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Archive for March, 2012

PREGNANCY: A DELICATE CONDITION WITH ROBUST LEGAL PROTECTIONS

Posted on: March 27th, 2012 by admin No Comments

Pregnancy discrimination involves the disparate (different) treatment of a female applicant or employee because of pregnancy, childbirth, or a medical condition related to pregnancy or childbirth. The federal Pregnancy Discrimination Act (“PDA”) forbids discrimination based on pregnancy when it comes to any aspect of employment, including hiring, firing, pay, job assignments, promotions, layoff, training, fringe benefits, such as leave and health insurance, and any other term or condition of employment.

The legislature has made it clear that public policy mandates protections for this vulnerable population. Both state and federal law protect employees from pregnancy discrimination under the rubric of gender (sex) discrimination and disability (handicap) discrimination. The Massachusetts anti-discrimination statute, M.G.L. c.151B, makes it unlawful for an employer to discriminate against any employees for the reasons of pregnancy. Likewise, Title VII under Federal law prohibits the aforementioned conduct by an employer or their agent towards a protected employee. Beal v. Board of Selectmen of Hingham, 419 Mass. 535, 544 (1995); The Massachusetts Maternity Leave Act (MMLA) ; and the Federal Family Medical Leave Act (FMLA) also afford protections to employees requiring leave as a result of the birth or adoption of a child.

The MCAD issued a recent decision that is illustrative of the elements of proof expected in a pregnancy discrimination action. In MCAD, et al. v. Florence Pizza Factory Corp., et al., the Massachusetts Commission Against Discrimination (the “MCAD”) found in favor of an employee of Florence Pizza Factory Corp. based upon her claim of pregnancy discrimination. The MCAD awarded the pregnant employee back pay, plus $20,000.00 for emotional distress.

In the Florence Pizza Factory case, the MCAD found that the employee established sufficient evidence to state a claim of pregnancy discrimination by demonstrating that upon notifying her manager of her pregnancy, her manager “made comments about her size, expressed concern about her ability to perform her job, reduced her hours and terminated her employment while she was pregnant.” These facts provide guidance as to what evidence an employee may use to prove a claim of pregnancy discrimination.

Although the MCAD considered evidence as to the Florence Pizza Factory’s rationale for the termination, namely that the restaurant experienced declining business and that Complainant’s performance was substandard, the MCAD was not persuaded that the employee performed poorly or that the restaurant’s sales had, in fact, decreased. Accordingly, the MCAD found no legitimate, non-discriminatory reasons for the employee’s termination. The MCAD further opined that “[t]he evidence supports Complainant’s contention that Respondents’ articulated reasons were pretext for discrimination and that she was terminated because of her pregnancy.” As is often the case, it appears that witness credibility and supporting documentation underlying the termination were key factors in this decision.

The Florence Pizza Factory decision illustrates that the MCAD will examine both the way a Complainant is treated at work and the employer’s explanation for its employment actions by looking beyond mere assertions. Here, the MCAD “peeled the onion” and found that the employee’s supervisor made comments that revealed his negative stereotypes about pregnant women in the workplace, and that the employer’s stated reason for terminating the employee—that business was decreasing and the employee’s performance was lagging—was not supported by the evidence.

The Florence Pizza Factory decision highlights the importance for employers to properly train supervisors, as well as generate contemporaneous and accurate documentation of employee performance. For employee advocates, the case highlights the importance of looking beyond the stated reasons for disciplinary action and carefully analyzing business and sales data when employed as a basis for termination.

Bennett & Belfort P.C. will continue to update this blog with future developments in this evolving area of discrimination law.

SOX WHISTLE BLOWING PROTECTIONS ONLY COVER EMPLOYEES: NOT INDEPENDENT CONTRACTORS

Posted on: March 5th, 2012 by admin No Comments

In a split opinion, the Federal First Circuit Court of Appeals in the matter of Lawson, et. al. v. FMR LLC. et. al. , found that Sarbanes-Oxley (“SOX”) s.806 (18 USC s.1514A) , a statute enacted to encourage the reporting of illegal conduct by employees of publicly traded companies, does not protect contractors of such companies who ‘blow the whistle’ and are punished for raising formal complaints about financial improprieties.   

Plaintiffs, Lawson and Zang, filed suit against their employers, private companies that advise and consult for the mutual fund giant Fidelity, alleging that they were discharged after complaining about inaccurate financial registration statements and illegal accounting methods, which were believed to be securities law violations, prepared specifically for Fidelity.  The Court’s two-judge majority focused on the fundamentals of statutory interpretation in declining to apply a broad reading to the definition of “employee” in the statute and thereby following what they believed to be Congress’ legislative intent when drafting SOX.  The Court concluded that because Congress did not define ‘employee’ to specifically include outside contractors, claims by such contractors were outside the scope of SOX’s whistleblower protections.  Fidelity successfully argued that if contactors were included under the umbrella of SOX, even the parking lot attendant could conceivably claim protections, far over-reaching, they suggested, the SOX drafters’ initial intent.

However,  Justice Thompson penned a scathing dissenting opinion, vehemently disagreeing and, in pertinent part, stating, “Not only does Sarbanes-Oxley s806 by its terms protect employees of contractors of public companies, but the agency that handles every s806 whistleblower complaint has issued formal regulations recognizing that straight forward interpretation…”  The dissent goes on to suggest that in excluding contractors (who do not work for publically traded companies), the majority ignored applicable precedent, the deference courts must give regulations and the broad language of the SOX statute.  Justice Thompson concludes that that majority disregards “not only our own precedent but also the views of the other branches of government, to say nothing for grammar and logic.” 

Employee advocates suggest that this decision is particularly dangerous because it discourages the reporting of illegal activity.  This is of particular concern in an industry historically rife with reporting fraud and bookkeeping deceit (e.g. Enron), which SOX was enacted and amended to reform.  Financial  transparency and corporate honesty are fundamental in our free market system as they level the playing field between competitors by providing accurate data to those considering and trading in their shares.  It is thought that SOX encourages the reporting of cheaters, those firms that intentionally submit tainted information to unfairly advance their self-interest.  Lawson will continue to receive attention for some time given these core policy considerations, that is SOX’s goal to foster public confidence in the stock market by cleaning up public companies that cook the books.  As such, preventing retaliation against contractors that have access to and are willing to bring to light potentially tainted financial information might well have been a logical extension of SOX’s reach.  If this central aim is to be upheld relative to publicly traded companies, the Plaintiffs asked, should it really matter when that individual, someone who risks their standing for the greater good and reports wrongdoing that might broadly damage the public, is a contractor?

It is important to note that almost across the board, employment laws carve out clear distinctions and afford varying rights for employees vs. independent contractors.  For example, wage laws, payroll taxes and insurance coverage all depend on the characterization of workers as either employees, who can claim the protections of those laws, or contractors, who cannot.   The holding in Lawson that SOX whistleblower provisions apply only to employees of publicly traded companies, and not their private contractor advisor colleagues, significantly narrows the scope of the statute in the mutual fund industry and elsewhere.  It continues a trend wherein courts distinguish those rights afforded to contractors v. employees. 

Stay tuned to the Bennett & Belfort Docket Blog for further unfolding developments in the hot employment law areas of retaliation, whistle blowing, public policy and The Sarbanes-Oxley Act.