Author: Dinse

Amy M. McLaughlin, Kendall Hoechst, Editors
Dinse, Knapp & McAndrew, P.C., Burlington

by Amy McLaughlin

The “#MeToo” movement is sweeping across the country and calling well-deserved attention to the issue of sexual harassment. The U.S. Court of Appeals for the 2nd Circuit (whose rulings apply to all Vermont employers) is following suit. In a recent decision, the 2nd Circuit chided an employer for not doing enough to monitor the work environment and ensure it was harassment-free. Employers, pay attention: This case illustrates the new standard of heightened awareness.

Facts

In late 1999 or early 2000, a female dental assistant complained to the Connecticut Commission on Human Rights and Opportunities that Dr. Michael Young, the dentist with whom she worked at University of Connecticut Health Center (UConn Health), had harassed her. The dental assistant alleged that Young sent her gifts and notes saying things like “You’re beautiful” or “I love your smile.”

The complaint resulted in a “last-chance” agreement between Young and UConn Health that required Young to see a psychiatrist and imposed a 10-day suspension on him for “offensive conduct towards a [coworker], poor judgment, and not cooperating during the initial investigation.” The agreement further provided that he could be fired for “any future instances of unsolicited flirtatious letters or comments to any employee, or any behavior similar to this.”

When he returned to work following his suspension, Young received no additional attention, monitoring, or training. Further, UConn Health never informed his subsequent supervisors that he had been the subject of a sexual harassment complaint or that he was disciplined as a result of the complaint, including being put on a last-chance agreement.

Fast-forward to March 2008, when UConn Health hired Mindy MacCluskey as a dental assistant. MacCluskey began working with Young two days a week at Manson Youth Institute, a Connecticut Department of Corrections facility. Approximately six months after she began working at Manson, Young started making comments about MacCluskey’s appearance and what she was wearing, called her “young and beautiful,” and commented that he was surprised she had three children. He also asked her personal questions that made her uncomfortable, such as inquiring about her relationship with her children’s father and asking whether “anybody has ever cheated.” Moreover, he stood very close to her in a way she described as “creepy.”

MacCluskey reported Young’s conduct to both a coworker and a nurse who was also a union representative. Someone then reported to Dr. Alexis Gendell, who supervised both Young and MacCluskey at Manson, that there was a concern at the dental clinic. Gendell stopped MacCluskey in the hallway and asked “if there was a situation, is everything [OK],” to which MacCluskey replied, “There is a situation and I’m all set. It is under control.”

UConn Health never made Gendell aware of the earlier sexual harassment complaint against Young or his last-chance agreement. Gendell didn’t follow up on the conversation with MacCluskey to inquire about the nature of the concern at the dental clinic, make any effort to investigate whether Young had a history of “concerns” with other coworkers, or monitor Young’s conduct.

Because she needed more hours to support her family, in August 2010, MacCluskey requested a transfer to MacDougall-Walker Correctional Institution, where she would be assigned to work with Young three days a week. Her transfer request was approved, and she began working at MacDougall-Walker in December 2010. According to MacCluskey, Young’s behavior toward her escalated over a series of months and included the following incidents:

• He repeatedly commented on her appearance and asked her out.
• He brought lingerie and bathing suit catalogs to work and asked her to model the clothing in them.
• He sent her e-mails asking how he could make her “blush”; telling her that there were “rules” for her position, such as kissing him before and when she left work; asking her about “crazy hookups”; and telling her, “I love you.”
• He repeatedly bumped into her, touched her hair and hands, gave her shoulder rubs, stared at her, and sent her a Valentine’s Day gift.
• On one occasion in 2011, he stood in a doorway and blocked her from leaving a room, and when she tried to leave, he grabbed her waist, pulled her close, and put his hand up her shirt.

After Young put his hand up her shirt, MacCluskey reported the sexual harassment to Rikel Lightner, her supervisor at MacDougall-Walker, and filed an incident report. Lightner, in turn, reported the complaint to UConn Health. Young was placed on paid administrative leave while UConn Health conducted an investigation. After the investigation revealed that he had violated the internal sexual harassment policy, Young chose to resign rather than be fired.

In September 2013, MacCluskey filed a sexual harassment lawsuit against UConn Health. The case went to trial, and the jury found in MacCluskey’s favor, awarding her $200,000 in damages. UConn Health appealed the jury’s verdict to the 2nd Circuit, arguing there was no legal basis for imputing liability to it because it had no knowledge of Young’s harassment of MacCluskey before she complained in 2011 after the incident in which he put his hand up her shirt.

2nd Circuit’s decision

To prevail on a hostile work environment claim, an employee must prove that (1) the workplace was permeated with discriminatory intimidation that was sufficiently severe or pervasive to alter the conditions of her work environment and (2) there is a specific basis for imputing the conduct that created the hostile environment to the employer. When a hostile work environment claim involves conduct by a coworker rather than a supervisor, the employer is liable only for its own failure to exercise reasonable care to address the harassment. Therefore, the test is whether the employer failed to provide a reasonable avenue for complaint or whether it knew, or in the exercise of reasonable care should have known, about the harassment yet failed to take appropriate remedial action.

On appeal, it was undisputed that UConn Health provided a reasonable avenue for complaint, and Mac- Cluskey didn’t report Young’s conduct prior to 2011. The question, then, was whether UConn Health had constructive notice of the harassment. In other words, the crucial issue the appellate court faced was whether UConn Health should have known about the harassment in the exercise of reasonable care.

After considering all the evidence presented at trial, the 2nd Circuit concluded that there was sufficient evidence for a reasonable jury to find that UConn Health should have, in the exercise of reasonable care, known about Young’s harassment. The court specifically highlighted the following facts:

• After Young sexually harassed another assistant in 2000, he was disciplined and subjected to a last-chance agreement.
• Young’s supervisors, including Gendell, weren’t made aware of the last-chance agreement.
• Young’s supervisors should have been monitoring him.
• From 2009 through 2011, Young made inappropriate comments about MacCluskey’s appearance, inquired about her personal life, and invaded her personal space.
• At some time between 2009 and 2010, MacCluskey complained about Young’s behavior to two coworkers.
• Gendell was alerted to a possible issue at the dental clinic involving MacCluskey, but when she asked about the “situation,” she did so in a hallway rather than a private setting and didn’t ask follow-up questions, raise the issue again, or take any further action.
• Had Gendell been informed about Young’s earlier harassing conduct and his last-chance agreement, she would have conducted a more robust inquiry when she became aware that there was a “situation.”

Given that evidence, the court concluded that UConn Health should have known about Young’s harassment of MacCluskey in 2009 or 2010 and should have taken steps to remediate the situation.

Lessons learned

Given today’s climate in which an ever-increasing number of sexual harassment allegations are being made, employers need to be especially cautious. Certainly, the holding in this case significantly reinforces that need.

Even though UConn Health had an antiharassment policy and MacCluskey didn’t avail herself of its provisions until more than two years after Young began harassing her, the employer was still held liable. The court concluded that given its knowledge of Young’s past harassing behavior, UConn Health didn’t do enough to ensure a harassment-free work environment and protect its employees. For example, it could have monitored Young’s behavior, informed his new supervisors of the last-chance agreement, and, perhaps most important, thoroughly delved into MacCluskey’s report of a “situation.”

Bottom line: It’s clear from this case that today’s environment requires employers to take a proactive approach. You must always be mindful, attentive, and cognizant of the work environment, and if there’s any potential issue that might rise to the level of concerning behavior, you must take immediate steps to address it.

Amy McLaughlin can be reached at amclaughlin@dinse.com or 802-859-7031.

Karen McAndrew, Leigh Cole, Editors
Dinse, Knapp & McAndrew, P.C., Burlington

by Karen McAndrew

The Vermont Supreme Court recently shed some light—although not total clarity—on the effect an employee-signed release agreement can have on any later worker’s comp claims she may file.

Facts

Brandy Clayton was a hair stylist at a J.C. Penney store. In February 2011, she filed a worker’s comp claim for a painful left foot condition that she alleged first occurred in March 2010 as a result of standing on her feet all day. Her employer accepted the claim as compensable.

In October 2013, while Clayton’s claim was being processed and settlement discussions were underway, she saw a podiatrist for pain in her right foot as well as her left foot. The podiatrist noted that her pain in both feet was likely related to standing all day at work. She saw the podiatrist again for the same complaints in early 2014, and in June 2014, she told an independent medical examiner of pain in both feet.

In September 2014, Clayton and J.C. Penney signed a “Full and Final Form 16 Settlement Agreement” related to the March 2010 injury and filed it with the Vermont Department of Labor (VDOL) for approval. A completed Form 16 must be filed before the VDOL will approve any settlement of a worker’s comp claim.

The accompanying release agreement contained something of a mash-up of language pertaining specifically to Clayton’s March 2010 work-related injury and any associated conditions and broad general release language about any injury or condition related in any way to her employment.

By statute, the labor commissioner can approve a worker’s comp settlement only if its terms are in the employee’s best interests. To this end, a hearing officer appointed by the commissioner sent Clayton a letter that referred to her “foot pain” resulting from her work activities and cautioned that she should understand that signing the release “means that if you get worse in the future and need to see a doctor . . . or even have to search for a less strenuous job, you will not be entitled to any worker’s compensation assistance. I need to know that you completely understand this.”

Clayton signed the agreement, with the acknowledgment that she understood “that once the agreement is approved, I will relinquish my right to all future worker’s compensation benefits causally related to my . . . work injury.” The hearing officer then approved the settlement.

Six months later, in March 2015, Clayton filed a worker’s comp claim for injury to her right foot. J.C. Penney filed a form denial, stating that the condition predated the release and was causally related to her left foot injury. The commissioner held that the release barred all claims causally related to the specific work-related injury but then took it upon herself to rule that a release that bars anything other than claims related to the specific work-related injury—here, the left foot injury—is void as a matter of public policy. The parties appealed the commissioner’s ruling to the Vermont Supreme Court.

Court weighs in

The specific question before the supreme court, therefore, was whether the commissioner had the authority to void a release on public policy grounds, and the court held that she did not.

The powers of an administrative agency such as the VDOL are limited to those specifically granted by statute. The applicable statute in this case says the commissioner has the power to disapprove of a settlement or release only if it doesn’t conform to the general worker’s comp scheme or if it is found not to be in the best interests of the employee. In this case, there was the added fact that the commissioner’s designee—the hearing officer—had previously approved the release, so the commissioner had no authority to reverse that decision.

This is where the confusion comes in, however, because in the end it’s not clear what the dispute was about. The commissioner had held that the release was valid insofar as it covered conditions arising from the original work-related injury but not to unrelated claims arising from later injuries. The supreme court said it was valid to the extent it covered injuries that “pre-date or co-occurred” with that March 2010 injury, and J.C. Penney had apparently narrowed its defense on appeal to a contention that Clayton’s right foot injury was causally related to her left foot injury. So it seems like everyone was on the same page, in which case it’s not clear why the supreme court even waded into what appears to be a nonissue.

Moreover, the court’s opinion doesn’t clarify what would seem to be the critical issue: Does the release cover all work-related injuries—such as the right foot injury—that occurred before the date the release was signed?

In most other contexts, releases are written in terms of any claims “known or unknown” that have occurred up to the date of the signing of the release—and the release in this case, while somewhat poorly worded, contains language to that effect. The court referred only to injuries that “pre-date or co-occurred” with the left foot injury. It didn’t address the question of whether the release would bar further related claims. If the right foot injury happened after the left foot injury but before the release was signed and it was known at the time the release was signed, would the release bar a claim on the right foot? That answer will have to wait for another day.

However, the court did provide some helpful language about the enforceability of releases in the worker’s comp context. Once a release is approved by the labor commissioner, it may be set aside only if entered into under circumstances of fraud or “mutual mistake of fact,” which are the general standards for setting aside any otherwise valid contract.

Bottom line

The main message, in this and other contexts, is the importance of clarity and precision in contractual language, including releases, which are often used in connection with settlement of discrimination, wrongful termination, and other employment-related claims as well as worker’s comp claims.

Karen McAndrew can be reached at kmcandrew@dinse.com or 802-864-5751.

Kendall Hoechst, Amy McLaughlin, Editors
Dinse, Knapp & McAndrew, P.C., Burlington

by Lauren Sampson

Can a state employee use 21 V.S.A. § 384(b)(7) or Article Four of the Vermont Constitution to sue his employer and enforce his minimum wage and hour rights? The Vermont Supreme Court recently affirmed that state employees are not covered by § 384(b)(7), and Article Four does not create property interests in claimed employment rights.

What the law says

In relevant part, § 384(b) states that an employer “shall not pay an employee less than one and one-half times the regular wage rate for any work done by the employee in excess of 40 hours during a workweek.” The subsection “shall not” apply to “state employees who are covered by the federal Fair Labor Standards Act” (FLSA).

The FLSA did not cover most state government employees when it was passed in 1938. However, when the federal law was amended in 1974, its coverage, including the minimum wage and maximum hour provisions, was “extended . . . to virtually all of the remaining State and local government employees who were not [previously] covered.” There are two key exceptions: elected officials and their appointees, and employees of legislative branches.

In Garcia v. San Antonio Metro. Transit Authority, the U.S. Supreme Court affirmed in 1985 that the FLSA generally covers state employees. In Alden v. Maine, however, the Court concluded in 1999 that state employees do not have a private right of action to enforce the FLSA’s provisions because Article I of the U.S. Constitution doesn’t permit individuals to sue nonconsenting states for damages in state courts.

Chapter I, Article Four, of the Vermont Constitution provides:

Every person within this state ought to find a certain remedy, by having recourse to the laws, for all injuries or wrongs which one may receive in person, property, or character; every person ought to obtain right and justice, freely, and without being obliged to purchase it; completely and without any denial; promptly and without delay; conformably to the laws.

The Vermont Supreme Court has ruled that Article Four is “equivalent to the federal Due Process Clause.” The court has also emphasized that Article Four “does not create substantive rights,” but rather is intended to “ensure access to the judicial process.”

Facts and procedural history

An employee worked for the Vermont Department of Labor (VDOL) from 2010 to 2014. After he was terminated, he sued the VDOL, claiming he had worked 704 hours of overtime over the course of his employment but hadn’t been paid time and a half. He brought claims under 21 V.S.A. § 384(b)(7) and the FLSA, but withdrew the FLSA claim when the state filed a motion arguing it was protected against the federal claim by sovereign immunity. The state then filed a motion asking the court to dismiss the state-law claim. The trial court granted the motion, finding that § 384(b)(7) “plainly exempts State employees” and that Article Four does not give state employees a private right of action to seek damages for unpaid overtime. The former employee appealed to the Vermont Supreme Court.

The employee argued that before 1994, when § 384 was amended, state employees were “statutorily excluded” from coverage under Vermont’s minimum wage and overtime law. He suggested that the fact that § 384 was amended in 1994 demonstrated that the legislature “intended for the State to be accountable to its employees for minimum wage and overtime wages.” That intent, according to the employee, was thwarted by the U.S. Supreme Court’s decision in Alden. He further argued that the FLSA is insufficient as a remedy because “for wronged state employees seeking the wages to which they are entitled by state statute, [the] FLSA effectively does not exist.” To that end, he maintained that despite its plain language, § 384( b)(7) provides state employees a private right of action to enforce the minimum wage and overtime law.

Second, the former employee argued that he could enforce his rights against the state through Article Four of the Vermont Constitution because it provides due process relief for plaintiffs with statutory rights, and state employees have a statutory property right to payment under the minimum wage and overtime law. Further, he stressed that he has no private right of action under the FLSA, and the “only other remedy”—that is, the wage complaint process through the U.S. Department of Labor (DOL)—is insufficient and doesn’t meet Article Four standards for due-process protection. In other words, there must be an Article Four right of action because he has a property right under the minimum wage and overtime law, but no adequate means of enforcing it.

Decision of the Vermont Supreme Court

In a unanimous decision, the Vermont Supreme Court rejected the former employee’s arguments for three reasons. First, the court declined to interpret § 384(b)(7) in a way that would contravene its plain language. The court noted that it’s illogical to convert an express exemption of state employees to an implied waiver of sovereign immunity, particularly since waivers of sovereign immunity must be express.

Second, the court disputed the former employee’s interpretation of the legislature’s intent in 1994, concluding that if lawmakers wanted to ensure state employees had a private right of action to enforce minimum wage and hour rights, they could have explicitly included language to that effect in the law. The court also noted that the legislature could have added such language following the U.S. Supreme Court’s decision in Alden or after Vermont federal courts concluded that § 384(b)(7) doesn’t waive the state’s sovereign immunity. Indeed, the U.S. 2nd Circuit Court of Appeals (whose rulings apply to all Vermont employers) has determined that although the exception for state employees “implicitly acknowledges” a legal obligation to follow the FLSA, § 384 “says nothing about how that obligation may be enforced.”

Third, the court concluded that the former employee’s characterization of the FLSA as “insufficient” without a private right of action doesn’t provide a legal basis to supplement § 384. The court observed that supplementing or creating a new remedy for the former employee would “infringe on the lawmaking responsibilities” granted to the Vermont Legislature.

Finally, the court rejected the former employee’s contention that state employees have a statutory property right to compensation under the minimum wage and overtime law. To that end, the court emphasized that Article Four doesn’t “create” property interests in alleged employment rights; instead, it affords an employee a remedy only if he “can show that he has a pre-existing property interest in those employment rights.” Because the court concluded that § 384 provides no such right, the former employee had no recourse under Article Four.

Significance for employers

There are a couple of important takeaways from the Vermont Supreme Court’s opinion in this case:

(1) The court unequivocally held that state employees are generally “covered by” the FLSA and that § 384(b)(7) doesn’t provide employees any minimum wage and hour rights or a statutory private right of action to enforce those rights. The court specifically noted the distinction between being covered by the FLSA and having the right to sue the state as an employer under the FLSA. In other words, although the state has a legal obligation to abide by the FLSA, it’s insulated from being sued for alleged violations under § 384. Instead, an FLSA-protected employee may file a complaint with the DOL, which has the discretion to investigate the complaint and bring an enforcement action against the state. To that end, an employee cannot simply resort to citing coverage by or inclusion in a federal or state statute when challenging an employer; he must also show that the legislature intended to afford him a private right of action.

(2) The court clarified that an employee cannot use Article Four to create a property interest or remedy based on an alleged employment right. There must be a stand-alone statutory or common-law cause of action enabling him to bring a claim.

Lauren Sampson can be reached at lsampson@dinse.com or 802-864-5751.