ascertain if the dog was necessary for the student to obtain an adequate and appropriate education. The district also argued the dog’s presence was an unfair burden to the rest of the students. Another student’s parent testified that her child had severe allergies that would prevent her from attending class if the dog were present.

In Texas, a university student claimed he needed his “doctor-ordered, therapy dog” for “emotional support,” but has run into the university’s “no-pets” policy. The university argued the student had not proven he is disabled or that his dog is a certified service dog. The student claimed to have provided the necessary documentation but–still no dog.

Then there’s always the question of whether the animal is truly a service animal. Litigation is currently pending in Canada where a dog owner has filed suit against the owners of a food store claiming they discriminated against him by not allowing him to bring his service dog into the store. The store’s owners argue that they were suspicious because the dog, a teacup Chihuahua, was not really a service animal. While the dog owner had a prescription sheet describing the dog as a service animal, the dog did not have any special harness, muzzle or markings and did not behave like a service animal. What’s more, the dog owner usually carried the dog in his arms. The dog owner claimed to suffer panic attacks and episodes of claustrophobia.

Under the Americans with Disabilities Act (ADA), employers and private businesses that serve the public are prohibited from discriminating against individuals with disabilities who use service animals trained to provide assistance.

Although these stories do not involve employer-employee relationships, employers undoubtedly share some of the same concerns. How do you recognize whether an animal is truly a service animal? Would the presence of one employee’s service animal cause problems for other employees or for the employer?

While the ADA does provide a definition for a service animal (any guide dog, signal dog, or other animal individually trained to provide assistance to an individual with a disability), the ADA does not license or certify service animals. The Department of Justice does, however, offer guidelines regarding service animals.

Would it help employers if the ADA provided more specifics regarding service animals such as what animals could be service animals or what tasks must be performed (i.e., guidance for a blind or visually impaired person, guidance for deaf individuals)? What if the ADA were amended to provide licensing or certification of service animals? Would that help employers avoid litigation in similar situations?


“Workers of the World: Sleep In!”

September 9th, 2009  |  Connie Eyer

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Last year, former Utah Governor Jon Huntsman (R) announced the Working 4 Utah initiative, which extended state government service hours from 7am to 6pm, Monday through Thursday, thus giving 17,000 of the state’s 24,000 executive branch employees three-day weekends for as long as the program lasts. While at least 70 cities already practice a form of either a staggered or compressed workweek, this large-scale experiment has been watched closely by many cash-strapped companies, cities and states.

Huntsman’s goals were ambitious: “As we go forward with this initiative, we will conserve energy, save money, improve our air quality, and enhance customer service,” he said. “We live in a dynamic, ever-changing environment, and it’s crucial that we take a serious look at how we can adapt and maintain our state’s unparalleled quality of life.”

So, one year into the program, how’s “Working 4 Utah” working for Utah? Although a recent evaluation of the program by state planners found that the energy savings haven’t materialized quite as much as expected, there were some unanticipated boosts to productivity and worker satisfaction. Lori Wadsworth, a researcher at Brigham Young University, surveyed state workers who’ve switched to the four-day workweek and found that 82 percent prefer it. “Utah employees actually show decreased health complaints, less stress, and fewer sick days,” Wadsworth noted.

In addition, absenteeism has noticeably dropped, while productivity and quality of service have improved, with early evidence seeming to allay fears that 10-hour workdays would “burn out” employees. Longer weekends can also result in more time spent in recreation and/or with the family. In addition—as noted by Tufts University research—workers also reported having more time to volunteer in their communities.

Although the original goal of the shorter workweek was to cut energy use by 20 percent, actual savings were more in line with a 13-percent reduction. Believe it or not, one of the major obstacles was trying to figure out how to turn off the massive heating and air conditioning units on Fridays. Even despite the technical difficulties, though, current energy savings translate into Utah shrinking its carbon footprint by 6,000 metric tons.

The financial savings were impressive, too. At the nine-month mark, it was reported that Utah had saved $1.8 million. And, according to Governor Huntsman, “the cost savings will only grow if the four-day workweek is granted permanent status” because the state can renegotiate long-term leases and further refine “smarter” energy, heating, and cooling systems in buildings. Add to that less driving, less gasoline consumption, and more money not spent on commuting that workers can now add to Utah’s economy as a stimulus.

What is the potential downside to this program? Will there be longer-term effects of working a four-day week? Can worker productivity keep up or will it eventually lag? Time will tell—in any case, it can’t hurt to at least re-think the post-1938 Fair Labor Standards Act workweek paradigm.

The final report on the pilot program is expected to be sent to Utah state lawmakers in October. In the meantime, there are a whole lot of interested folks out there contemplating taking the three-day weekend plunge themselves.


Wage violations may lead to “trickle-up” economy stagnation

September 8th, 2009  |  Matt Pavich

>Next week, if someone were to rob you of $51, you’d probably call the police. Now imagine that it happens every week. Or let’s say that you’re driving and someone broadsides you, but pressures you into not going to the hospital for your injuries.

Sound outlandish? Seem a bit predatory? Sound like something that could never happen here? Well, these scenarios are reality for approximately two-thirds of the low-wage workers in the United States, according to a recent study. The New York Times has reported that the study, which analyzed wage violations in low-wage industries, found that the typical low-wage worker lost the aforementioned $51 per week due to wage violations. That’s a hefty chunk taken out of an average paycheck of $339.

See the story here: http://www.nytimes.com/2009/09/02/us/02wage.html?_r=3&partner=rss&emc=rss

It gets worse for those toiling in, among other industries, apparel manufacturing, child care and retail. In what is certain to be a controversial finding, the study suggests that employers have enjoyed astounding success in pressuring their low-wage workers not to file workers’ comp claims. A breathtakingly low eight percent of these workers file for compensation when they suffer serious injuries on the job.

It gets worse still. 57% of the participants did not receive mandatory pay documents that would ensure legal and accurate compensation. 12% of workers who received tips stated that their employer stole their tips. And of the workers who filed wage complaints, 43% said that they experienced some form of illegal retaliation as a result.

And these violations are not, according to the study, limited to a few bad actors, nor do the violations disproportionately affect undocumented workers, those least likely to assert their rights. Instead, the study shows that the disregard for federal labor standards is widespread throughout the low-wage labor market and affects in almost equal parts, undocumented workers (39%), legal immigrants (31%) and native-born citizens (30%.)

We can expect more workers to be affected by such violations. According to recent reports, the underemployment rate — which includes part-time workers who’d prefer a full-time position and people who want work but have given up looking — reached a record 16.8 percent. That’s more and more workers who are forced to take low-wage, part-time employment.

And that, indirectly, affects us all. An already-struggling economy isn’t receiving the assistance it could from these workers who have less money to spend as a result of these violations. And the federal government, which needs the money for little things like health care reform, paying down the deficit and financing two wars, isn’t getting all the tax revenues that it can.

So, what is to be done? Obviously hiring more investigators is a good first step. Immigration reform might assist as well, as it would theoretically offer a reason for undocumented workers to come out of the shadows, thereby diminishing the power employers have over those workers. And some version of labor reform is essential to give employees a stronger voice. But, as previously noted, this might not happen.

As any casual observer of labor reform efforts knows, its opponents have been far more effective at spreading their message than have its proponents. And that’s fine. One of the hallmarks of our modern American democracy is that the group that messages the best gets to light the cigars. But a recent comment by Senate Majority Leader Mitch McConnell (R-KY) highlights a general belief that may doom labor reform. The Bluegrass State Republican explained why none in his caucus will vote for the Employee Free Choice Act, no matter what form it takes, should the day come when it reaches the Senate floor. Workers, you see, don’t want to join unions because of the “very enlightened management in this country now, treating employees better.”

If McConnell’s statement is taken at face value, it suggests that many simply don’t believe that egregious wage violations and unfair labor practices still occur. The participants in this survey would beg to differ. Perhaps because of the industries in which they work and the pay they receive, their voices just don’t get heard as often as they should. But we disregard their plight at risk to our own economic future.