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The Employer E-Letter:
Labor and Employment Law News from the
Duluth, Minnesota law firm of
Hanft Fride, A Professional Association.
Editor, Kathleen S. Bray, ksb@hanftlaw.com or 218.529.2427.
Please feel free to forward this e-mail or share it with others. If there are other topics of interest to you or any other suggestions concerning this newsletter, please let us know.
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THIS MONTH'S TOPICS:
- U.S. SUPREME COURT LOWERS BAR FOR RETALIATION CLAIMS
- JOINT AND SURVIVOR ANNUITY ONLY APPLIES TO THE SPOUSE YOU ARE MARRIED TO AT THE TIME OF THE ELECTION
- NEW PROPOSED REGULATIONS GOVERNING DEPENDENT CARE SERVICES
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U.S. SUPREME COURT LOWERS BAR FOR RETALIATION CLAIMS
In a decision issued this week, on June 22, 2006, the U.S. Supreme Court expanded the circumstances under which an employee may bring and recover on a claim for retaliation against his or her employer. The Court unanimously affirmed a jury verdict on a female employee's retaliation claim against her employer, in the case of Sheila White v. Burlington Northern and Santa Fe Railway Company, 548 U.S. ____ (2006), finding that the employer's actions in transferring Ms. White to a more physically demanding job and suspending Ms. White for over a month without pay pending an internal grievance for insubordination, amounted to material adverse action and retaliation in violation of the Civil Rights Act of 1964, Title VII.
Sheila White was the only female working in the maintenance department at the Tennessee Yard location for Burlington Northern. After being hired as a laborer in 1997, she soon became a forklift operator. Within a few months after hire, she complained to the management that her supervisor made inappropriate remarks to her in front of co-workers, and that he also told her women should not be working in the department. Burlington responded to her complaint by suspending her supervisor for 10 days and ordering him to attend sexual harassment training. Ms. White was advised of the discipline and response. However, the employer also removed Ms. White from the forklift duties and assigned her to only track laborer tasks. Burlington's management told Ms. White that co-workers had complained a "more senior man" should have the less strenuous and cleaner job of forklift operator. Within a month after being removed from the forklift, she filed an EEOC claim, alleging gender discrimination and retaliation.
The Court spent a lot of time exploring what the term "discriminate against" means in the anti-retaliation section of the statute. The Court discussed whether the adverse retaliatory action had to be employment-related and how severe the action had to be for protection under Title VII. The Court determined that actions outside the workplace, as well as those actions that are not directly related to the employment situation, could form the basis of a retaliation claim. This is a broader standard than that used in the actual discrimination cases. The EEOC reference and compliance manuals referred to "exceptionally broad protection" under the anti-retaliation provisions.
Thankfully, the Court continued the idea that the retaliatory action complained of must be one that results in material adversity to the employee. They stated, in relevant part: "An employee's decision to report discriminatory behavior cannot immunize that employee from those petty slights or minor annoyances that often take place at work and that all employees experience." The Court also confirmed that the standard of harm or adversity, is based on a reasonable employee standard.
The concern for employers following this case, though, is the Court's further explanation that determining whether the employee was treated materially adversely, was dependent on the perspective of the plaintiff as a reasonable person, evaluated within the circumstances presented at the time. Along these lines, Burlington argued that the new position to which Ms. White was transferred was not a step down, as she received the same wages for it as in her old job. The evidence at trial supported a conclusion that the forklift operator position is popular and viewed as a "better" job by employees than many others.
In addressing her temporary suspension pending investigation on the grievance charge, the Court made another finding that is troubling to employers. Even though the employer ultimately reinstated Ms. White with back pay at the conclusion of their investigation, she was left 37 days not knowing her job security status, with her paychecks stopped. The jury found this was a materially adverse action by the employer, and the Supreme Court ultimately agreed. This finding came as a surprise to many, because the employee was made whole and therefore, arguably, did not suffer any long-term adverse effects.
Employers should tread carefully, as retaliation claims will take even more of a case-by-case approach to assess merits and defenses following this decision. Questions regarding this recent case? Contact Kathy Bray at ksb@hanftlaw.com or 218-529-2427.
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NEW PROPOSED REGULATIONS GOVERNING DEPENDENT CARE SERVICES
On May 24, 2006, the Internal Revenue Service published proposed regulations affecting the types of expenses that Dependent Care Flexible Spending Arrangements can reimburse. The proposed regulations do not become effective until the final regulations are published. However, employers may elect to apply the proposed regulations now. If you have a dependent care reimbursement program, you may wish to review these proposed regulations with your plan provider to determine the impact of these proposed regulations on your plan and the timing of any plan amendments.
The remainder of this article highlights briefly some of the changes and clarifications of the proposed regulations:
(1) There are new rules for part-time employees. The proposed regulations provide that, in general, taxpayers who work part-time must allocate expenses between days worked and days not worked. However, taxpayers who work part-time but are required to pay for dependent care expenses on a weekly or longer basis are not required to allocate expenses between days worked and days not worked. What this means is that if the day care provider charges a flat weekly rate no matter how many days the child attends day care, then the full weekly rate can be reimbursed. If, however, the day care provider charges for the time on a daily or lesser basis, then the employee may only be reimbursed for those days when he or she is working – even if the child attends day care all week.
(2) The age of the child for which day care expenses may be reimbursed has been reduced from under age 15 to under age 13. Like the part-time rule, this change is made on a daily basis. If an employee's dependent turns 13 on August 2, the dependent no longer qualifies on that day.
(3) The regulations clarify that nursery school may be a qualifying dependent care expense, but kindergarten expenses are not.
(4) Day camps are a qualifying expense, but overnight camps are not.
(5) The rules clarify that payment to a spouse or to a parent of an employee's child who is not a spouse, cannot qualify as dependent care assistance. Behind this rule is the principle that a parent has an underlying legal obligation to a child. Furthermore, payments to a dependent under the age of 19 do not qualify.
These proposed regulations also apply to individual taxpayers taking dependent care credits. Individuals should consult with their own tax advisors concerning the impact of these proposed regulations.
Questions regarding the dependent care regulations or other employee benefits issues? Contact Faye Witt at fmw@hanftlaw.com or 218.529.2428.
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JOINT AND SURVIVOR ANNUITY ONLY APPLIES TO THE SPOUSE YOU ARE MARRIED TO AT THE TIME OF THE ELECTION
The Eleventh Circuit Court of Appeals has held that a plan's last survivor option applied only to the wife at the time the option was elected and not to the current wife. In this case, the participant retired in 1991. When he retired he elected a "Last Survivor Option" which resulted in lower monthly benefit payments, because those payments would not end at the participant's death but would continue to his spouse if she survived him. Three years later his wife at the time of his retirement died. The participant later remarried.
In 2001, the new owner of the participant's former company elected to accelerate payments under the plan. (This acceleration was also challenged and upheld by the court.) The participant's lump sum payment did not reflect any survivor benefits. The participant and his current wife then brought this action claiming that the lump sum should have included the value of survivor benefits to his current wife.
The district court and the appellate court were not persuaded. The Court of Appeals stated, "ERISA's interest in protecting surviving spouses does not extend so far as to require that retirement plans ensure continued benefit payment to anyone whom a plan participant might marry after his retirement and after the death of his spouse." The court found that under joint and annuity plans, survivor annuity benefits are only available to a spouse who was married to the participant when the annuity payments began.
Contact Faye Witt with questions regarding this retirement plan case, at fmw@hanftlaw.com or 218.529.2428.
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Hanft Fride's business and trial lawyers are located at 1000 U.S. Bank Place, in Duluth Minnesota. Visit our website at www.hanftlaw.com. In addition to general information on the firm and our attorneys, you can find past issues of this newsletter. Keep checking back for new information, and let us know if there is anything you would like to see added to the site that would help you and your organization.
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The information provided in this E-letter is general in nature and should not be used as a substitute for professional services and advice. The communication and receipt of this information is not intended to create an attorney-client relationship. Readers should consult with their legal counsel before taking any action on matters covered in this E-letter.
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To subscribe or unsubscribe to Employment Express, e-mail your request to Kathleen S. Bray, ksb@hanftlaw.com or call 218-722-4766.
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Copyright 2006 by Hanft Fride, P.A. All rights reserved. Hanft Fride, A Professional Association, 1000 U.S. Bank Place, 130 W. Superior Street, Duluth, MN 55802. Phone 218-722-4766; fax 218-529-2401.
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