State-Specific Developments: January 2013

Iowa: The Iowa Supreme Court recently held that an Iowa dentist who fired his dental assistant because he viewed her as a threat to his marriage did not unlawfully discriminate against her based on her gender. After the dentist’s wife found out that the two had been texting each other about personal matters, she demanded that he terminate the assistant’s employment. When explaining the reason he fired the dental assistant, the dentist told the assistant’s husband that he feared he would try to have an affair with her if he did not fire her. The dental assistant alleged the dentist discriminated against her based on her gender. The dentist denied this allegation, noting that all of his assistants were women. Instead, he contended that her firing was due to the threat to his marriage. The Iowa Supreme Court found there was no gender discrimination, citing cases that state an employer does not engage in unlawful gender discrimination by discharging a female employee who is involved in a relationship that has triggered personal jealousy.

Kansas: On January 4, 2013, the U.S. District Court for the District of Kansas ruled that the Employee Retirement Income Security Act (“ERISA”) does not preempt an employee’s state law claim that his employer breached an employment contract to provide disability insurance. The District Court, relying on previous Tenth Circuit holdings, noted that ERISA only preempts four categories of state laws because they “relate to” a benefit plan. Specifically, according to the Tenth Circuit, ERISA preempts state laws that regulate plan benefits and terms; those that create plan requirements for reporting, disclosure, funding, or vesting; those that provide benefit calculation rules; and those that prescribe misconduct remedies. The District Court concluded that the employee who asserted the breach of contract claim was not seeking plan benefits paid from the plan, but rather was “asking for promised benefits from [the defendant employer] which are alleged to be part of an employment contract.” Therefore, the District Court found that enforcing the contract “should have no impact upon the plan in question or the goals of ERISA to ensure that plans are subject to uniform regulation.” McNeal v. Frontier AG Inc., No. 6:12-cv-01284-RDR-KGS (D. Kan., Dec. 4, 2013).

Minnesota: On January 3, the Minnesota Workers’ Compensation Court of Appeals found in favor of the employer in a case in which an employee sued for benefits after injuring his Achilles tendon in an employer-sponsored flag football game. The game was a fundraiser for the United Way, and the employer hoped to increase charitable contributions by allowing employees paid company time to play. A Minnesota statute provides: “Injuries incurred while participating in voluntary recreational programs sponsored by the employer, including . . . athletic events . . . do not arise out of and in the course of the employment even though the employer pays some or all of the cost of the program. This exclusion does not apply in the event that the injured employee was ordered or assigned by the employer to participate in the program.” The Court found the employee’s participation in the game was voluntary, and thus, the employee’s claim failed.

Missouri: A former employee of a Missouri Licensing Office recently pled guilty to participating in a conspiracy to produce illegal drivers’ licenses and identifications to undocumented aliens. According to the United States Attorneys’ Office, undocumented immigrants traveled from across the country to obtain licenses from the employee. The employee admitted that he accepted stolen birth certificates from undocumented immigrants and issued licenses using the stolen identities. The illegal aliens, in turn, used the licenses to obtain employment and remain in the United States. According to the employee’s plea agreement, he must pay a minimum judgment of $125,000. He faces a maximum prison sentence of five years and a fine of up to $250,000.

Montana: The Montana Federal District Court recently denied a Motion for Summary Judgment on an age and disability discrimination and wrongful discharge suit. The Court rejected the employer’s argument that the Wrongful Discharge From Employment Act (WDEA) barred the discrimination claim based on prior precedent. However, it agreed that if the jury concluded that there had been discrimination, the plaintiff could not also recover for the wrongful discharge claim. Second, the Court denied summary judgment on both claims because the plaintiff presented evidence of pretext. Specifically, the employer alleged it had discharged him as part of a RIF because he was the only lab training coordinator and they did not need one. The plaintiff submitted evidence that only ten percent of his duties were training, he otherwise performed as a lab technician, and he never applied for the training position. Additionally, the employer did not apply its RIF criteria for lab technicians to him and had it done so, the plaintiff should have been retained. Moreover, while he was on a leave of absence, the employer hired a new lab technician.

Montana: Montana approved a referendum effective January 1, 2013 which precludes illegal aliens from employment with a state agency or receiving a professional license, professional permit, unemployment insurance, —or vocational rehabilitation among other rights and privileges. The Montana Immigrant Justice Alliance has filed suit to obtain an injunction, arguing that the law is unconstitutional in various respects, including being pre-empted by federal law. The hearing is set for February 7, 2013.

North Dakota: The North Dakota Supreme Court recently held an oil company that retained an independent contractor to drill and complete its oil wells was not responsible for the death of the drilling company’s employee, even though it owned the drilling and occupancy rights for the property where the death occurred. The Court highlighted the general rule that an employer is not liable for the torts of an independent contractor and found that the oil company did not retain sufficient control over the property to subject itself to liability. The Court reasoned that the oil company’s requirement that the drilling company adhere to various “safety regulations” on the property failed to satisfy the amount of control necessary to impose liability, particularly where the parties agreed that the oil company “shall have no direction or control of [the independent contractor] or its employees and agents except in the results to be obtained.”

South Dakota: In Baker v. Masco Builder Cabinet Group (“MBCG”), the South Dakota Supreme Court held that MBCG was contractually obligated to pay its former employees severance after it had sold its Rapid City plant to another company. MBCG had issued a memo to its Rapid City employees stating that the plant would be closing by the end of September 2009 and that any employees who stayed until the plant closed would receive severance. However, a few months later, before the plant closed, the plant was purchased by another company. MBCG then announced that only employees who were not hired by the successor company would receive severance. The South Dakota Supreme Court held that the promise to pay severance was an enforceable contract, unaffected by the sale of the plant.

Wyoming: A proposed bill would prevent employers from firing workers because they disagree with the workers’ political party affiliation. The measure will make it illegal for employers to fire, refuse to hire, or discriminate in other ways against employees because of their political affiliation. It also prohibits employers from retaliating against workers who file a discrimination complaint based on their political party affiliation. The legislation will be considered during the Jan. 8th session.

Read the Full Newsletter: Labor & Employment Law Alert January 23, 2013