Oregon News & Analysis

  • New OT rule sparks questions beyond where to set salary threshold for 'exempt' status

    It has taken several years, but the U.S. Department of Labor (DOL) has finally issued its new final rule determining which employees can be exempt from the law requiring overtime pay. The new rule, slated to take effect January 1, 2020, is far more moderate than the Obama administration’s effort to update the salary threshold for the overtime exemption. A federal judge struck down that rule shortly before it was to go into effect in December 2016. 

  • No fantasyland for employee: sexual harassment at the porno store

    A lower court judge found a pornographic video store failed to deal appropriately with a sexually hostile work environment and retaliated against an employee who complained about the situation. The Oregon Court of Appeals' subsequent decision in the case reminds employers it's hard to reverse a loss at trial unless there's been a legal mistake and clarifies the rules for recovering attorneys' fees.

    Facts

    Wilford Bearden, who is openly gay, worked as a clerk at a pornographic video store that does business as Fantasyland II. Over the course of a few months, another clerk brought in copies of Busted, a magazine that prints mug shots of arrestees. The clerks wrote offensive sexual remarks in the magazines, leading the clerk who brought the magazines to the store to complain to "Frank," a clerk who worked the day shift and had trained Bearden. However, another person, "Mansur" was the actual manager of the store.

    Frank responded to the clerk's complaint by stating, " Yeah, they're idiots." When Bearden reiterated his coworker's complaints, Frank responded, "Boys will be boys." Eventually, the magazines were removed from the store.

    Busted to other clerks' "teams." They assigned a man who had been arrested for murder and sexual abuse of a corpse to Bearden's team. He told them not to use his name in that way and let them know that he was offended and assumed the assignment had a sexual connotation.

    After the magazines were removed, another clerk drew a very offensive cartoon about Bearden. When Bearden found the cartoon, he showed it to Frank and told her, "You know, this is sexual harassment. Something's got to be done about it." He felt the cartoon targeted him because he is gay. Frank told Bearden to talk to Mansur.

    The next morning, Mansur contacted the offending employee and "read [him] the riot act," remarking that if Bearden pursued legal action for sexual harassment, the clerk could lose his job. Bearden hadn't yet spoken with Mansur. A few days later, the clerk who had drawn the cartoon delivered a letter of apology to Bearden and told him what Mansur had said in the call. Bearden thanked the employee for the apology, and they shook hands and agreed to start fresh.

    When Bearden went to work the next Monday, he was told that someone else would work his shift, and he was sent home. He tried to contact Mansur but was unsuccessful. On Tuesday, Mansur sent him a message asking him to come to the store, where she terminated him. He was immediately replaced with a new clerk.

    Lawsuit and appeal

    Bearden sued Fantasyland, alleging he was subjected to sexual harassment based on his sex and sexual orientation and retaliation for his complaints about the harassment. The case was tried before a judge rather than a jury. The judge ruled in favor of Bearden on all claims. Fantasyland appealed to the Oregon Court of Appeals, arguing the case should have been dismissed when it asked the court to find there was insufficient evidence to support any of the claims.

    It's important to note that once a case is tried, the appeals court's standard of review for insufficient evidence is very narrow. It needs to find only that there was some evidence supporting the verdict in favor of the party that prevailed at trial. In doing so, the court views all the evidence and any inferences that can reasonably be drawn from it in favor of the prevailing party.

    The appeals court first reviewed Fantasyland's contention that there was no evidence Mansur knew Bearden had engaged in protected activity when she terminated his employment. That argument failed because the evidence indicated that shortly after Bearden complained about sexual harassment to Frank, Mansur called the offending employee and told him he could lose his job. Accordingly, the trial judge could infer that Frank had informed Mansur that Bearden had complained about harassment before she terminated his employment.

    Fantasyland also argued the trial judge's verdict should be reversed because there was no evidence the harassment was based on Bearden's sexual orientation, the evidence didn't support a finding that the clerks' conduct would be objectively sexually offensive to a gay man, the sexual harassment wasn't severe or pervasive enough to create a legal claim, and there was no evidence it knew or should have known of the harassment. The court of appeals rejected all four claims, in large part because of the narrow standard of review.

    First, the court found it certainly was possible for the trial judge to find the conduct was sexual in nature and objectively offensive to a gay man. The court next determined the evidence was sufficient to allow the trial judge to determine the sexual harassment was severe and pervasive. The inappropriate conduct with the magazine occurred numerous times despite the complaints to Frank and continued unabated over three months. And at least some of the conduct was directed at Bearden.

    Further, the conduct involving Busted provided a backdrop for the later cartoon, which the court of appeals described as "an explicit humiliating depiction of [Bearden's] body and bodily functions that carried an extremely offensive and personal sexual implication." The court found that based on the evidence, it could not reverse the trial judge's decision that the conduct had altered the conditions of Bearden's employment and created an abusive working environment.

    The court also rejected Fantasyland's argument that the sexual harassment claim failed because it didn't know about the harassment since Bearden and the other clerk complained to Frank, who wasn't a manager. The evidence was clear, however, that Frank had informed Mansur, who was a manager, about the harassment. That should have led to an investigation and appropriate remedial action, which didn't occur.

    Attorneys' fees and costs

    The court then turned to Bearden's contention that his award of attorneys' fees and costs was too low. Typically, in most discrimination cases, a prevailing employee is entitled to an award of attorneys' fees and costs. Bearden claimed the trial judge had improperly reduced the fees he was awarded for working with the Bureau of Labor and Industries (BOLI) before the lawsuit was filed.

    The appeals court noted that in cases in which fees may be awarded, time spent working on other matters related to the claims is recoverable. The trial judge simply rejected all the fees related to the BOLI proceeding. Because the judge hadn't evaluated how much of those fees were reasonably incurred to achieve ultimate success in the lawsuit, the matter was sent back to the lower court for review.

    Similarly, Bearden complained that he received only half the fees spent by his attorneys in connection with an unsuccessful motion that the trial court grant judgment in his favor before trial. The appeals court also sent this issue back to the trial judge for a complete explanation of why the amount he requested was excessive.

    Finally, Bearden complained about certain costs he wasn't awarded, such as for photocopying, telephone charges, and postage. Unfortunately for him, he asked that those amounts be awarded as "costs" under the statute when they're actually recoverable as a portion of attorneys' fees. Because he never asked the trial judge to consider them as attorneys' fees, he couldn't later ask the appeals court to do so.

    Bottom line

    There are a number of practical and legal lessons to be learned from this case. First, it's a good reminder that you need to have a clear policy addressing how employees should deal with harassment in the workplace.Bearden and his coworker didn't know to whom they should complain about the offensive conduct. Without a clear line of responsibility, Fantasyland failed to adequately respond to the sexual harassment claims. A clear policy also would have reminded supervisors and employees that it's unlawful to retaliate against someone who complains about harassment or discrimination.

    On the legal side, this case is a reminder that once you lose at trial, it's difficult to mount a successful challenge to the sufficiency of the evidence. And although employers can infrequently recover attorneys' fees when they prevail in discrimination cases, employees can almost always recover attorneys' fees. You should keep in mind that the attorneys' fees clock is ticking throughout the process, including when the employee is working on the claim with BOLI at the agency level.

    The author can be reached at ckeith@perkinscoie.com.

  • Preparation, training help employers cope with unsettling ICE news

    The thought of immigration enforcement agents surrounding a workplace, seizing business records, questioning employees, and even making arrests is worrisome to say the least. But it has been and likely will continue to be a reality for many employers since audits and raids by U.S. Immigration and Customs Enforcement (ICE) are on the upswing. Plus, the Social Security Administration has once again begun sending "no-match letters" to employers that have W-2 forms with mismatched names and Social Security numbers. Now referred to as educational correspondence (EDCOR) or an employer correction request (ECR), the letters require employers to take action to resolve the problem. So the signals are clear: Employers with undocumented workers are on notice that they face serious consequences.

  • Is morbid obesity 'impairment' protected by ADA? 9th Circuit doesn't decide

    After being fired, a man sued his former employer, alleging he was let go because he is overweight. His case made its way to the U.S. 9th Circuit Court of Appeals (whose rulings apply to all Oregon employers). The question before the court was whether obesity is a covered disability under the Americans with Disabilities Act (ADA). Unfortunately, the court didn't provide a definitive answer.

  • 9th Circuit says it's not enough for bias to be 'motivating factor'

    The Americans with Disabilities Act (ADA) prohibits covered employers from discriminating against qualified employees on the basis of a disability. In 2005, the 9th Circuit issued a ruling in Head v. Glacier Northwest, Inc., in which it said that to prove a violation of the ADA, an employee needs to show only that disability discrimination motivated the employer's adverse decision even if other reasons played a role (the "motivating factor" analysis). The employee does not have to show that the adverse employment action wouldn't have occurred but for the disability (the "but-for" standard). The motivating-factor standard applies to discrimination claims under Title VII of the Civil Rights Act of 1964.

  • New Portland payroll deduction takes effect

    Effective September 1, 2019, a new Portland City Code Section (§ 2.10.010C) provides that publicor private-sector employees have the right to make contributions to candidates running for political office in the city through payroll deductions by their employer. If the employer already allows payroll deductions for any other purpose, it must allow deductions for city elections. If the employer doesn't have such deductions already, allowing them is voluntary.

  • Just pay it: 9th Circuit revives California wage claims for brief 'off-the-clock' inspections

    The de minimis doctrine under the Fair Labor Standards Act (FLSA), the federal minimum wage and overtime law, says that employers do not need to pay employees for otherwise compensable amounts of time that are small, irregular, or administratively difficult to record. When deciding whether certain amounts of time are de minimis, federal courts governed by the U.S. 9th Circuit Court of Appeals (whose rulings apply to employers in Oregon and eight other Western states) consider:

  • Oregon Supreme Court broadens employer liability under 'cat's paw' theory

    The Oregon Supreme Court has adopted a legal concept known as the "cat's paw" theory, under which an employer may be liable for discrimination after an adverse employment decision against an employee even though the ultimate decision maker is unbiased and has no discriminatory motives. Under the theory, a subordinate's discriminatory motive is imputed to the actual decision maker if the biased subordinate has some significant influence or involvement that leads to the adverse action.

  • IRS authorizes more preventive services to be paid by HSA-eligible health plans

    The IRS recently issued guidance expanding the definition of "preventive care" that may be covered—possibly free of charge—by a high-deductible health plan (HDHP) that's paired with a health savings account (HSA). While the changes made by the guidance are relatively simple, they have the potential to make HSAs substantially more attractive, particularly to employees who have a chronic condition that is controlled by medication or therapy. Before diving too far into the details, however, it's important to have a solid understanding of HSAs and how they work.

  • Association retirement plans may not be ready for prime time

    The U.S. Department of Labor (DOL) recently finalized regulations allowing multiple employers to offer a retirement plan to their employees through a combined association retirement plan (ARP). In what is becoming a common theme for the agency under President Donald Trump, the new rules are intended to make it easier for small to mid-sized employers to offer such plans to their employees. While they are similar to rules finalized last year that established a new type of association health plan, they go even further by establishing guidelines for professional employer organizations (PEOs) to sponsor retirement plans for their members' employees. Unfortunately, they also may face some of the same problems as those rules, but we're getting ahead of ourselves.