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Employer’s attempt to contractually shorten limitations period on FMLA claim fails

November 28th, 2017  |  Ron Miller

A contractual provision in an on-line job application which purported to provide for a six-month limitations period for any employment-related claims was unenforceable with respect to an employee’s FMLA claims, ruled a federal district court in Utah in Zisumbo v. Convergys Corp. Finding that the FMLA provides a right employees would not otherwise enjoy, the court concluded that a contractual provision purporting to limit the FMLA’s two-year limitations period impeded that right and therefore violated public policy.

Contractual limitations period. In 2012, the employee submitted an on-line application for employment. The application stated that the employee agreed that any employment-related claims must be brought no more than six months after the action arose, and waived any statute of limitations that was longer than six months. Ultimately, the employee was hired, but was fired just over a year later on June 28, 2013. During her employment, she had taken some medical leave before being fired. She subsequently received notice from the employer that her health insurance policy through the company had been retroactively cancelled months before her termination, leaving her responsible for various unpaid medical bills.

Subsequently, a collections agency sued the employee to collect on unpaid medical bills. Those claims were settled and the employee brought a third-party complaint asserting FMLA and ERISA claims against the employer.

The employee’s complaint was filed on June 25, 2014, just under a year after her termination. Thus, her claims were timely under the statutory limitations period for the FMLA (two years) and ERISA (six years), but untimely under the restricted six-month contractual limitations period. The question then was whether her employment application validly altered the statutory limitations period for any claims under the FMLA and ERISA. The parties filed cross-motions for summary judgment.

FMLA claims. With regard to her FMLA claim, the employee argued that the application’s provision purporting to limit the two-year FMLA statutory limitations period to six-months was unenforceable because it violated public policy. While the general rule is that parties may contract to limit the statutorily-prescribed time to bring a lawsuit, their ability to do so is limited in two ways: (1) there must be no “controlling statute to the contrary,” and (2) the shorter limitations period must otherwise be reasonable.

District courts that have addressed the issue of whether parties may contractually limit the FMLA’s two-year limitations period have split on the issue. At the heart of the split is whether limitations periods are more properly considered a right employees or a procedural protection afforded employers. The FMLA itself prohibits an employer from interfering with or restraining an employee’s rights under the FMLA (but says nothing of expanding procedural protections for employers.)

The majority view is that a contract shortening the statutory two-year limitations period impedes that right and therefore violates public policy. However, a minority of district courts have concluded that statutes of limitations are not “rights” given to employees but instead “more correctly exist for the protection of defendants,” so contractually restricting them does not implicate statutory and regulatory provisions prohibiting interference with or waiver of FMLA rights.

In Zisumbo, the district court observed that while the Tenth Circuit had not weighed in on the matter, it nevertheless concluded that the majority interpretation was the better argument—that is, that contractual provisions restricting the statutory FMLA limitations period violated public policy and was therefore unenforceable.

The court noted that the FMLA expressly prohibits an employer from interfering with or restraining an employee’s rights under the FMLA, including the right to bring a federal suit within two years of any violation. Here, the six-month limitations period in the employment application interfered with those rights, and consequently ran afoul of the proscription on interfering with rights under the FMLA. Accordingly, the application’s shortened limitations period was contrary to public policy, and not enforceable.

ERISA claims. With regard to the employee’s ERISA claim, the district court noted that ERISA has no analogous provision precluding an employer from contractually restricting the statutory limitations period. In fact, both the Supreme Court and the Tenth Circuit have recognized that parties may contractually limit the time to bring ERISA claims. Therefore, the court concluded that the contractual six-month limitations period did not violate public policy as applied to the employee’s ERISA claim.


Class Action Trends Report deep-dives into minimum wage claims

November 16th, 2017  |  Lisa Milam-Perez

“Rare indeed is the employer that is unaware most employees must be paid at least an hourly wage that does not fall below a minimum rate set by law. Equally rare is the employer that, cognizant of this mandate, deliberately flouts it. More commonly, employers faced with the complexities of the state and federal laws governing wage payment commit inadvertent technical violations of the statute,” the attorneys of Jackson Lewis write in the Fall 2017 edition of the Jackson Lewis Class Action Trends Report.

In the second in a series of Trends reports focused on wage-and-hour class claims, attorneys in the firm’s Class Action and Complex Litigation Practice Group discuss those complexities, and offer guidance for avoiding common minimum wage “traps.”

As practice group Co-Leaders Will Anthony and Stephanie Adler-Paindiris note: “Knowledge and proactive compliance can spring these traps before your business becomes embroiled in a lawsuit or Department of Labor action.”

Check out our latest collaboration with  Jackson Lewis.


Florida city attorney Craig E. Leen slated for senior DOL post—OFCCP Director?

November 14th, 2017  |  Cynthia L. Hackerott

Various news sources are reporting that Coral Gables, Florida, city attorney Craig E. Leen will be the next OFCCP Director. The primary source of these reports appears to be a November 9, 2017, article in the Miami Herald, which reported that Leen was leaving his post as Coral Gables City Attorney “to take a senior position at the Labor Department under President Donald Trump.” In the article, Leen described his post as one “overseeing compliance rules for government contractors.”

Prior to taking over at the DOL, Secretary of Labor Acosta was the Dean of the Florida International University College of Law. According to Leen’s bio page on the City of Coral Cables website, Leen has taught as an adjunct professor at the Florida International University College of Law, where he has taught Local Government, Evidence, and Legal Skills and Values III. The Miami Herald article states that Leen said Acosta contacted him over the summer and requested he join him in Washington.

Mr. Leen received his Juris Doctor degree from Columbia Law School in 2000 and his Bachelor of Arts degree, cum laude, from Georgetown University in 1997, where he double majored in Government and Economics, and completed the Honors Program for the Department of Government. Leen, who is Board Certified by the Florida Bar in City, County, and Local Government Law, has also taught State & Local Government Law and Real Property & Government adjunct professor for the University of Miami School of Law.

Prior to his job as the Coral Gables City Attorney, Leen worked for the Miami-Dade County Attorney’s Office as an Assistant County Attorney, where he served as Chief of the Federal Litigation Section and previously as Chief of the Appeals Section. He has also worked in the private sector for firms including: Morgan, Lewis & Bockius, LLP (Miami), Skadden, Arps, Slate, Meagher & Flom, LLP (Boston), and Cleary, Gottlieb, Steen & Hamilton LLP (N.Y.). In addition, Leen served as a Law Clerk to the Honorable Robert E. Keeton, United States District Judge for the District of Massachusetts.

According to the Miami Herald, Leen’s wife, Ana, a child psychiatrist, has already moved to the Washington area, and they will be living there with their two children. The couple has been active in the Miami area promoting inclusion for people with autism.

Is Senate confirmation necessary? The Obama Administration eliminated the Department of Labor’s Employment Standards Administration (ESA) in November 2009 but maintained the four component agencies previously under the ESA umbrella – the OFCCP, the Wage and Hour Division, the Office of Labor Management Standards, and the Office of Workers’ Compensation Programs. Thus, the heads of the four sub-agencies currently have the authority to report directly to the Secretary of Labor. Whether this current structure will require Senate confirmation of the OFCCP Director is unclear.

As of press time, the Department of Labor has not responded to Employment Law Daily’s inquiry regarding these reports.


Airline discriminated against employee with HIV

November 7th, 2017  |  Deborah Hammonds

A federal jury awarded $1.3 million, including $800,000 in punitive damages, after finding Delta Air Lines failed to accommodate an employee with HIV and then terminated him.

The employee’s Americans with Disabilities Act lawsuit alleged he was denied an accommodation provided for by federal law when he got ill when Delta’s medical insurance failed to provide timely medication, and was wrongfully terminated for the two days he was ill with a protected absence due to his disability.

According to the jury’s verdict, the employee was both denied an accommodation provided for by federal law when he got ill when Delta’s medical insurance failed to provide timely medication, and was wrongfully terminated for the two days he was ill with a protected absence due to his disability. The employee filed his lawsuit under the Americans with Disabilities Act.

The unanimous verdict, announced on October 20, came after an almost four-day trial in a federal district court in Nevada. Finding Delta’s actions were knowing and reckless, the jury awarded punitive damages. Back pay, front pay and legal fees have yet to be determined.

The employee was represented by Stone & Woodrow LLP of Charlottesville, Virginia, with Thatcher A. Stone and William T. Woodrow III as lead trial counsel and Nevada State Senator Richard Segerblom. In a press statement, Segerblom said the verdict was “likely to be the largest verdict for employment discrimination in Nevada history.”

Delta was represented by Scott Mahoney of the Las Vegas office of Fisher and Phillips and Kelly Giustina, a Delta lawyer.


ARB denies JPMorgan Chase’s request for interlocutory review of ALJ’s refusal to dismiss OFCCP claims of sex bias in pay practices

October 30th, 2017  |  Cynthia L. Hackerott

Concluding that there were no exceptional circumstances warranting mandamus or other means of interlocutory review, a DOL Administrative Review Board (ARB or Board) panel denied JPMorgan Chase & Co.’s petition for interlocutory review of an ALJ’s refusal to dismiss an action in which the OFCCP alleges that the bank discriminated against female employees in certain professional positions by compensating them less than their male counterparts. The panel found that JPMorgan failed to establish any basis for departing from the Board’s general rule against accepting interlocutory appeals. (OFCCP v. JPMorgan Chase & Co, October 5, 2017, slip op)

Pay bias allegations. In January 2017, the OFCCP filed a complaint with the DOL’s Office of Administrative Law Judges (OALJ) alleging that the bank discriminated against female employees in certain professional positions by compensating them less than their male counterparts (DOL ALJ Case No 2017-OFC-007). As the result of a compliance review, the OFCCP concluded that, since at least May 15, 2012, JPMorgan paid at least 93 females employed in Application Developer Lead II, Application Developer Lead V, Project Manager and Technology Director positions within its Investment Bank, Technology & Market Strategies unit, less than comparable men employed in these same positions. This compensation disparity remained after adjusting for differences in legitimate compensation-determining factors, the agency maintains in a January 18, 2017 press release announcing the suit.

The OFCCP also claims that JPMorgan failed to evaluate the compensation systems applicable to these employees and that the bank had an “insufficient affirmative action plan” in that it failed to perform the type of in-depth analysis of its employment practices required by Executive Order (EO) 11246 and its implementing regulations.

The ALJ denied JPMorgan’s motion to dismiss the administrative complaint for failure to state a claim, rejecting the bank’s assertion that the plausibility standard for stating a claim under Fed. R. Civ. P. 8 as set forth in the U.S. Supreme Court’s rulings in Ashcroft v. Iqbal (2009) and Bell Atlantic Corp. v. Twombly, (2007) (Iqbal/Twombly)applies to OFCCP administrative complaints and was not satisfied by the complaint in this case. In addition, the ALJ denied JPMorgan’s motion for reconsideration as well as  its subsequent request to certify the issue for interlocutory review by the ARB as provided by 28 U.S.C. § 1292(b). Nevertheless, JPMorgan filed a petition for interlocutory review with the ARB.

Regulatory mechanism for interlocutory review lacking. As a preliminary matter, the ARB panel found that the OFCCP’s regulations at 41 C.F.R. Part 60-30 (“Rules of Practice for Administrative Proceedings to Enforce Equal Opportunity under Executive Order 11246”), and the cases interpreting them (including the Seventh Circuit’s 1978 ruling in Uniroyal, Inc. v. Marshall and the Secretary’s subsequent ruling in U.S. Department of the Treasury v. Harris Trust & Savings Bank, OALJ No. 1978-OFCCP-002, May 10, 1979), do not provide a mechanism for interlocutory review in EO 11246 administrative proceedings. The regulations in two separate locations41 C.F.R. § 60-30.19(b) and 41 C.F.R. § 60-30.28—provide for the filing of exceptions with the ARB, but only after receipt of the ALJ’s recommended decision.

However, the ARB panel explained that the Secretary of Labor has delegated to the Board, via Secretary’s Order No. 02-2012 § 5(c)(13), the authority to issue final agency decisions upon appeals of decisions of DOL ALJs in cases arising under EO 11246. That order explicitly provides that the ARB may accept interlocutory appeals in “exceptional” circumstances, but it is not their general practice to accept petitions for review of non-final dispositions issued by an ALJ. The Secretary of Labor and the Board have held many times that interlocutory appeals are generally disfavored and that there is a strong policy against piecemeal appeals, the ARB panel here noted. Importantly, the Secretary of Labor noted in the 1993 ruling in OFCCP v. Honeywell, Inc. (OALJ No. 1977-OFCCP-003; June 2, 1993) that the Secretary has never reconciled the language of the regulations with Secretary’s Order No. 02-2012, the ARB panel pointed out.

“Exceptional circumstances” also lacking. Therefore, the ARB assessed whether there were any “exceptional circumstances” warranting interlocutory review under its delegated authority. When a party seeks interlocutory review of an ALJ’s non-final order, the ARB has generally followed one or more of three different approaches for determining what might constitute “exceptional circumstances.”  Here, the court analyzed the three most common approaches, as well a fourth approach advanced by JPMorgan—a writ of mandamus.

The first approach is contained in the interlocutory review procedures at 28 U.S.C. Section 1292(b), which provides for certification of issues involving a controlling question of law as to which there is substantial ground for difference of opinion, an immediate appeal of which would materially advance the ultimate termination of the litigation. But the bank conceded that because the ALJ’s order denying its motion to certify the question of law it raised (failure to state a claim) was not the type of interlocutory order from which an appeal may not be taken pursuant to Section 1292(b).

JPMorgan did not address or argue as to the second approach, consideration of an interlocutory order meeting the ‘collateral order’ exception to finality that the Supreme Court recognized in Cohen v. Beneficial Indus. Loan Corp. (1949). The ARB assumed the bank did not advance this approach because the ALJ’s denial of its motion to dismiss does not involve a collateral order given that the order at issue here was plainly is not separate from the merits.

The third approach was derived from the Secretary of Labor’s ruling in Honeywell, Inc., where the Secretary accepted and ruled on an interlocutory appeal in an EO 11246 case because that unusual case involved many threshold procedural and substantive issues of interpretation of EO 11246 and the parties did not object to the Secretary’s review of the ALJ’s order as an interlocutory appeal. The ARB panel also noted that the Secretary reviewed the interlocutory appeal in Honeywell because it involved threshold legal issues the resolution of which would encourage the parties to engage in voluntary mediation. That was not the case here, the ARB panel stated, noting further that the OFCCP does object to this interlocutory appeal.

Turning to the approach advanced by JPMorgan, the ARB panel first noted that the Secretary’s Order (cited above) delegating authority to the ARB to issue final agency decisions in cases arising under EO 112463 does not specifically delegate mandamus authority to the Board, and the ARB has thus far declined to decide the issue or recognize such authority.

Mandamus authority, even if available, not warranted. Even if mandamus authority were available, the ARB panel found that JPMorgan failed to demonstrate that such review was warranted here. The bank had not demonstrated that the circumstances existed in this case to satisfy the criteria set forth in the U.S. Supreme Court’s 2004 ruling in Cheney v. U.S. District Court for the District of Columbia to warrant interlocutory review through a writ of mandamus. In Cheney, the High Court held that the party seeking such review must meet three criteria: (1) it must have no other adequate means to attain the desired relief,  (2) it must show that its right to issuance of the writ is “‘clear and indisputable,’” and (3) the issuing court, in the exercise of its discretion, must be satisfied that the writ is appropriate under the circumstances.

Since the ALJ denied JPMorgan’s request to certify the issue for interlocutory review, the third criteria was not applicable here. As to the first criteria, although the bank asserted that there is no alternative means to address the ALJ’s denial of its motion to dismiss for a failure to state a claim given that an appeal after discovery and an adjudication on the merits would be futile, it is not uncommon for courts to deny interlocutory review of motions to dismiss, the ARB observed. Second, JPMorgan failed to show that it has a “clear and indisputable” right to issuance of the writ. The ALJ’s rationale in denying the bank’s motion to dismissthat the regulations at 41 C.F.R. § 60-30.5(b) provide an applicable pleading standard for OFCCP complaints filed pursuant to EO 11246was a reasonable interpretation, the ARB panel found. [Wolters Kluwer note: the standard at 41 C.F.R. § 60-30.5(b) is comparable to the “fair notice” standard for pleading in civil rights sanctioned by the U.S. Supreme Court in its 2002 ruling in Swierkiewicz v Sorema NA].

Accordingly, the ARB panel denied JPMorgan’s petition for interlocutory review remanded the case back to the ALJ for further proceedings.