FEBRUARY 2010

• Employer Concern for Violence by Employee Justified Termination Even Where Employee Diagnosed as Bipolar
• Employers' Unemployment Taxes to Raise in Many States in 2010
• Outback Steakhouse To Pay $19 Million for Class Sex Discrimination Suit by Women
• Airline Passengers on International Flights to U.S. Face Mandatory New Security Screening
• Cobra Subsidy and Jobless Benefits Extended

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Employer Concern for Violence by Employee Justified Termination Even Where Employee Diagnosed as Bipolar

A federal district court in Tennessee has held that firing an employee because of fear of potential violence by that individual is a "legitimate nondiscriminatory reason" for an employee's termination, in spite of the fact that the employee had been diagnosed with bipolar disorder. Robert Calandriello sued his former employer, Tennessee Processing Center (TPC), for disability discrimination under the state's anti-discrimination statute. The company filed a motion for summary judgment, which was granted by the district court. The court's decision was premised on the third step of the shifting burden analysis, which requires an employee to disprove the company's "legitimate business reason" for an adverse employment action. Beginning in 2005, Robert Calandriello worked at TPC 's Nashville location, which processed business data on which U.S. government stock and wire transfers were based. Because of the nature of the business conducted, TPC operated under certain security protections, including FBI record checks for employees, a gated facility and retinal scans for employee access. In September 2007, TPC issued a "final warning" to Calandriello after learning that he had used company equipment to modify a company poster by adding a photo of Charles Manson. During the disciplinary process, Calandriello acknowledged that he made a poor choice in displaying the poster but informed TPC (for the first time) that he suffered from bipolar disorder, which, he said, caused that lapse in judgment. Calandriello also argued that because he had not destroyed company property, threatened anyone or caused financial loss to the company, he should be exempt from disciplinary action because he was entitled to accommodation under the American Disabilities Act (ADA). In spite of that, Calandriello was fired after further investigation showed that he had viewed online images of violence, assault weapons and serial killers on his company computer. TPC's action was based on a "loss of confidence" in Calandriello, and a concern that Calandriello's continued employment posed a risk of workplace violence. Calandriello admitted to viewing sites about assault weapons and serial killers but argued that guns were a "constant conversation topic" in the workplace at TPC. Nonetheless, the court found in favor of TPC, holding that "fear of potential violence is a legitimate nondiscriminatory reason for an adverse employment action," including termination, and quoted a federal appellate court opinion that the ADA "does not require an employer to retain a potentially violent employee." It further found that Calandriello was unable to provide evidence that the reason given by TPC for the termination was simply a pretext for discrimination. TPC was able to substantiate its position by citing a written company policy that specifically prohibited employees from visiting Internet sites that are "known to contain or are suspected of containing objectionable matter" including "profane or otherwise inflammatory material." (Calandriello v. Tennessee Processing Ctr., M.D. Tenn., No. 3:08-1099)

December 15, 2009 - This story was provided by Maria Greco Danaher, attorney with the firm of Ogletree Deakins in Pittsburgh, who stresses that this case should be carefully weighed in light of the situation. The deciding factors here included the high-security workplace and the written company policies related to company computers. Further, the fact that the company was unaware of Calandriello's impairment until after its initial disciplinary action supports its argument that the termination was based on legitimate nondiscriminatory reasons. Employers should view issues related to medical and psychological impairments on a case-by-case basis to ensure compliance with both state and federal laws.

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Employers' Unemployment Taxes to Raise in Many States in 2010

According to U.S. Department of Labor estimates, by 2011, 40 state unemployment trust funds will be drained as a result of the recession's jobless toll. Employers' unemployment taxes for 2010 are projected to rise as a result. Currently, 25 states and the Virgin Islands have run out of unemployment money and have borrowed more than $24 billion from the federal government to fill the gap. Nine states have borrowed more than $1 billion, with California alone borrowing $5.63 billion. When there is a shortfall in state unemployment-compensation funds, state governments generally are forced to cut the benefit or to raise the payroll tax. A recent survey of all 50 states and Puerto Rico administered by the National Association of State Workforce Agencies (NASWA) shows 35 states have increased their unemployment insurance (UI) taxes on employers for 2010. Specific survey findings include the following:

- Seven states (Ark., Fla., Ind., N.H., Tenn., Vt. and W.Va.) have enacted legislation to increase their "taxable wage base," the level of wages subject to a payroll tax on employers.

- Twenty-seven states and Puerto Rico (Alaska, Ala., Ariz., Colo. Ga., Hawaii, Iowa, Idaho, Ill., Kan., Mass., Md., Maine, Minn., Mont., N.D., Neb., N.H., N.J., N.Y., Ohio, Ore., Pa., Va., Vt., Wis. and Wyo.) said that the tax schedule in their state will see an increase in 2010 compared to 2009. The majority of these increases will be automatic; adjustments are triggered by low levels of reserve funds in the state accounts used to finance unemployment benefits.

- In addition, 10 states (Calif., Conn., Del., Ky., Mich., Mo., N.C., R.I., S.C. and Tenn.) indicated that their tax rate schedules were already at the highest tier, which would prevent them from automatically increasing in 2010. In these states, the state legislatures must enact changes in state laws -- either increasing the tax rates by changing tax rate schedules or increasing the state taxable wage bases.

- Seven of the 51 programs surveyed (Ark., Calif., Conn., Fla., Hawaii, Mass. and S.D.) said that they will automatically increase their tax rates due to a solvency tax already in state law. The majority of these solvency taxes also activate when states' trust fund balances fall below specified levels.

- Thirty-five states estimated the level of UI tax revenue collected in 2010 would surpass the level collected in 2009; with a median projected increase of 27.5 percent. The range of these projected increases was 2.5 percent to 600 percent. While the percentage increases in UI taxes for some employers in 2010 is substantial, the average tax rate on total wages paid by employers is relatively low by historical standards. Since 1938, the average national UI tax rate on employers as a percent of total wages ranged from 0.5 percent to 2.7 percent, while the average national UI tax rate on employers as a percent of taxable wages has varied between 1.25 percent and 3.25 percent. The average national employer tax rate as a percent of total wages in 2008 was 0.6 percent. State unemployment taxable wage bases have been relatively low compared to other social insurance programs. In 2010 state unemployment insurance taxable wage bases will range from $7,000 in Arizona, California, Mississippi, Puerto Rico, and South Carolina to $37,800 in Hawaii. In contrast, the taxable wage base under the social security old age, survivors and disability insurance program will be $106,800 in 2010.

Written by Joanne Deschenaux , SHRM senior legal editor. http://www.shrm.org/LegalIssues/StateandLocalResources/Pages/RaiseEmployersUnemploymentTaxes.aspx.

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Outback Steakhouse To Pay $19 Million for Class Sex Discrimination Suit by Women

The U.S. Equal Employment Opportunity Commission (EEOC) on Dec. 29, 2009, announced that Outback Steakhouse has agreed to pay $19 million to settle a major class lawsuit alleging sex discrimination against thousands of women at hundreds of its corporately owned restaurants nationwide. According to the EEOC, Outback discriminated against its female employees in the terms and conditions of employment and denied women equal opportunities for advancement. The EEOC alleged in the lawsuit that female employees hit a glass ceiling at Outback and could not get promoted to the restaurant's higher-level profit-sharing management positions. The EEOC also alleged that women were denied favorable job assignments, particularly kitchen management experience, which was required for employees to be considered for the top management job in the restaurants. The settlement stems from a lawsuit filed by the EEOC in September 2006 under Title VII of the Civil Rights Act in U.S. District Court for the District of Colorado (EEOC v. Outback Steakhouse of Florida Inc., No. 06-cv-01935). In addition to the monetary relief, the settlement, contained in a four-year consent decree requires that Outback:

- Institute an online application system for employees interested in managerial and other supervisory positions.

- Employ a human resource executive in the newly created position of vice president of people.

- Employ an outside consultant for at least two years who will determine compliance with the terms of the decree and analyze data from the online application system to determine whether women are being provided equal opportunities for promotion.

- Report every six months to the EEOC on carrying out the terms of the decree.

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Airline Passengers on International Flights to U.S. Face Mandatory New Security Screening

Travelers entering the United States by air face new security measures, the U.S. Transportation Security Administration (TSA) announced. The security directives apply to all U.S. and international air carriers on U.S.-bound international flights and mandate "threat-based and random screening" for passengers on such flights. The measures, effective Jan. 4, 2010, come in the wake of a Dec. 25, 2009, aborted attempt to create an explosion aboard a Northwest Airlines plane. The flight originated in Nigeria and departed from Amsterdam en route to the U.S. A man attempted to ignite the device as the plane prepared to land in Detroit but was thwarted by crew and other passengers. The new measures are mandated for every person flying into the United States "from anywhere in the world traveling from or through nations that are state sponsors of terrorism or other countries of interest," the TSA said in a Jan. 3, 2010, news release. No expiration date was given for the measures, which the TSA described as long-term and developed "in consultation with law enforcement officials and our domestic and international partners." Passengers on such flights will undergo "enhanced screening," according to the TSA, but it did not elaborate as to what that entails.

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Cobra Subsidy and Jobless Benefits Extended

On Saturday, December 19, 2009, the U.S. Senate passed the Fiscal Year 2010 Department of Defense (DOD) Appropriations Act and President Obama immediately signed this bill into law (P.L. No: 111-118). This federal spending bill included important provisions to both: 1) Extend and expand the Consolidated Omnibus Budget Reconciliation Act (COBRA) subsidy program that was enacted under the American Recovery and Reinvestment Act (ARRA) and 2) Extend expanded unemployment benefits through February 28, 2010.

The COBRA subsidy program extension in the DOD bill will:

- Expand the ARRA's COBRA premium subsidy period from nine to 15 months

- Change the end date for eligibility for the subsidy from December 31, 2009, to February 28, 2010

- Provide a retroactive period of 60 days (commences upon enactment) for payment of premiums for eligible individuals whose subsidy period expired on November 30, 2009

- Require a special notice outlining these changes within 60 days to all eligible individuals on COBRA on or after October 31, 2009, or those who are terminated after this date

- Clarify the original COBRA subsidy program, noting that eligibility and notice are based on the timing of the qualifying event Unemployment Insurance (UI)

 The DOD bill also provides an extension and expansion of unemployment insurance benefits. These changes are outlined below.

- The period during which individuals may file applications for Federal Emergency Unemployment Compensation (EUC) is extended from the current end date of December 31, 2009 to February 28, 2010 and the period during which individuals may claim and be paid EUC is extended from May 31, 2010 to July 31, 2010.

- The period during which individuals may qualify for the Federal Additional Compensation (FAC), the extra $25 weekly benefit amount on state and federal unemployment compensation, is extended from the current end date of January 1, 2010 to February 28, 2010 with weekly payment provided during the phase out period for weeks ending June 30, 2010 to August 31, 2010.

- The period during which 100 percent federal reimbursement for weeks of regular federal extended benefit payments for states opting to trigger federal extended benefits based on the Total Unemployment Rate is extended from the current end date of January 1, 2010 to February 28, 2010, with the state option to continue the extended period from May 30, 2010 to July 31, 2010.

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Editor's Note: The items presented above contain only selected employment law cases and do not represent a comprehensive listing of all employment law settlements, awards and decisions in the United States. This information has been abridged from many different sources, and DiversityCentral and EPS make no claims to any original copyrighted works. DiversityCentral and EPS do not guarantee the accurateness of excerpts, articles, or information contained in this list.

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