Avoiding State Law Pitfalls

Scenario One

You receive a call from a manager of one of your restaurants located in Washington, DC. He is in the process of hiring a new waitress and is deciding between two female candidates with no known disabilities who are the same age, race, and national origin. Candidate #1 has several years of experience as a waitress, while Candidate #2 has virtually none. The restaurant is located close to several Georgetown University fraternities and its customers are predominantly male. The manager feels that Candidate #2 (who is more physically attractive than Candidate #1) would draw more male customers into the restaurant. The manager asks you whether it is illegal to make a hiring decision based on the physical attractiveness of a candidate. Although you do not personally approve of the manager's decision-making process, you advise him that there is no legal bar to using a candidate's physical attractiveness in making a hiring decision as long as the manager does not use age, race, national origin, or a known disability as a factor in his decision.

Result

Candidate #1 files suit against the Company under the Human Rights District of Columbia Code, which prohibits discrimination on the basis of 'personal appearance.' See Washington D.C. Human Rights Act of 1977, D.C. Code '2-14014.01. The manager testifies at trial regarding his rationale for selecting Candidate #2 over #1 (her physical attractiveness), and judgment is entered against the company for reasonable attorneys' fees, costs, and compensatory damages.

Scenario Two

A manager of a Chicago restaurant calls you regarding a long-term employee whose son is in the U.S. Marines. The employee would like to take a month off work to spend time with his son before the latter departs for Iraq. The employee does not have any unused vacation or other form of leave available under the company's policies. The manager advises that the employee's performance is average, but a 30-day leave would negatively impact the restaurant's operations during the busy summer months. You advise the manager that the Family & Medical Leave Act does not apply because neither the employee nor his family member suffers from a serious health condition, and the Uniformed Services Employment & Reemployment Act (USERRA) is inapplicable because that statute only protects employees who are, themselves, in the military. You further inform the manager that it is permissible to deny the employee leave and that the manager should apply the company's attendance policies consistently to all employees. The manager denies the employee's leave request, and the employee decides that spending time with his son before he goes to war is more important than any job. The employee advises the manager of his decision, and the manager terminates the employee.

Result

The employee brings suit against the company under the Illinois Family Military Leave Act, which provides up to 30 days of unpaid family military leave to employees whose spouse, son, or daughter has been called to military service lasting longer than 30 days with the State or United States pursuant to the orders of the Governor or the President of the United States. See 820 ILCS '151/1, et seq. The company has no defense; the court orders the company to reinstate the employee, and grants the employee other equitable relief.

Scenario Three

The manager of a restaurant in Hartford, CT, calls you regarding an outspoken cook who frequently expresses his views on controversial topics. All of the cooks discuss a broad range of topics while working, and these discussions do not interfere with their performance. Nevertheless, the manager has advised this particular cook that he should be careful about offending others with his views on sensitive topics. The cook responds that this is America, and he has a constitutional right to say whatever he wants. The manager asks you whether this is true. You correctly advise the manager that the First Amendment to the U.S. Constitution does not apply to private employers. Rather, federal constitutional rights only come into play if there is some form of 'state action.' The next time the cook expresses his view on a controversial topic, the manager fires him.

Result

The employee files suit under Connecticut state law, which prohibits the discipline or discharge of an employee for exercising his or her rights guaranteed by the First Amendment to the U.S. Constitution. See Conn. Gen. Stat. '31-51q. The employee prevails. In addition to reinstatement, the employee is awarded his attorneys' fees, back pay, and $1 million in punitive damages by a jury that was offended by the company's attempt to suppress the cook's right to free speech.

Scenario Four

A manager of a Minneapolis, MN, restaurant calls you regarding an employee who showed up for work exhibiting bizarre behavior and with white powder under her nose. The company has a written policy prohibiting the use of illegal drugs and authorizing the company to conduct probable cause testing of employees. In accordance with company policy, the employee undergoes testing which confirms that she is under the influence of cocaine. The manager is calling for approval to terminate the employee. You know that some states prohibit random drug testing, but you are not aware of any law that would prohibit an employer from discharging an employee who shows up for work under the influence of cocaine, especially when the employer has probable cause to test the employee and the testing confirms the employee's use of an illegal drug. You authorize the termination.

Result

The employee sues the company under the Minnesota Drug and Alcohol Testing in the Workplace Act, which prohibits employers from discharging an employee who tests positive for illegal drugs on only one occasion. See Minn. Stat. '181.950, et seq. Under these circumstances, the employer has a statutory obligation to offer the employee the opportunity to participate in a rehabilitation program at the employer's expense. The employee prevails and is reinstated to her former position. In addition, the employee is awarded back pay, attorneys' fees, and $500,000 in punitive damages to punish this out-of-state employer for not familiarizing itself with Minnesota's laws.

Conclusion

As these examples illustrate, there are state laws lurking out there with counter-intuitive prohibitions and serious penalties. To further complicate matters, new state laws are passed regularly, making it virtually impossible for large employers to stay apprised of all of the laws passed at the state level. Thus, it is important to research applicable state (and municipal and county) law and to consult local employment counsel whenever possible.

William J. Wortel, a member of this newsletter's Board of Editors, is a member of the Labor and Employment and Commercial Litigation Client Service Groups and he serves on the Labor and Employment Best Practices Committee in the Chicago office of Bryan Cave, LLP. He would like to thank Richard Herbst, a former summer intern who assisted with the research on this article.

Navigating the treacherous waters of federal employment law is not easy. Well-intentioned employers can unknowingly violate some of the more complicated (albeit well-known) laws like the Family & Medical Leave Act and the Americans With Disabilities Act due to a lack of familiarity with the applicable regulations or the case law interpreting them. When an employer has operations in multiple jurisdictions, the analysis becomes even more complex due to circuit splits on pivotal issues.

With so much to worry about on the federal front, it is no wonder that human resources personnel, in-house counsel and outside counsel often do not spend sufficient time and resources staying apprised of some of the more obscure state laws on the books. If you are reading this article, you almost certainly have internal or external clients relying on you to give them accurate advice on whether the applicable statute is federal or state, well-known or obscure, recently-passed or decades old. The purpose of this article is to highlight the importance of this obligation through hypothetical examples of well-intentioned employers violating unfamiliar state laws.

For purposes of the following hypothetical examples, assume you are in-house counsel for a large restaurant chain with operations throughout the United States. You do not have human resources personnel in each state, and you often are called upon to render advice regarding the legality of various employment decisions.

Scenario One

You receive a call from a manager of one of your restaurants located in Washington, DC. He is in the process of hiring a new waitress and is deciding between two female candidates with no known disabilities who are the same age, race, and national origin. Candidate #1 has several years of experience as a waitress, while Candidate #2 has virtually none. The restaurant is located close to several Georgetown University fraternities and its customers are predominantly male. The manager feels that Candidate #2 (who is more physically attractive than Candidate #1) would draw more male customers into the restaurant. The manager asks you whether it is illegal to make a hiring decision based on the physical attractiveness of a candidate. Although you do not personally approve of the manager's decision-making process, you advise him that there is no legal bar to using a candidate's physical attractiveness in making a hiring decision as long as the manager does not use age, race, national origin, or a known disability as a factor in his decision.

Result

Candidate #1 files suit against the Company under the Human Rights District of Columbia Code, which prohibits discrimination on the basis of 'personal appearance.' See Washington D.C. Human Rights Act of 1977, D.C. Code '2-14014.01. The manager testifies at trial regarding his rationale for selecting Candidate #2 over #1 (her physical attractiveness), and judgment is entered against the company for reasonable attorneys' fees, costs, and compensatory damages.

Scenario Two

A manager of a Chicago restaurant calls you regarding a long-term employee whose son is in the U.S. Marines. The employee would like to take a month off work to spend time with his son before the latter departs for Iraq. The employee does not have any unused vacation or other form of leave available under the company's policies. The manager advises that the employee's performance is average, but a 30-day leave would negatively impact the restaurant's operations during the busy summer months. You advise the manager that the Family & Medical Leave Act does not apply because neither the employee nor his family member suffers from a serious health condition, and the Uniformed Services Employment & Reemployment Act (USERRA) is inapplicable because that statute only protects employees who are, themselves, in the military. You further inform the manager that it is permissible to deny the employee leave and that the manager should apply the company's attendance policies consistently to all employees. The manager denies the employee's leave request, and the employee decides that spending time with his son before he goes to war is more important than any job. The employee advises the manager of his decision, and the manager terminates the employee.

Result

The employee brings suit against the company under the Illinois Family Military Leave Act, which provides up to 30 days of unpaid family military leave to employees whose spouse, son, or daughter has been called to military service lasting longer than 30 days with the State or United States pursuant to the orders of the Governor or the President of the United States. See 820 ILCS '151/1, et seq. The company has no defense; the court orders the company to reinstate the employee, and grants the employee other equitable relief.

Scenario Three

The manager of a restaurant in Hartford, CT, calls you regarding an outspoken cook who frequently expresses his views on controversial topics. All of the cooks discuss a broad range of topics while working, and these discussions do not interfere with their performance. Nevertheless, the manager has advised this particular cook that he should be careful about offending others with his views on sensitive topics. The cook responds that this is America, and he has a constitutional right to say whatever he wants. The manager asks you whether this is true. You correctly advise the manager that the First Amendment to the U.S. Constitution does not apply to private employers. Rather, federal constitutional rights only come into play if there is some form of 'state action.' The next time the cook expresses his view on a controversial topic, the manager fires him.

Result

The employee files suit under Connecticut state law, which prohibits the discipline or discharge of an employee for exercising his or her rights guaranteed by the First Amendment to the U.S. Constitution. See Conn. Gen. Stat. '31-51q. The employee prevails. In addition to reinstatement, the employee is awarded his attorneys' fees, back pay, and $1 million in punitive damages by a jury that was offended by the company's attempt to suppress the cook's right to free speech.

Scenario Four

A manager of a Minneapolis, MN, restaurant calls you regarding an employee who showed up for work exhibiting bizarre behavior and with white powder under her nose. The company has a written policy prohibiting the use of illegal drugs and authorizing the company to conduct probable cause testing of employees. In accordance with company policy, the employee undergoes testing which confirms that she is under the influence of cocaine. The manager is calling for approval to terminate the employee. You know that some states prohibit random drug testing, but you are not aware of any law that would prohibit an employer from discharging an employee who shows up for work under the influence of cocaine, especially when the employer has probable cause to test the employee and the testing confirms the employee's use of an illegal drug. You authorize the termination.

Result

The employee sues the company under the Minnesota Drug and Alcohol Testing in the Workplace Act, which prohibits employers from discharging an employee who tests positive for illegal drugs on only one occasion. See Minn. Stat. '181.950, et seq. Under these circumstances, the employer has a statutory obligation to offer the employee the opportunity to participate in a rehabilitation program at the employer's expense. The employee prevails and is reinstated to her former position. In addition, the employee is awarded back pay, attorneys' fees, and $500,000 in punitive damages to punish this out-of-state employer for not familiarizing itself with Minnesota's laws.

Conclusion

As these examples illustrate, there are state laws lurking out there with counter-intuitive prohibitions and serious penalties. To further complicate matters, new state laws are passed regularly, making it virtually impossible for large employers to stay apprised of all of the laws passed at the state level. Thus, it is important to research applicable state (and municipal and county) law and to consult local employment counsel whenever possible.

William J. Wortel, a member of this newsletter's Board of Editors, is a member of the Labor and Employment and Commercial Litigation Client Service Groups and he serves on the Labor and Employment Best Practices Committee in the Chicago office of Bryan Cave, LLP. He would like to thank Richard Herbst, a former summer intern who assisted with the research on this article.