9th Circuit: Independent Contractor Can Assert Disability Claim Under Rehabilitation Act
The Ninth Circuit Court of Appeals ruled recently that an independent contractor may assert a disability claim against an employer under the Rehabilitation Act. Click the link to read the opinion on Fleming v. Yuma Regional Medical Center.
The Rehabilitation Act prohibits discrimination on the basis of disability in programs conducted by Federal agencies, in programs receiving Federal financial assistance, in Federal employment, and in the employment practices of Federal contractors. The standards for determining employment discrimination under the Rehabilitation Act are the same as those used in Title I of the Americans with Disabilities Act (ADA).
In Fleming, an anesthesiologist who worked as an independent contractor sued the medical center at which he worked, alleging a discriminatory constructive discharge. The trial court dismissed the case on the basis that Fleming was an independent contractor and that the Rehabilitation Act applied only to employee-employer relationships. The Ninth Circuit reversed, holding that the Rehabilitation Act provides a cause of action to any individual subjected to disability discrimination by any program or activity receiving federal financial assistance. While the Rehabilitation Act adopts the standards that are applied under the ADA, it does not adopt the ADA's limitation to the employee-employer relationship.
Independent contractors are not considered "employees" for purposes of most employment discrimination laws, and many employers hire independent contractors to avoid potential liability under such laws. Fleming shows that, at least for employers covered by the Rehabilitation Act, independent contractors may still find ways to seek the protections of those laws despite their "non-employee" status. In addition, many employers incur significant tax and other liabilities by misclassifying people as "independent contractors" when they really should be treated as employees. For more information, the Internal Revenue Service offers this guidance for determining whether someone is or is not correctly classified as an independent contractor.
Supreme Court Lets Stand Ruling Allowing EEOC to Issue Subpoenas After Right-To-Sue
Yesterday the U.S. Supreme Court declined to review a Ninth Circuit Court of Appeals decision that allows the Equal Employment Opportunity Commission (EEOC) to continue investigating allegations of employment discrimination, and even to issue subpoenas to employers, after issuing a right-to-sue letter to the employee who filed the initial complaint. Click here to read the Ninth Circuit decision in Federal Express Corp. v. EEOC.
In order to file a lawsuit under Title VII of the Civil Rights Act of 1964, an employee must first file a complaint of discrimination with either the EEOC or an analogous state agency, a process known as "exhausting administrative remedies." Only after the EEOC issues a "right-to-sue letter" may the employee then file a lawsuit. It is not uncommon for an employee to file a complaint with the EEOC and withdraw it almost immediately, obtain the right-to-use letter and file a lawsuit, all before the EEOC has had a chance to investigate. In Federal Express, the employee did just that in order to join a pending class action lawsuit. The employer expected the EEOC to drop its investigation, but instead EEOC continued to investigate and issued a subpoena to the employer.
The Ninth Circuit enforced the subpoena, writing: "By continuing to investigate a charge of systemic discrimination even after the charging party has filed suit, the EEOC is pursuing its obligation to serve the public interest." The Ninth Circuit's decision is in line with a decision from the Third Circuit, but contrary to decisions from the Fifth, Seventh and Tenth Circuits. The Supreme Court will often take a case like Federal Express to resolve such splits between the circuit courts, but declined to do so in this case. As a result, the EEOC's investigatory powers will continue to vary depending on where a complaint is made.
Given the Supreme Court's ruling in Federal Express, employers can no longer safely assume that the EEOC will drop its investigation once it issues a right-to-sue letter. The EEOC may choose to continue investigating charges of discrimination, especially in cases involving allegations of systemic or widespread violations of anti-discrimination law. Employers (at least those in the Ninth and Third Circuits) should be prepared to comply with EEOC investigations even after the right-to-sue letter has issued.
Managers Individually Liable for Unpaid Wages Despite Employer's Bankruptcy
A recent case should strike fear into the hearts of all upper-level managers and human resources professionals: in Boucher v. Shaw, the Ninth Circuit ruled that individual managers were liable for their subordinates' unpaid wages, even though the employer company filed for bankruptcy.
In Boucher, a group of former casino employees sued the CEO, CFO and the labor relations manager of their former employer, the Castaways Hotel, Casino and Bowling Center. The three managers moved to dismiss, arguing that they were not "employers" that could be liable for unpaid wages under the Fair Labor Standards Act (FLSA), and that they should receive protections from the Castaways' bankruptcy filing.
The Ninth Circuit noted that under the FLSA, the term "employer" is to be construed broadly to include individuals who have “control over the nature and structure of the employment relationship,” or “economic control” over that relationship. It concluded that the three executives, two of whom were also alleged to be co-owners of the casino, fit that definition of "employer." The court also found that because the three executives were not parties to the bankruptcy proceeding, they were not entitled to any bankruptcy protections.
As the World of Work reported earlier this month, the Washington Supreme Court reached a similar ruling based on almost identical facts in Morgan v. Kingen. These cases should serve as a reminder to managers everywhere: if your business is failing, you may want to prioritize paying your employees' wages over everything else. Failure to do so may lead to personal liability.
California Overtime Laws Cover Nonresidents Who Work in California
Do California wage and hour laws - including their daily and weekly overtime provisions - apply to non-residents who occasionally perform work in California? Yes, according to a decision from the Ninth Circuit Court of Appeals earlier this month. Click here to read the court's decision in Sullivan v. Oracle Corp.
In Sullivan, Oracle sent employees who regularly lived and worked in Arizona and Colorado to California on temporary assignments to train Oracle's customers on the use of its software products. The plaintiffs sued under California law for daily and weekly overtime when they worked in California. Oracle argued that Arizona and Colorado law should apply because the employees regularly work and live in those states. (Of course, the plaintiffs would not have been entitled to any overtime pay under Arizona or Colorado law). A district court sided with Oracle and granted its motion for summary judgment. However, the Ninth Circuit overturned that decision and held that “California's employment laws govern all work performed in the state, regardless of the residence or domicile of the worker.”
What does this mean for employers? If you have non-California employees working in California, even on temporary assignment, make sure that you comply with California's unique wage and hour and overtime laws. For more information on California law, including its daily and weekly overtime provisions, check out this helpful FAQ from the California Labor Board.
Ninth Circuit Asks Washington Supreme Court to Define "Disability" under WLAD
The Ninth Circuit Court of Appeals earlier this week certified a question to the Washington Supreme Court, seeking that court's help in defining "disability" under the Washington Law Against Discrimination (WLAD).
Two years ago, in McClarty v. Totem Electric, 137 P.3d 844 (2006), the Washington Supreme Court significantly narrowed the definition of "disability" under the WLAD. In 2007, the Washington Legislature passed a law codifying the broader, pre-McClarty definition of disability, and explicitly stated that definition would apply retroactively.
This week, in Moore v. King County, the Ninth Circuit certified to the Washington Supreme Court the question of whether the retroactive application of the 2007 law is lawful under the separation of powers doctrine in the Washington Constitution, where the cause of action arose prior to the McClarty decision.
This case is of interest to Washington employers with pending disability claims under the WLAD. It will be a significant win for Washington employers if the Washington Supreme Court answers that the retroactive application is unlawful, as any WLAD disability cases arising before July 6, 2007 (the effective date of the new definition of "disability"), will be decided under the narrower McClarty definition of disability.
Ninth Circuit Affirms "Emotional Distress Damages" Caused by Denial of FMLA Leave
The employer appealed, arguing that the jury's award amounted to an impermissible "back door" recovery of emotional distress damages under FMLA. The Ninth Circuit disagreed, holding that because FMLA allows for the recovery of "any wages ... lost ... by reason of the violation," plaintiff may recover wages lost due to emotional distress, even if he could not recover directly for the emotional injuries .
We expect to see more types of "emotional distress" claims like these in the future. While this might not qualify as a landmark ruling, be assured that plaintiff's attorneys will be following it closely and will likely be adding claims for lost wages due to emotional distress.
