SPECIAL FOCUS The Facts

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1 Vol. 28, No. 4 april 2011 SPECIAL FOCUS The Facts In Carder, airline pilots who were members of the Reserves and National Guard pursued a class action against Continental Airlines, asserting management had repeatedly chided and derided plaintiffs for their military service through the use of FEDERAL APPELLATE COURT REJECTS HOSTILE ENVIRONMENT THEORY UNDER USERRA An employer may not be subject to liability for a hostile work environment under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), the Fifth Circuit Court of Appeals has held. Carder v. Continental Airlines, No (5th Cir. Mar. 22, 2011). In a case alleging discrimination because of military status under USERRA, the Court ruled the statutory language of USERRA did not cover claims for harassment that neither rose to the level of a constructive discharge nor denied a benefit of employment. This is the first appellate decision to address this issue, although some lower court decisions have recognized such claims. The Fifth Circuit has jurisdiction over Louisiana, Mississippi and Texas. WHAT S INSIDE U.S. Supreme Court Holds Oral Complaint Sufficient To Trigger FLSA Retaliation Provision... 3 SSA s No Match Letters To Employers: They re Back!...5 discriminatory conduct and derogatory comments regarding their military service and military leave obligations. The plaintiffs declared management had made such statements as Continental is your big boss, the Guard is your little boss and you need to choose between [Continental] and the Navy. Notably, the statements alleged by the pilots were similar to the statements alleged in the recent U.S. Supreme Court decision addressing USERRA, Staub v. Proctor Hospital, No (Mar. 1, 2011). See Supreme Court Recognizes Cat s Paw Liability in Army Reservist s USERRA Discrimination Case ( resources.php?sid=3561). The plaintiffs in Carder also alleged the company had placed onerous restrictions on military leave and these restrictions affected the pilots opportunity to log flight hours toward participation in a retirement fund. These claims appear to be based on the requirements in USERRA that employees on military leave be provided the same non-seniority rights and benefits available to similarly situated employees under an employment contract, agreement, policy, practice or plan in effect at the employee s workplace. See Final USERRA Regulations from Department of Labor Go into Effect January 18 ( php?sid=883). The trial court dismissed the plaintiffs hostile environment claim on the basis that USERRA does not provide for such a claim. It did not dismiss the plaintiffs claims that they were not receiving comparable benefits. The plaintiffs received permission to appeal the dismissal directly to the Fifth Circuit. (Continued on Page 2)

2 FEDERAL APPELLATE COURT REJECTS HOSTILE ENVIRONMENT THEORY UNDER USERRA (Continued from page 1) Fifth Circuit Decision The appeals court affirmed dismissal of the hostile environment claim. The Court described the issue as one of interpreting the language in USERRA prohibiting the denial of any benefit of employment to a member of the uniformed services based on such membership or the performance of service. 38 U.S.C Noting differences between the statutory language of USERRA prohibiting the denial of benefits and Title VII of the Civil Rights Act s statutory language prohibiting discrimination with respect to conditions of employment (which permits claims for hostile environment), the Court held USERRA s language would not permit a hostile environment claim absent a denial of a tangible benefit. While the Court concluded employees cannot assert a pure hostile environment claim under USERRA, the opinion noted at least two caveats. First, a number of courts, including the Eighth and Ninth Circuits, have recognized constructive discharge claims under USERRA. See, e.g., Wallace v. City of San Diego, 479 F.3d 616 (9th Cir. 2007); Knowles v. Citicorp Mortgage, Inc., 142 F.3d 1082 (8th Cir. 1998). A constructive discharge claim might arise where an employee could show his working conditions became so intolerable that a reasonable person would have felt compelled to resign. Penn. State Police v. Suders, 542 U.S. 129 (2004). Second, the Court noted the term benefits of employment under USERRA is quite broad and the issues raised by the plaintiffs in Carder might still permit recovery if they could show they lost such benefits because of their employer s actions. Carder will now return to the trial court to review the benefits issues raised. Implications for Employers This decision will make it easier for employers to avoid trial in USERRA cases based on technical violations where an employee cannot point to tangible damages. Employers should consider taking at least three steps to reduce exposure to USERRA discrimination claims. First, as the allegations in Carder and Staub make clear, supervisors may make potentially inappropriate statements regarding members of the Reserves and National Guard that lead to litigation. Therefore, training supervisors to ensure they understand such statements are prohibited, in the same way as statements impacting Title VII, would help reduce the risk. Second, to limit exposure to constructive discharge claims, employers should provide for reporting procedures of workplace complaints, and promptly investigate such complaints, and ensure their policies are broad enough to cover a wide range of workplace law issues. Third, employers should review the benefits available to employees on various leaves of absence to ensure those on military leave are receiving comparable benefits. In some cases, the need to compare leave benefits may not be obvious. For example, if an employer permits an employee to make up lost overtime because of a three-day bereavement leave, it might also be required to permit an employee to make up lost overtime because of weekend military activity. Jackson Lewis attorneys are available to discuss investigations and employer s rights and obligations under USERRA, as well as the interplay between USERRA and the patchwork of state statutes governing employment of Reservists and National Guardsmen. --Ken Wentz WentzK@jacksonlewis.com --Conrad S. Kee Stamford Office KeeC@jacksonlewis.com --Matthew F. Nieman Washington DC Region Office NiemanM@jacksonlewis.com --Scott A. Blaney Phoenix Office BlaneyS@jacksonlewis.com 2

3 U.S. SUPREME COURT HOLDS ORAL COMPLAINT SUFFICIENT TO TRIGGER FLSA RETALIATION PROVISION Continuing its support of employee retaliation claims, the U.S. Supreme Court has ruled 6-2 that an oral complaint over time-keeping practices constitutes protected activity implicating the anti-retaliation provision of the Fair Labor Standards Act ( FLSA ), and that employee complaints need not be written to enjoy statutory protection. Kasten v. Saint-Gobain Performance Plastics Corp., No (Mar. 22, 2011). The Court remanded for determination, however, the question whether any complaint made solely to an employer orally or in writing falls under the FLSA s protective mantle. Justice Elena Kagan did not participate in the case. Facts Petitioner Kevin Kasten alleged that his employer, Saint- Gobain Performance Plastics Corporation, terminated him because he made internal complaints to management about the company s time-keeping practices. Without addressing any of the underlying factual issues, the district court ruled that an oral complaint is insufficient to implicate the FLSA s anti-retaliation provision and granted the company summary judgment. The Seventh Circuit Court of Appeals affirmed. Oral Complaint Protected The Supreme Court disagreed and vacated the appeals court decision. Justice Stephen Breyer, writing for the majority, held that the FLSA protects oral complaints. He observed that the FLSA anti-retaliation provision forbids employers from discharg[ing] or in any other manner discriminat[ing] against any employee because such an employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to the Act. Justice Breyer s reasons for deeming oral complaints protected by the FLSA include the following: certain dictionaries, regulations of federal agencies other than the Department of Labor (which enforces the FLSA), and state statutes indicate that a person could file an oral statement; the phrase, any complaint, used in the statute, suggests a broad interpretation for what constitutes a complaint; Franklin Roosevelt, in promoting the FLSA, said the Act was designed to protect illiterate, less educated workers, who might not appreciate fine statutory distinctions; illiteracy studies from the early part of the 20th century 3 support the view that the FLSA was enacted to allow such marginalized employees to make complaints that would be protected from retaliation; and it is appropriate to defer to the Department of Labor, which has taken the position that filed any complaint encompasses oral complaints. Unresolved Issue Left unresolved in the Court s ruling is the issue of whether the FLSA s filed any complaint language was meant to include complaints, oral or written, that an employee brings to his or her employer internally, without involving a governmental agency. Justice Breyer found the question was not appropriate for review. Justice Antonin Scalia strongly disagreed with the majority, finding that the internal-complaint issue was properly raised by the company in its opposition to Kasten s petition for high court review. According to Justice Scalia, the Court was issuing an advisory opinion by addressing the oral/writing issue without addressing whether an internal complaint constituted protected activity. On the merits he would concluded that the filed any complaint language meant that FLSA protected activity contemplate[d] an official grievance filed with a court or an agency. --Susan M. Schneider SchneidS@jacksonlewis.com --Paul DeCamp Washington DC Region Office DeCampP@jacksonlewis.com --Paul Patten Chicago Office PattenP@jacksonlewis.com

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5 Register for free delivery of Preventive Strategies Online Workplace Law s to have our legal updates sent to your inbox monthly. Read what our professionals are saying about labor, employment, benefits, and immigration issues and developments. Go to and complete the electronic form. LABORWATCH (ISSN ) is published monthly. To order, write: Laborwatch Circulation Dept., Regency Circle, Suite 400, Omaha, NE call: (800) or (402) fax: (402) parkerv@jacksonlewis.com visit our website: Jackson Lewis LLP, Regency Circle, Suite 400, Omaha, NE (402) Publisher: Kelvin C. Berens Editor: Christopher E. Hoyme LABORWATCH is designed to provide general information regarding recent developments in labor and employment law as well as human resources issues. It is not intended to substitute for legal advice based on specific facts in any individual case. For further information regarding any matters discussed in this publication, or on any labor or workplace issues, please feel free to contact any of the attorneys at the address above or visit the website for our addresses at SSA S NO MATCH LETTERS TO EMPLOYERS: THEY RE BACK! IMMIGRATION UPDATE Amy Peck is a nationally recognized immigration attorney practicing out of the Jackson Lewis LLP Omaha, Nebraska office. After a hiatus of several years, the Social Security Administration has resumed notifying employers of social security number mismatches of employees. The SSA s No Match or Request for Employer Information letter states that the information reported on an individual s W-2 or W-2c form do not match the Agency s records. The SSA requests in the No Match letter that the employer: Compare the SSA information with the individual s employment records. If the records match, ask the employee to check the name and Social Security number on their Social Security card. If the card does not show the employee s correct name or Social Security number, or if a name change or a correction is necessary, instruct the employee to contact a SSA office to resolve the discrepancy. Provide written responses to several questions about the individual in question and return the completed form to the Agency (separately from any Form W-2c correction filing). The SSA cautions the employer that a No Match letter alone should not the basis for taking adverse action against an employee. A mismatch can occur for many reasons, including typographical errors, incomplete or blank names reported, name changes, or incomplete or blank social security numbers reported. In the past, about 10 percent of all W-2s initially received by the Agency have some sort of a name-number mismatch. Employers who receive a No Match letter should contact legal counsel to determine whether any action is necessary. Each case is different and must be examined and analyzed individually. --Amy L. Peck Amy.Peck@jacksonlewis.com 5