Indefinite Leave, Quirky Question # 123
Quirky Question # 123:
Here’s a problem we encounter periodically. We have a large workforce (in excess of 100,000 employees). An employee goes out on disability leave, with an expected return date of X. As that date approaches, we are advised that the employee will need additional time away from the job. We try to get precise information regarding when the employee actually will be back at work, but we just don’t seem to get a straight answer. Some times, we are provided notes from physicians that simply push the return dates out to some indefinite point in the future. Some times, the dates specified in the doctors’ notes come and go, without the employee returning to work. The employee then advises us that he or she has experienced “complications” or that the “recovery is taking longer than anticipated” or that “the initial problem has caused related problems that will require additional time off,” etc. Arrgghhh!
How long do we have to let the employee stay out on disability leave? At some point, can we just give a firm date and state if the employee is not back at work by that date, he is fired?
Roy’s Analysis:
You are not alone. The fact pattern you describe reflects one of the most common frustrations employers have with the Americans with Disabilities Act and other statutes bearing upon this issue – how do you deal with an employee out on an indefinite leave of absence? Several other questions are implicit in this inquiry: a) how long can an employee remain out an leave; b) must the employer keep the job open for him or her; c) what should be done if the temporary replacement employee outperforms the employee on leave; d) must the employer find a “new” job for the employee when he or she is ready to return to work? None of these questions has an easy answer.
Let’s consider the legal issues you may wish to evaluate. First, the Americans with Disabilities Act (ADA) creates a number of different issues for your consideration. In most instances, the date your employee will return to work from a disability-related leave is a subject upon which you and your employee can reach agreement. In certain situations, however, as in the question you pose, the return date seems to change constantly, some times legitimately, some times not.
Second, the issue of when your employee returns to work may implicate the Family and Medical Leave Act (FMLA). Assuming your employee qualifies to receive benefits under this statute, he or she is entitled to 12 weeks of unpaid leave in a 12-month period. Administering the FMLA becomes complicated when the employee’s reason for the leave (leave for himself/herself or a qualifying family member) is intermittent, perhaps spread out over a period of many months. Ultimately, however, though calculating the time taken off may be somewhat difficult, the FMLA leave does have an endpoint.
Third, if your employee was injured while working, an entirely different statutory scheme comes into play – your state’s Workers’ Compensation statute. For a work-related injury, your employee’s return to work date will depend on a variety of factors, including the nature of the injury, whether your employee is permanently or partially disabled, whether your company could provide your employee a job that addresses whatever limitations may have been imposed on your employee by his or her physician, etc.
Fourth, with respect to all three of these inter-related statutory schemes, you have to be sensitive to a potential retaliation claim. If your employee has asserted his or her rights under the ADA, the FMLA, or a state worker’s comp statute, and your company then takes adverse action against the employee, you risk a claim of retaliation. This does not mean that your company cannot, or even should not, take adverse action (such as termination), you just need to base your decision on sound, non-retaliatory reasons.
But, for the purpose of your question, let’s assume the your employee was not injured at work, and did not seek any leave from your company under the FMLA. For the purpose of your question, I will assume that your employee has been absent from work due to a qualifying disability and has been discussing with your company, albeit without success, regarding when he or she should be able to return to work.
Even if your employee has a qualifying disability, which your company has been trying to accommodate by affording the employee an extended leave, this does not mean you must keep a job open indefinitely, or that your employee has the freedom to return to the job at any time in the recovery process. This conclusion is grounded on the issue of whether your employee could perform the essential functions of the job, with or without a reasonable accommodation.
For example, in Peyton v. Fred’s Stores of Arkansas, Inc., No. 08-2346 (8th Cir. April 15, 2009), the appellate court examined a factually difficult case involving an employee suffering from ovarian cancer. She informed her employer of her need to for hospitalization, and her fiance’ provided the employer with a note from her physician, “Floyce Peyton needs to be off work at least [until] 1/9/06. Return date unknown.” Plaintiff had surgery on January 12. Her employer contacted her at the hospital to inquire how long she would be on leave. Peyton allegedly said that she did not know, although she was heavily sedated at the time and could not recall the conversation. On January 14, just two days following the surgery, the employer terminated the plaintiff’s employment. After six months of chemo-therapy, plaintiff had recovered sufficiently to return to work. By that time, however, her job had long since been given to another employee.
In the litigation, the defendant company agreed that Peyton had been disabled by her illness and subsequent treatment. Thus, the sole focus of the litigation was whether the plaintiff could perform the essential functions of her job, either with or without a reasonable accommodation. Peyton criticized the “interactive process,” which she argued her employer had failed to conduct. Although the 8th Circuit considered (without deciding) the quality of the interactive process (or the lack thereof), the appellate court still found for the employer.
The court observed, “Despite the unfortunate circumstances of plaintiff’s illness, the ADA does not provide a recovery against her employer. As noted, it is axiomatic that a person who cannot perform any of the functions of a job, with or without a reasonable accommodation, cannot, as a matter of law, be considered ‘otherwise qualified’ under the ADA. That is the case here.” The court noted that at the time Peyton had surgery and requested leave as an accommodation, she had no idea when she would be able to return to work. The court stated, “her request for reasonable accommodation . . . is that defendant should have waited indefinitely to determine the full extent of her diagnosis, treatment and recovery.” The court concluded that this claim “fails,” pointing out that courts recognize that employers “should not be burdened with guess-work regarding an employee’s return to work after an illness.” The court cited to the 1999 decision of Browning v. Liberty Mutual Insurance Co., 178 F.3d 1043, 1049 (8th Cir.),
“Employers are not qualified to predict the degree of success of an employee’s recovery from an illness or injury. To afford . . . protections of the ADA during the early stages of . . . recuperation from surgery . . . would be to burden [the employer] with the duty to see into the future. We do not believe that such was the intent of Congress in passing the ADA.”
Finding that Peyton’s illness and surgery made it impossible for her to perform the essential functions of the job and that there was no reasonable accommodation that could have been offered, the appellate court affirmed the summary judgment grant for the employer.
As the Peyton and Browning cases illustrate, when an employee fails to provide an employer with a definite return date from a disability-based leave, the courts may conclude that the employee is unable to perform the essential functions of the job. In these contexts, an employer would not violate the ADA if it elects to terminate the employee seeking indefinite leave as an accommodation.
Keep in mind, however, that some courts have held that a requested leave, even of many months, may constitute a reasonable accommodation. These decisions often arise in the context of mental disabilities, such as an employee suffering from depression or PTSD. In these cases, where the employee has specified a return date, even one several months away, some courts have found that type of accommodation to be reasonable. At that point, the analysis moves into the separate question of whether a protracted leave is likely to cause an undue hardship, which the employer has the burden to establish.
Finally, even though your company may have the right to terminate an employee who is out on an indefinite leave, I suggest that you examine carefully whether you want to do so. First, if the employee out on leave is a long-term employee with a substantial knowledge base about your company, you lose a lot by terminating that individual. Second, depending on the position of the employee out on leave, the time it takes to find a comparably qualified employee and train that individual may be roughly equivalent to the time your existing employee is on leave. Third, if you accommodate the employee out on leave, you may ensure that you have an incredibly loyal employee in your workforce, someone truly appreciative of the accommodation provided by your company. Fourth, not only is the directly affected employee likely to be extremely loyal if you accommodate his or her leave request, your company also may enhance its good will with other employees, who respect the way in which the company has treated your employee on leave.
Let’s face it, the ADA is a statute that provides protections for everyone. We are all just one drunk driver, one contaminated food product, one freakish accident, or one unexpected illness, from needing its protections. The way in which an employer treats employees seeking an accommodation under the ADA, may say quite a bit about the values of the company, a fact that will not be lost on your employees.
Another Religious Accommodation Issue, Quirky Question # 122
I read the religious discrimination question posed to your colleague in Seattle. We have a slightly different issue. All of our employees are required to wear identification tags when they are in our buildings. The IDs have their pictures on them. One of our employees recently advised us that it violated his religious beliefs to have his photo taken or to include his photo on the ID tag he wears. He has asked us to accommodate his religious beliefs by foregoing our requirement of photo IDs. We believe that the photo IDs serve a number of important purposes at our company. Must we accommodate his request to provide him special treatment on this issue.
Roy’s Analysis:
You pose an interesting question regarding whether you are obligated to accommodate one of your employee’s religious beliefs by allowing him to disregard your policy requiring to display his photo on your company ID tag. As a prefatory comment, I’d start with a refrain you’ve heard from me in previous Blog analyses – much of employment law involves a balancing act between two (or more) competing societal interests. If an employer and employee cannot amicably resolve how these conflicting interests should be reconciled, courts will assume the responsibility for sorting out which societal interest should predominate. At times, general principles can be articulated that will have widespread application. At other times, however, the governing principles will be entirely dependent on the specific facts of a case.
Let me illustrate the above observation with an example. In general, as you may have seen from my other Blog pieces addressing accommodating genuine religious beliefs, courts often focus on whether the requested accommodation would cause the employer an undue hardship. But that general principle can be dramatically affected by the specific facts of a particular case.
You did not describe the nature of your business. If, for example, your company manufactured hockey sticks, and there were not significant theft or security issues that mandated your company’s use of photo IDs, the accommodation sought by your employee might seem reasonable. If, however, your company was a private security contractor with responsibility for guarding spent nuclear fuel rods, the requirement that every employee wear an identification card, with his or her picture, may be absolutely essential. Accommodating an employee’s religious beliefs in this job environment would involve a dramatically different calculus than it would for a hockey stick manufacturer.
A recent case from the Eastern District of Pennsylvania, Cherry v. Sunoco, Inc., No. 07-cv-2235 (August 17, 2009), involved some of these issues. The plaintiff, John Cherry, worked as a refinery operator at Defendant Sunoco’s Philadelphia refinery. When he was hired in early 2001, he informed his employer of his religious beliefs, which were grounded on the Church of the True and Living God, a sect of Hebrew Israelites, that apparently prohibits its members from posing for pictures or photographs or from carrying such pictures or photographs on one’s person. At the time of Cherry’s hiring, Sunoco was willing and able to accommodate his religious beliefs, and issued him an employee ID without a photograph.
Even after the events of September 11, 2001, the defendant employer still was able to accommodate plaintiff’s religious beliefs and did not compel him to pose for or carry a photo ID. Sunoco did require plaintiff to report to security when he came into work, and, at times, plaintiff’s supervisor would have to verify his identity if the security guard on duty did not recognize him.
In the post-9/11 world, however, Congress began implementing various statutes to enhance our nation’s security. Among the statutory provisions enacted by Congress was the Maritime Transportation Safety Act (MTSA), with the US Coast Guard adopting regulations to “implement portions of the maritime security regime.” Sunoco, and specifically its Philadelphia Refinery where plaintiff worked (a port facility), was required to comply with the Coast Guard regulations by mid-2004. Defendant developed a Facility Safety Plan that required all employees at the Philadelphia refinery to carry a photo ID. At that point, plaintiff’s religious beliefs, which the defendant employer had accommodated for several years, became problematic.
Sunoco insisted that plaintiff pose for and begin wearing a photo ID. Plaintiff refused, re-explaining his religious beliefs, and proposing several alternative solutions (e.g., fingerprinting; iris scan; escort to job location). After checking with the Coast Guard as to whether any of these accommodations would suffice, and being informed that the photo ID requirement could not be waived, the defendant first suspended and later terminated plaintiff’s employment.
Upon his discharge, plaintiff sued under Title VII and the Pennsylvania Human Rights Act for religious discrimination. As discussed in other Blog analyses, to establish a prima facie case, a plaintiff claiming religious discrimination must demonstrate that he: a) held a sincere religious belief that conflicted with a job requirement; b) notified his employer of the conflict; and c) was disciplined for failing to comply with the conflicting requirement. The district court found that Cherry had established a prima facie case. Once a prima facie case is established, the employer may demonstrate that it made good faith efforts to accommodate the employee’s religious beliefs or that doing so would cause it an undue hardship. Because Sunoco acknowledged that it made no effort to accommodate the plaintiff’s religious beliefs once the MTSA and the Coast Guard regulations went into effect, the central issue in the Cherry case became whether Sunoco could accommodate plaintiff’s religious beliefs without experiencing an undue hardship.
As the trial court pointed out, “Under hardship is requiring the employer ‘to bear more than a de minimis cost’ in order to accommodate the employee’s religious practice. Economic, as well as non-economic costs can impose an undue hardship on employers. The Supreme Court has strongly suggested that ‘the undue hardship test is not a difficult threshold to pass.’”
Relying on analogous precedent, the district court concluded that it would constitute an undue hardship for an employer to require it to violate a valid criminal statute, thereby exposing its administrators to criminal prosecution and the possible consequences associated with prosecution. Because the MTSA and the Coast Guard regulations mandated that all of the port facilities’ employees carry and display a photo ID and because there were potential criminal consequences for violating that requirement, the court concluded that it would cause the employer an undue hardship to accept any of the accommodations proposed by the plaintiff-employee.
The Cherry decision is instructive, though it may not be dispositive of the parallel situation your company is confronting. To summarize, there are several critical issues you should examine when you are being asked to accommodate an employee’s religious beliefs. First, are the religious beliefs sincere? Second, do the employee’s religious beliefs conflict with some work requirement? Third, has the employee notified your company of the conflict? Fourth, can you accommodate the employee’s religious beliefs? Fifth, would accommodating those beliefs cause your company an undue hardship (recognizing that establishing an undue hardship should not be limited to an economic calculus, and may not be a difficult burden to satisfy)? The Cherry decision also demonstrates the importance of considering whether the work requirements or rules to which the employee has objected for religious reasons are based upon any external variables (e.g., federal statutes, state statutes, criminal law proscriptions, common law principles, significant public policies, etc.). It may be that the most compelling justification for rejecting the employee’s request for an accommodation is grounded upon a source external to the employer rules and requirements.
Again, however, it may be perfectly appropriate to accommodate your employee’s request for a religious accommodation, including the specific request relating to your employee’s desire to avoid having his or her picture taken or wearing a photo ID. As is evident in the Cherry case, despite a large workforce (over 1500 employees at the Philadelphia facility), Sunoco was able to accommodate its employee’s request to avoid using a photo ID for the several years preceding the passage of the MTSA and the Coast Guard regulations that altered the ID equation for port facilities. It could be that your company has equally compelling justifications for requiring employees to display a photo ID and it could be that allowing your employee to disregard this requirement would cause your company an undue hardship. But, before you leap to that conclusion, consider the mix of issues carefully. You may discover that this request can be accommodated relatively easily with virtually no hardship, undue or otherwise, to your company.
Wage and Hour Cases in the Ninth Circuit
Wage and Hour Cases in the Ninth Circuit
By: Mandana Massoumi and Carllene Placide
Wage and hour class actions comprise approximately one third of all class action litigation. The Ninth Circuit Court of Appeals has taken note as during the past six months, a number of significant wage and hour cases were decided by the court. Most of these cases involved class allegations where the court considered issues related to employee classification, off-the-clock work and individual liability. These recent decisions provide guidance to employers defending against these claims, particularly since the court seems to have heightened the scrutiny applied to these class actions.
A. Preemptive Strike on Class Certification Permissible: On July 7, 2009, the Ninth Circuit published In re: Wells Fargo Home Mortgage, 571 F.3d 953 (2009) and Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935 (2009); each favorable for employers defending against wage and hour class actions. In Vinole, the Ninth Circuit affirmed a preemptive decertification motion. Plaintiffs sought to represent a proposed class of Countrywide external home loan consultants whom they alleged were misclassified as “exempt” outside sales employees.
Countrywide preempted plaintiffs’ class certification motion by filing a motion to deny certification pursuant to Federal Rule of Civil Procedure 23. The district court granted Countrywide’s motion. On appeal, the Ninth Circuit considered whether the district court abused its discretion by granting the motion to decertify the class action prior to plaintiffs’ motion for class certification and pretrial deadlines, and whether the court could otherwise deny class certification. The 9th Circuit affirmed and found as follows:
“First, no rule or decisional authority prohibited Countrywide from filing its motion to deny certification before Plaintiffs filed their motion to certify, and Plaintiffs had ample time to prepare and present their certification argument. Second, the district court did not abuse its discretion by denying certification under Rule 23 (b)(3) because the record supports its conclusion that individual issues predominate over common issues.”
As to the timing of the motion for decertification, the Ninth Circuit held that Rule 23 requires the certification issue be resolved at an “early practicable time,” and the “plain language of Rule 23(c)(1)(A) alone defeats Plaintiffs’ argument that there is some sort of ‘per se rule’ that precludes defense motions to deny certification….”
The appellate court also affirmed the district court’s opinion that the outside salesperson exemption precluded certification. The court found such analysis would require an individualized inquiry and held:
“We decline to adopt such an approach because-as set forth in greater length in our opinion In re Wells Fargo we hold that a district court abuses its discretion in relying on an internal uniform exemption policy to the near exclusion of other factors relevant to the predominance inquiry. See In re Wells Fargo Home Mortgage Overtime Pay Litig., No. 08-15355, slip. op. at 8335-36. As we stated there, focusing on a uniform exemption policy alone does little to further the purpose of Rule 23(b)(3)’s predominance inquiry, which requires an assessment of the relationship between individual and common issues.”
B. Reliance on a Uniform Policy Insufficient: In re: Wells Fargo Home Mortgage (referenced in Vinole), also involved class allegations premised on misclassification claims. There, the lower court granted plaintiffs’ motion for class certification and certified a class of loan specialists. The Ninth Circuit vacated the lower court’s decision and found the district court abused its discretion by relying almost exclusively on the existence of a uniform policy which classified the loan specialists as exempt. It held:
“In short, Wells Fargo’s uniform exemption policy says little about the main concern in the predominance inquiry: the balance between individual and common issues. As such, we hold that the district court abused its discretion in relying on that policy to the near exclusion of other factors relevant to the predominance inquiry.”
Both decisions provide guidance for employers defending against wage and hour class actions. Vinole provides opportunity for a preemptive dispositive motion even before the plaintiffs’ motion for class certification. In re: Wells Fargo further offers a great defense to employers defending against class allegations premised solely on the mere existence of uniform employment policies. Notably, both decisions demonstrate increased scrutiny by the appellate court in evaluating class allegations, particularly those based on misclassification claims.
C. Pharmaceutical Sales Reps, Certification of Issues to California Supreme Court: D’Este v. Bayer Corporation, 565 F.3d 1119 (9th Cir. 2009) involved yet another wage and hour case alleging misclassification of employees. Plaintiff moved to certify a putative class of pharmaceutical sales representatives classified as exempt. The district court granted summary judgment in favor of Bayer, finding that D’Este was exempt under California’s outside sales exemption and declined to decide whether D’Este also was exempt under California’s Administrative exemption. On appeal the case was consolidated with two other nearly identical cases pending before the Ninth Circuit, Barnick v. Wyeth, 07-56684 and Menes v. Roche, 08-55286.
Due to limited existing authority regarding state law issues, the Ninth Circuit requested the California Supreme Court exercise its discretion to decide certified questions involving classification of pharmaceutical sales representatives s under California’s outside sales person or administrative exemptions. As such, the California Supreme Court can now exercise its discretion to offer the requested clarification, critical to employers seeking further guidance on employee classification issues.
D. Commuting Time and Related Activities: In Rutti v. Lojack Corporation, Inc., 578 F.3d 1084 (2009), the Ninth Circuit attempted to define activities that qualify as compensable time. Plaintiff alleged class claims under the Fair Labor Standards Action (FLSA), seeking recovery on behalf of a putative class of nationwide technicians. Plaintiff sought compensation for the time spent commuting to worksites in company vehicles and for time spent on preliminary and postliminary activities performed at their homes. Lojack moved for summary judgment and the district court granted the motion, holding that plaintiff’s commute was not compensable and the preliminary and postliminary activities were not compensable because they “either were not integral to Rutti’s principal activities or consumed a de minimis amount of time.” The 9th Circuit affirmed in part and vacated the lower court’s decision as follows:
“We affirm the district court’s denial of compensation for Rutti’s commute and for his preliminary activities. However, we vacate the district court’s grant of summary judgment on Rutti’s postliminary activity of required daily portable data transmissions, and remand the matter to the district court for further proceedings consistent with this opinion.”
First, the Court concluded “the district court properly held that Rutti is not entitled to compensation for the time spent commuting to and from his job sites in a vehicle provided by Lojack under either 29 U.S.C. [Section] 254(a)(2) or California law.” The court found that even Lojack’s requirement of using the company vehicle and restrictions placed on the use of the company vehicle did not trigger an obligation to compensate Rutti’s commute under the Employee Commuting Flexibility Act or California law.
Second, the Ninth Circuit also considered whether Rutti’s off-the-clock claims were viable, and if he was entitled to compensation for activities he engaged in for Lojack before traveling to his first jobsite and after returning home from his last job. The court found Rutti’s morning “preliminary” activities (“receiving, mapping and prioritizing jobs and routes for assignments”), to the extent that they are both distinct from his commute (which is not compensable) and related to his principal activities, appear to be de minimis, and thus, not compensable.” However, the postliminary activities, including time spent sending a PDT transmission to Lojack using a modem (after getting home) were compensable. The court applied the three-prong test: “the practical administrative difficulty of recording the additional time;” “the aggregate amount of compensable time;” and “the regularity of the additional work.” Using this test, and based on the facts before it, the court found “the grant of summary judgment in favor of Lojack on Rutti’s claim for the transmission must be vacated.” Rutti reemphasizes that regular commuting time need not be paid under the FLSA or California Labor Code. The decision also attempts to discern whether “preliminary” and “postliminary” work is compensable or can qualify as de minimus; serving as further reminder to employers to closely monitor pre- and post-work activities, which could qualify as compensable time.
E. Potential Managerial Liability Under the FLSA: In Boucher v. Shaw, 572 F.3d 1087 (9th Cir. 2009), former employees of the Castaways Hotel, Casino and Bowling Center (Castaways) sued the Castaways’ individual managers for unpaid wages under state and federal law. The issue was whether the individual Castaways’ managers could be held liable for unpaid wages under the FLSA.
On June 26, 2003, Castaways filed for Chapter 11 bankruptcy protection. In January 2004, the former employees were discharged. On February 10, 2004, Castaways’ Chapter 11 petition was converted to a Chapter 7 liquidation and the company ceased operations. The former employees’ claims consisted of unpaid wages and accrued vacation and holiday pay. The individual Castaways’ managers named as defendants were the Chairman and Chief Executive Officer, who owned 70 percent of the company, the labor and employment professional (L&E Professional), who owned 30 percent of the company, and the Chief Financial Officer. The former employees alleged that the named individual managers had custody or control over them, their employment or their place of employment at the time the wages were due, and thus, could be individually liable.
The circuit court ruled that individual managers can be “employers” under the FLSA and thus, liable for unpaid wages. The court held that where an individual exercises control over the nature and structure of the employment relationship, or economic control over the relationship, that individual is an employer within the meaning of the Act and is subject to liability. The Chairman/CEO and the L&E Professional owned the company, and, together with the CFO, all three individual managers had control and custody of the employees, their employment and place of employment. Thus, the court found that the individual managers were properly classified as “Employers” under the FLSA and liable for the claims of unpaid wages. Further, the court found that the company’s bankruptcy had no effect on the claims against the individual managers.
This decision provides an expansive interpretation of the FLSA concepts to effectuate its broad remedial purposes. Under the FLSA, individual managers who hold a majority ownership or controlling ownership in the company, and who also oversee the day-to-day employment operations of the company, and make decisions that affect the employees, their employment and place of employment, may be held individually liable for unpaid wages. In order to limit such risk of liability, employers should limit a majority owner or controlling owner’s control over the day-to-day operations of the company and/or decision making that affects the workforce’s employment and place of employment.
Negligent Credentialing, Quirky Question # 121
Quirky Question # 121:
Our organization is responsible for evaluating the credentials for employees at certain medical facilities. I have reason to believe that one or more of the individuals we have referred out may have been less qualified than we were led to believe. Does that present any risks for our organization?
Roy’s Analysis:
Great question, the answer to which the answer is “Yes, there are risks for your organization.” Your question squarely explores the issue of the legal theory known as “negligent credentialing.” This is an offshoot of the doctrine of negligent hiring or retention, which is recognized in most jurisdictions. (For a discussion of this legal theory, see Quirky Question # 26, which is accessible through the “View By Topic” bar to the upper left. Just scroll down to the topic of “Negligent Hiring,” and you will find that analysis.) Simply stated, the negligent hiring doctrine is a common law theory that imposes an appropriate standard of care on those making hiring decisions, when considering the totality of the circumstances (e.g., the nature of the job, the risk to co-workers or the public, the employee’s employment history and skills, etc.). Often, negligent hiring cases arise in contexts where an employee with a discoverable, but undiscovered, propensity for violence or dishonesty, commits a crime that injures a member of the public or a co-worker.
The negligent credentialing theory is an offshoot of the negligent hiring doctrine. In essence, it holds those responsible for making credentialing determinations responsible to the injured third-party if they fail to meet the standard of care that would be expected of someone making these determinations.
You stated in your question that you were responsible for evaluating credentials for employees at certain medical facilities. By way of extreme (and admittedly unlikely) example, if your organization had to ensure that brain surgeons were adequately qualified to receive nuero-surgery credentials and you instead provided “credentials” to individuals who had no training whatsoever in brain surgery, resulting in injuries to patients, you would have a problem.
The Minnesota Supreme Court first recognized a cause of action for negligent credentialing two years ago in the case of Larson v. Wasemiller, No. A05-1698 (Minn. S. Ct. 2007), a case that arose in the medical credentialing context. In Larson, a medical malpractice case involving a botched gastric bypass operation, the plaintiff sued the physicians who performed the surgery, and the St. Francis Medical Center, which had granted the physicians’ hospital privileges, on a negligent credentialing theory. The medical center moved to dismiss the case, but the District Court rejected that motion. The trial court, however, certified the question to the Minnesota Court of Appeals, which reversed, finding that Minnesota does not recognize that legal theory. The Minnesota Supreme Court reversed again, holding that a claim of negligent credentialing exists in Minnesota.
When assessing whether to recognize this legal theory, Minnesota’s high court pointed out that whenever it has the responsibility for evaluating a new common law tort, it assesses four factors: a) whether the tort is inherent in, or the natural extension of, a well-established common law right; b) whether the tort has been recognized in other states; c) whether recognizing the tort will create tension with other applicable laws; and d) whether such tension is outweighed by the importance of the additional protections the new legal theory would provide to injured persons.
Despite considerable opposition from not just the defendant medical center but various amici groups (e.g., the Minnesota Hospital Association, the Minnesota Defense Lawyers Association), the Supreme Court found that the negligent credentialing theory was a natural extension of other recognized rights. For example, the court pointed to the decisions holding that hospitals have an obligation to protect patients from other intoxicated patients, and that hospitals have the obligation to retain a sufficient number of attendants to ensure patient safety. Moreover, the court noted that the negligent credentialing theory is closely analogous to the doctrines of negligent hiring and negligent selection of an independent contractor.
The Minnesota court then examined the question of whether the legal theory had been recognized in other states, noting that only two states that have considered the claim have rejected it. The plaintiff argued that “this broad recognition of the claim evidences a national consensus that hospitals owe a common law duty to patients to exercise reasonable care when making privileging decision[s].” After reviewing the analyses of other jurisdictions, Minnesota’s high court found this argument persuasive.
Turning to the third factor in the analysis, the court explored whether recognizing the tort would create tension with other applicable laws. The defendant medical center argued that this cause of action would conflict with Minnesota’s Peer Review Statute, which contains both confidentiality and limited liability provisions. The defendant argued that because it is precluded by statute from revealing the information relied upon in making its credentialing decisions, it would not be possible to defend against this type of claim. The court rejected this argument, noting that some of the same information upon which the credentialing committee relied may be available through original sources. (The court also noted that both Ohio and Wyoming had considered that argument and found it unpersuasive.) Minnesota’s Supreme Court acknowledged that the confidentiality provisions of the statute may complicate the underlying trial on a negligent credentialing claim but felt that that burden would fall more heavily on the plaintiffs than the defendants.
With regard to the fourth factor, the court found that the importance of recognizing this new legal theory and providing additional protections to patients outweighed the problems associated with resolving the tensions created by the inherent conflicts between the tort theory and the proscriptions of the Peer Review Statute. The court left for another day the potential problems associated with the need for a bifurcated trial and the scope of both the confidentiality and immunity provisions of the Peer Review Statute, finding that those issues could best be addressed by the trial court as part of its trial management responsibilities. The Minnesota Supreme Court concluded, “We therefore hold that a claim of negligent credentialing does exist in Minnesota, and is not precluded by Minnesota’s peer review statute.”
Applying this decision to your situation raises a number of points you may wish to explore. First, is your company located in Minnesota? If so, the Larson case will be dispositive of the question you raised. If not, you will want to explore carefully whether your state has addressed this issue in the context of medical facilities and medical credentialing committees. Second, if your medical center or hospital is not located in Minnesota, you should carefully examine the peer review statute of the state (or states) where you are operating. Those statutes may be similar or dissimilar to the statutes in Minnesota, and may afford your organization new or different arguments. Third, even if your facility is located in Minnesota, there likely will be difficult issues, reserved by the Larson court, that may be outcome determinative in your situation.
The bottom line, however, is that in many jurisdictions, courts have recognized a cause of action for negligent credentialing. Recognition of this theory heightens the obligations on all credentialing committees (hospital or otherwise) to ensure that credentials only are being offered to those who are qualified to perform the job responsibilities for which the credentials have been granted. Particularly if those credentials are granted to individuals who are physicians or others working with vulnerable members of the public, it is critical that the credentialing committee perform its tasks carefully and responsibly, exercising the reasonable care that would be expected of them. Keep in mind that your work will be judged from a “knew or should have known” standard, and that the underlying atmospherics will be a patient or another member of the public who has suffered injuries allegedly because of the failure of your credentialing committee to do its job effectively.
My last observation is that now that you have independently reached the determination that you may have “credentialed” undeserving parties, as you state in your question, you should act. In my view, even if your initial decision to credential someone may have been defensible, now that you know you based your decision on erroneous information, you need to take action. It would be very difficult for you to explain to a party injured in the future that despite your recently acquired knowledge, you remained silent. Presumably, those facts would come out during the discovery phase of a negligent credentialing lawsuit and they would be difficult to defend. Of course, how you go about communicating your recently discovered information and how you do so without creating separate problems for your organization, such as a defamation action, would have to be carefully and thoughtfully examined before you proceed.
Accommodating Religious Beliefs, Quirky Question # 120
Quirky Question # 120:
Our retail company has mandatory weekly sales meetings which occur across town from one of the store branches. Each week, our store branch manager and his four salespersons must come from across town to the sales meeting. Many of the salespersons are part-time employees and students, and consequently take public transportation to work. The employees who are working a shift during which the meeting occurs have two options for getting to the weekly sales meeting: (1) take public transportation; or (2) carpool with the store manager. Two of the salespersons are male, two are female.
In the past, the store branch manager has driven the salespersons to the weekly sales meeting. Recently, a new branch manager has been hired, and this arrangement is no longer working. The new branch manager refuses, for what appears to be bona fide religious reasons, to carpool alone with any female employee. The practical outcome of this situation is that when only one female employee needs a ride to the mandatory weekly sales meeting, she is usually left taking public transportation at the last minute because of the branch manager’s refusal to drive her to the meeting. Female employees have been late, and sometimes missed the meeting as a result. The female employees have complained to Human Resources. The branch manager has explained the religious belief to the company.
The company has informed the branch manager that it is his responsibility to ensure that his employees are at the weekly sales meeting, and that he will be penalized if they are not because of his refusal to carpool. The company’s human resources manager is troubled by this situation. What should we do?
[Readers: Quirky Question # 120 was submitted to my colleagues in our Seattle office. The analysis below was prepared by Sarah Evans. If you have any questions about Sarah's analysis, you can reach her at evans.sarah@dorsey.com, or at 206.903.2396. Additional information about Sarah is available at http://www.dorsey.com/evans_sarah/. Regards, Roy]
Sarah’s Analysis:
Your human resources manager is right to be troubled. In analyzing why, we must first discuss whether your company’s decision increases the likelihood that your branch manager would bring a religious discrimination claim and whether your company risks liability if he does. To establish a prima facie case of religious discrimination, an employee must demonstrate that: (1) he had a bona fide religious belief; (2) the practice of which conflicted with an employment duty; (3) he informed the employer of his belief and conflict; and (4) the employer threatened him or subjected him to discriminatory treatment because of his inability to fulfill job requirements. Opuku-Boateng v. State of California, 95 F.3d 1461 (9th Cir. 1996).
Here, we will assume that your branch manager meets the first element, and has a bona fide religious belief that prohibits him from being alone with any female. The second element is also met where the company has created an employment duty for the branch manager (i.e., transporting employees to the sales meeting) by penalizing him if his employees do not attend the sales meeting due to his failure to provide transportation. He has put the company on notice of his belief and the conflict, thus meeting the third element. Likewise, the fourth element is met where the employer has informed him that he will be penalized if an employee is not at the sales meeting because he refused to carpool with them.
Meeting the prima facie case alone is not enough to establish liability, however. Once the employee establishes his prima facie case, the burden shifts to the employer to demonstrate it satisfied its statutory obligation to engage in good-faith efforts to negotiate accommodation of employee’s religious beliefs. Id. at 1467. Only if an employer can show that no accommodation would be possible without undue hardship, is an employer excused from taking the necessary steps to accommodate an employee’s religious beliefs. Id. at 1467, citing Heller v. EBB Auto Co., 8 F.3d 1433, 1438 (9th Cir. 1993), EEOC v. Townley Eng’g & Mfg. Co., 859 F.2d 610, 615 (9th Cir. 1988).
It is not clear from the facts you described whether your company satisfied its statutory obligation to engage in a good-faith effort to negotiate an accommodation. It would appear, however, that your company essentially refused to provide any accommodation to your branch manager. In this scenario, your company can avoid liability only if it can show that no accommodation would be possible without an undue hardship. It would seem that your company could accommodate your branch manager’s request that he not be required to be alone with any female in his vehicle without experiencing an undue hardship. As you described, your employees have multiple options for getting to your sales meeting. For example, they could ride the bus. Alternatively, another employee might be able to provide the female employees a ride. Yet another option would be for your company to pay for cab fare, likely an insignificant expense for periodic meetings. In short, it does not seem likely that your company will be able to mount a very effective “undue hardship” hardship defense.
Separate issues are raised by the possibility that the branch manager might offer to provide rides only to male employees as an accommodation to his religious belief? Should the company accept this solution? As EEOC v. Townley Engineering and Manufacturing Company, 859 F.2d 610, 614-615 (1988), states: “The language in our cases merely emphasizes that the burden of attempting an accommodation rests with the employer rather than the employee. When an employer does not propose an accommodation, or when its proposed accommodation does not eliminate the employee’s religious conflict, the employer must accept the employee’s proposal or demonstrate that the proposal would cause the employer undue hardship. (Citing American Postal Workers Union v. Postmaster General, 781 F.2d 772, 776 (9th Cir.1986); Burns, 589 F.2d at 406.)
Note, however, that an employer does not have to accept an employee’s proposed accommodation if it violates the company’s policies. In Peterson v. Hewlett-Packard, decided by the Ninth Circuit Court of Appeals, 358 F.3d 599 (9th Cir. 2004), the Court stated that the company did not fail to accommodate an employee’s religious beliefs where it had four meetings with the employee to discuss his conduct, and the employee refused to consider any accommodations other than those that he himself offered – all of which violated the company’s harassment and diversity policies. The employee, a self-described “devout Christian,” disagreed with his employer’s diversity and nondiscrimination policy, posted Biblical scriptures opposing homosexuality, and in other ways did not cooperate with the company diversity policy. (For a more complete discussion of the Hewlett Packard case, see Quirky Question # 58, accessible by using the “View By Topic” bar to the upper left and scrolling down to the topic, “Reasonable Accommodations of Religious Beliefs.”)
The branch manager’s proposed accommodation may similarly violate your company’s antidiscrimination policy because it could be construed as a discriminatory practice to provide men rides with the branch manager to the weekly sales meeting while women are left taking public transportation. This is potentially discriminatory for two reasons. First, it gives the men access to the manager in the form of time and exclusivity. Second, it treats men preferentially in that they get to carpool and do not have to be dependent on mass transit to get to a mandatory meeting. Each of these arguments could give rise to a discrimination claim by female employees that they were treated differently solely because of their gender. In short, your company would not required to accept the branch manager’s proposed accommodation and there may be compelling reasons not to do so.
What might your company propose instead? Based upon this set of facts, you might consider prohibiting your branch manager from driving any employee, male or female, to the weekly sales meeting. Even though this solution may create some morale problems or minor inconveniences for the affected employees, these risks would not be sufficient to justify accepting your branch manager’s proposed accommodation. Caselaw in the Ninth Circuit is clear that:
“hypothetical morale problems are clearly insufficient to establish undue hardship. ‘Even proof that employees would grumble about a particular accommodation is not enough to establish undue hardship.’” Opuku-Boateng, 95 F.3d 1461, 1474 (9th Cir. 1996), citing Anderson v. General Dynamics Convair Aerospace Div., 589 F.2d 397, 402 (1978), cert. denied in International Ass’n of Machinists and Aerospace Workers AFL-CIO v. Anderson, 442 U.S. 921, 99 S.Ct. 2848, 61 L.Ed.2d 290 (1979); Burns v. Southern Pac. Transp. Co., 589 F.2d 403, 407 (9th Cir.1978), cert. denied, 439 U.S. 1072, 99 S.Ct. 843, 59 L.Ed.2d 38 (1979).
In sum, your branch manager seemingly has a bona fide religious belief that precludes him from transporting female employees to your sales meetings in his car. Moreover, it does not seem as though your company could advance a compelling undue hardship argument that would justify forcing your employee to choose between disregarding his religious beliefs or transporting your female employees. As discussed above, however, your company is not obligated to accept your employee’s proposed accommodation, especially where doing so could create other potential liabilities for your firm. Given this fact, it seems that the best solution would simply be to prohibit your manager from transporting any employees to the sales meetings. This solution would accommodate your manager’s religious beliefs while simultaneously ensuring that your company is not risking exposure for gender discrimination.
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