Recent Developments from Around the States

Robert Hammond was a worker on a gravel roads project. He complained that the type of rock being used on the roads project violated contractual specifications. He also alleged mismanagement of the project and lodged a complaint with the Federal Highway Administration claiming violation of a federal law prohibiting the making of false statements in connection with federally funded highway projects. After he made these allegations, Hammond's wages were reduced, and he was placed on paid-off-site status. Upon investigation of Hammond's charges by the FHA and the state, an independent state investigator determined that Hammond's complaints lacked a reasonable basis and were made in bad faith. As a result of the investigator's conclusions, Hammond's employment was terminated. Hammond, who was represented by a union, filed a grievance in response to his discharge under the collective bargaining agreement in place, claiming that his termination was without just cause. The grievance subsequently went to arbitration. Additionally, Hammond filed a claim under Alaska's whistleblower statute. The arbitrator concluded that Hammond was, in fact, discharged for just cause and accordingly found no violation of the collective bargaining agreement. In the court action, the state of Alaska moved for summary judgment on the ground that the arbitrator's decision precluded litigation of the whistleblower claims. Hammond appealed.

The Supreme Court of Alaska determined that the lower court's grant of summary judgment in favor of the state was in error, holding that under the Alaska Whistleblower Act (Alaska Stats. '' 39.90.100-39.90.150), “an employee's exercise of the right to arbitrate under a [collective bargaining agreement] does not preclude subsequent litigation of related statutory claims in state court unless the employee clearly and unmistakably submits the statutory claims to arbitration.” Despite his filing of the grievance, the court found that Hammond had not “clearly and unmistakably” submitted his claims to arbitration and could therefore litigate his state whistleblower claims. “An employee is not required to choose between the rights provided by a contract and the rights provided by statutes such as the Alaska Whistleblower Act; absent a clear and unmistakable waiver, the employee is entitled to both,” the majority wrote. Here, the court observed, the mandatory arbitration provisions of the collective bargaining agreement did not clearly and unmistakably pertain to statutory claims. In order to constitute an effective waiver of Hammond's statutory claims, the collective bargaining agreement “must either contain an arbitration clause including 'a provision whereby employees specifically agree to submit all federal causes of action arising out of their employment to arbitration' or contain 'an explicit incorporation of the statutory anti-discrimination requirements in addition to a broad and general arbitration clause,'” the court further noted, quoting the U.S. Court of Appeals for the Second Circuit's opinion in Rogers v. New York University, 220 F.3d 73 (2d Cir. 2000). The collective bargaining agreement applicable to Hammond's employment did not do so here, the court found. Additionally, Hammond's references to his whistleblower claims in the prior arbitration did not effectively commit his statutory claims to arbitration, and Hammond's union representative had not sought to arbitrate those claims. Finally, the court observed that Alaska's public policy strongly favoring the resolution of disputes through arbitration did not outweigh its countervailing policy against allowing entities other than the employee himself to waive his statutory rights. “Granting preclusive effect to arbitration proceedings mandated by a [collective bargaining agreement] and negotiated by the employee's union — rather than the employee — would, in the absence of a clear and unmistakable submission of the statutory claim to arbitration, unacceptably diminish these statutory rights,” the court held.

MONTANA

Prostitution Proposal Was Job-related, High Court Rules

A motel manager's statements to a 16-year-old applicant for a “live in maid” position that the job would require the applicant to have sex with him and motel customers was a quid pro quo, job-related exchange, the Montana Supreme Court has ruled. Schmidt v. Cook, 2005 WL 562629 (Mont. Mar. 8).

Nina Schmidt inquired into a “live in maid” position at the Triple Crown Motor Inn in Great Falls, MT, in September 2000. She was 16 years old at the time. During her interview with motel manager Elvin Cook, Cook informed Schmidt that she would be hired for the position. Cook also made clear, however, that she would be required to have sex with him and motel customers as part of her job. At the time, Schmidt was aware that a friend, who was employed at the motel and who had referred her to the interview, was engaged in a sexual relationship with Cook. Schmidt told her mother about Cook's comments, and her mother promptly called the Great Falls Police Department. As it happened, the police were already investigating the situation based on an earlier complaint. At the urging of the police, Schmidt agreed to wear a recording device when she returned to the hotel. When Schmidt returned to the motel, Cook reiterated that the live in maid position would require prostitution; he then pulled down Schmidt's underwear and slapped her buttocks with a ping pong paddle. Cook was later arrested and pleaded guilty to promotion of prostitution and sexual assault. A few months later, Schmidt filed a complaint with a Montana state agency, alleging that Cook had subjected her to sex discrimination in employment. Although the agency agreed with Schmidt and awarded her $35,000 for emotional distress, the Montana Human Rights Commission reversed the decision, finding that Cook's actions “did not occur in an employment context” and that the relevant quid pro quo exchange did not take place in a job interview, but rather in the context of a police investigation. A lower court affirmed the Commission's findings, and Schmidt appealed.

On review, the Montana Supreme Court reversed the lower court, finding that the proposed “sexual conduct was a condition of [Schmidt's] employment.” Despite Schmidt's awareness that the friend who had referred her to the interview was sexually involved with Cook, Schmidt had not testified in the court below that she thought that sex was part of the job. A dissenting justice wrote that it must have been “perfectly clear” to Schmidt that the interview was actually for a prostitution position, not for a genuine maid's position at the motel. Rejecting this view, however, the majority found that it “makes no sense” to blame Schmidt, “a 16-year-old girl with an 8th-grade education and no prior employment experience” for Cook's conduct.

NEW HAMPSHIRE

Illegal Status May be Used to Rebut Lost Wages Claim

Answering a question of first impression, the New Hampshire Supreme Court has held that an employer may rebut an illegal worker's claim for lost wages based on earnings in the United States rather than in his or her country of origin by demonstrating the worker's illegal status. Rosa v. Partners in Progress Inc., 2005 WL 497214 (N.H. Mar. 4).

At the construction site of a Wal-Mart store in Manchester, NH, general contractor Wrenn Associates subcontracted painting to Partners in Progress, which, in turn, subcontracted exterior painting to Eagle General Laborers. Wudson Rosa, a Brazilian citizen, was injured in December 2000 when an aerial lift belonging to United Rentals fell on him at the construction site. Eagle General Laborers was Rosa's direct employer. Rosa filed suit against Partners in Progress, Wrenn Associates, and United seeking various damages, including damages lost earnings capacity. Rosa based the level of his claim for lost wages on United States, rather than Brazilian, wage levels. The superior court transferred certain disputed issues to the state's high court, namely: 1) whether an illegal alien should be entitled to make a claim for lost wages; 2) if an alien were so entitled, whether the level of his or her claim should be based on wage levels in their country of origin; and 3), whether the defendants should be entitled to rebut the alien's wage claim with evidence of his illegal status.

The New Hampshire Supreme Court answered all three issues in the affirmative. Illegal workers in the U.S., the court noted, are given access to the judicial system and have a right to sue to enforce various contractual obligations and redress civil wrongs, such as a negligently inflicted injury. The court therefore reasoned that a claim for lost wages cannot be separated from such rights. As for the issue of how to measure the allegedly lost wages, the court observed that, as a general matter, an individual working illegally in the U.S. may not recover lost U.S. earnings because of the unlawful nature of the employment. In this instance, however, tort deterrence principles tipped in favor of awarding damages based on U.S. wage levels to a worker employed by an employer who is aware of the worker's illegal status. To refuse to allow such damages would otherwise encourage employers who knowingly hire illegal workers to treat such individuals as disposable, the court noted. Thus, “[a] person responsible for an illegal alien's employment may be held liable for lost United States wages if that illegal alien can show that the person knew or should have known of his status, hired or continued to employ him nonetheless,” the Court held. As for the third issue on review, the court reiterated the general rule that an individual working illegally in the U.S. may not recover lost U.S. earnings. The court concluded, “an illegal alien's status, though irrelevant to the issue of liability … is relevant to the issue of lost earnings.”

ALASKA

Prior Union Grievance Does Not Preclude Whistleblower Claim

Reversing a grant of summary judgment to the state of Alaska, the Alaska Supreme Court has held that a Department of Transportation employee who filed a grievance over his discharge was not precluded from pursuing a state law whistleblower claim on the basis of the same termination. Hammond v. Alaska, 2005 WL 435171 (Alaska Feb. 25).

Robert Hammond was a worker on a gravel roads project. He complained that the type of rock being used on the roads project violated contractual specifications. He also alleged mismanagement of the project and lodged a complaint with the Federal Highway Administration claiming violation of a federal law prohibiting the making of false statements in connection with federally funded highway projects. After he made these allegations, Hammond's wages were reduced, and he was placed on paid-off-site status. Upon investigation of Hammond's charges by the FHA and the state, an independent state investigator determined that Hammond's complaints lacked a reasonable basis and were made in bad faith. As a result of the investigator's conclusions, Hammond's employment was terminated. Hammond, who was represented by a union, filed a grievance in response to his discharge under the collective bargaining agreement in place, claiming that his termination was without just cause. The grievance subsequently went to arbitration. Additionally, Hammond filed a claim under Alaska's whistleblower statute. The arbitrator concluded that Hammond was, in fact, discharged for just cause and accordingly found no violation of the collective bargaining agreement. In the court action, the state of Alaska moved for summary judgment on the ground that the arbitrator's decision precluded litigation of the whistleblower claims. Hammond appealed.

The Supreme Court of Alaska determined that the lower court's grant of summary judgment in favor of the state was in error, holding that under the Alaska Whistleblower Act (Alaska Stats. '' 39.90.100-39.90.150), “an employee's exercise of the right to arbitrate under a [collective bargaining agreement] does not preclude subsequent litigation of related statutory claims in state court unless the employee clearly and unmistakably submits the statutory claims to arbitration.” Despite his filing of the grievance, the court found that Hammond had not “clearly and unmistakably” submitted his claims to arbitration and could therefore litigate his state whistleblower claims. “An employee is not required to choose between the rights provided by a contract and the rights provided by statutes such as the Alaska Whistleblower Act; absent a clear and unmistakable waiver, the employee is entitled to both,” the majority wrote. Here, the court observed, the mandatory arbitration provisions of the collective bargaining agreement did not clearly and unmistakably pertain to statutory claims. In order to constitute an effective waiver of Hammond's statutory claims, the collective bargaining agreement “must either contain an arbitration clause including 'a provision whereby employees specifically agree to submit all federal causes of action arising out of their employment to arbitration' or contain 'an explicit incorporation of the statutory anti-discrimination requirements in addition to a broad and general arbitration clause,'” the court further noted, quoting the U.S. Court of Appeals for the Second Circuit's opinion in Rogers v. New York University , 220 F.3d 73 (2d Cir. 2000). The collective bargaining agreement applicable to Hammond's employment did not do so here, the court found. Additionally, Hammond's references to his whistleblower claims in the prior arbitration did not effectively commit his statutory claims to arbitration, and Hammond's union representative had not sought to arbitrate those claims. Finally, the court observed that Alaska's public policy strongly favoring the resolution of disputes through arbitration did not outweigh its countervailing policy against allowing entities other than the employee himself to waive his statutory rights. “Granting preclusive effect to arbitration proceedings mandated by a [collective bargaining agreement] and negotiated by the employee's union — rather than the employee — would, in the absence of a clear and unmistakable submission of the statutory claim to arbitration, unacceptably diminish these statutory rights,” the court held.

MONTANA

Prostitution Proposal Was Job-related, High Court Rules

A motel manager's statements to a 16-year-old applicant for a “live in maid” position that the job would require the applicant to have sex with him and motel customers was a quid pro quo, job-related exchange, the Montana Supreme Court has ruled. Schmidt v. Cook, 2005 WL 562629 (Mont. Mar. 8).

Nina Schmidt inquired into a “live in maid” position at the Triple Crown Motor Inn in Great Falls, MT, in September 2000. She was 16 years old at the time. During her interview with motel manager Elvin Cook, Cook informed Schmidt that she would be hired for the position. Cook also made clear, however, that she would be required to have sex with him and motel customers as part of her job. At the time, Schmidt was aware that a friend, who was employed at the motel and who had referred her to the interview, was engaged in a sexual relationship with Cook. Schmidt told her mother about Cook's comments, and her mother promptly called the Great Falls Police Department. As it happened, the police were already investigating the situation based on an earlier complaint. At the urging of the police, Schmidt agreed to wear a recording device when she returned to the hotel. When Schmidt returned to the motel, Cook reiterated that the live in maid position would require prostitution; he then pulled down Schmidt's underwear and slapped her buttocks with a ping pong paddle. Cook was later arrested and pleaded guilty to promotion of prostitution and sexual assault. A few months later, Schmidt filed a complaint with a Montana state agency, alleging that Cook had subjected her to sex discrimination in employment. Although the agency agreed with Schmidt and awarded her $35,000 for emotional distress, the Montana Human Rights Commission reversed the decision, finding that Cook's actions “did not occur in an employment context” and that the relevant quid pro quo exchange did not take place in a job interview, but rather in the context of a police investigation. A lower court affirmed the Commission's findings, and Schmidt appealed.

On review, the Montana Supreme Court reversed the lower court, finding that the proposed “sexual conduct was a condition of [Schmidt's] employment.” Despite Schmidt's awareness that the friend who had referred her to the interview was sexually involved with Cook, Schmidt had not testified in the court below that she thought that sex was part of the job. A dissenting justice wrote that it must have been “perfectly clear” to Schmidt that the interview was actually for a prostitution position, not for a genuine maid's position at the motel. Rejecting this view, however, the majority found that it “makes no sense” to blame Schmidt, “a 16-year-old girl with an 8th-grade education and no prior employment experience” for Cook's conduct.

NEW HAMPSHIRE

Illegal Status May be Used to Rebut Lost Wages Claim

Answering a question of first impression, the New Hampshire Supreme Court has held that an employer may rebut an illegal worker's claim for lost wages based on earnings in the United States rather than in his or her country of origin by demonstrating the worker's illegal status. Rosa v. Partners in Progress Inc., 2005 WL 497214 (N.H. Mar. 4).

At the construction site of a Wal-Mart store in Manchester, NH, general contractor Wrenn Associates subcontracted painting to Partners in Progress, which, in turn, subcontracted exterior painting to Eagle General Laborers. Wudson Rosa, a Brazilian citizen, was injured in December 2000 when an aerial lift belonging to United Rentals fell on him at the construction site. Eagle General Laborers was Rosa's direct employer. Rosa filed suit against Partners in Progress, Wrenn Associates, and United seeking various damages, including damages lost earnings capacity. Rosa based the level of his claim for lost wages on United States, rather than Brazilian, wage levels. The superior court transferred certain disputed issues to the state's high court, namely: 1) whether an illegal alien should be entitled to make a claim for lost wages; 2) if an alien were so entitled, whether the level of his or her claim should be based on wage levels in their country of origin; and 3), whether the defendants should be entitled to rebut the alien's wage claim with evidence of his illegal status.

The New Hampshire Supreme Court answered all three issues in the affirmative. Illegal workers in the U.S., the court noted, are given access to the judicial system and have a right to sue to enforce various contractual obligations and redress civil wrongs, such as a negligently inflicted injury. The court therefore reasoned that a claim for lost wages cannot be separated from such rights. As for the issue of how to measure the allegedly lost wages, the court observed that, as a general matter, an individual working illegally in the U.S. may not recover lost U.S. earnings because of the unlawful nature of the employment. In this instance, however, tort deterrence principles tipped in favor of awarding damages based on U.S. wage levels to a worker employed by an employer who is aware of the worker's illegal status. To refuse to allow such damages would otherwise encourage employers who knowingly hire illegal workers to treat such individuals as disposable, the court noted. Thus, “[a] person responsible for an illegal alien's employment may be held liable for lost United States wages if that illegal alien can show that the person knew or should have known of his status, hired or continued to employ him nonetheless,” the Court held. As for the third issue on review, the court reiterated the general rule that an individual working illegally in the U.S. may not recover lost U.S. earnings. The court concluded, “an illegal alien's status, though irrelevant to the issue of liability … is relevant to the issue of lost earnings.”