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Well, we’ve fought our way through yet another year — the ups and the downs, the good and the bad, the pretty and the not so pretty. So what did the year bring general counsel when it comes to work matters? And what might 2003 hold? It was pretty quiet on the legislative front in 2002. Yes, Dallas did enact an ordinance prohibiting discrimination on the basis of sexual orientation and making it a crime to boot. (Tip: Make sure your anti-discrimination policies reflect sexual orientation as a protected classification or at least have a provision providing that you comply with all local laws and ordinances.) Congress made a stab at stopping the practice of requiring winning plaintiffs in employment cases to pay taxes on both their compensatory awards and the award of attorneys’ fees, which left many plaintiffs with a pyric victory — a $50,000 award to the employee, a $500,000 fee to the lawyers, but a $600,000 tax bill to the employee. Go figure, but still a powerful tool for GCs in trying to settle a case with low actual damages. As if that’s not enough, here are two more reasons not to do business in California: an amended disability law saying that mitigating measures can’t be used in determining disability status (take your glasses off, you’re now covered) and to partially pay for time off under California’s version of the Family and Medical Leave Act. And, of course, there was the Sarbanes-Oxley Act of 2002, which means general counsel now will have a special place in their 2003 Rolodexes for lawyers to refer their chief executive officers, chief financial officers and chief operating officers to so they can get advice for themselves. General counsel must get used to reading the Sarbanes-Oxley version of the Miranda warning: “I represent the company and its shareholders. I can’t represent you as an individual. Here is the name of a lawyer to call to give you individual counsel.” We think it will come to that. The Texas Supreme Court was consistently pro-employer but only in the context of reversing lower courts making bad decisions. Let’s take a look. In May, the high court approved of workplace arbitration programs, in In Re Halliburton, saying that continued employment after the program is implemented is sufficient consideration, but hasn’t yet tackled some of the tougher issues: Can an employer require an employee to split the arbitration fees? Is it permissible to truncate potential damages? Can an arbitration agreement provide for de novo appellate review? (In Harris v. Parker College, the 5th U.S. Circuit Court of Appeals in March 2002 said “yes” but cautioned that an employer must use certain magic language or it’s stuck.) The high court also fended off, for the time being, the increasing tendency of employee lawyers to sue for negligence, brewing up a duty where none existed, for example a duty for negligent investigation, which the high court rejected in Sears v. Texas Farm Bureauin September. And in June the court, in Minyard Food Stores, zeroed out a $300,000 defamation award to an employee who claimed the manager defamed her during a sexual harassment investigation; the court reiterated that to win a defamation suit, a plaintiff must show the statements were made in “furtherance of the employer’s business and for the accomplishment of the objective for which the manager was employed.” A high standard. Finally, in a one-pager in Midland Judicial District v. Jonesthe court said in June that quoting a salary to an employee is not an employment contract. What was up with the U.S. Supreme Court? In Wolverine Worldwide v. Ragsdale, the high court in March struck a U.S. Department of Labor regulation regarding retroactive designation of FMLA leave that an employer cannot retroactively designate a leave as a FMLA leave. Yes, a welcome win, but you’ll see in 2003 more general counsel using the regulation to their advantage, instead of mounting efforts to invalidate them. Look at, for instance, the regulations on conditional leave where the statute actually helps: You can grant conditional FMLA leave depending upon what a further investigation determines and require the employee to get back to you within a certain period of time FMLA information. Making a regulation work for you, not the other way around, will be a mantra for 2003. What was the biggest development in the 5th Circuit? Well, our bet is the adoption of “the maximum recovery rule,” which is pro-company and requires courts, in deciding whether to set aside or reduce a damage award in a civil rights case, to look at the damages awarded by a jury in comparison to other damage awards in similar cases. Because damage awards in Texas for things such as emotional distress have not been that great, the 5th Circuit decision to go with the maximum recovery rule, which they set out in July in Thomas v. Texas Department of Criminal Justice, basically creates a “constructive cap” on how much money a trial court or an appeals court will allow juries to award for mental anguish damages. And, you guessed it, the constructive cap is much less than the statutory one. ENDANGERED SPECIES AWARD Now, because it is the end of the year, we thought we’d look at what we hope will be our annual “Endangered Species” award. These are cases that, well, just leave us wondering, and if you feel your Christmas fruitcake is short a few nuts, read on. We have three nominations for employer and employee, and will leave it to you to decide the winner. First, let’s look at the Endangered Species Award for Employees for 2002. Nominee No. 1 is an employee who went to work for the city of Lake Forest. According to a Northern District of Illinois opinion decided in May, she allegedly began a romantic relationship with one supervisor, ended that and then started one with another. She ultimately was terminated for tardiness. She admitted she was tardy but argued that after a night of intimacy with the supervisor she was dating, it was only natural that she would be late, according to the opinion. Because the supervisors were responsible for her termination, the company was culpable (or so went her argument) and she should be off the hook and allowed to sue for sex discrimination. She lost. Don’t believe us? Take a look at Schrader v. City of Lake Forest. Finally, in the annals of no shame, a man was arrested by federal agents for receiving and possessing child pornography, according to the February opinion in Muick v. Glenayre Electronics. The opinion lays out the following details of the case: He allegedly was doing so from his work area on a company laptop. After conviction, and being shipped to federal prison, he had a lot of time on his hands and sued the company, saying that the employer and the FBI double-teamed him and violated his constitutional privacy rights. (Perhaps it’s a novel argument, but not so farfetched in a world in which the Pledge of Allegiance is declared unconstitutional.) While the case was thrown out, it serves as a timely reminder that companies always should make sure that employees have no expectations of privacy on any company-provided mechanism — whether a desktop, laptop, PDA, etc. If you think your employees are misusing equipment, don’t have the company technology group do an investigation or the company will be accused of doctoring the evidence. Get a neutral forensic expert. Now let’s look at the nominations for employers, starting with the manager of a restaurant. According to the opinion, these were the details of the case: The manager allegedly had a vibrator in his pocket and buzzed it for a female employee. She subsequently complained and was terminated; she later filed a suit claiming retaliation. The manager denied having a vibrator in his pocket. He claimed he had a portable back massager that happened to be in his front trouser pocket. He said it inadvertently activated when he “propped his leg on one of the shelves” as he was punching a time card for another employee, and that’s what the female employee heard. Take a look at Brooks v. Mendozadecided in March by the Eastern District Court of Pennsylvania. The outcome of the case? The plaintiff was allowed to sue for intentional infliction of emotional distress. Or look at the California Court of Appeals case, Fotiades v. Hi-Tech Auto Collision, in which the court in May said that $500,000 was an appropriate remedy for a 27-year-old body shop estimator, who worked for a collision repair company. His manager and assistant manager allegedly decided to play paparazzi when he went into the restroom. According to the opinion, these were the details of the case: The manager and assistant manager picked the restroom lock, opened the door and snapped a picture of the body shop estimator. Not only did they show it around the workplace, but they also started to refer to him by a variety of derogatory and not-so-complimentary terms. Then the manager e-mailed the photo to other store managers, who also showed it around. The company’s defense at trial was that the 27-year-old should “get over it”; the jury’s response was to tag the company for $1.5 million, which the appeals court reduced to $500,000. In May, the Court of Appeals for the 2nd Appellate District, Division 6 in California decided Briseno v. Diamond Video World Inc. The opinion noted that a man went to work as a sales clerk for a video store in Los Angeles. Not only did the store sell X-rated videos, but it also sold various sex toys such as “sex harnesses” and “riding crops.” According to the opinion, these were the details of the case: The man claimed that his female supervisor created a sexually hostile work environment by requiring him to wear a sex harness. She didn’t deny it but said the only way the staff could sell the merchandise was if they were experienced with it. The male clerk also said the supervisor placed a collar around his neck, attached a leash and did various other things. He was afraid to complain because he feared losing his job. The supervisor denied all the allegations, other than the one involving having the man wear a sex harness. She claimed she ultimately fired the clerk because he wasn’t meeting job expectations. The male clerk sued, and the jury returned a verdict for him of almost $30,000. From time to time, companies tell us, “Yes, maybe the employee was harassed, but after all, it is a tough working environment, and he should expect a certain amount of it; after all, we’re not the police.” Well, sorry to say, you are. While some cases say the type of industry should be considered in deciding whether there’s a hostile environment and rough-and-tumble industries should get a pass, most take a common sense view that all employers — regardless of whatever industries they may be in — must follow the same laws, and there’s no such defense as “he was asking for it.” Well, that’s it for this year. Have a good holiday, and we’ll see you in January with an article on 10 work matters pledges for 2003. Michael P. Maslanka is chairman of the labor and employment section at Godwin Gruber in Dallas and writes the Texas Employment Law Letter, which can be accessed at HRhero.com. His e-mail address is [email protected]. Burton D. Brillhart is a participating associate at the firm.

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