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KENTUCKY EMPLOYMENT LAW
continuing Commentary and
Review on Employment Law and Cases
Retirement Plan Stock Losses Are Basis For
Employees' Suit Against The Hartford
Employees, who have seen the value of
their retirement accounts plummet as the stock value of their
employer, The Hartford, has nosedived, have filed suit alleging
mismanagement of their 401(k) retirement plans and failure to fairly
and truly disclose the company's financial condition reports the
Hartford Courant, "Employees
Sue The Hartford Over Retirement-Plan Stock Losses." At the end
of 2007, the company's stock was valued at $87.19 and 21.4% of the
employees' retirement plan holdings were invested in the company
stock. This year the stock has dropped to $10.46 per share amid
continuing disclosures of poor investments by the company. As a
consequence, the value of the employees' retirement accounts has
also dropped.
The suit claims that the company
failed to prudently manage the plan as required by ERISA, the
Employee Retirement Income Security Act, which governs the
management of employee retirement accounts.
Robert L. Abell
November 15, 2008
Interrupted Lunch Breaks Cited
In Wage Class Actions
Interrupted lunch breaks are the
basis for class action lawsuits for unpaid wages filed on behalf of
workers at two hospitals reports the
Syracuse Post-Standard, "Firm
Sues 2 Hospitals In Syracuse."
Wage and hour law does not require
employers to pay employees for their lunch breaks. However,
employers are required to pay employees for the time they work. If
an employee's lunch break is interrupted by work duties, the
employee must be paid according to the
U.S. Department of Labor.
Robert L. Abell
November 15, 2008
Failure To Fully Pay Life
Insurance Benefits Breached UNUM's Fiduciary Duty Under ERISA
Beneficiaries of group life insurance
policies must be fully paid the policy benefits upon proof of their
claim, the First Circuit has ruled in Mogel
v. UNUM Life Ins. Co., No. 08-1334 (November 6, 2008). UNUM
issued group insurance policies to employees at a number of
companies. Plaintiffs were beneficiaries of those policies and
presented proof substantiating their benefits claims. However,
instead of paying the policy benefits, UNUM sent the beneficiaries a
checkbook and a letter advising them that (1) their benefits had
been deposited in a "UNUM Security Account"; (2) checks from $250.00
up to the balance of the account could be written; and, (3) interest
on the account would be paid at a varying rate.
The court ruled that UNUM breached
its fiduciary duty by retaining control and use of the
beneficiaries' money in what the court referred to as a
"euphemistically named 'Security Account.'" Sending the
beneficiaries a checkbook "was no more than an IOU which did not
transfer the funds to which the beneficiaries were entitled" and
constituted a breach of UNUM's fiduciary duties under ERISA.
Robert L. Abell
November 11, 2008
Pregnancy Discrimination Act Marks 30 Year
Anniversary
Today marks the 30 year
anniversary of the Pregnancy
Discrimination Act. In
recognition of this milestone,
the
National Partnership for Women
and Families has released a
report,
The Pregnancy Discrimination
Act: Where We Stand 30 Years
Later, on the PDA's effects
and proposes some improvements.
Highlights include the
following:
-
charges of pregnancy
discrimination to the EEOC
increased 65% from 1992 to
2007 with this increase
disproportionately
attributable to pregnancy
discrimination aimed at
women of color
-
working in a historically
female occupation does not
significant decrease the
likelihood of pregnancy
discrimination
-
pregnancy discrimination
complaints have risen at a
rate faster than that by
which women have entered the
workforce
-
overt, direct pregnancy
discrimination was not as
uncommon as other forms of
discrimination with cases
including a hotel manager
who was repeatedly demoted
after announcing her
pregnancy and a senior
management representative
stated that pregnant women
were inappropriate for
management positions and
missed to much work, a
maternity clothing specialty
store settled a lawsuit
based on its policy of not
hiring pregnant applicants
and a rising star at another
company was told to consider
her options and had her
management training canceled
after she announced her
pregnancy
-
social science research has
revealed predominant social
attitudes that pregnant
women should favor family
over their job
Robert L. Abell
October 31, 2008
Retirement Plan Manager Breached Fiduciary
Duty By Secretly Increasing Retirees' Medical Insurance Premiums
A retirement plan manager breached
its fiduciary duty under ERISA by increasing without notice to the
plan's participants that their medical insurance premium was being
increased the United States Court of Appeals ruled in
Orth v. Wisconsin State Employees Union, No. 07-2778 (7th Cir.
October 22, 2008). When the plaintiff, Orth, retired a
collective bargaining agreement provision required the plan to apply
the monetary value of his accrued and unused sick leave toward his
portion (10%) of his medical insurance premium. However, the plan
manager without notifying Orth or other retirees increased his
premium portion to 100%, a practice that Orth learned of when the
plan manager told him to send more money to pay his medical
insurance premium. This court ruled that this change breached the
plan manager's fiduciary duty because ERISA required the plan
manager to notify the retirees of any changes to their plan. Also,
the court noted that ERISA requires that "a plan's participants and
beneficiaries must be notified in writing of all modifications to
the plan." Therefore, the court concluded that the change was
"doubly unlawful -- as unwritten and as secret."
The court also ruled that Orth was
properly awarded restoration of his accrued sick leave benefits. In
addition, the court upheld an award of attorneys' fees to Orth,
asserting that the "use of deceptive conduct toward the retired
employees as a basis for trying to duck liability was shabby." And
the court added that "one purpose of allowing an award of attorneys'
fees to a prevailing plaintiff is to disable defendants from
inflicting with impunity small losses on the people whom they
wrong."
Robert L. Abell
October 24, 2008
Injured Workers May Sue Under Racketeering
Law Based On Scheme To Deny Them Workers Compensation Benefits
Injured workers may pursue civil claims for
damages under the federal racketeering law known as RICO (Racketeer
Influenced Corrupt Organizations) based on a scheme to wrongfully
deny them workers compensation benefits the Sixth Circuit ruled
today in
Brown v. Cassens Transport Co., No. 05-2089. The plaintiffs, a
group of six injured workers, claimed that their employer, Cassens
Transport Company, the company that administered Cassens's workers
compensation claims, Crawford & Company, and a doctor, Saul Margules,
"employed mail and wire fraud in a scheme to deny them worker's
compensation benefits." More specifically, the injured workers
alleged that "Cassens and Crawford deliberately selected and paid
unqualified doctors, including Margules, to give fraudulent medical
opinions that would support the denial of worker's compensation
benefits, and that defendants ignored other medical evidence in
denying them benefits."
The court, in reversing a district court decision
dismissing the case, ruled that the workers had pleaded a pattern of
racketeering activity based on the following commonalities of the
defendants' acts: (1) the common purpose of reducing "Cassens's
payment obligations towards worker's compensation benefits by
fraudulently denying worker's compensation benefits to which the
employees are lawfully entitled"; (2) the common result of denying
"worker's compensation benefits to certain Cassen's employees who
are entitled to such benefits under Michigan law"; (3) common
participants including worker's compensation officials at Cassens
and Crawford and "Margules, a doctor who the plaintiffs allege, with
regard to some of the predicate acts, fraudulently recommended
ineligibility of benefits at the request of Cassens and Crawford";
(4) common victims in the injured employees eligible for but
wrongfully denied worker's compensation benefits; and (5) similar
methods of commission, the fraudulent application of legal standards
to wrongfully deny worker's compensation benefits to eligible
employees. The court further held that the defendants' predicate
acts were continuous under both closed- or open-ended theories
because they had gone on for a time span "well over three years" and
were alleged to have been defendants' standard way of doing
business: "fraudulently denying benefits to which the employees are
entitled through the use of fraudulent communications by mail and
wire."
This case outlines a path by which injured workers
may obtain relief from schemes by employers, insurance companies and
doctors aimed not at dealing with the true and real facts but at
wrongfully denying benefits to truly and legitimately injured
workers. It should also raise a flag of caution for those insurance
companies and doctors that reflexively oppose and deny the claims of
truly and legitimately injured workers.
Robert L. Abell
October 23, 2008
Protections For Disabled
Workers Enhanced By ADA Amendments
Amendments to the Americans With
Disabilities Act, usually referred to as the ADA, were signed into
law on September 25 by President Bush. These amendments restored
protections for disabled Americans that the courts over the last 15
years have read out of the law. The amendments include the
following:
- directions that the courts
construe and apply the law to provide the greatest protections
- directions that the courts
determine whether a person is disabled and protected by the law
based on their condition without consideration for how medicine
or other aids may mitigate the condition
- clarifies that persons wrongly
"regarded as" disabled are protected regardless of the scope of
their actual disability
- empowers the Equal Employment
Opportunity Commission to issue controlling regulations
Robert L. Abell
September 26, 2008
Police Sick Leave Suit Granted
Class Action Status
A lawsuit challenging
the practice of the Columbus, Ohio police department to compel
employees returning from sick leave to disclose the condition that
necessitated the leave has been granted class action status by a
federal district court, the
Columbus
Dispatch reports, "Sick-Leave
Suit Against Police Now Class Action." The police department
also requires employees returning from Family Medical Leave time to
take for a sick family member to disclose the nature of the family
member's illness. The suit, which was originally filed by six
dispatchers, claims that these policies violate the HIPAA, the
federal medical privacy law, Health Insurance Portability and
Accountability Act).
Robert L. Abell
August 26, 2008
Retaliation & Age
Discrimination Complaints Increase Most, EEOC Reports
Retaliation and age discrimination
complaints led an overall increase in complaints filed with the
Equal Employment Opportunity Commission, the Houston Chronicle
reports, "Job
Bias Lawsuits On The Increase." While there was an overall
increase of 9% filed with the EEOC, retaliation complaints were up
18% and age discrimination complaints 15% in fiscal year 2007.
Robert L. Abell
August 26, 2008
Retaliation Against Employee Taking Family
Medical Leave Held Unlawful
Retaliation against an employee for
taking leave under the Family Medical Leave Act (FMLA) is unlawful,
the Sixth Circuit has ruled in
Bryant v. Dollar General Corp. (No. 07-5006 decided August 15,
2008). The court affirmed a jury verdict for a fired employee.
The employer, Dollar General, argued
that the "FMLA does not bar an employer from firing an employee
because that employee took FMLA leave," a contention that was
soundly rejected. First, the "overwhelming consensus of the case
law .. as well as the nature of the statutory scheme and the FMLA's
legislative history" weighed "strongly in favor of rejecting" Dollar
General's argument. Second, "any 'right' to take unpaid leave would
be utterly meaningless if the statute's bar against discrimination
failed to prohibit employers from considering an employee's FMLA
leave as a negative factor in employment decisions." Third,
adopting Dollar General's position would run counter to principles
of statutory construction that caution against absurd results.
Robert L. Abell
August 15, 2008
$10 Million Police Overtime Case Settled
Police officers in Cleveland, Ohio
have settled an overtime compensation case for $10.4 million, the
Cleveland Plain-Dealer reports,
"Cleveland Settles $10 Million Comp Time Dispute With Police."
The suit challenged the city's policy of not paying overtime to
police officers and instead required them to bank "comp time" hours
that they could cash out at retirement. Police officers who wished
to use their banked hours for paid time off were often not permitted
to do so.
Robert L. Abell
August 11, 2008
Religious Discrimination
Compliance Manual Issued By EEOC
Federal and Kentucky
state law prohibit covered employers, employment agencies, and
unions from: (1) treating applicants or employees differently based
on their religious beliefs or practices – or lack thereof – in any
aspect of employment, including recruitment, hiring, assignments,
discipline, promotion, and benefits; (2) subjecting employees to
harassment because of their religious beliefs or practices – or lack
thereof – or because of the religious practices or beliefs of people
with whom they associate; (3) denying a requested reasonable
accommodation of an applicant’s or employee’s sincerely held
religious beliefs or practices – or lack thereof – if an
accommodation will not impose an undue hardship on the conduct of
the business;17 and, (4) retaliating against an applicant or
employee who has engaged in protected activity, including
participation (e.g., filing an EEO charge or testifying as a witness
in someone else’s EEO matter), or opposition relating to alleged
religious discrimination (e.g., complaining to human resources
department about alleged religious discrimination). Charges of
religious discrimination made with the EEOC have more than doubled
since 1992. It has recently issued a new guidance manual that can
be found here.
Robert L. Abell
August 7, 2008
Employee Can Sue For
Constructive Wrongful Discharge
An employee fired for refusing to do
an illegal act in the course of his or her employment may sue for
wrongful discharge. An employee faced with intolerable conditions
of employment and thereby compelled to quit is constructively
discharged. The Indiana Court of Appeals recently combined the two
concepts and ruled in
Baker v. Tremco, Inc. (No. 29A02-0711-Cv-1001 July 16, 2008)
that an employee constructively discharged because he refused to
commit an illegal act in the course of employment may sue for
damages. "It makes little sense," the court observed, "to allow an
employer to accomplish constructively what the law will not allow it
to do directly."
Robert L. Abell
July 30, 2008
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