Is everything covered by the Americans with Disabilities Act (ADA)? Although we all know the ADA broadly defines the conditions that are protected disabilities, the Seventh Circuit Court What Does the Future Hold and Does It Really Matter? 7th Circuit Holds ADA Doesn’t Necessarily Cover Future Impairmentsof Appeals’ decision in Shell v. Burlington Northern Santa Fe Railway Company, shows that there are limits. Earlier this year, the Seventh Circuit held that obesity alone, without another physiological condition, is not a protected disability. And with the Shell decision last week, the Seventh Circuit held that the ADA does not reach discrimination based on an employer’s belief that an employee is likely to develop a disability in the future.

THE UNDERLYING FACTS

Ronald Shell was a rail yard employee for 33 years. His job included work as a heavy machine operator. When BNSF bought his former employer, he and all other employees had to re-apply for their jobs. BNSF made Shell a conditional offer of employment, subject to a medical examination. Shell’s medical examination showed that he suffered from no current health conditions.  However, his body mass index (BMI) was 47.5, and he was considered obese.

Pursuant to company policy, BNSF does not hire applicants for safety-sensitive positions, such as the heavy machine operator position Shell applied for, if their BMI is 40 or above. BNSF justifies this rule because a person with a BMI over 40 is at risk for developing health conditions that could result in a sudden loss of consciousness, such as sleep apnea, diabetes, and heart disease, and the unexpected onset of those conditions poses a safety hazard. Because Shell’s BMI exceeded 40, BNSF withdrew its offer of employment.

Shell claimed that BNSF’s refusal to hire him violated the ADA because it was based on BNSF’s perception that he had a disability. The district court sided with Shell and denied BNSF’s motion for summary judgment. The Seventh Circuit granted an interlocutory appeal to decide the following issue: “whether the ADA’s regarded-as provision encompasses conduct motivated by the likelihood that an employee will develop a future disability within the scope of the ADA.” The Court also invited the EEOC to weigh in with its position.

Shell argued that, because BNSF refused to hire him because it feared he would develop a future impairment, the company essentially treated him as if he currently suffered from an impairment. The EEOC supported Shell’s position by arguing that the purpose of the ADA is to “combat society’s accumulated myths and fears about disability and disease” and by pointing to guidance in the EEOC Compliance Manual that indicates future impairments are covered by the ADA.

THE SHELL HOLDING

The Seventh Circuit sided with BNSF, relying on the plain language of the statute. The ADA states that it protects people who are regarded as having an impairment. In this case, BNSF regarded Shell as likely to develop an impairment, but it did not regard him as having one. The Court held the ADA only protects a person who currently has a disability or is perceived to currently have a disability. Under this ruling, an employer’s fear that a person will develop a disability in the future is not a basis for an ADA claim.

TAKEAWAYS

This case shows that the ADA’s scope of protected disabilities, while broad, is not unlimited. But employers should still use caution when making decisions based on an employee’s likelihood of developing future conditions. While obesity, standing alone, is not a disability, many employees who are likely to develop future medical conditions may already have some other underlying condition that entitles them to ADA protection.

Good Reasons Sometimes Win:  5th Circuit Cites “Unprofessional Behavior” of Plaintiff in Dismissing ADEA ClaimAdd this case to your “Be Sure to Document Your Non-Discriminatory Reasons” file. An employee doing bad things lost on summary judgment in an employment discrimination action, even though she alleged that the company did not properly investigate the reasons for her termination. The Fifth Circuit affirmed a summary judgment on an age claim because the plaintiff’s own poor conduct was enough of a non-discriminatory reason to terminate her.

Misconduct Still Carries a Lot of Weight

In this case, Patricia Gill worked as a sales director at the aptly named environmental firm, DIRTT. Ms. Gill’s coworkers complained that she engaged in bad behavior such as  1)  disseminating false information to coworkers and clients; 2) attempting to take over responsibilities of other workers; 3) excluding coworkers from necessary contract negotiations; and 4) improperly marking contracts so as to increase her own commissions. She also failed to comply with company standards. DIRTT finally had enough and terminated her. Ms. Gill then filed an EEOC charge and eventual lawsuit claiming she had been terminated due to her age.

In defense of the suit, DIRTT noted that even if Ms. Gill could show a prima facie case of age discrimination, it had numerous legitimate, non-discriminatory reasons to terminate her and she could not show that it was pretextual. The court agreed and dismissed the case. Ms. Gill appealed to the 5th Circuit.

Is Failure to Investigate Enough to Show Pretext?

Ms. Gill’s primary arguments on appeal were that the district court failed to properly consider DIRTT’s failure to investigate as evidence that its reason for terminating her was pretextual. If an employee presents evidence that the unfavorable employment decision was based on a protected status, in this case age, then the burden switches to the employer to show a legitimate non-discriminatory reason for the employment decision. Here, both sides agreed that both those prongs were met. The big question was whether Ms. Gill showed that DIRTT’s explanation for the termination was “false or unworthy of credence” and was therefore pretextual.

To show pretext, Ms. Gill argued first that DIRTT failed to follow its own policies and procedures when coworkers reported her bad behavior. The Fifth Circuit said that DIRTT’s failure to follow the policies was not relevant because Ms. Gill couldn’t connect it to her age. Next, Ms. Gill argued that DIRTT lied to the EEOC when it said that they did an investigation of her alleged misconduct. While the Fifth Circuit recognized that erroneous statements in an EEOC position statement may be circumstantial evidence of discrimination, it ultimately held that the language in the statement was not inconsistent with what actually occurred. As such, it could not constitute proof of pretext. Finally, Ms. Gill argued that DIRTT could not claim that the coworker complaints were the actual basis of the termination because DIRTT did not investigate the complaints or tell her about them. The Fifth Circuit found that it was not required to determine that the company made the decision in good faith– only that the company did not make the decision for a discriminatory reason.  It held that Ms. Gill failed to show that DIRTT did not make a reasonably informed decision in firing her. The court noted the numerous complaints and proof that DIRTT tried to meet with Ms. Gill about them. The Fifth Circuit found that despite Ms. Gill’s allegations of a shoddy or non-existent investigation, she ultimately failed to show that the termination reasons given were pretextual.

What Do We Learn from This?

Again, to beat an already well-beaten drum, it is imperative that employers document their decisions. Here, the employer was fortunate that it had enough proof of the bad employee’s misconduct and complaints from coworkers to overcome the allegations that an investigation didn’t occur. But the opinion does note that a failure to properly investigate or inconsistent statements in an EEOC position statement can be used as evidence of pretext. This is why it is important to take complaints seriously and fully document the investigation process.

The U.S. Department of Labor (DOL) recently published a Notice of Proposed Rulemaking with changes to regulations regarding tips under the Fair Labor Standards Act (FLSA) and the Consolidated Appropriations Act of 2018 (CAA).

What’s the Federal Law as It Currently Stands?

DOL Issues Proposed Rule for Tipped EmployeesThe FLSA currently permits employers to take a credit towards the minimum wage for tipped employees. The “tip credit” is equal to the difference between the required federal cash wage for tipped workers, currently $2.13 per hour, and the federal minimum wage of $7.25 per hour. In states with a higher minimum wage or higher required cash wage for tipped workers, the allowable tip credit would be different, and some states do not allow employers to take a tip credit at all.

Also, the current regulations have the dual-jobs provision – the 80/20 rule – that provides that when tipped workers spend more than 20% of their shift on non-tipped tasks, employers cannot take a tip credit for the time spent on those duties. So, if your wait staff spends more than 20% of their shift on tasks like rolling silverware, setting tables, refilling condiments or cleaning the dining area, you can’t use the tip credit. While the DOL rescinded the 80/20 rule in a 2018 Opinion Letter, courts around the country have declined to afford deference to the Opinion Letter and the noted change in position. The proposed rule is likely in response to this lack of traction with the courts.

What Is the DOL Proposing to Change?

The proposed regulations would make a number of changes, including:

  • Allowing a tip pool to include back of the house. Employers who do not take a tip credit could establish a mandatory tip pool among non-management personnel in which employees who do not customarily and regularly receive tips (i.e., cooks and dishwashers) may participate.
  • Eliminating the 80/20 rule. Employers could take a tip credit for any amount of time that an employee in a tipped occupation performs non-tipped duties, so long as such duties are performed contemporaneously with his or her tipped duties or for a reasonable time immediately before or after performing the tipped duties. Servers’ wages and tips combined must still equal or exceed the minimum wage.
  • Prohibiting management from keeping tips. The proposal prohibits employers and managers from keeping employees’ tips whether or not the employer takes a tip credit. (This is an adoption of a CAA provision.)

Though not yet final, the proposed regulations have been well received among employers in the hospitality industry, specifically the National Restaurant Association and the Restaurant Law Center, which has voiced support for and commendation to the DOL for providing clarity on these issues. If adopted the proposed regulations would eliminate the unworkable task of employers having to track the exact breakdown of time spent on tipped tasks vs. non-tip generating tasks, and would allow for more wage equity between the take-home compensation of “front of the house” servers and “back of the house” kitchen workers. The complexity of complying with the 80/20 rule has for many years fostered litigation from the plaintiff’s bar and employees claiming time spent on non-tip generating duties exceeded 20% of their shift. The proposed rule appears to provide welcome guidance and relief to employers across the country.

Takeaways

Employers should make every effort to understand and comply with the FLSA’s tipped employee rules as they currently stand but should also be prepared for changes that may come should the proposed rule become final. You should also consider voicing support for the proposed rule by submitting a comment by December 9, 2019.

If you are a multi-state employer, don’t forget that even if the proposed regulations become final, DOL regulations interpret and provide guidance on the FLSA alone and do not impact state and local laws regarding tip credits. Employers should consult with legal counsel before taking a tip credit and when establishing tip pools to ensure that they comply with all state and federal laws.