ROUTE TO: ______ ______ ______ EMPLOYMENT LAW LETTER SUMMER 2005 Whistleblowers Win NATIONAL NEWS Broader Protection Connecticut employers should be aware of these im- portant developments at the national level. More People who complain about corporate fraud or miscon- information is available by contacting any member duct are protected under various statutes. However, a recent of the Labor and Employment Law Department of Superior Court decision in Stamford expanded that protec- Shipman & Goodwin LLP. tion beyond the limits of those laws. An HR director for the baking operations of Unilever • Retiree Health Benefits: A federal court has is- claimed he was fired because he conducted a successful sued a permanent injunction against implementa- multi-state investigation of fraud and corruption involving tion of a proposed EEOC regulation that would have employees at some of the company’s best-known subsidiar- specifically authorized health insurance plans for ies. He asserted he was retaliated against when he failed to retirees that coordinate with Medicare by reducing heed warnings from superiors to back off because he was benefits at age 65. The court said that the intent of “pissing people off.” Congress in enacting the ADEA was to prohibit When he went to court, however, the plaintiff had a prob- arrangements that treat older workers less favor- lem because laws protecting whistleblowers didn’t protect ably than younger ones. Some observers fear the him. One such statute only applied to employees complain- result may be that fewer employers will offer any ing to state or federal regulatory agencies, and his activities retiree insurance at all. were only within the company. Another statute applied to • Surveillance Cameras: An NLRB requirement that publicly held companies, and the entity for which he worked an employer must negotiate with the union repre- was not publicly held. senting its employees before installing hidden sur- The judge, however, found that the public policy behind veillance cameras in the workplace has been up- these statutes prohibited retaliation against employees for held by a federal appeals court. In fact, the court disclosing corporate wrongdoing. In other words, termina- went farther than the Board, which had declined to tion for an employee under these circumstances constitutes void the discipline of several employees caught on wrongful discharge under common law principles, even if tape engaging in misconduct. The judges sent the there is no statute that specifically applies. After all, requir- case back to the Board with instructions to explain ing an employee to complain to a public agency in order to why it allowed the discipline to stand, when in some obtain legal protection would tend to discourage internal in- analogous cases it has overturned disciplinary ac- vestigations. tions tainted by employer misconduct. In another case, two vice presidents of Fairfield-based • Lawyers and FLSA: The US Labor Department Competitive Technologies were recently awarded over has issued an opinion letter stating that attorneys $400,000 each after the U.S. Department of Labor ruled are professionals who are excepted from the sal- they had been fired in violation of the 2002 Sarbanes-Oxley ary or fee requirements of the FLSA, and there- Act. The two had been on the company’s disclosure com- fore do not lose their exempt status if they are not mittee, and apparently incurred the wrath of the CEO when paid on a salaried basis, e.g. if deductions are made they insisted that certain oral contracts he had entered into for partial day absences. The same rule apparently with consultants should be disclosed on the company’s 10- applies to doctors and certain other professionals Q reports to the Securities and Exchange Commission. who have to be licensed to perform their work.
The employer is contesting those awards in federal court, was not the maximum allowable rate of return, but rather but a District Court judge recently upheld the DOL decision. the level of profits immediately before the strike. In addition to monetary damages, the judge also said the two Our opinion is that computing strike-related income and executives were entitled to reinstatement. He rejected claims expense is not an exact science, and that redistributing “un- that the discharges were for performance reasons and “re- reasonable” profits to customers is even less so. After all, structuring,” citing the suspicious timing and other circum- how many phone customers actually experience any reduc- stances indicating the real reason was retaliation for the ethi- tion in services during a strike? cal stand the employees took. Our advice to employers is to assume that in this post- Part Time Workers May Enron era, new and more stringent standards will be applied to corporate treatment of those who take a stand against Get Jobless Benefits their employer’s mismanagement or misconduct, even in situ- ations where Sarbanes-Oxley does not strictly apply. In a little noticed court decision issued recently, a Superior SNET Must Refund Court judge has called into question a longstanding rule that in order to receive unemployment compensation benefits, a claimant has to be available for full time work. The decision Strike-Related Profits holds that if a worker’s inability to work full time is the result of a mental or physical disability, he or she cannot be denied In 1998, the Communications Workers of America struck benefits on that basis. SNET for 26 days, and during that period the phone com- The case involved two claimants. One was a woman with pany earned $2.8 million in “unreasonable profits,” accord- bipolar disorder and back injuries, whose clinical social ing to a DPUC ruling. The company appealed through the worker said could not work full time but would benefit from court system, but the Connecticut Supreme Court has now part time work. The other was a man who suffered a dis- upheld the DPUC ruling, requiring SNET to refund the money abling leg injury and had difficulty walking. His doctor re- to its customers. stricted him to six hours of work per day. Both were denied The profits at issue were the result of wage savings from benefits under the rule requiring claimants to be available for paychecks the striking workers didn’t get. SNET argued full time work, and both went to court alleging disability those profits were not unreasonable, because the company discrimination. never earned a higher return on investment than the maxi- One Connecticut statute says that every state agency must mum authorized by DPUC regulations. The lower court ac- perform its services to the public without discrimination cepted this view, and ruled that SNET could keep the money. based on mental or physical disability, and another says that The Supreme Court pointed out that during the strike, the mental or physical disabilities may not be considered as lim- level of service to customers declined because SNET’s abil- iting factors in administering programs involving distribu- ity to provide various services was impaired. The justices tion of funds. The judge said the regulation requiring those said it would be unreasonable to allow SNET to keep money seeking jobless benefits to be able to work full time violated that it saved as a result of diminished service to its custom- both laws. ers. They found the appropriate comparison for determining The Labor Department has filed an appeal, and has asked whether the company should be required to give up the profits the legislature to address the situation, but the General As- sembly adjourned in June without taking any action. Among EMPLOYMENT other things, the Labor Department is concerned that if the LAW LETTER full time requirement is eliminated, it is possible that some- one who is able to work only an hour or two a day could be eligible for benefits. is published quarterly as a service to clients and friends by the firm’s Labor and Employment Law Department, The impact of this decision is potentially significant. In with the cooperation and assistance of the Litigation theory, someone who is only available for part time work Department and Employee Benefits Group. The contents could get benefits based on full time wages earned during the are intended for general informational purposes only, base period. Also, unlike the federal laws regulating disability and the advice of a competent professional is suggested discrimination, Connecticut law includes almost any mental to address any specific situation. Reproduction or or physical impairment, whether temporary or permanent, redistribution is permitted only with attribution to the source. and regardless of whether or not it substantially interferes with a major life activity.
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