SPECIAL FOCUSThe Facts

In Carder, airline pilots who were members of the Reserves and National Guard pursued a class action against Continental Airlines, asserting management had “repeatedly chided and derided plaintiffs for their military service through the use of discriminatory conduct and derogatory comments regarding their military service and military leave obligations.” The plaintiffs declared management had made such statements as “Continental is your big boss, the Guard is your little boss” and “you need to choose between [Continental] and the Navy.” Notably, the statements alleged by the pilots were similar to the statements alleged in the recent U.S. Supreme Court decision addressing USERRA, Staub v. Proctor Hospital, No. 09-400 (Mar. 1, 2011). See Supreme Court Recognizes Cat’s Paw Liability in Army Reservist’s USERRA Discrimination Case (http://www.jacksonlewis.com/resources.php?NewsID=3561).

The plaintiffs in Carder also alleged the company had placed “onerous restrictions” on military leave and these restrictions affected the pilots’ “opportunity to log flight hours toward participation in a retirement fund.” These claims appear to be based on the requirements in USERRA that employees on military leave be provided the same non-seniority rights and benefits available to similarly situated employees under “an employment contract, agreement, policy, practice or plan in effect at the employee’s workplace.” See Final USERRA Regulations from Department of Labor Go into Effect January 18 (http://www.jacksonlewis.com/resources.php?NewsID=883).

The trial court dismissed the plaintiffs’ hostile environment claim on the basis that USERRA does not provide for such a claim. It did not dismiss the plaintiffs’ claims that they were not receiving comparable benefits. The plaintiffs received permission to appeal the dismissal directly to the Fifth Circuit.

VOL. 28, NO. 4 APRIL 2011

FEDERAL APPELLATE COURT REJECTS

HOSTILE ENVIRONMENT THEORY UNDER

USERRA

WHAT’S INSIDE

U.S. Supreme Court Holds Oral Complaint Sufficient To Trigger FLSA Retaliation Provision ................................................................... 3

SSA’s “No Match” Letters To Employers: They’re Back!..........................5

(Continued on Page 2)

An employer may not be subject to liability for a hostile work environment under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), the Fifth Circuit Court of Appeals has held. Carder v. Continental Airlines, No. 10-20105 (5th Cir. Mar. 22, 2011). In a case alleging discrimination because of military status under USERRA, the Court ruled the statutory language of USERRA did not cover claims for harassment that neither rose to the level of a constructive discharge nor denied a “benefit of employment.” This is the first appellate decision to address this issue, although some lower court decisions have recognized such claims. The Fifth Circuit has jurisdiction over Louisiana, Mississippi and Texas.

Fifth Circuit Decision

The appeals court affirmed dismissal of the hostile environment claim. The Court described the issue as one of interpreting the language in USERRA prohibiting the denial of any “benefit of employment” to a member of the uniformed services based on such membership or the performance of service. 38 U.S.C. § 4311. Noting differences between the statutory language of USERRA prohibiting the denial of benefits and Title VII of the Civil Rights Act’s statutory language prohibiting discrimination with respect to “conditions” of employment (which permits claims for hostile environment), the Court held USERRA’s language would not permit a hostile environment claim absent a denial of a tangible benefit.

While the Court concluded employees cannot assert a pure hostile environment claim under USERRA, the opinion noted at least two caveats. First, a number of courts, including the Eighth and Ninth Circuits, have recognized constructive discharge claims under USERRA. See, e.g., Wallace v. City of San Diego, 479 F.3d 616 (9th Cir. 2007); Knowles v. Citicorp Mortgage, Inc., 142 F.3d 1082 (8th Cir. 1998). A constructive discharge claim might arise where an employee could show his working conditions became “‘so intolerable that a reasonable person would have felt compelled to resign.’” Penn. State Police v. Suders, 542 U.S. 129 (2004).

Second, the Court noted the term “benefits of employment” under USERRA is quite broad and the issues raised by the plaintiffs in Carder might still permit recovery if they could show they lost such benefits because of their employer’s actions.

Carder will now return to the trial court to review the benefits issues raised.

Implications for Employers

This decision will make it easier for employers to avoid trial in USERRA cases based on technical violations where an employee cannot point to tangible damages. Employers should consider taking at least three steps to reduce exposure to USERRA discrimination claims. First, as the allegations in Carder and Staub make clear, supervisors may make potentially inappropriate statements regarding members of the Reserves

and National Guard that lead to litigation. Therefore, training

supervisors to ensure they understand such statements are

prohibited, in the same way as statements impacting Title VII,

would help reduce the risk.

Second, to limit exposure to constructive discharge claims,

employers should provide for reporting procedures of

workplace complaints, and promptly investigate such

complaints, and ensure their policies are broad enough to

cover a wide range of workplace law issues.

Third, employers should review the benefits available to

employees on various leaves of absence to ensure those

on military leave are receiving comparable benefits. In

some cases, the need to compare leave benefits may not be

obvious. For example, if an employer permits an employee to

make up lost overtime because of a three-day bereavement

leave, it might also be required to permit an employee to

make up lost overtime because of weekend military activity.

Jackson Lewis attorneys are available to discuss investigations

and employer’s rights and obligations under USERRA, as

well as the interplay between USERRA and the patchwork

of state statutes governing employment of Reservists and

National Guardsmen.

--Ken Wentz

Omaha Office

WentzK@jacksonlewis.com

--Conrad S. Kee

Stamford Office

KeeC@jacksonlewis.com

--Matthew F. Nieman

Washington DC Region Office

NiemanM@jacksonlewis.com

--Scott A. Blaney

Phoenix Office

BlaneyS@jacksonlewis.com

FEDERAL APPELLATE COURT REJECTS HOSTILE ENVIRONMENT THEORY UNDER USERRA (Continued from page 1)

2

3

U.S. SUPREME COURT HOLDS ORAL COMPLAINT SUFFICIENT TO TRIGGER FLSA

RETALIATION PROVISIONContinuing its support of employee retaliation claims, the U.S. Supreme Court has ruled 6-2 that an oral complaint over time-keeping practices constitutes protected activity implicating the anti-retaliation provision of the Fair Labor Standards Act (“FLSA”), and that employee complaints need not be written to enjoy statutory protection. Kasten v. Saint-Gobain Performance Plastics Corp., No. 09-834 (Mar. 22, 2011). The Court remanded for determination, however, the question whether any complaint made solely to an employer – orally or in writing – falls under the FLSA’s protective mantle. Justice Elena Kagan did not participate in the case.

Facts

Petitioner Kevin Kasten alleged that his employer, Saint-Gobain Performance Plastics Corporation, terminated him because he made internal complaints to management about the company’s time-keeping practices. Without addressing any of the underlying factual issues, the district court ruled that an oral complaint is insufficient to implicate the FLSA’s anti-retaliation provision and granted the company summary judgment. The Seventh Circuit Court of Appeals affirmed.

Oral Complaint Protected

The Supreme Court disagreed and vacated the appeals court decision. Justice Stephen Breyer, writing for the majority, held that the FLSA protects oral complaints. He observed that the FLSA anti-retaliation provision forbids employers from “discharg[ing] or in any other manner discriminat[ing] against any employee because such an employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to” the Act.

Justice Breyer’s reasons for deeming oral complaints protected by the FLSA include the following:

• certain dictionaries, regulations of federal agencies other than the Department of Labor (which enforces the FLSA), and state statutes indicate that a person could “file” an oral statement;

• the phrase, “any complaint,” used in the statute, suggests a broad interpretation for what constitutes a complaint;

• Franklin Roosevelt, in promoting the FLSA, said the Act was designed to protect “illiterate, less educated” workers, who might not appreciate fine statutory distinctions;

• illiteracy studies from the early part of the 20th century

support the view that the FLSA was enacted to allow

such marginalized employees to make complaints that

would be protected from retaliation; and

• it is appropriate to defer to the Department of Labor,

which has taken the position that “filed any complaint”

encompasses oral complaints.

Unresolved Issue

Left unresolved in the Court’s ruling is the issue of whether

the FLSA’s “filed any complaint” language was meant to

include complaints, oral or written, that an employee

brings to his or her employer internally, without involving a

governmental agency. Justice Breyer found the question was

not appropriate for review.

Justice Antonin Scalia strongly disagreed with the majority,

finding that the internal-complaint issue was properly raised

by the company in its opposition to Kasten’s petition for high

court review. According to Justice Scalia, the Court was

issuing an “advisory opinion” by addressing the oral/writing

issue without addressing whether an internal complaint

constituted protected activity. On the merits he would

concluded that the “filed any complaint” language meant that

FLSA protected activity “contemplate[d] an official grievance

filed with a court or an agency.”

--Susan M. Schneider

Omaha Office

SchneidS@jacksonlewis.com

--Paul DeCamp

Washington DC Region Office

DeCampP@jacksonlewis.com

--Paul Patten

Chicago Office

PattenP@jacksonlewis.com

4

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SSA’S “NO MATCH” LETTERS TO EMPLOYERS:

THEY’RE BACK!

IMMIGRATION UPDATE

Amy Peck is a nationally recognized immigration attorney practicing out of the Jackson Lewis LLP Omaha, Nebraska office.

After a hiatus of several years, the Social Security Administration has resumed

notifying employers of social security number mismatches of employees. The

SSA’s No Match or “Request for Employer Information” letter states that the

information reported on an individual’s W-2 or W-2c form do not match the

Agency’s records.

The SSA requests in the No Match letter that the employer:

• Compare the SSA information with the individual’s employment records.

• If the records match, ask the employee to check the name and Social Security

number on their Social Security card.

• If the card does not show the employee’s correct name or Social Security

number, or if a name change or a correction is necessary, instruct the

employee to contact a SSA office to resolve the discrepancy.

• Provide written responses to several questions about the individual in

question and return the completed form to the Agency (separately from

any Form W-2c correction filing).

The SSA cautions the employer that a No Match letter alone should not the basis

for taking adverse action against an employee. A mismatch can occur for many

reasons, including typographical errors, incomplete or blank names reported,

name changes, or incomplete or blank social security numbers reported. In the

past, about 10 percent of all W-2s initially received by the Agency have some

sort of a name-number mismatch.

Employers who receive a No Match letter should contact legal counsel to

determine whether any action is necessary. Each case is different and must be

examined and analyzed individually.

--Amy L. Peck

Omaha Office

Amy.Peck@jacksonlewis.com