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Shawe Rosenthal E-Update, February 2012

Submitted By Firm: Shawe & Rosenthal, LLP

Contact(s): Elizabeth Torphy-Donzella, Gary L. Simpler


Kraig B. Long

Date Published: 2/29/2012

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Court Invalidates Release of Age Claims in Conjunction with Severance Agreements, Despite Employer’s Good Faith Efforts to Comply with OWBPA

In a collective action brought under the Age Discrimination in Employment Act (ADEA) by former employees, a federal district court in Wisconsin ruled that the age discrimination releases contained within severance agreements signed by some of the employees in connection with a group reduction-in-force were invalid because they failed to comply with the Older Workers’ Benefit Protection Act (OWBPA).

Facts of the Case: In Ribble v. Kimberly-Clark, the employer reduced its workforce through a series of reductions-in-force (RIFs) over the course of three years. Affected employees were offered severance packages in return for their signing a waiver and general release of claims. Subsequently, the employees filed suit alleging that the waivers they signed were invalid because they did not comply with the OWBPA on several grounds. The employees’ primary challenge was directed at the company’s attempt to comply with the OWBPA disclosure requirements.

In the context of a group lay off or RIF, it is commonplace for employers to seek from the affected employees waivers of age discrimination claims under the ADEA. The OWBPA sets forth the minimum requirements that a release agreement must satisfy to effectively waive such a claim. These requirements are imposed to ensure that older employees receive information necessary to enable them to evaluate any potential ADEA claims they may have before electing to sign a release.

Under the OWBPA, if the waiver is being sought in connection with a “group” lay off (i.e., two or more employees), the employer must inform each affected individual, in writing and in a manner calculated to be understood by the average individual, of the class, unit, or group of employees from which the employer chose the employees who were and who were not selected for the lay off (also known as the “decisional unit”). In addition to this information, the employer must identify:

(a) any eligibility factors used to determine which individuals are subject to the RIF;
(b) the time limits applicable to the RIF; and
(c) the job titles and ages of all individuals eligible or selected for the RIF, as well as the ages of all individuals in the same job classification or organization unit who were not eligible or selected for the RIF.

The employee must be provided at least 45 days within which to consider signing the release, although the employee can elect to sign sooner.

The Court’s Ruling: In their complaint the employees claimed that the employer failed to disclose in an understandable manner the information required in order to permit them the opportunity to assess the validity of the claims that they were being asked to waive. The U.S. District Court for the Eastern District of Wisconsin agreed in part with the employees, and determined that three of the eight RIFs did not conform to the disclosure requirements of the OWBPA.

As part of one of the RIFs, employees were told that “employees in specific organizations” were eligible for the RIF and provided a list of the ages and job titles of all of the employees considered for the RIF, but did not say what “specific organizations” were included and whether all employees within those organizations were included. The court ruled that this vague description failed to identify the actual group of employees who were considered for termination to permit an affected employee to assess the validity of a possible age discrimination claim, and therefore invalidated the waivers. Similarly, the court found that employees in a second RIF who were advised that “certain persons” were laid off were not provided with sufficient information for the employees to evaluate the likelihood that their age played a role in the termination decisions. Thus, those waivers were ruled invalid. Finally, the court found that the employer failed to reasonably identify the group of employees affected in a third RIF, thus rendering the waivers signed by the employees invalid under OWBPA.

Practical Impact: Reductions in force and lay offs have been an unfortunate result of the current economic downturn. Even in good economic times, however, employers assess their operational needs and may sometimes decide to reduce their workforce. An employer’s decision to lay off certain employees, while retaining others, may lead discharged workers to believe that they were discriminated against based on their age. Thus, employers must be cautious when implementing RIFs. They raise a myriad of employment law issues, including identifying the scope of the proper decisional unit for purposes of making disclosures under the OWBPA. It is crucial that an older employee’s waiver of claims be correctly drafted, or employers risk paying severance and still getting sued for age discrimination.

Employee’s Inability to Work Overtime Does Not Substantially Limit Major Life Activity of Working Under the ADA

The U.S. Court of Appeals for the Fourth Circuit (covering Maryland, Virginia, West Virginia and North and South Carolinas) joined the majority of circuits when it held that an employee who was medically restricted from working overtime, but could work a normal 40 hour workweek, was not substantially limited in a major life activity under the ADA.

Facts of the Case: In Boitnott v Corning, Inc., the employee worked as a maintenance engineer. He worked rotating 12 hour shifts and alternated every other week between the day and night shifts. Beginning in 2002, the employee suffered a string of medical problems. After being out for several months over the course of two years, the employee advised the employer that he was prepared to return to work, but provided a note from his doctor limiting him to working no more than 8 hours a day. The employer took the position that the employee was not disabled under the ADA because he was capable of working a normal 8 hour day and 40 hours a week, and refused to accommodate his request. The employee did not return to his 12 hour shift job. Instead, he applied for long term disability benefits and filed a discrimination charge with the EEOC, alleging that the employer had failed to reasonably accommodate his efforts to return to work.

The employee initially was granted long-term disability benefits, but those benefits were terminated months later because the employee was capable of working a normal 40 hour work week and there were existing maintenance engineer positions that did not require overtime. After his benefits were cut off, the employee inquired about some available day shift positions in the maintenance department, but they required 10 hour days and some overtime. The employee eventually provided a medical certification from his doctor clearing him to work 10 hours a day plus a “moderate” amount of overtime. However, by the time he provided the certification, none of the positions he had inquired about were available.

The employee worked with his union and negotiated an agreement with the employer that authorized the creation of a new position in the maintenance department that was limited to day shift work of 8 hours per day plus overtime and the right of the employee to apply for the position. The new position was posted, and the employee was hired for the position.

The Board’s Ruling: The employee sued the employer under the ADA for failing to provide him a “reasonable accommodation” for his disability when he attempted to return to his 12 hour shift position. He claimed that his inability to work more than 8 hours a day rendered him disabled under the ADA because he was substantially limited in his ability to work. To prove the limitation, the employee had to show that the impairment significantly restricted his ability to perform either a class of jobs or a broad range of jobs in various classes, as compared to the average person with comparable training, skills and abilities.

The Fourth Circuit considered whether the employee’s ability to work was substantially limited under the ADA where he was capable of working 40 hours per week but unable to work overtime because of his impairments. The Court announced that it was joining the overwhelming and uniform authority of its sister circuits that the inability to work overtime, standing alone, is not a substantial limitation on a major life activity under the ADA.

Practical Impact: The Fourth Circuit now falls in line with the First, Third, Fifth, Sixth, and Eighth Circuits in holding that an employee’s inability to work overtime does not mean the employee is substantially limited in his or her ability to work. The court, however, did not foreclose the possibility that the inability to work overtime could support a successful ADA claim against an employer. Before affirming the dismissal of the employee’s claim, the Fourth Circuit performed an individualized inquiry into the employee’s local labor market to determine if his inability to work overtime could have substantially limited his ability to perform a class of jobs or a broad range of jobs in the area of maintenance engineering. The employee, however, did not present any evidence indicating that his inability to work overtime significantly restricted his ability to work. Presumably, if the employee had presented evidence to that effect, he could have prevailed on his ADA claim.

NLRB Limits Employers’ Restrictions on Employees Wearing Pro-Union Buttons and Ribbons

The National Labor Relations Board and courts have frequently considered the issue of displaying pro-union insignia in healthcare settings. The traditional rule has been that restrictions on insignia in immediate patient care areas were presumptively valid because such insignia “might be unsettling to patients — particularly those who are seriously ill and thus need quiet and peace of mind.” However, a recent NLRB case, St. John’s Health Center, will make it harder for healthcare employers to restrict the wearing of buttons and ribbons containing pro-union messages.

Facts of the Case: In the context of a union organizing campaign, several nurses wore a ribbon distributed by the union stating “Saint John’s RNs for Safe Patient Care.” The hospital banned this ribbon in immediate patient care areas. The hospital had issued its own ribbon stating “Saint John’s Mission Is Patient Safe Care,” which it allowed nurses to wear in immediate patient care areas. Additionally, the hospital permitted nurses to wear other union buttons in immediate patient care areas — just not the specific ribbon that was considered critical of the hospital.

The Board’s Ruling: The NLRB found that the ban was not presumptively valid because it was selectively enforced — in that the hospital allowed the pro-employer ribbons and other union buttons to be worn in immediate patient care areas. Without a presumption of validity, the Board then considered if “special circumstances” still justified the ban. The Board has previously found special circumstances in a healthcare setting where the restriction is “necessary to avoid disruption of health-care operations or disturbance of patients.” In St John’s Health Center, the Board compared the language between the prohibited union ribbon and permitted employer ribbon and found that there was “no difference between the two messages as they would be perceived by a patient.” Thus, the employer’s justification for the ban on the union ribbon was “weakened by the fact that [it] distributed a virtually identical ribbon and allowed nurses to wear it in immediate patient care areas.” Furthermore, the Board stated that the employer presented “no evidence” that patients were aware of the union organizing campaign, to the extent that the ribbon would disturb them or “disrupt healthcare operations.” Thus, the Board found no such special circumstances and that the employer’s ban on the union ribbon violated the National Labor Relations Act.

Practical Impact: Any policies or bans on union buttons or ribbons must be reconsidered in light of this case. It appears that such bans will be entitled to presumptive validity only if they are applied to all insignia in immediate patient care areas. It is possible that even without presumptive validity, “special circumstances” — such as a particularly strong union message or a message particularly critical of the Hospital’s care, staffing, etc. — might render the ban lawful, but the employer will need strong evidence that the union insignia will “disturb patients or disrupt healthcare operations” in order to prevail.


COBRA. An employer that failed to provide several required pieces of information in a COBRA notice to a terminated employee, despite its efforts to comply in good faith with the statute and the employee receiving all the information needed to make an informed decision, still violated the employee’s rights under COBRA according to the federal district court for the Eastern District of Virginia. In Middlebrooks v. Goodwin, the employer conceded that it failed to include in a terminated employee’s COBRA notice, the consequences of failing to elect or for waiving coverage; the grace periods and consequences for delayed or nonpayment of premiums; the importance of keeping the plan administrator informed of the employee’s current contact information; a notice that the employee had 60 days to enroll in COBRA; the correct date that the maximum 18 months of coverage would expire; and the name of the plan. The court, however, found that the employee had not been prejudiced as a result of these omissions and was generally aware of her COBRA rights. Further, the employee had not incurred any uninsured expenses after her termination and before she was covered under a new employer’s plan nearly six months later. The employee also made no effort to exercise her COBRA rights or to contact the employer about coverage. The employer’s deficiencies were not brought to its attention until the employee filed suit two years after the employer had sent the employee the COBRA notice. Despite the court finding that the employer had acted in good faith in connection with satisfying its COBRA obligations, it ruled that the deficiencies in the notice did have the potential to harm and mislead terminated employees. The court determined that a penalty of $500 was appropriate for the employer’s noncompliance. While the penalty issued by the court may seem small, the employer inevitably incurred far greater costs in having to defend a lawsuit, demonstrating the importance of making sure that a post-termination COBRA notice contains all of the required information and accurately advises the employee of his or her rights under COBRA.

Record Keeping Requirements Extended to GINA. The EEOC has issued an extension of its existing recordkeeping requirements under Title VII and the Americans with Disabilities Act (ADA) to entities covered by Title II of the Genetic Information Nondiscrimination Act (GINA). Title II of GINA, which like Title VII and the ADA covers employers with 15 or more employees, protects job applicants, current and former employees, labor union members, and apprentices and trainees from employment discrimination based on genetic information. Under Title II of GINA, covered entities now must preserve personnel records for a specified period like they do under Title VII and the ADA. For example, private employers must retain personnel and employment records for one year from the date the record is made or the personnel action is taken, whichever occurs later. And in the case of involuntary termination, employers must retain the terminated employee’s personnel records for one year from the date of termination. Additionally, when a charge of discrimination has been filed under Title VII, the ADA, or GINA, or where a civil action has been brought by the EEOC or the Attorney General, private employers must retain all records related to the charge or action until its final disposition.

Healthcare Law Mandates New Employer Disclosures. On February 6, 2012, the Department of Health and Human Services extended the effective date of yet another mandate of the Patient Protection and Affordable Care Act. Effective September 23, 2012 (rather than March 23, 2012, as previously announced), employers will be required to provide employees and new hires with certain disclosures about the healthcare benefit plans offered by the employer. Employers will be required to provide a “Summary of Benefits and Coverage” (“SBC”) to employees summarizing and explaining the benefits and coverage provided by the company’s group healthcare plan (a sort of mini summary plan description). Employers also will have to supply a glossary of commonly used health plan terms. These notices will have to be provided to employees who enroll in the employer’s healthcare on or after September 23, 2012 and annually during each open enrollment period thereafter. The format and content of the SBC also must conform to several specific requirements. For example, the SBC cannot be more than four pages long and the print not less than 12-point font. It must be written in a “culturally and linguistically appropriate manner” and use language that is easily understandable by the average plan participant. The content of the SBC must include a summary description of the coverage that is available under the plan, using uniform definitions of standard terms. It must include explanations of the cost sharing features (e.g., deductibles, coinsurance, and co-payments) and provide examples of “common benefits scenarios” (e.g., pregnancy, serious and catastrophic medical conditions, etc.). The Department of Labor has online resources for plan sponsors to comply with the new SBC requirements that can be found at Model SBC and a Glossary of Health Coverage and Medical Terms.


Attendance policies that require employees to provide a doctor’s note stating the nature of the absence before the health-related absence would be excused could result in unlawful medical inquiries under the ADA. In a case filed by the EEOC against Dillard’s department stores on behalf of employees who were affected by such an attendance policy (EEOC v. Dillard’s, Inc.), the EEOC claimed that the employer violated the ADA when it required that doctor’s notes in support of an absence specifically identify the nature of the illness, or the absence would be treated as unexcused. Some employees were disciplined and terminated for these “unexcused” absences.

The U.S. District Court for the Southern District of California concluded that Dillard’s attendance policy, on its face, permitted supervisors to conduct impermissible disability-related inquiries. Dillard’s policy required employees to disclose “the nature of the absence (such as migraine, high blood pressure, etc ....)” and “the condition being treated.” Such an inquiry by Dillard’s, the court held, may tend to elicit information regarding an actual or perceived disability and invited intrusive questioning into the employee’s medical condition in violation of the ADA. Indeed, the ADA regulations make clear that an employer “shall not ... make inquiries of an employee as to whether such employee is an individual with a disability or as to the nature or severity of the disability, unless such examination or inquiry is shown to be job-related and consistent with business necessity.” The court found that there was no evidence indicating that Dillard’s policy was job-related or a matter of business necessity.

This case provides a strong reminder for employers to review their attendance policies to ensure that they comply with today’s interpretation of workplace laws to avoid the EEOC’s scrutiny. The court did provide some guidance for Dillard’s, and employers in general, when it noted that “Dillard’s could have required its employees to submit a doctor’s note specifying the date on which the employee was seen, stating that the absence from work was medically necessary, and stating the date on which such employee would be able to return to work.”  

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