State Specific Developments: May 2013

Iowa: A Waterloo hospital is ﬁ nalizing a $2 million settlement agreement for a race discrimination class action lawsuit. The class action complaint was ﬁ led on behalf of African American persons who applied for employment with the hospital but were not hired, who were passed over for promotional opportunities, or were terminated by the hospital. Under the settlement, the hospital will pay approximately $1 million to 35 applicants, $667,000 for attorney fees, approximately $10,000 for administrative expenses, and the remainder of the $2 million to nonproﬁ t organizations which serve primarily African Americans in Waterloo. Attorneys for both sides recently appeared at a hearing in district court to discuss the joint motion to ﬁ nalize the settlement, and a judge will make the ﬁnal decision on the terms.

Kansas: On March 7, 2013, the U.S. District Court for the District of Kansas entered a decision in an ADA discrimination suit (Hardwick v. Amsted Railway Co., Inc., Case No. 12-2039- RDR, March 7, 2013) which reafﬁ rms that transferring an employee from one job to another, in and of itself, does not constitute an adverse employment action. The plaintiff in Hardwick contended that after he disclosed his physical restrictions to Amsted Railway, the company retaliated against him when it twice threatened to transfer him. In its analysis, the Kansas District Court relied upon the U.S. Supreme Court’s holding that an adverse employment action includes conduct constituting “a signiﬁcant change in employment status, such as hiring, ﬁring, failing to promote, reassignment with signiﬁcantly different responsibilities, or a decision causing a signiﬁcant change in beneﬁts.” Burlington Indus. v. Ellerth, 524 U.S. 742, 761 (1998). The District Court also cited the Tenth Circuit Court of Appeals, which has jurisdiction over Kansas, and has taken a “case-by-case approach, examining the unique factors relevant to the situation at hand” to deﬁne what constitutes an adverse employment action. Hillig v. Rumsfeld, 381 F.3d 1028, 1031 (10th Cir. 2004). The Tenth Circuit has cautioned that more than “de minimus harm” or a “de minimus impact” upon an employee’s job opportunities or job status must be shown and that “mere inconvenience or an alteration of job responsibilities” will not qualify as an adverse employment action. Unfortunately for the plaintiff in Hardwick, the only “evidence” he offered to support his contention that the transfer would have constituted an adverse employment action was his personal belief that the job to which he would have transferred was less desirable than the one he held. The District Court of Kansas dismissed the plaintiff’s case because, standing alone, an “employee’s negative views of transfer” are insufﬁcient to render a transfer an adverse employment action. See McCrary v. Aurora Pub. Schs., 57 Fed.Appx. 362, 368-69 (10th Cir. 2003).

Minnesota: Minnesota’s Governor signed a new law, taking effect January 1, 2014, prohibiting most employers from inquiring about or taking into consideration a job applicant’s criminal record until after the applicant is either selected for interview or given a conditional offer of employment. This “ban the box” law, referring to the box on most job applications which an applicant must “check off” if he or she has a criminal record, includes an exception for employers who have a statutory duty to conduct or consider criminal background checks in hiring. Since the start of the year, Minnesota’s legislature, primarily led by members of the Democratic-Farmer-Labor party, has introduced several other bills supportive of employees which employers should be watching. If passed, these bills would increase Minnesota’s minimum wage, prohibit discrimination based on unemployment status, guarantee pregnant women accommodations and leaves of absence, and prohibit employers from requiring employees or applicants to provide information regarding their social networking sites.

Missouri: In Missouri Ins. Coalition v. Huff, the U.S. District Court for the Eastern District of Missouri held that the Patient Protection and Affordable Care Act (PPACA) preempts a Missouri state law that requires insurers to offer employee health plans that exclude contraceptive coverage. Missouri state law requires health insurers that provide coverage for pharmaceuticals to provide coverage for contraceptives. The law, however, also includes an opt-out provision by which employers can request policies that exclude coverage for contraceptives if their use is contrary to the employer’s “moral, ethical or religious beliefs or tenants.” In Huff, the court held that the Missouri optout provision squarely conﬂicts with the PPACA’s women’s preventive services mandate, which generally requires health insurers to provide contraception coverage without cost in all plans issued to individuals and employers.

Montana: The Montana Supreme Court recently afﬁrmed dismissal of a plaintiff’s complaint and denial of a motion to amend, after the Plaintiff had accepted her former employer’s arbitration demand on her Wrongful Discharge from Employment Act (“WDEA”) claim. The Supreme Court reasoned that the district court lost jurisdiction over the case once the plaintiff had accepted the employer’s offer to arbitrate. Of more interest was that the district court had addressed the plaintiff’s argument that the arbitration provision in the WDEA was unconstitutional because it required her to pay the employer’s attorney’s fees if she had declined arbitration and lost the suit. Therefore, she argued the statute effectively compelled her to give up her constitutional right to a jury trial. While the district court reasoned that the arbitration provision h its fee shifting mechanism was not unconstitutional, the Supreme Court held that it need not reach that issue because the district court had correctly determined that it had no jurisdiction and should never have decided that issue. Employers should anticipate seeing that argument at some point in another case.

North Dakota: The North Dakota Supreme Court recently held that employees locked out during a labor dispute were eligible to collect unemployment beneﬁts. While the state statute bars the recovery of beneﬁts for unemployment resulting from strikes, sympathy strikes and work stoppages “of any kind,” the court reasoned that the statute only referred to work stoppages initiated by employees. In total, the employees may collect up to $4.1 million in beneﬁts.

South Dakota: In Heil v. Belle Starr Saloon & Casino, Inc., the plaintiff brought tort claims for assault and battery and intentional inﬂiction of emotional distress against her employer based on the physical and sexual abuse she endured from her supervisor. The employer ﬁled a motion for partial summary judgment, claiming that her tort claims were precluded by the exclusive remedy provision of South Dakota’s worker’s compensation laws. However, that exclusive remedy provision includes an exception for “rights and remedies arising from intentional tort.” The South Dakota Supreme Court has held that to meet this exception, a plaintiff must allege facts that “plausibly demonstrate an actual intent by the employer to injure or a substantial certainty that injury will be the inevitable outcome of the employer’s conduct.” The federal district court in South Dakota denied the employer’s motion for partial summary judgment, ﬁnding that “a jury could reasonably conclude [the employer] endorsed, condoned, and encouraged the physical and sexual abuse of their employees” because the employer was “not in the dark about” the supervisor’s ongoing improper conduct yet took no afﬁrmative action to control it.