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What is a fiduciary and what does it have to do with employment law?

Fiduciary duties are not a substantial component of employment law in the same way they saturate other areas of law like securities law or trust law; however, they play an important role in specific issues in employment such as employee benefits and issues involving employee competition with the employer. Employees should understand the interplay between fiduciary duties under federal and Colorado law and their employment, both on behalf of the employer and employee. As this can involve complex legal issues, employees should talk to a Colorado employment lawyer for advice about specific situations.

What is a fiduciary?

A fiduciary is a person or entity that holds a legal relationship of trust with another. Two  common ways a person can become a fiduciary to another is by:

  1. Creating an agency relationship; and/or
  2. Acting as the trustee of assets.

A party becomes a trustee by holding the assets of another when the trustee is entrusted with the care and control of the beneficiary’s assets. For example, when you deposit your wages in your bank account your bank is a trustee of the account and therefore a fiduciary to those funds. It must act with care to your account and not use your money for its own purposes.

An agency relationship also creates a fiduciary relationship. Agency merely means there is a principal-agent relationship. The agent is a fiduciary to the principal in the relationship. An agent is a person empowered by the principal to act on its behalf as though the principal acted itself. For example, if you hire a lawyer to represent you in an employment lawsuit then the lawyer is your agent in the legal proceedings and must act with care in dealing with your case and pursue the case for your interests rather than her own.

What is a fiduciary duty?

A fiduciary has fiduciary duties to the principal (for an agency relationship) or beneficiary (to a trustee). Fiduciary duties are primarily the duties to act in good faith and loyalty to the person owed those duties. Courts across the country deem fiduciary duties as the highest duties imposed upon a party under the law. In practice courts do not always hold parties to the soaring rhetoric used to describe these duties but at least they tell us they should.

Most people think about fiduciary relationships with relationships between business and consumer such as a bank and its customers or consumers and professionals such as lawyers or real estate agents. These are definitely fiduciary relationships under federal and Colorado law. Fiduciary relationships also exist in other forms of asset entrustment and agency relationships. This is definitely true in the employment relationship. Employers can owe fiduciary duties to their workers and vice versa.

It’s important to point out that fiduciary duties can arise from various legal relationships within the employment context. For example, an employer may have statutory fiduciary duties to employees under the federal Employee Retirement Income Security Act (ERISA) to employee benefit plans protected by ERISA and the employee may have fiduciary duties to the employer under Colorado common law. The specific fiduciary duties owed differ under these relationships and sources of law. Even across states the fiduciary relationship and fiduciary duties can vary significantly.

Defining the specific fiduciary duties in a given situation can be complex and require specific legal analysis under federal and Colorado law. Do not rely upon general information to assess the parameters of a fiduciary relationship or fiduciary duties involved.

What is an employee’s fiduciary duty to his or her employer?

The employee-employer relationship is an agency relationship which means the employee has a duty as the employer’s agent as a fiduciary. An employee’s fiduciary duty primarily revolves around the duty of loyalty. The duty of loyalty of an employee is not really a single duty but rather a collection of duties to the employer. Forgetting the issues of law for a moment, it makes common sense. No sane employer would hire an employee expecting the employee to use the position to harm the employer or compete against the employer. It does not mean the employee is at all times a slave to the employer; but the employee has a responsibility to deal fairly with the employer.

Courts at times disagree with what exactly an employee’s duty of loyalty entails. Often courts hold that an employee’s duty of loyalty is commensurate with the employee’s job duties and level of trust extended by the employer. For example, a front line employee might have a minimal duty of loyalty to the employer; however, a sales executive likely has a greater duty because she has access to confidential client lists, product knowledge and could easily use that information with a competing business.

Broadly an employee’s duty of loyalty to the employer can be broken up into two sub-duties:

  1. Duty to exercise job with care; and
  2. Duty not to compete with the employer.

Duty of care by the employee

The duty to fulfill job duties with care is very simple. An employee is reasonably expected to perform the job duties with diligence and without intentionally causing waste or harm to the employer’s business or property. That does not mean every time an employee underperforms the employee has breached a fiduciary duty to the employer; however, when an employee intentionally performs the job in a manner that is harmful to the employer then the employer may have an argument for a breach.

In practice, this often becomes an issue when an employee with access to valuable property willfully causes its destruction or loss of value. Most employers do not want to endure the time or cost to hire employment lawyers and pursue a lawsuit against an employee.

Employee’s duty not to compete with the employer

Fiduciary duty claims against employees are far more likely when the employee uses his or her position to compete against the employer. In fact, most breach of fiduciary duties in any fiduciary relationship arise from the fiduciary self-dealing. Employees management positions, sales staff and employees responsible for developing new products or services are most likely to have access to resources that allow them to compete with the employer. Common ways employees compete against the employer include:

  • Taking confidential customer or client lists to use at another employer;
  • Using one employer’s proprietary sales techniques for another employer;
  • Making sales or purchases for the employer that produce a side benefit for the employee;
  • Taking or selling confidential or proprietary research or products to another business;
  • Soliciting other employees to follow them to a competing business; or
  • Owning or working for a competing business without the employer’s approval.

Both federal and state courts assessing fiduciary duty claims in Colorado tend to uphold employer claims when employees compete against their employers in these ways. Practically, the more an employee’s self-dealing or competition with the employer may or has financially harmed the employer the more likely the employer is to pursue a claim against the employee in court.

Non-compete Agreements

Although employers can pursue breaches of fiduciary duty claims in Colorado, an employer may decide that a lawsuit after the breach occurs is not a great remedy. After all, if an employee sends trade secrets like client lists or marketing research to a competing business then it’s effectively impossible to get that information back. Filing a lawsuit may take years to resolve with no guarantee that a jury will be more sympathetic to an employer than employee. To help solve this problem many employers require employees with access to confidential information, client relationship, or high level decision-making to sign non-compete agreements.

Non-compete agreements, under employment law, are contracts between employer and employee that restrict the employee from competing against the employer by:

  • Working for a competitor;
  • Sharing confidential trade secrets with competitors;
  • Self-dealing to the employer’s detriment; or
  • Soliciting clients and employees to join a competing business.

A non-compete agreement in many ways converts fiduciary duties from common law to contract and gives employers contractual remedies against the employee. A non-compete agreement can go farther than an employee’s fiduciary duties by limiting the employee’s ability to quit working for the employer and immediately go to work for a competitor.

Colorado law and non-compete agreements

States differ in how broad they allow non-compete agreements to restrict an employee’s ability to earn a living beyond the employer. Employers have an incentive to use non-compete agreements aggressively to retain employees. Employers may seek broad non-compete agreements as a poison pill to make it difficult for employees to leave and find work elsewhere. That in turn can give the employer a tactical advantage in negotiating compensation to the employee’s detriment.

Colorado greatly limits the enforceability of non-compete agreements to prevent employer overreach. These limits are first statutory under Colorado Revised Statutes 8-2-113 which makes all covenants not to compete void unless they meet an exception involving:

  • The sale of a business;
  • Protection of a trade secret;
  • Executive or managerial employees and their staff.

Colorado, unlike some other states, does not allow a non-compete agreement to bind professionals like physicians to an employer even if the physician has trade secrets or acts in a managerial capacity over a hospital or clinic.

If a covenant not to compete passes the statutory bar it may still fail in the courts. Colorado courts refuse to uphold non-compete agreements if they are not reasonable in duration and scope. A non-compete agreement is unreasonable if it exceeds the bounds necessary to protect the employer’s interests and does not impose a material hardship on the employee. Courts in Denver and other parts of Colorado routinely uphold covenants not to compete up to five years and 100 miles from the business. See Reed Mill & Lumber Co., Inc. v. Jensen, 165 P.3d 733 (Colo. App. 2006).

Do employers have a fiduciary duty to employees?

Generally employers do not have fiduciary duties to employees. Recall that the fiduciary relationship flows unilaterally from fiduciary to beneficiary. It is not a bilateral relationship; however, within a two-party relationship it is possible that the parties are separately fiduciaries in different roles to the other.

The most common way an employer acts as a fiduciary to employees is when it operates retirement benefits for the employee. Retirement plans, such as defined benefit pensions, 401k plans and 403b plans, require employers to hold assets in trust for employees. This requires that the employers act in the interests of employees and exercise care with the assets. The Employee Retirement Income Security Act of 1974 (ERISA) governs most private employee retirement plans and establishes statutory fiduciary duties that limit the employer’s ability to use the plan or plan assets to its own financial gain. ERISA’s thicket of statutory and regulatory duties tightly constrain employers and a breach of these duties can result in costly penalties to the employer.

Some lawyers and other legal experts argue that employers are or should be fiduciaries to employees for wages and other compensation earned but not paid. To date Colorado courts generally have not agreed although there are at least good arguments why employers should have fiduciary duties when they deduct from wages for benefits, child support payments and other legal purposes. In many of these cases Colorado provides statutory remedies when employers unlawfully deduct from wages, do not make timely payment of wages, or otherwise fail to pay wages within the confines of the Colorado Revised Statutes.

When should you hire an employment lawyer in Colorado for a fiduciary duty issue?

Breach of fiduciary duty claims can carry substantial financial recovery for a prevailing employer therefore it is always a good idea to talk to an employment law attorney as soon as an issue arises. Ideally you should talk to an attorney before making any employment or business decision that your employer might perceive as self-dealing or competition. However, if the employer has already filed suit or threatened to file suit then you need to talk to an attorney immediately.

If you believe your employer self-dealt or otherwise abused assets in a retirement plan then you should find an employment law attorney to talk to about potential claims against your employer. Under ERISA and other laws governing employee benefits, an employee or retiree must often follow a specific process before filing suit and must file specific claims in a lawsuit to recover from the employer. ERISA claims are extremely complex claims and employers often hire employment lawyers from big law firms that specialize in ERISA to represent them.

 

 

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First Circuit moves towards acknowledging sexual orientation discrimination prohibited by Title VII

Over the past two months I’ve written about federal employment discrimination lawsuits focusing on LGBT-based discrimination as forms of sex discrimination under Title VII of the Civil Rights Act of 1964. The Second Circuit recently joined the Seventh Circuit to hold sexual orientation is a prohibited form of sex discrimination under Title VII and the Sixth Circuit explicitly held transgender discrimination is prohibited under Title VII. This month the First Circuit continues down the path with another lawsuit involving sexual orientation. Although the First Circuit did not go as far as its colleagues in the Second Circuit and Seventh Circuit, it acknowledged that employment discrimination law is evolving in that direction. This decision in Franchina v. City of Providence is the first to address sexual orientation as the “plus” factor in a sex-plus discrimination lawsuit under Title VII.

The backstory on Franchina v. City of Providence

Lori Franchina was a firefighter for the City of Providence, Rhode Island and is a lesbian who suffered a long history of sex discrimination at work. Franchina worked with a male firefighter who often made comments and sexual gestures to Franchina and other firefighters about her sexual orientation. Although she did not complain herself, the coworker’s behavior became known to a superior who disciplined the coworker. In response, Franchina suffered a long history of workplace harassment related to her sex, including vulgar comments, both verbal and written, and foul acts against her. Despite forty written complaints, the department took no action to stop the harassment. Eventually she retired from the department with a diagnosis of PTSD.

Franchina’s lawsuit advanced to an eight day trial in which she asserted the disgusting behavior was unlawful sex-plus harassment. The “plus” factor alleged was her sexual orientation. The jury awarded her over $800,000 in emotional distress and lost wages which unsurprisingly triggered the employer to appeal. After launching a series of weak arguments up on appeal the First Circuit affirmed the trial court’s judgment.

The plaintiff initially pursued a separate sexual orientation discrimination claim which was dismissed upon a motion to dismiss early in the lawsuit because the First Circuit decided in the past not to extend Title VII over sexual orientation claims. The appellate court explicitly acknowledged that other appellate courts had changed their minds on this issue but declined to follow because Franchina did not appeal the dismissal of her claim. Nevertheless, the sex-plus discrimination claim continues an important line of authoritative acknowledgement of sexual orientation discrimination as a component of sex discrimination under Title VII.

What is a sex-plus discrimination claim under Title VII?

The sex-plus theory of discrimination is a form of sex discrimination that alleges the employer discriminated on the basis of sex plus another factor that made a discrete group of women the target for discrimination. The “plus” factor can be another protected status or trait, such as race or age, but it can also be a factor not explicitly protected like women who have small children. Sex-plus claims do not set a higher burden of evidence for the employee; the employee does not even have to prove the “plus” factor. An employee only has to show sex or gender was, by itself, at least one motivating factor in an adverse employment action.

Sex-plus discrimination claims acknowledge that sometimes sexual harassment and other forms of sex discrimination target some women but not others because of a second, related trait and the discrimination on the second factor cannot be untangled from the sex discrimination. As a substantive matter, courts have long accepted sex-plus discrimination claims to protect employees from sex discrimination in which only some members of a sex may be targeted because Title VII does not require a perpetrator to discriminate against every member of a sex for the victim to prevail on a claim. Procedurally, when the “plus” factor is not explicitly protected under Title VII the sex-plus discrimination claim makes it difficult for the employer to take the position that it discriminated but only on the unprotected “plus” factor and not on sex or gender.

Sex-plus discrimination and sexual orientation

Nevertheless, that is exactly what the employer attempted to do on appeal in this case. The thrust of the employer’s appeal relies on the argument that the plaintiff only presented sufficient evidence of sexual orientation discrimination and not sex or gender, therefore the jury verdict cannot be upheld. The employer pointed to First Circuit precedent denying sexual orientation as the sole basis for a sex discrimination claim under Title VII. The First Circuit dismantles the employer’s position on two fronts.

First, it acknowledges its own precedent but points out even the employer’s chosen case law the appellate court left open the door to sexual orientation as a “plus” factor. The Court then expresses that no reason exists why sexual orientation cannot be a “plus” factor. The court does not deeply explore this issue but in explicitly thrusting the door fully ajar it took full advantage of the appeal in front of it to expand sexual orientation as an issue related to sex discrimination under Title VII. Not only will this make it easier, at least in this circuit, to bring sex-plus claims with sexual orientation, but also signals the court may be willing to take more progressive steps in future appeals.

Second, the court explored the evidence and found even without looking at the evidence of sexual orientation there was more than sufficient evidence of sexual harassment on plaintiff’s sex and gender given the many offensive comments and acts perpetrated by her coworkers.

Although the First Circuit did not spend much space applying the facts to sexual orientation as a “plus” factor, its clear willingness to do so in any future case has broad and important meaning for future cases in the circuit.

What this case means for Colorado employees

As usual, I like to bring these discussions back to Colorado and what it means for employees in this state. Colorado is not part of the First Circuit so this case does not directly affect employees in this state; however, it is another federal circuit moving sympathetically towards including sexual orientation discrimination as a prohibited act under Title VII which affects Colorado employees. As more circuits reverse precedent opposing its inclusion, the circuits will either settle the matter by reaching agreement or a circuit split will push the Supreme Court to have the final word. Then federal law will join Colorado state law in prohibiting sexual orientation discrimination at work, giving employees another legal avenue to pursue claims for sex discrimination in the workplace. If you believe you suffered employment discrimination at work on the basis of sex or sexual orientation then you should find an employment law attorney in Colorado and schedule a consultation.

2018 likely a big year for employment law in Colorado

We’re closing in on the end of the first quarter of 2018 which means the Colorado legislature is a little over halfway through its legislative session and the state courts are in full swing for the rest of the year. We’ve already seen a flurry of employment law activity in both the legislature and judiciary with more likely to come. Most employment law watchers have their eyes on the labor law appeals at SCOTUS but Colorado has a lot on the schedule for labor and employment law as well.

Colorado legislative employment law activity

Colorado is among several states where conservative lawmakers pursued bills seeking to undermine labor union presence and minimum wage protections. Thankfully in this state these bills appear dead for the session but other bills live on in the session. Among the labor and employment law legislation introduced this session include:

Immigration status. The House is currently perusing a bill to extend legal work status to undocumented workers in the state that meet specific requirements proving the worker’s history in this country has been positive.

FMLA insurance. Another House bill seeks to introduce an FMLA insurance program for wages. Under the proposed architecture small employee contributions would fund a wage replacement program for Colorado employees who take unpaid family and medical leave. Given the challenges created by the way the Colorado legislature designed its state FMLA statute to sit on top of the federal FMLA passage of this program could create new complications in the state’s family and medical leave law.

Non-compete exception for physicians. Physicians are generally better protected from overreaching non-compete agreements under Colorado law; however, they can be liable for damages caused by terminating the agreement. This Senate bill would create an exemption to damages for physicians to continue to provide care to patients with rare conditions.

Minimum wage waiver. In one of the more ridiculous legislative offerings a House representative offered a bill that would (1) require employers to notify job applicants of the right to negotiate minimum wage and (2) to negotiate a minimum wage less than the Colorado Constitution requires. The House committee quickly laughed at and destroyed this awful legislation.

Right to work bill. Not to limit their terribleness to just one bill, House Republicans introduced a bill to make Colorado a “right to work” state that allows workers to decline representation or membership in a union as a condition of employment. These bills are introduced by the GOP virtually every session but as usual this bill failed to reach a floor vote.

Gig workers are contractors. The Senate passed a bill last week that makes workers who find part-time jobs through online job marketplaces are contractors rather than employees. While many of these workers likely are contractors this bill seems more of a first step in expanding state law to make all workers in the gig economy contractors–surely a move backed by larger players in the field like Uber and Lyft who have been hit with misclassification lawsuits around the country.

Colorado courts employment law activity

If March is any indication how the Colorado Supreme Court feels about employment law it’s not a good sign for employees. This month Colorado’s highest court ruled against employee rights on small but important issues.

Teacher right to hearing before placement on unpaid leave overturned

The Colorado Supreme Court overturned an appeal on public school teacher rights to a hearing before being placed on unpaid leave. The teachers’ union asserted the Teacher Employment, Compensation and Dismissal Act of 1990 (TECDA) required a hearing before a teacher may be placed on unpaid leave. TECDA limits a teacher’s exposure to termination to specific reasons of just cause after a hearing, if the teacher completed the three year probationary period. The teachers’ union argued this created a due process right to a hearing on unpaid leave.

The court disagreed, holding that TECDA does not create a contract between the state and teachers, therefore the teachers lack a property interest in benefits and salary. Without a property interest the teachers do not have a violation of due process rights to assert. The result will be that school districts will obtain greater flexibility to eliminate teachers or force out teachers.

Statute of limitations on unpaid wage claims upon termination under the Colorado Wage Claim Act

In a case with broader implications, the Colorado Supreme Court also interpreted the Colorado Wage Claim Act (CWCA) to reduce the limitations period for claims of wages due upon termination. In Hernandez v. Ray Domenico Farms the court resolved the ambiguity over how far back an employee could seek unpaid wages due upon termination.

The CWCA sets a two year limitations period (extended to three if the violation is willful) for claims brought under the statute. (C.R.S. § 8-4-122.) Among the statutory claims is the right to be paid all due and unpaid wages upon termination. (C.R.S. § 8-4-109). The plaintiffs in this case, along with some Colorado courts, argued the limitations period reset with each instance of unpaid wages so the unpaid wages owed could extend as far back as the beginning of the employment relationship.

The Colorado Supreme Court disagreed, interpreting the CWCA similar to federal interpretations of limitations periods under the Fair Labor Standards Act (FLSA). The court held the limitations period only reaches back two years (or three if willful) before the date of termination. The court noted that the limitations period begins to run with each set of wages due; so it is possible that an employee could pursue a claim under C.R.S. § 8-4-109 as late as three years after the date of termination. The Supreme Court did not clarify this point but it appears to be the intended interpretation of the court’s opinion.

What should we expect for the rest of 2018?

The rest of the year will likely be a mixed bag for employees, particularly with the SCOTUS decisions that will weigh on federal labor law issues. As usual movement on the legislative and judicial fronts will be incremental with judicial decisions drawing narrow interpretations of existing statutes and employer-friendly lawmakers pushing through small changes. Most of these smaller changes receive little attention which allows a long but effective pro-employer shift in labor and employment law.

Another appellate court holds Title VII bars LGBT discrimination as a form of sex discrimination

Last week I wrote about the Second Circuit’s opinion earlier this year holding sexual orientation discrimination as a form of sex discrimination prohibited by Title VII. In the title of that post I questioned whether the tide is turning among federal courts to prohibit sexual orientation discrimination under Title VII. It certainly seems that way as the Sixth Circuit dropped its opinion in EEOC v. R.G. &. G.R. Harris Funeral Homes reaching the same conclusion on transgender discrimination. This brings the count to three of the thirteen federal circuits abandoning earlier positions opposing inclusion of LGBT discrimination under Title VII in favor of broader protections against sex discrimination.

Overview of EEOC v. R.G. & G.R. Harris Funeral Homes

In EEOC v. R.G. & G.R. Harris Funeral Homes a transgender employee was fired after disclosing her intent to transition. Aimee Stevens was hired by the funeral home with her male birth name and appearance. After obtaining the job she informed her employer that she intended to transition and would begin working with her female appearance. The funeral director in response fired her. A Michigan federal district court dismissed the EEOC‘s case on the basis that transgender discrimination was not a form of sex discrimination prohibited by Title VII.

Sixth Circuit holds transgender discrimination is sex discrimination

The Sixth Circuit disagreed with the district court holding:

We hold that the EEOC could pursue a claim under Title VII on the ground that the Funeral Home discriminated against Stephens on the basis of her transgender status and transitioning identity. The EEOC should have had the opportunity, either through a motion for summary judgment or at trial, to establish that the Funeral Home violated Title VII’s prohibition on discrimination on the basis of sex by firing Stephens because she was transgender and transitioning from male to female.

Discrimination against employees, either because of their failure to conform to sex stereotypes or their transgender and transitioning status, is illegal under Title VII. The unrefuted facts show that the Funeral Home fired Stephens because she refused to abide by her employer’s stereotypical conception of her sex, and therefore the EEOC is entitled to summary judgment as to its unlawful-termination claim.

Total beat down on the district judge.

Unlike sexual orientation discrimination which has only more recently been recognized as a form of sex discrimination under employment discrimination laws, discrimination on the basis of gender and sex stereotypes has been recognized as an unlawful form of sex discrimination under Title VII since Price Waterhouse v. Hopkins in 1989 and commonly extended to cover transgender discrimination.

The Sixth Circuit also rejected the employer’s argument that accepting her identity burdens his exercise of religious freedom.

Although in last week’s post I opined that SCOTUS likely won’t hear any of these cases until more circuits weigh in and a circuit split in new cases exists; however, with the interplay of the religious issue SCOTUS might be more inclined to hear this case given its recent desire to hear cases on religious freedom issues.

What this means for Colorado employees

Another decision outside of the Tenth Circuit bears no direct effect on Colorado employers or employees but it brings us closer to a day when the Tenth Circuit may find allies on either side of its own decision on LGBT issues. If this case makes its way to SCOTUS and the court decides to weigh in on the LGBT issues under Title VII then the issue may be settled under federal law for Colorado. For now employees facing LGBT discrimination in Colorado enjoy protections under state law so the issue is less urgent in this states than other less forward-thinking states. Colorado employees facing LGBT discrimination in the workplace should contact a Denver employment lawyer for help.

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10th Circuit weighs in on work schedule conflicts in a religious accommodation

Title VII of the Civil Rights Act of 1964 prohibits employers from discriminating against employees on the basis of a sincere religious belief. Part of this employment discrimination protection requires employers to extend a reasonable accommodation to an employee’s sincere religious belief or practice. Whether an accommodation is “reasonable” within the boundaries of Title VII’s anti-religious discrimination prohibition remains not completely answered in the statute’s fifty-four year history. In Tabura v. Kellogg USA, No. 16-4135 (10th Cir. 2018) the Tenth Circuit weighed in on a case regarding a reasonable accommodation and schedule swapping as a reasonable accommodation.

Facts of Tabura v. Kellogg religious discrimination suit

In this case an employer’s non-discriminatory schedule change placed workers in a situation in which they became occasionally scheduled to work on their Sabbath and the accommodation offered by the employer did not avoid work on their religious holy day. Here are the factual allegations as summarized by the Tenth Circuit.

The plaintiffs in Tabura are employees at a Kellogg plant in Utah where in 2011 the employer restructured work schedules into twelve hour shifts on two or three days and then off for the same period, resulting in a rotating schedule each week. The plaintiffs are Seventh Day Adventists who have a sincere belief against working on the Sabbath, which begins Friday at sundown through Satuday at the same time. Due to the rotating schedule they would inevitably be scheduled through the Sabbath. Upon requesting an accommodation, Kellogg allowed them to use a combination of vacation time, sick time and schedule swapping to avoid work during the Sabbath.

Kellogg allows employees to swap shifts so long as it approves the shift and the shift conforms to their scheduling rules. These rules require the swapped employee to be qualified to perform the duties of the swapping employee. Additionally no employee may work more than thirteen straight hours so no employee working the prior shift could accept a swap. (Those employees worked during the Friday night part of the Sabbath.) As a result, the plaintiffs could not always find approved swaps. After months of absenteeism related to missed Sabbath shifts the plaintiffs were fired. They then filed a charge of discrimination on the basis of religious discrimination, failure to accommodate and retaliation.

Whether Kellogg provided a reasonable accommodation to the shift scheduling problem

The Tenth Circuit weighed in on the issue of reasonableness of the accommodation extended by Kellogg. The trial court granted summary judgment to Kellogg and the plaintiffs appealed only on the failure to accommodate. The Tenth Circuit reversed, noting that Kellogg conceded the plaintiffs made out a prima facie case for failure to accommodate and there was now a factual dispute whether, “Kellogg reasonably accommodated plaintiffs’ Sabbath observance and, alternatively, that Kellogg would incur an undue hardship if it further accommodated their religious practice.”

The panel mostly fell in favor of the plaintiffs’ arguments. It explained, “an accommodation will not be reasonable if it only provides plaintiff an opportunity to avoid working on some, but not all, Saturdays,” or merely to “delay their eventual termination.”  The panel did not go so far as to fully accept plaintiffs’ position that the employer must eliminate all burden to the employee or ensure the plaintiffs’ never received a Saturday shift–only that a reasonable accommodation exist when a shift is scheduled.

It also declined to accept plaintiffs’ position (supported by the EEOC) that a reasonable accommodation cannot be affected by a neutral policy made available to other employees–shift swapping. Had the plaintiffs’ successfully swapped all their Saturday shifts then they would have likely had little argument that the employer failed to accommodate. The panel, however, clarifies that it is not enough for an employer to extend a neutral policy to absolve its duty under Title VII to accommodate religious practices.

The panel went on to discuss the problems plaintiffs faced swapping schedules as raising fact questions precluding summary judgment. Generally the employees could only swap with a handful of employees who were free to decline the request and some had their own religious practices precluding them from swapping. The reversal notes that a jury could find that the difficulties dissolved the reasonableness of the accommodation and requires Kellogg to take a more active role in securing swaps. Lastly, the panel reversed summary judgment on the employer’s undue burden defense insisting the plaintiffs’ proposed alternatives were too costly because the employer failed to present evidence to their assertions or to even move for summary judgment on the issue.

(This case is also discussed by other employment law blogs such as here and here.)

What Tabura v. Kellogg may mean for Colorado employers and employees

This lawsuit is a good reminder that religious accommodation requests must be taken seriously and an employer’s assertion that an accommodation poses an undue burden requires a meaningful look at the facts rather than the superficial inconvenience.

Although we do not yet know what a jury will conclude about the reasonableness of the accommodation, we can take away the panel’s conclusion that a neutral employment policy is likely not a reasonable accommodation if the employees are unable to consistently use the policy to resolve the need for an accommodation. Many employers rely upon similar PTO and shift swapping schemes as a religious accommodation but should be sensitive to complaints by employees needing accommodations that the available PTO and swapping opportunities are not working and the employer may need to step in and actively manage the situation.

Colorado employees who require schedule modifications as a religious accommodation should also be aware of how the Tenth Circuit’s reversal here may affect their accommodation request. If an employee finds himself or herself unable to take approved leave or swap schedules then the employee should notify the Colorado employer through appropriate channels of the deficiency before the employer begins taking action due to absenteeism. That way the employer cannot claim to have lacked the opportunity to institute a reasonable accommodation. As always, if faced with the situation an employee should talk to a Denver employment lawyer early in the process.

 

 

Are tides changes in favor of prohibiting sexual orientation discrimination under Title VII?

The last several years questions have renewed whether sexual orientation discrimination may be a form of sex discrimination prohibited by Title VII. For most of Title VII’s history federal courts have said no. Recently the federal Seventh Circuit changed its mind and became the first court of authority to say yes. Last month a full panel of the Second Circuit reversed its prior decisions and held sexual orientation discrimination is an unlawful form of sex discrimination under Title VII. While this may not have a substantial impact for Colorado employees it certainly moves the nation closer to a Supreme Court opinion on the matter.

Title VII and sexual orientation discrimination

Title VII of the Civil Rights Act of 1964 (here) prohibits discrimination on the basis of sex. Initially this discrimination prohibition was used to put an end to employment practices that blocked women from jobs and promotions in addition to sexual harassment. Over time courts expanded the statute’s role to prohibit discrimination related to gender and sex stereotypes–Price Waterhouse v. Hopkins, 490 U.S. 228 (1989)–and eventually accepted that the statute prohibits same-sex harassment–Oncale v. Sundowner Offshore Services, Inc., 523 U.S. 75 (1998).

However, federal courts generally have continued to hold that Title VII does not apply to discrimination on the basis of sexual orientation. In recent years the Seventh Circuit became the first appellate court to rule Title VII does cover sexual orientation discrimination while the Eleventh Circuit declined to rule of the question in 2017. The EEOC moved in 2015 to formally adopt the position favoring inclusion of sexual orientation within Title VII but that position is not mandatory for federal courts.

The failure to include sexual orientation within Title VII drew some states to specifically include sexual orientation within its anti-discrimination statutes. For example, the Colorado Anti-Discrimination Act specifically prohibits sexual orientation discrimination in the workplace.

Second Circuit changes its mind on Title VII and sexual orientation discrimination

At the end of February a full panel of the Second Circuit delivered a sixty-nine page decision on Title VII and sexual orientation discrimination, reversing its prior opinion denying Title VII protection. The underlying case is a fairly standard sexual orientation case. The plaintiff, a homosexual male employee, alleged he was discharged because he was openly gay and did not avoid the subject in the workplace. The employer alleged the discharge related to customer complaints. (Zarda v. Altitude Express)

At the district court the employer moved to dismiss and the court granted dismissal under then-current precedent. A panel of the Second Circuit affirmed. When the plaintiff sought an en banc review the appellate court made the unusual decision to agree. The product of the en banc convention of the court resulted in overturning its prior precedent and protecting sexual orientation under Title VII.

In its lengthy opinion the majority’s position might best be summed up by the following quote (clipped by an excellent employment law blog here):

Title VII’s prohibition on sex discrimination applies to any practice in which sex is a motivating factor. . . . Sexual orientation discrimination is a subset of sex discrimination because sexual orientation is defined by one’s sex in relation to the sex of those to whom one is attracted, making it impossible for an employer to discriminate on the basis of sexual orientation without taking sex into account. Sexual orientation discrimination is also based on assumptions of stereotypes about how members of a particular gender should be, including to whom they should be attracted. Finally, sexual orientation discrimination is associational discrimination because an adverse employment action that is motivated by the employer’s opposition to association between members of particular sexes discriminates against an employee on the basis of sex.

What this means for Colorado employees facing sexual orientation discrimination

Eventually SCOTUS will be set up to resolve a circuit split among the federal appellate courts whether Title VII prohibits sexual orientation discrimination. The Second Circuit is not binding on Colorado courts and the Tenth Circuit, which oversees the federal District of Colorado,  has yet to rule on the issue. Until the Tenth Circuit or SCOTUS weigh in favor of accepting sexual orientation discrimination as a form of sex discrimination under Title VII, it must be assumed the federal courts here will not rule differently.

It may take time before the federal appellate courts create enough of a divide in the law that SCOTUS feels compelled to wade into the conflict. The more state statutes prohibit sexual orientation discrimination the fewer people need to rely upon Title VII as a remedy and therefore the less SCOTUS needs to act to resolve what may otherwise be mostly a philosophical issue among the courts. My belief is that by the time SCOTUS accepts a case on the subject public opinion will support including sexual orientation discrimination under Title VII that the court will no longer accept it as controversial and concede the inclusion–much like the court’s approach to same sex marriage in Obergefell.

However, for Colorado employees a change in interpretation of Title VII will do little because the state anti-discrimination law already prohibits sexual orientation as an unlawful form of employment discrimination. Employees harassed or otherwise discriminated against on the basis of sexual orientation may already pursue claims under state law that closely mirror the remedies under federal law. A Denver employment lawyer may always want more arrows in the quiver and welcome a Title VII claim; but employees in Colorado do not have to wait pursue these claims until the federal courts act.

If you believe you suffered sexual orientation discrimination in a Colorado workplace then you should contact a Colorado employment law attorney right away. Remember that sexual orientation discrimination, like other forms of sex discrimination, do not only exist under a single dynamic. While many instances of this form of workplace discrimination target LGBT employees and applicants, it is no less appropriate to discriminate against an employee who is straight or for an LGBT manager to discriminate against an LGBT employee or applicant.

 

Denver marijuana employment laws

Colorado Lawmakers to Consider Prohibiting Marijuana-Related Employment Discrimination

Colorado made news in 2015 when the lawsuit involving Dish Network firing an employee for marijuana use was upheld by the Colorado Supreme Court. In 2012 Dish Network fired Brandon Coats, a paralyzed medical marijuana patient, for failing a drug test. He filed a lawsuit under Colorado Revised Statutes 24-34-402.5. The Colorado Supreme Court held the language of the statute prohibiting employers from terminating employees for engaging in lawful activity did not apply to conduct unlawful under federal law. Denver NORML is pushing for legislation to amend C.R.S. 24-34-402.5 to protect employees from termination for off-premises marijuana use.

 

Coats v. Dish Network

In Coats v. Dish Network the Colorado Supreme Court considered whether C.R.S. 24-34-402.5 protects activity lawful under state law but not federal law. This statute generally prohibits employers from firing or otherwise taking an adverse employment action against the employee on the basis of lawful activity during off-work hours. Under the statute employees can still be terminated for lawful activity during work hours. Coats argued through his attorney that Colorado had legalized his medical marijuana therefore his use was lawful. The Colorado Supreme Court took the opposite position holding that the statute did not prevent employers from taking action against an employee for activity that was unlawful under federal law.

Proposed legislation to change the outcome in future marijuana employment cases

Denver NORML proposes legislation that extends Colorado’s Unfair Employment Practices statute (C.R.S. 24-34-402.5) to protect employees from adverse employment acts by the employer for using marijuana off work hours or from testing positive for marijuana in a drug test. The proposed legislation will still allow employers to take action against an employee who uses marijuana at work or is under the influence of the drug at work. The advocacy organization will begin lobbying for the legislation this winter. The proposed statute is sure to find opposition from the business community in the state who expect a high degree of servitude from their employees. This proposed statute is similar to a law already enacted in Maine for the same purpose.

Contacting a Denver employment lawyer

If you believe your employer took adverse employment action against you on the basis of off duty activity then you should talk to a Denver employment lawyer right away. Employees in Colorado are generally protected from termination and other adverse employment acts on the basis of off-duty activities. Although for now partaking in marijuana is not protected by the Colorado Revised Statutes, it will likely only be a matter of time before Colorado employment law changes to align with the state’s legalization. State or federal law may provide other claims related to your off-duty activities. Contact a Denver employment lawyer to discuss your situation.