Tuesday, August 27, 2013

When is a Disciplinary Decision Tainted by Ex Parte Contact?

Is it valid for a federal official to rely upon ex parte information when deciding what kind of discipline to issue the employee?  That question has bedeviled the Merit Systems Protection Board for years. On August 16, 2013, the MSPB again addressed it in Bennett v. Department of Justice, 2013 MSPB 64. 

Ex parte information is something the decider hears, but does not disclose to the employee who is about to be disciplined.  The principles are fairly straightforward.  A federal employee who may be disciplined is entitled under the Constitution to certain basic due process rights: written notice of the charges against him, an explanation of the employer's evidence, and an opportunity to present his side of the story.  In its leading decision on the subject, the U.S. Court of Appeals for the Federal Circuit applied this principle both to whether the employee should be disciplined and to “the level of penalty to be imposed”. Stone v. FDIC, 179 F.3d 1368, 1376 (Fed.Cir. 1999).  According to the Court, due process is violated if the employee has “notice only of certain charges or portions of the evidence and the deciding official considers new and material information.” In other words, “[i]t is constitutionally impermissible to allow a deciding official to receive additional material information that may undermine the objectivity required to protect the fairness of the process.”

In Stone, after the employee was removed and appealed to the Board, he learned through discovery that the deciding official had received two memoranda which had not previously been disclosed.  The first was a memorandum from the proposing official recommending that Stone be removed; the second was a memorandum from yet another official urging Stone’s removal.  While the deciding official testified he would have removed Stone anyway, the Court held that Stone’s due process rights had been violated and it remanded the case so Stone could receive a fair hearing.

In Bennett, the Board addressed a similar situation.  Bennett was a Supervisory Criminal Investigator whose removal was proposed on several grounds, including providing false information to a law enforcement officer in the course of an official inquiry.  Regarding the charge of providing false information, the proposal included this statement: 

You hold a position in which your honesty and integrity must be unquestioned. In this case, you compromised your honesty by telling the arresting officer that you did not have your weapon with you, when, in fact, you did. Your conduct as set forth in this notice is such that sustaining [the falsification charge] alone would be enough to support removal.

After Bennett submitted his response to the Proposal, the deciding official asked HR for an analysis of the discipline actually imposed on employees who had provided false information to local law enforcement officers. The HR Specialist replied that such cases involved Giglio concerns, under which an investigator who had been accused of providing false information could not testify against a defendant in criminal proceedings because the investigator’s testimony could be easily impeached.  Of the five employees whose removal had been proposed for giving false information, only two had been removed.  The deciding official removed Bennett, stating that the falsification charge standing alone was sufficient.  She did not mention any Giglio concerns.  In an earlier case, Solis, which also involved Giglio, the Board held that the deciding official’s failure to alert the employee to Giglio constituted a violation of his due process rights.  In Solis, the deciding official admitted that he had considered Giglio when he decided on removal as a penalty.

In Bennett, however, the Board held that while the deciding official clearly knew about the Giglio issue, there was no evidence that she actually considered it as a factor in the removal decision.  The Board found there was a difference between knowledge and reliance, and it remanded the case for a supplemental hearing because of the absence of evidence on this issue in this case.

We believe the Board’s decision tips the scales in favor of the agencies.  In this case, the agency knew of evidence that the penalty may have been based upon a factor hidden from the employee.  Specifically, the employee was never given a chance to address management’s concerns about the impact of Giglio on the employee’s future law enforcement activities. The agency bears the burden of proving at the hearing that it did not rely upon that factor. If the Agency fails to meet that burden, it should not be given a second chance. In this case, it is particularly unfair that the Board is allowing the decision-maker to testify again – after the Board has advised the deciding official how to testify. 

In Stone, the court held that the outcome would depend upon the importance of the evidence withheld.  In Bennett, the Board has allowed the Agency merely to deny that it considered the evidence.  That is, to say the least, unfortunate.

Tuesday, August 20, 2013

White Employee's Race Discrimination Case Against Paula Deen is Dismissed

Last week, the Paula Deen racial remarks saga reached a new low, when the District Court dismissed Lisa Jackson’s claims of a racially hostile work environment based in part on Ms. Deen’s controversial past use of the “n-word.”  For those who did not follow the case when it dominated the pop culture zeitgeist earlier this summer, Ms. Jackson sued Paula Deen and her brother, Bubba Hiers, claiming that she was subjected to a racially and sexually hostile work environment at the restaurant owned by Ms. Deen and Mr. Hiers, Uncle Bubba’s Seafood and Oyster House.   

According to Ms. Jackson, Ms. Deen and Mr. Hiers engaged in a pattern and practice of racially offensive actions that severely discriminated against African-Americans and women.  Ms. Jackson alleged that Ms. Deen and Mr. Hiers perpetuated an early 20th century mentality in the workplace by repeatedly using the “n-word” when referring to African-Americans, and by engaging in archaic and insensitive behavior such as refusing to allow African-American employees to use the restaurant’s public entrance or restrooms.  In fact, one extreme example of the atmosphere was when Ms. Deen had the gall to plan a themed party in which all of her African-American workers dressed as slaves, before recognizing that some might find this offensive.   

In such a work environment, it is hard to recognize how a Judge might find that this work environment was not racially insensitive to the point worthy of legal action, except for one key fact that often went unreported:  Ms. Jackson is not African-American; Ms. Jackson is white.

In a disappointing holding, the District Court held that because of Ms. Jackson’s race, she did not have standing to pursue claims of a racially hostile work environment, while allowing her gender claims to survive.  In issuing its decision, the Court relied on the recent Supreme Court decision, Thompson v. N. Am. Stainless, LP, 131 S.Ct. 863 (2011), which created a new test for who has the right to sue in employment discrimination cases.  The prior standard, established by the Supreme Court in Traficante v. Metro Life Ins. Co., 409 U.S. 205 (1972), was that interracial association was such a benefit to all members of society that the loss of such an association created standing for any member of any race to sue.  The District Court claimed that the Supreme Court narrowed this standard in Thompson when it created a new test that gave standing to those who were in those “zone of interest sought to be protected by the statutory provision whose violation forms the legal basis for his complaint.” Citing this decision, the District Court stated that Ms. Jackson was not in the “zone of interest” envisioned by Title VII, and claimed that she was, at best, “an accidental victim of the alleged racial discrimination.”  According to the Court, Ms. Jackson’s race prevented her from being offended by remarks and actions that were hostile to African-Americans.  On these grounds, the Court dismissed Ms. Jackson’s racial discrimination claims. 

The firm of Kalijarvi, Chuzi, Newman & Fitch, P.C., strongly disagrees with the District Court’s decision, believing it to be based on an overly narrow analysis of a highly complex issue.  For one thing, it openly contradicts the longstanding precedent set in Rogers v. E.E.O.C., 454 F.2d 234 (5th Cir. 1971), which held that all employees, regardless of race, are entitled to work in a non-discriminatory work environment.  Further, even though Ms. Jackson is white, she has family members who are biracial and partially African-American.  One of the racially offensive remarks was actually directed at her own Sicilian father, when Mr. Hiers claimed that her father looked like an “n-word.”  At the very least, Ms. Jackson has the right to be offended on behalf of the insult to her family, bringing her within the “zone of interest” envisioned by Thompson.  More broadly speaking, as established in Traficante, the loss of ability to peacefully co-exist with members of other races was a benefit to Ms. Jackson.  Even though the District Court claimed that this standard could not survive in light of Thompson, the Thompson court had the opportunity to specifically throw out the standard, and did not.  In the Deen decision, the District Court took it upon itself to speak for the Supreme Court and threw out the Traficante standard.  Had this standard been applied as it should have been, Ms. Jackson’s claims would have survived.  

Further, the District Court’s error is made readily apparent when viewed in conjunction with the long line of existing sexually hostile work environment case law.  In sexual hostile work environment cases, a plaintiff can bring a claim based on sexually offensive remarks made in the environment, regardless of the gender the remarks directed at.  See, e.g., Oncale v. Sundowner Offshore Servs., Inc., 523 U.S. 75, 82 (1998).  This situation directly mirrors Ms. Jacksons’s claims.  If a man can bring a hostile work environment claim based on another man or woman making uncomfortable sexual remarks directed at women around him, Ms. Jackson should be able to bring a hostile work environment claim based on racial remarks made about others races. 

On a final note, the heavy irony in this decision should not go unmentioned.  One of the more controversial remarks made by Ms. Deen in this matter was when she was asked in her deposition if she thinks jokes using the “n-word” are “mean.”  In response, Ms. Deen passed up an obvious opportunity to attempt to rectify her own past wrongs, and simply stated “I can’t, myself, determine what offends another person.”  But in reaching its decision as it did, the Court did determine what offended another person.  By dismissing Ms. Jackson’s claims, the Court essentially decided for Ms. Jackson what could and could not offend her. One can only surmise if Ms. Deen now agrees.

The case is Jackson v. Deen, No. CV412-139 (D.C. S.D.Ga., Order, 8/12/2013).

Monday, August 12, 2013

It Is Illegal To Punish Workers For Qualifying For Health Care Assistance

On July 24, 2013, the Washington Post ran a story on page A1 called, “Health-care law is tied to new caps on work hours for part-timers.” Reporter Sandhya Somashekhar detailed how part-time workers are facing reductions in their hours as their employers plan to evade their tax liabilities for failing to provide health insurance as required under the Affordable Care Act (ACA).

That same day, I sent an email to Sandhya Somashekhar citing the section of the ACA that makes such adverse actions against employees unlawful.  Section 1558 of the ACA prohibits employers from discriminating against any employee because that employee “received a credit” or “a subsidy” under the ACA.  You can find the text of this section at http://www.whistleblowers.gov/acts/aca.html.  It is also well recognized under whistleblower law that employers cannot retaliate against an employee in anticipation of their future protected activity.  Thus, just because an employee may become eligible for a credit or subsidy under the ACA is not legal justification to cut that worker's hours now.

On February 27, 2013, OSHA issued interim final rules for handling whistleblower complaints under Section 1558 of the Affordable Care Act.  See 29 CFR Part 1984; 78 FR 13222. The regulations can be found here.  OSHAŹ¼s background statement contains a helpful description of the new employee protection:

[T]he Affordable Care Act’s section 1558 amended the Fair Labor Standards Act (FLSA) to add section 18C, 29 U.S.C. 218C (section 18C), which provides protection to employees against retaliation by an employer for engaging in certain protected activities.

Under section 18C, an employer may not retaliate against an employee for receiving a credit under section 36B of the Internal Revenue Code of 1986 or a cost-sharing reduction (referred to as a ‘‘subsidy’’ in section 18C) under section 1402 of [the] Affordable Care Act. These provisions allow employees to receive tax credits or cost-sharing reductions while enrolled in a qualified health plan through an exchange, if their employer does not offer a coverage option that is affordable and provides a basic level of value (i.e., ‘‘minimum value’’). Certain large employers who fail to offer affordable plans that meet this minimum value may be assessed a tax penalty if any of their full-time employees receive a premium tax credit through the Exchange. Thus, the relationship between the employee’s receipt of a credit and the potential tax penalty imposed on an employer could create an incentive for an employer to retaliate against an employee. Section 18C protects employees against such retaliation.

Section 18C also protects employees against retaliation because they provided or are about to provide to their employer, the Federal Government, or the attorney general of a State information relating to any violation of, or any act or omission the employee reasonably believes to be a violation of, any provision of or amendment made by title I of the Affordable Care Act.

Prior cases under other laws have recognized a reduction in work hours as an adverse action. Accordingly, I believe the Department of Labor will find that the practices of employers to evade ACA liability are unlawful.

The public record of comments on these regulations are here.

My comments on the regulations are here.

Employees have 180 days to file complaints under 29 U.S.C. 218C (ACA Section 1558).  Employees need to know that there is a place where they can make complaints and a time limit to make those complaints.

Sadly, the Washington Post did not print my comments, or any other discussion of the illegality of the reductions in hours for part-timers. 

This Wednesday, August 14, 2013, at 7:35 a.m., I will be the guest on WSHC's morning call-in show with Zakee McGill and John Case.  We will be discussing Section 1558, and what workers can do if they face adverse actions on account of employers trying to evade their health care duties under the ACA.  You can call in at, 304-876-5369, or listen live at: http://897wshc.org/listen_live/index.html.

We might not reach all the readers of the Washington Post, but we have to start getting the word out.  It is illegal to punish workers for qualifying for health care assistance.  Workers have 180 days to file a complaint with OSHA.

Written by Richard Renner, Kalijarvi, Chuzi, Newman & Fitch

Thursday, August 8, 2013

NELA and GAP file Supreme Court Amicus Brief to Protect the Employees of Contractors

The first briefs are now filed in the first Sarbanes-Oxley Act (SOX) whistleblower case ever accepted by the Supreme Court. The case is Lawson v. FMR.  The Court is reviewing last year's terrible decision by the First Circuit Court of Appeals. 

In that decision, the two-judge majority of the First Circuit held that SOX does not protect the employees of contractors, even though SOX says that the anti-retaliation provision applies to “any officer, employee, contractor, subcontractor, or agent.” Despite this plain language, and a vigorous dissent that pointed to the obvious purpose of SOX, the two judges were determined to protect contractors from liability.  They held that Congress only meant to prohibit contractors from firing employees of publicly traded companies. In their eyes, there was no reason to protect the employees of Arthur Anderson during the scandal at Enron.

When Lawson appealed to the U.S. Supreme Court, I wrote an amicus brief urging the Supreme Court to accept the case and reverse the First Circuit.  My work on this brief was easier because the Department of Labor's Administrative Review Board (ARB) thoroughly rejected the Lawson decision in a case I handled, Spinner v. David Landau and Associates, LLC, ARB Nos. 10-111 and -115, ALJ No. 2010-SOX-29, 2012 WL 2073374 (May 31, 2012).

In Lawson, the Supreme Court asked the U.S. Solicitor General to comment on behalf of the U.S. Government.  Consequently, in April of this year, the Solicitor General filed a brief that conceded the obvious, that the First Circuit majority failed to follow the plain text of SOX, but then argued that this case did not deserve the Supreme Court's attention, at least not yet.  Thankfully, the Supreme Court disagreed and accepted the case for full briefing.

Last week, law professor Eric Schnapper filed the merits brief for Jackie Lawson and Jonathan Zang.
It is a brilliant brief that parses the statutory language just the way certain Supreme Court justices like to do. It explains how unnecessary and illogical it would be for Congress to add the words “contractor” and “subcontractor” unless it meant to prohibit them from firing the whistleblowers in their own staffs.  The brief also draws on the statutory context of SOX among other whistleblower laws, the regulations of the Department of Labor, and the Spinner decision.

Yesterday, the National Employment Lawyers Association (NELA) and the Government Accountability Project (GAP) filed another brilliant brief. 
R. Scott Oswald, with assistance from attorneys Michael T. Anderson, Rebecca Hamburg Cappy, Kellee Kruse and me, of Kalijarvi, Chuzi, Newman & Fitch, wrote the brief for NELA.  Attorney Tom Devine participated on behalf of GAP. While this brief agrees with Eric Schnapper's brief about the clear meaning of the plain text of SOX, it also emphasizes the remedial purpose of SOX:  to restore investor confidence in the nation’s financial markets. This purpose utterly fails if big companies merely outsource their compliance work, and legally maintain a “corporate code of silence” by threatening to fire anyone who blows the whistle on fraud. The amicus brief also explains the public benefit of assuring corporate employees that if they speak up to prevent accounting violations, they will have the law on their side to protect their careers.

I am particularly pleased with two other arguments in this amicus brief.  One raises this question: if SOX was meant to protect the financial markets from a crisis of fraud, such as the one Enron and WorldCom created, why didn't it prevent the mortgage fraud that caused the 2008 fiscal crisis? The brief points to a law review article by Professor Richard Moberly of the University of Nebraska. There, he explains how narrow interpretations of the SOX whistleblower protection under the prior administration prevented corporate employees from getting the protection Congress intended.

The other argument draws on an argument the U.S. Chamber of Commerce made to the Securities and Exchange Commission (SEC) when it was trying to get the SEC to require employees to report their concerns to company management. The Chamber told the SEC, “Effective compliance programs rely heavily on internal reporting of potential violations of law,” and “identifying potential wrongdoing” depends on “promotion of a culture of compliance . . ..” My hunch is that the Chamber of Commerce will soon file its own brief, and that brief will say something different to the Supreme Court.  I also suspect that the Chamber's brief will ignore altogether what it told the SEC.

The Supreme Court might schedule oral argument in Lawson as soon as November.  I expect we will receive a decision sometime in the first half of next year.  If the Supreme Court takes the opportunity to explain the importance of the SOX whistleblower protection, and the value of encouraging employees to speak up about wrongdoing, that could be a benefit to whistleblowers everywhere.

Written by Richard Renner, Kalijarvi, Chuzi, Newman & Fitch