(lead article for cover)

HERE's Chief Organizer, Thomas Hanley, Resigns to Settle Embezzlement Charges

Thomas Hanley, director of organization for the Hotel Employees and Restaurant Employees International Union ("HERE") and son of long-serving former HERE President Edward Hanley, resigned recently in compliance with an agreement, previously reported in the HIQ, settling charges of embezzlement and misuse of union funds. He was replaced by Kenneth C. Paulsen. Hanley also resigned officially from his position as president of Local 1 in Chicago.

Reportedly, under the agreement, Hanley agreed to give up his positions with Local 1 and the international union for one year and pay a $25,000 penalty to the union. Hanley can remain a union member during this one-year period, and, on August 31, 1999, will be permitted to again participate in HERE without any restrictions. Many had expected Hanley's departure following a statement released by the U.S. Attorney for the District of New Jersey, which announced that charges were pending against union officials including Hanley. Hanley faced embezzlement and fraud allegations concerning union members' funds and property.

In the meantime, the General Executive Board of the 245,000-member union recently voted to implement all 48 of the reforms recommended in the court-appointed monitor's report, regardless of the fact that the recommendations were non-binding. The recommendations for reform are contained in the "Fourth Report of the Monitor of HEREIU," which was released recently by the U.S. Attorney's Office for the District of New Jersey. The report raises not only the need for internal reforms and structural changes, but also identifies disciplinary measures being taken against 34 international and local union officers, business agents, and consultants, including Edward Hanley, who stepped down as general president after serving in that capacity for 25 years; John O'Gara, the union's former general vice president; Herman Leavitt, who retired as the union's general secretary-treasurer in 1996; and Thomas Hanley. Others disciplined include officers, business agents, and consultants working in local unions in Chicago, Milwaukee, Buffalo, Pittsburgh, and Cleveland, often because of the official's alleged association with organized crime. A total of 17 individuals were barred from HERE for life through the reform process. The report summarizes Kurt Muellenberg's experience as court-appointed monitor of HERE between September 5, 1995 and March 5, 1998.

The report contains a preface describing HERE as operating for decades without basic organizational structures such as budgets, personnel policies and organizational charts. The report states that "[f]rom the onset, it was clear that the International Union suffered from a management deficit and did not subscribe to generally accepted business practices. Despite an apparent abundance of personnel, the staff of 35 employees was neither prepared nor expected to carry out certain functions normally deemed basic and essential to most business entities of any size. . . ."

As a solution, the report recommends that the union develop annual budgets and an auditing process to detect fraud and waste. The report also suggests the establishment of basic personnel policies and a written policy for evaluating employee performance and compensation standards. The report also urges reform of policies that financially benefit a small number of current and former officers, business agents and friends of union leaders. One such policy in need of reform involves per diem payments of $100 per day to the union's four general officers. These payments were made 365 days per year, irrespective of the official's activities on any particular day. Per diem payments of between $40 and $100 per day are also made to certain retired officers. Others also receive per diem payments. HERE paid a total of $478,150 in per diem expenses in 1997.

The report also recommends numerous restrictions on the use of leased vehicles, including a prohibition on lease-end purchases of vehicles and the end to policies providing leased vehicles to consultants and retired union officials. The report also details the improper use of union credit cards, recommends that credit card expenditures be reviewed by an accounting firm, and suggests that officers be familiarized with federal rules concerning business expenses. Additionally, the report suggests that HERE no longer give union credit cards to retired officers.

A small union reform group known as HERE To Insure Change ("HERETIC") called on John Wilhelm, current general president of HERE, to pursue a broader reform agenda and depart from HERE's traditions of corruption and mismanagement. A spokesman for HERETIC said "A lot of us believe this is just the tip of the iceberg. But given that the monitorship ended, this is the extent of what the reform process has achieved." The Association for Union Democracy also criticized the report for what it saw as a failure to deal effectively with the fundamental issues of union democracy. The Association also challenged the union's ability to reform itself without federal intervention.

San Diego Tribal Casinos Agree to Organizing Procedures with the CWA

The Viejas Bank of Kumeyaay Indians and the Communications Workers of America ("CWA") have agreed to a process for the union to attempt to organize employees at the tribe's casino on tribal land near San Diego, California. Because the casino is on sovereign tribal land, it is not covered under the National Labor Relations Act. However, the Viejas tribal chairman explained that "[t]he voluntary election agreement . . . is similar to [procedures under] the National Labor Relations Act . . . ." According to the CWA, a tribal employee contacted Local 9400 and requested that the union organize the casino service employees.

Approximately 250 casino employees may be eligible to be in the bargaining unit. In accord with the recent agreement, if 30 percent of the casino's service employees sign union authorization cards, then Viejas will hold a secret ballot election. "If a majority of casino service employees elect CWA as their collective bargaining representative, Viejas will recognize CWA as the exclusive representative with respect to collective bargaining over wages, hours and other terms," explained a Viejas spokesman. Arbitration will resolve issues arising during the election process.

In the Courts

Ninth Circuit Adopts Heightened Standard for Punitive Damages

In Ngo v. Reno Hilton Resort Corp., the Ninth Circuit held that evidence of an intentional civil rights violation is not, without more, sufficient to support a punitive damages award. Instead, the court held that "an award of punitive damages under Title VII is proper where the acts of discrimination giving raise to liability are willful and egregious, or display reckless indifference to the plaintiff's federal rights."

Bally's (Reno Hilton's predecessor) hired Ngo as a cocktail waitress on a full-time schedule, but classified her and all other cocktail servers as part-time employees. When Hilton purchased the hotel, it adopted Bally's employee classifications, but later reclassified Ngo and other cocktail servers who actually had been working full-time schedules as "full-time employees."

Later, when Ngo developed complications during her pregnancy, the assistant beverage manager told her he would grant her a medical leave of absence. However, the HR Director terminated Ngo because she erroneously believed that Ngo did not have one year of continuous full-time employment. Hilton rehired Ngo three months later with a loss of seniority and benefits. Ngo then filed a race discrimination suit against Hilton under Title VII, based on the fact that Hilton granted a white cocktail waitress a two to three week leave of absence for her honeymoon, although she did not meet the length of service requirement. Ngo was awarded minimal damages ($9,000 in back pay and $3,000 emotional distress). Ngo appealed after the trial court did not permit a punitive damage award as a matter of law.

The Ninth Circuit joined the First, Sixth, Eighth, and Fourth Circuit Courts of Appeal in interpreting the language of Section 1981a and held that the standard for punitive damages is: "An award of punitive damages under Title VII is proper where the acts of discrimination giving rise to liability are willful and egregious, or display a reckless indifference to the plaintiff's federal rights." Relying on congressional intent and the other circuit courts' reluctance to allow awards of punitive damages under Sections 1981 and 1983 without more than evidence of intentional civil rights violations, the Ninth Circuit affirmed the trial court's ruling that punitive damages were inappropriate.

In the Courts

Court Reinstates Verdict for White Employee Complaining About Race Discrimination

The U.S. Court of Appeals for the Eleventh Circuit ruled that a trial court erred in setting aside a jury's finding that a white Taco Bell employee was discharged for complaining about race discrimination at the restaurant where he worked. Olmsted v. Taco Bell Corp.

Olmsted, a white male, worked as an assistant manager at Taco Bell for three years. In January 1993, he complained to his manager and a manager for one of the company's human resources divisions about what he perceived as racially discriminatory behavior at the restaurant. Shortly after this incident, he was transferred to another Taco Bell. On July 1, 1993, Olmsted informed his new supervisor that he could not work that day because his wife required emergency surgery and Olmsted recorded the day as sick leave on his time sheet. A dispute arose about whether Olmsted had actually accrued a day of sick leave and he was suspended from work for falsifying time records. At the time he was suspended, his supervisor also gave him three memoranda stating that he had been verbally warned that he had violated company cash-handling practices. Olmsted was terminated on July 27, 1993 for falsifying time records. Olmsted filed suit in federal court.

After trial, the district court granted Taco Bell's post-trial motion to overturn the jury verdict awarding Olmsted $10,000 in back pay, $450,000 in compensatory damages, and $3 million in punitive damages. The trial judge found that Olmsted failed to prove a prima facie case of retaliation under Title VII.

In reversing the lower court, the Eleventh Circuit stated that to establish a prima facie case of retaliation under Title VII, a plaintiff must prove that he engaged in statutorily protected expression, he suffered an adverse employment action, and that a causal link exists between the two events. The court stated that the causal link should be construed broadly, in that a plaintiff merely has to prove that the protected activity and the negative employment action are not completely unrelated. The court found the evidence in this case "amply supported" a retaliation claim. It noted that of the four managers who made the "consensus decision" to terminate Olmsted, three knew about his prior complaint of race discrimination, the same three managers had prepared the first disciplinary action against Olmsted, and one of them allegedly remarked that Olmsted "wasn't going to be with the company much longer." Therefore, a reasonable jury could have found that the company's decision to suspend and terminate Olmsted was causally related to his complaints of racially motivated conduct. The Eleventh Circuit did affirm the lower court's decision reducing the award of $450,000 in compensatory damages and $3 million in punitive damages to reflect the $300,000 damage cap under the Civil Rights Act of 1991, which amended Title VII of the 1964 Civil Rights Act.

Bargaining Developments

17 Major Washington, D.C. Hotels Agree to New Three Year Contract with HERE

Seventeen major Washington, D.C. hotels are operating under terms of a new three-year agreement with Hotel Employees and Restaurant Employees ("HERE") Local 25. The contract took effect one day after the prior agreement expired and will remain in place until mid-September 2001. The parties negotiated the economic provisions first, instead of late in the negotiations, which allowed the parties to settle on a new agreement over a month before schedule.

The master agreement between thirteen hotels that bargain through the Hotel Association of Washington, D.C., and HERE Local 25 covers some 3,800 employees. Also represented by Local 25 are approximately 800 employees at eleven other city hotels that normally sign "me-too" agreements patterned after the master contract. Already, four of those other hotels have reportedly agreed to the me-too contracts.

Under the master contract, the hotels have agreed to continue paying 100 percent of the premium cost of health insurance coverage for employees and their families. Health insurance will be provided through Kaiser Permanente at a rate similar to that paid previously and there will be no premium increases for the employers during the term of the contract. The hotels also agreed to increase their contribution rate to the pension plan from 31 cents per hour worked to 36 cents in the first year, 46 cents in the second year, and 56 cents in the third year of the contract. The contract also provides for the establishment of a new 401(k) plan.

The new contract also establishes a training fund. The employers will contribute 2 cents per employee per hour worked during the first year and 1 cent in each of the second and third years. The union anticipates that each 1 cent contribution to the fund will generate between $85,000 to $89,000 per year. Additionally, because the hotel industry reportedly suffers from a labor shortage, the parties agreed to use some funds from the training fund for recruiting, training, and placing unemployed employees. Some of the funds can also be leveraged for federal or state training opportunities.

Under the new contract, nontipped employees are to receive wage increases of 35 cents per hour in the first and second years of the contract and 40 cents per hour in the contract's third year. Bus persons will receive 75 percent of the nontipped increase and tipped employees will receive half of those increases under the new contract. The previous contract provided for an average hourly rate of $10.70 for nontipped employees.

In the Courts

Jury Finds for Employee Who Reported Sewage Backup

Linda Gibbins, a 30-year-old student and part-time bartender, who was a 7?-year employee at the Club Bombay, alleged that she was terminated after she voiced health and safety concerns to her manager and at least two public agencies. Gibbins v. Tag Enterprises, Inc. d/b/a Club Bombay. One month earlier, Club Bombay had several incidents of sewage backup inside its server bar, while it stayed open and continued to serve drinks. After expressing her health and safety concerns to her personnel manager, Club Bombay received a Notice of Correction from the Environmental Health Department. Shortly thereafter, the Club terminated the bartender.

The plaintiff then filed suit, alleging she was terminated for reporting the sewage backups to public agencies. The Club argued that the plaintiff was terminated for insubordination. The Club offered $1,000 to settle, but Gibbins demanded $15,000. After a three-day trial and one-half-day in deliberations, a jury returned a verdict of $3,000 compensatory damages plus $3,469.60 in costs for the plaintiff.

Bargaining Developments

San Francisco Marriott Institutes Pay Raise After Contract Talks with HERE Reach Standstill

The Marriott Hotel in San Francisco, California has been involved in numerous disputes with Hotel Employees and Restaurant Employees ("HERE") Local 2 since the 1980s, as previously reported in the HIQ. Marriott began negotiating with the union in 1996, after Mayor Willie Brown announced that a majority of employees at the downtown hotel had signed authorization cards, choosing Local 2 as their bargaining representative. Since that time, HERE has filed numerous unfair labor practice charges against the hotel with the National Labor Relations Board. However, the Board has not yet reached any decision on the issues raised by the claims and, recently, Marriott paid $1.5 million in back pay and improved benefits to approximately 900 employees.

Marriott announced the raise in a letter to employees and a spokesman said the wage increase "has nothing to do with the union." Apparently, the increase became possible after time had passed following stalled contract talks between the hotel and HERE last spring. In the letter to employees, the hotel general manager announced that "the union appears to have given up on bargaining," after 75 meetings. Thus, the hotel determined that it would exercise its right under the National Labor Relations Act to unilaterally implement its benefit and wage proposals.

Marriott's pay increase is retroactive to January 1997 when the hotel awarded raises to management and nonunion employees. Some employees have received payments of as much as $6,000, according to Marriott. Room cleaners previously earning $11.50 an hour will now make $12.50 an hour.

In addition, employees who were paying $90 a month in copayments for family insurance coverage and part-time employees who were paying $150 for medical coverage are now paying $10 per month. This amount is reportedly the same as that paid by Local 2 members in other Class A hotels in San Francisco. Marriott's letter also extends medical and dental coverage to part-time employees averaging 16 hours of work a week. The hotel will offer domestic partner benefits to bargaining unit members beginning on January 2, 1999.

Newsworthy

Kentucky Fried Chicken to Pay $30,000 to Manager Terminated After Owner Discovered He was Gay

The Massachusetts Commission Against Discrimination ("MCAD") recently ordered a fast-food outlet to pay a former employee approximately $30,000 in damages and back wages after it determined that the restaurant discriminated against him after learning he was gay. Fijal v. Kentucky Fried Chicken/JTN Food Service Inc. The award to the former assistant store manager, Christopher Fijal, included $25,000 for emotional distress and $3,460 for lost wages because it took him approximately two years to find a comparable job.

Fijal had worked for Kentucky Fried Chicken ("KFC") during the summers of 1990 and 1991 without incident. In October 1992, after KFC promoted him to assistant manager, Fijal told some fellow employees that he was gay and later answered "yes" when two managers asked him if he was gay. A few days later, Fijal was given his first written warning and was also singled out for discipline in the two following months. Then, in June 1993, when Fijal reported to work, he saw a name tag with a Greek word on it attached to the name tag machine. Although Fijal did not know the word was Greek slang for a sex act, the Greek owner of the outlet became angry and convinced that Fijal had made the tag because, according to the store owner, only a homosexual could know the word's meaning. The owner then threatened to terminate Fijal for creating the tag. Fijal was discharged soon thereafter and filed a discrimination complaint with MCAD.

KFC argued it terminated Fijal for poor performance, alleged offensive remarks about the owner's wife, and his refusal to identify the employee who told Fijal that the owner called him a derogatory name. However, MCAD found that name-calling was simply the last act in an escalating series of hostile interactions between the outlet's owner and Fijal which began after Fijal's sexual orientation became widely known. MCAD also focused on the fact that no other employee received discipline for similar acts, finding that this supported the conclusion that Fijal was treated differently than other employees after his supervisors learned of his sexual orientation.

In the Courts

El Torito Restaurant Defeats Sexual Harassment Claim at Trial

Maria Michael Spirtos, a 40-year-old part-time waitress, worked at an El Torito restaurant in California for 10 months. During that time, she claimed the general manager constantly harassed her by making sexual comments both to and about her and that she was constructively discharged when El Torito put her on an on-call status. Maria Michael Spirtos v. Family Restaurants, Inc. Only after she left her employment did the plaintiff allege that she had been sexually harassed by the general manager. The plaintiff claimed both quid pro quo and hostile environment sexual harassment and requested emotional distress damages.

El Torito argued that the plaintiff fabricated her sex harassment allegations to retaliate against the general manager who had terminated her son for theft. The plaintiff and another employee engaged in a concerted effort to have the general manager terminated. According to El Torito, to advance their plan, the two employees made several documented calls to the employee relations manager with complaints against the general manager, but never mentioned sexual harassment. During the trial, other employees also testified that the plaintiff had complained about the general manager and called him names, but had not complained about sexual harassment. Further, El Torito argued that the plaintiff had not been discharged, but had simply refused to work as scheduled.

The parties first unsuccessfully attempted to settle through arbitration. The plaintiff made a demand for $100,000, pursuant to California Code of Civil Procedure 998, which she later reduced to $50,000. The restaurant offered $10,000, which it increased to $20,000 at trial. After a seven-day trial and four hours of deliberation, the jury returned a verdict for El Torito.

Bargaining Developments

Las Vegas Bellagio Recognizes HERE Affiliates as Other Las Vegas Hotels Settle Contracts

Recently, an impartial arbitrator verified that a majority of employees at the newly opened Bellagio Hotel in Las Vegas had signed union authorization cards identifying Culinary Workers Local 226 and Bartenders Local 165, affiliates of the Hotel Employees and Restaurant Employees ("HERE") union, as their chosen bargaining representatives. The Bellagio employees took approximately two months to authorize the HERE affiliates as their exclusive bargaining representatives.

The Bellagio was built by Mirage Resorts Inc., which owns the Mirage, Golden Nugget, and Treasure Island resorts and employs some 4,300 employees. Under an accretion provision in the contracts between the HERE affiliates and the major hotel/casinos owned by an employer, following a card check, existing contracts are extended to the newly organized employees. Hence, because the HERE affiliates got a majority of authorization cards signed, Bellagio employees will be covered by the current contract negotiated with Mirage Resorts, and reported previously in the HIQ.

The HERE affiliates also plan to run organizing campaigns at several other mega resorts being built in Las Vegas which are scheduled to open within the next year. The Mandalay Bay, being built by Circus Circus Enterprises, is scheduled to open with some 3,000 employees next spring and Paris, being built by Hilton, is expected to open next fall with several thousand employees. In addition, the Venetian, the largest of the resorts, is under construction by the owner of the Sands, which was razed last year. The hotel will have approximately 6,000 rooms, when all phases of construction are completed. The HERE has contended that former employees from the Sands should be given preferential treatment for jobs at the new hotel, which is scheduled to open in April 1999.

About 85 percent of the HERE affiliates' members, working in some 35 hotel/casinos, are covered by new contracts or settlements. Recently, members of the locals ratified a new five-year contract with Boyd Gaming Corp. covering approximately 2,260 employees at the Stardust, the Fremont, and Main Street Station. Other newly ratified contracts cover employees at the Riviera Hotel, the Four Queens, the Tropicana, and Hilton Hotels, covering employees at Bally's, the Las Vegas Hilton, and the Flamingo Hilton, as previously reported in the HIQ. The contracts basically follow those negotiated earlier this year with Mirage Resorts and Circus Circus Enterprises.

At 12 smaller hotels, contracts have not yet been reached, including some downtown hotels such as the Horseshoe, Union Plaza, the Showboat, the El Cortez, and the Maxim.

At the Board

NLRB Remands Case to ALJ After Disagreeing with Basis for Credibility Determination

In a highly unusual ruling, the National Labor Relations Board ("NLRB") found that an administrative law judge ("ALJ") made an incorrect finding of credibility in Linda Lewis and Roger Weekly, Individually and as a Partnership, d/b/a Iron Griddle Restaurant. The ALJ originally held that the Iron Griddle Restaurant violated Section 8(a)(1) of the National Labor Relations Act by discharging an employee for engaging in protected concerted activity rather than insubordination. The ALJ discredited testimony by the employer that she terminated the employee for insubordination. The ALJ decided that the employee's alleged insubordination was not asserted by the Iron Griddle at the employee's unemployment compensation hearing and declared that this was "because it [the alleged act of insubordination] did not happen." The Board majority, however, found that the Iron Griddle had raised the insubordination defense at the unemployment compensation hearing. Therefore, the Board remanded the case to the ALJ for reconsideration of his credibility determinations and for a supplemental decision because of the incorrect basis the ALJ asserted for discrediting the employer's testimony. Former Chairman Gould was the lone dissenter and declared that it was unnecessary and a waste of NLRB resources to remand the case to the ALJ because ". . . the [ALJ] had sufficient, correct, and independent reasons for his credibility resolution."

In the Courts

Florida District Court Awards $154,000 Against Restaurant and Mandates New Hiring Rules

In EEOC v. Joe's Stone Crab Inc., the U.S. District Court for the Southern District of Florida ordered the landmark Miami Beach restaurant, Joe's Stone Crab, to pay $154,000 to four women who were not hired for food serving positions that were traditionally filled mostly by men. The court also held that for the next three years, the restaurant must use specified recruiting and hiring procedures, overseen by a court-appointed monitor "to ensure that all women who apply to work at Joe's will be evaluated on merit, free from sex-discrimination." The court went further, stating "[t]he old world notion that it is `classier' to have only male food servers is, at best, a quaint anachronism; it is not a defense to the charge of sex discrimination."

After a bench trial, the court ruled that the restaurant dissuaded many qualified female servers from applying, through its well-known reputation of hiring only men at its annual applicant screenings. Between 1986 and 1990, before the EEOC investigated the restaurant, it filled 108 successive serving vacancies with men. Joe's had argued that its maitre'd's hired male servers because they came from a European tradition, where staffs were common in fine restaurants.

The court ordered the restaurant to adopt a corporate resolution that it is an equal opportunity employer and which states that Joe's does not discriminate on the basis of sex in hiring food servers. Joe's must announce its policy at its annual applicant screenings and communicate the policy to the restaurant's hiring staff. The restaurant also must pay for a validation study of its hiring criteria, advertise the applicant screenings in local newspapers, maintain a recorded information line, institute formal training for its three-member interview panel, use an interview training manual and evaluation form developed by a court-appointed expert, and give a standardized food tray carrying test. Further, the EEOC can attend applicant screenings and must be given all hiring-related records. Significantly, job offers must be pre-approved by the court, based on gender reports by the court-appointed monitors.

At the Board

Employer Need Not Institute Contempt Proceedings in

Court to Enforce Subpoena Issued by NLRB's Regional Director

In reviewing objections to an election held at the Best Western City View Motor Inn in New York and the hearing officer's recommendations, a majority of the National Labor Relations Board, consisting of former Chairman Gould and Members Fox, Liebman, and Brame addressed the issue of non-compliance with an enforced ex rel subpoena. The Board found that the tally of ballots from the election showed 16 for and 4 against the Petitioner, New York Hotel and Motel Trades Council, with 7 challenged ballots, an insufficient number to affect the election results. Then, the Board discussed contempt proceedings to enforce a subpoena issued by the Regional Director to an employee-witness. Under Section 102.31(d) of the Board's Rules and Regulations, the majority stated:

"Accordingly, upon the request of the party on whose behalf a subpoena was issued and enforcement proceedings were instituted, the Regional Director must initiate contempt proceedings in U.S. district court upon noncompliance with an enforced subpoena, unless contempt proceedings would be inconsistent with law and the policies of the Act. *** However, contempt, like subpoena enforcement proceedings need not be instituted by the Regional Director absent a request by the party on whose behalf the subpoena was issued; the Regional Director is under no obligation to institute contempt proceedings sua sponte. In any event, a party itself is not obligated to institute contempt proceedings in court. Its only procedural obligation is to request the Regional Director to initiate such proceedings."

Thus, the Board rejected the hearing officer's finding that the employer had the burden of instituting contempt proceedings in court against the subpoenaed employee-witness who did not appear at the hearing. The Board then remanded the proceeding to the Regional Director for a supplemental decision concerning the proof of service of the subpoena allegedly served on the employee-witness and for any other further proceedings. Member Hurtgen dissented in part, arguing that the Board was responsible for seeking compliance with a court order enforcing a subpoena, and that it should not wait for a request from a private party on whose behalf the Board sought the court order.

In the Courts

District Court in Florida Rejects Quid Pro Quo Harassment

Under Section 1981

In Shelton v. Shoney's, Inc., the U.S. District Court for the Middle District of Florida determined that Section 1981 cannot support a claim of quid pro quo racial harassment.

The plaintiff, Amy Shelton, who is white, was enrolled in a two week management training program for Captain D's, which is a subsidiary of Shoney's. The plaintiff alleged that during that training period, her immediate supervisor, who is African American, both sexually and racially harassed her by repeatedly grabbing her, rubbing against her, and making sexual comments to her. The plaintiff also claimed that her supervisor told her that her job promotions depended on how she treated him. The plaintiff filed suit against Shoney's and her supervisor alleging quid pro quo harassment under Section 1981, race and sex discrimination under Title VII, and state law violations. The plaintiff claimed that she was forced to quit her job and then filed the lawsuit. Shelton's Title VII claim alleged sexual harassment under both quid pro quo and hostile work environment theories. In addition, Shelton alleged that she had been constructively discharged in violation of Title VII and the Florida Civil Rights Act. Shelton's Section 1981 claim included charges of quid pro quo harassment, hostile environment, and constructive discharge because of her race. Shelton also added other state law tort claims.

The court determined that, as a matter of law, quid pro quo harassment does not apply to race discrimination claims. The court also dismissed Shelton's federal and state discrimination claims against her supervisor, who had been sued in his official capacity as Shoney's agent, because the claims were "redundant" of her claims against Shoney's. The court's decision allowed the plaintiff to proceed with her other claims against Shoney's.

At the Board

Board Calls for Second Election at Casino that Interrogated Employees

The National Labor Relations Board recently affirmed an administrative law judge's ("ALJ") conclusions that the Peppermill Hotel Casino, Inc. d/b/a Peppermill Hotel Casino and Rainbow Casino in Nevada violated Section 8(a)(3) of the National Labor Relations Act (the "Act") by issuing a negative evaluation to an employee because of his organizing activities for Operating Engineers Local 3. The Board further upheld the ALJ's finding that the casino violated Section 8(a)(1) of the Act by interrogating and threatening employees, giving the impression of surveilling employees' union activities, and offering better jobs or increased pay to employees if they voted against union representation. Specifically, the ALJ found, with Board approval, that certain misconduct by the hotel, which included interrogating two employees about their intended votes and impliedly promising improved benefits if they voted against union representation, interfered with the election held in May 1997. The Board also stated that the ALJ was incorrect in presuming that evidence of this type of objectionable conduct had been disseminated. Both the Board and the ALJ found it significant that the outcome of the election, a 12-12 tie, could have been influenced by a change in either of the two employee's votes. The Board set aside the election and remanded the case to the Regional Director to conduct a second election at the hotel.

In the Courts

Deli Faces Trial in Eighth Circuit on Race Claims

The Eighth Circuit held an African American woman, who was denied a promotion to manager of an Omaha delicatessen, showed enough evidence of race discrimination to bring her case to trial, because of her "superior" education and experience and her denial that she told her employer that she was looking for another better paying job. McCullough v. Real Foods, Inc.

McCullough began working at Chef Roy's Deli in 1992. A year later, the deli was sold and McCullough continued working at the deli for $6 an hour, with her hours varying from part-time to full-time. Soon afterwards, the new owner hired a white woman as a part-time deli clerk. Although she had prior experience as a checker at a grocery store, she had no prior experience as a deli worker. She also had only a sixth-grade eduction, and had poor reading, writing, and math skills, requiring assistance from McCullough for several jobs, such as calculating prices and reading recipes. McCullough had a college degree.

Three months after the new employee started work, the new owner named her manager of the deli, selecting her over McCullough, the only other employee at the time. The owner did not set up formal criteria for the decision, but cited the new employee's strong work ethic, her experience as a checker and a baker, and her interest in full-time, long-term employment as reasons for choosing her. The new owner contended that McCullough was overeducated for the job and had told him she would leave for a better position and expected higher pay as manager. McCullough denied making those statements and filed suit under Title VII, claiming Real Foods discriminated against her on the basis of race. A federal judge granted the company's motion for summary judgment, concluding McCullough failed to present enough evidence to bring the case to trial.

In reversing the district court, the Eighth Circuit noted that McCullough had 15 months more hands-on experience in the deli, as well as objective educational qualifications that greatly exceeded those of the other employee. The court held: "Although we are not convinced that a college degree is a necessary or even a nice-to-have qualification for the position of deli manager, when McCullough's education and experience are contrasted with [the other employee's] poor reading, writing, and math skills -- as evidenced by her inability to read recipes or calculate prices -- a reasonable inference arises that [the owner] promoted a substantially less qualified white woman over a substantially better qualified . . . [African American] woman." When that is done, a reasonable inference arises that the employment decision was based on something other than the relative qualifications of the applicants, said the court. The court found that the employer's asserted nondiscriminatory reasons for the decision were "essentially checkmated by McCullough's denials that she ever made the statements that she was seeking another job."

Bargaining Developments

Disneyland Agrees to New 42 Month Contract Covering 3,500 Service Employees

Disneyland's new 42-month contract agreement provides for a 10 percent over-term wage increase for the 3,500 service employees at the entertainment complex in Anaheim, California. The agreement will expire on March 15, 2001. The relatively quick approval by the unions' membership is a change from three years ago. In the last round of bargaining, the company's offer was rejected twice by the membership before the joint union bargaining committee accepted Disneyland's final offer, understanding that Disneyland was not going to make any additional offers.

Recently, the present settlement was approved by members of International Brotherhood of Teamsters Local 495, United Food and Commercial Workers Local 324, Service Employees International Union Local 1877, and Bakery, Tobacco and Confectionery Workers Local 83, who bargain in concert as the Master Service Trades Council.

Under the new settlement, Disneyland has instituted a 3 percent initial wage increase. Then, Disneyland will increase wages another 3 percent in September 1999, and 4 percent in 2000. Under the previous contract, bargaining unit wages started at $7 per hour for "casual regular" employees to approximately $14 per hour for employees in the "attractions" job group. The new agreement also strengthens seniority rights for employees in the "cast" classification. The agreement covers ride operators, ticket sellers, food servers, entertainers, and shop clerks, among others.

The Disneyland proposal also included a 401(k) plan in place of the existing pension plan for employees hired after March 2002. Disneyland offered a 2 percent match to employee contributions to the 401(k) plan. However, the union bargaining committee has postponed the vote on the 401(k) plan until later in the year. The current pension benefits, when added to Social Security, replace between 65 percent and 85 percent of a retiree's previous income, but in five years, 50 percent of the bargaining unit may be new employees who would be eligible only for the 401(k) plan, if adopted.

Bargaining Developments

Los Angeles International Airport Becomes Target for Multi-Union Organizing by AFL-CIO

The AFL-CIO recently designated Los Angeles International Airport ("LAX") as a target for multi-union organizing. The AFL-CIO's organizing drive includes Service Employees International Union Local 1877, which is attempting to organize terminal employees, including airport baggage screeners and wheelchair attendants, and Hotel Employees and Restaurant Employees Local 814, which is trying to organize the food and retail employees at LAX. The organizing effort is targeting between 3,000 and 3,500 employees and primarily focuses on the issue of a "living wage."

In May 1997, Los Angeles instituted a living wage ordinance requiring most city contractors to pay their employees a minimum of $7.25 per hour if health benefits are included, and $8.50 per hour if the employer does not provide health benefits. In addition, an amendment to the living wage ordinance confirming that the living wage ordinance applies to any leased building used regularly by large numbers of the public, including airports, was passed by the Los Angeles City Council. The amendment also expands "rights and remedies" of employees who suffer retaliation as a result of demanding inclusion under the ordinance.

The union coalition and its supporters have maintained, since the living wage ordinance passed, that its provisions applied to airline terminal employees. However, the airlines, which lease the terminals from the Department of Airports and often contract out service work to other firms, have maintained that the law does not cover terminal employees because they are engaged in the air transportation business and are not doing work that would otherwise be done by city employees.

Previously, the Los Angeles Bureau of Contract Administration held that the city's living wage ordinance covered security and maintenance employees at approximately 25 terminals leased by commercial airlines and not employees involved in the air transportation services at the terminals. Meanwhile, the airlines contend that the living wage ordinance does not apply to airline terminal employees and have appealed the decision. The airlines maintain that they are exempt from the living wage ordinance because the Airline Deregulation Act prohibits state or local agencies from enacting laws or regulations that relate to rates, routes, or services of an airline.

If upheld, the decision could affect several thousand employees working at terminals at both LAX and the Ontario, California Airports.

In the Courts

Texas Cruise Company Settles EEOC's Retaliatory Discharge Suit for $24,000

A Texas company has entered into a $24,000 settlement with the Equal Employment Opportunity Commission in a lawsuit the agency brought on behalf of a past employee, alleging that he was terminated because he opposed the company's alleged policy forbidding him to hire African American or Hispanic applicants. EEOC v. Party Boat Inc. d/b/a Dolphin Docks. The employee opposed the company's policy against hiring Hispanics, refused to terminate that employee after Dolphin Docks instructed him to do so, and tried to hire an African American applicant over the company's objections, according to the EEOC's complaint.

According to a consent decree filed in the U.S. District Court for the Southern District of Texas, Dolphin Docks settled in order to avoid further litigation and without admitting Title VII liability. Under the decree, Dolphin Docks agreed that it would not establish or maintain a practice of refusing to hire qualified African Americans and Hispanics. Dolphin Docks also will not terminate any employee for opposing discriminatory employment practices violative of Title VII of the 1964 Civil Rights Act. Additionally, Dolphin Docks will distribute copies of its employee manual to all employees and maintain separation records for three years. Under the decree, Dolphin Docks also will not mention the former employee's EEOC filing to his prospective employers. The decree will remain in effect for three years.

At the Board

Hotel's Handbook Violates NLRA

On a stipulated record, the National Labor Relations Board found that the Lafayette Park Hotel in California violated Section 8(a)(1) of the National Labor Relations Act because its employee handbook contains "unacceptable conduct" rules. A majority, consisting of former Chairman Gould and Members Hurtgen and Brame, with Members Fox and Liebman dissenting, found that certain standards of conduct forbidden by the hotel's handbook, including conduct that does not support the hotel's goals and objectives, divulging hotel private information to unauthorized individuals, unlawful or improper conduct off the hotel's premises or during nonworking hours, use of the restaurant or cocktail lounge for entertaining guests without prior approval, and socializing with hotel guests on hotel property would chill the employees' exercise of their Section 7 rights. A different majority, composed of Gould, Fox and Liebman, with Hurtgen and Brame dissenting, also decided that the hotel's prohibition on making false statements concerning the hotel or its employees had a reasonable tendency to chill employees' exercise of their Section 7 rights. The Board was unanimous in its finding held that the hotel's scheduling and attendance rule, which required employees to leave the premises immediately after completion of their shift, violated Section 8(a)(1). However, Gould wrote a separate concurring opinion, while Fox and Liebman wrote a separate opinion dissenting in part. At press time, it was unknown whether the hotel intends to appeal the Boards ruling.

At the Board

Hotel/Casino Violates NLRA by Forbidding Employees to Discuss Investigation

Administrative Law Judge ("ALJ") Frederick C. Herzog recently held that Desert Palace, Inc. d/b/a Caesar's Palace violated Section 8(a)(1) of the National Labor Relations Act ("NLRA") in promulgating and enforcing a rule which prohibited its employees from talking among themselves about the hotel's ongoing investigation of alleged illegal behavior by employees. The NLRB filed a complaint against the hotel after it terminated two slot technicians for violation of the hotel's discussion rule.

In October 1996, the hotel received an anonymous letter alleging that an unnamed slot technician had engaged in various illegal activities both at the hotel and during nonwork hours. The hotel launched a discrete internal investigation of the allegations listed in the letter. During the course of the investigation, the hotel's Assistant Vice President for Slot Operations and Corporate Security personnel interviewed various slot technicians. However, the hotel did not disclose confidential information concerning the slot technician's alleged illegal activities and did not disclose the letter or confidential information disclosed by other interviewees. During each interview, the interviewee was told not to discuss anything related to the investigation ". . . with anybody at any time." The hotel never told the employees the purpose of the rule. Any employee who violated the rule was subject to discipline, up to and including termination.

Several days after conducting the employee interviews, the hotel learned that two of the employees interviewed had discussed confidential information about the investigation. The hotel determined that its investigation had been compromised and terminated the two employees. The hotel stated that the terminations were based on "[f]ailure . . . to maintain . . . satisfactory relationships with other employees, including supervisors; insubordination . . . ; . . .false statements . . . ; Unauthorized discussion of company confidential information; Willful neglect, disregard, or a violation of any company policy, procedure or regulation established within the department assigned." One of the two employees' terminations was also based on the fact that he created a cartoon about the slot technician who was under suspicion.

In analyzing the case under Section 8(a)(1), the ALJ first determined whether the General Counsel had made a prima facie showing that supported an inference that protected conduct was a "motivating factor" in the employer's decision. After finding that the General Counsel had made such a showing, the ALJ looked to see whether the hotel had met its burden of demonstrating that the same action would have occurred even without the protected conduct.

The ALJ found that the two employees were engaged in protected conduct because they had discussed their fear that discipline would result from the hotel's investigation and had not disclosed confidential information in those discussions. The ALJ held that the employees had a right to discuss the possibility of discipline that might be common between them. This topic was consistent with the employees' protected right to discuss legitimate "working conditions." In addition, the ALJ found that it was undisputed that the hotel's decision to terminate the two employees was based on their discussions of the investigation.

Next, the ALJ rejected the hotel's argument that its confidentiality rule was valid and constituted a legitimate business concern. The ALJ determined that because other employees that discussed the investigation were not terminated and, in at least one instance, not disciplined at all, the rule could not be upheld. Further, the hotel had not limited its rule in scope or time.

The ALJ ordered that the two employees be reinstated with back pay and without loss of seniority or other privileges. As an additional finding, the ALJ held that the hotel violated Section 8(a)(1) by interrogating another employee before informing him of the purpose of the questioning and that he could refuse to answer without fear of reprisal.

Election Results

NLRB Rejects Riverboat Casino's Objections to Election

The National Labor Relations Board recently certified Local 74, Hotel Employees and Restaurant Employees, and Service Employees International Union as bargaining representatives for a 300-employee unit of the President Riverboat Casinos of Missouri, Inc., in St. Louis, Missouri. In doing so, the Board upheld the Regional Director's findings which overruled the Casino's objections to the representation election. The Casino's employees had voted 170 to 103 for representation. The bargaining unit includes food and beverage employees, porters, slot, floor and other gaming personnel.

At the Board

Sheraton is Successful at NLRB Against HERE

Recently, the National Labor Relations Board affirmed an administrative law judge's ("ALJ") decision that the Hotel Employees and Restaurant Employees Local 274 violated Section 8(e) of the National Labor Relations Act ("NLRA") by entering into and maintaining portions of its collective bargaining agreement with CHC Hotel & Resorts Inc. d/b/a Sheraton University City Hotel which required the hotel's lessee or concessionaires to also abide by the terms of the agreement. Member Hurtgen additionally noted that the case did not present the issue of whether the sale or transfer of a business constituted "doing business" within the meaning of Section 8(e) of the NLRA.

In the Courts

Family Restaurant Chain Fights Age Discrimination Claims

A Massachusetts jury recently awarded $6.7 million in damages to four former managers of the Ground Round restaurant chain after they claimed that their termination violated state age discrimination law. McCarthy v. The Ground Round Inc.

The four former employees were between 44 and 50 years old when they were fired and filed suit claiming that they were terminated on pretextual grounds as a result of Ground Round Inc.'s alleged policy of replacing older, upper-level, more highly compensated employees with younger, lower-level, lower-paid individuals. Ground Round, which operates 165 restaurants in 20 states, maintained that the dismissals were the result of 19 layoffs "motivated by legitimate and compelling business reasons."

After a trial lasting 2 weeks and three days of deliberation, the jury awarded the plaintiffs back pay, front pay, and emotional distress damages. Then, because the jury determined that Ground Round had knowingly violated the law, the jury multiplied the awards by 2.535. The individuals received from $972,000 to almost $2.4 million apiece. Ground Round plans to appeal.

According to the plaintiffs, in 1990, when a 34-year-old became chief executive, Ground Round started to discriminate against employees older than 40. The plaintiffs claimed that the executive, who is no longer with the company, bragged about lowering the average age of restaurant managers to 27 and faulted older managers with being resistant to change.

The four plaintiffs had worked at Ground Round for up to 30 years and held positions which included accounting manager, manager of special projects, and controller. The plaintiffs claimed that after they left, they were replaced by younger employees who divided their former duties and were paid substantially less. The plaintiffs further asserted that when they sought unemployment benefits, they first learned that Ground Round said that they had been dismissed for their inability to meet company standards. According to the complaint, the plaintiffs had previously been told that Ground Round was eliminating their jobs.

At trial, Ground Round argued that the former employees were

not certified public accountants, did not have college degrees and were, therefore, unqualified for their jobs. As rebuttal, the four employees proffered testimony from a previous chief executive officer who described them as the best employees retained from previous ownership. The four plaintiffs also proffered evidence that all four had records of good work with outside auditors and that Ground Round hired them as consultants to train their replacements. Ground Round had allegedly also advertised for managers with five to seven years of experience, indicating that it preferred younger employees, when it sought to hire the plaintiffs' replacements. Ground Round had originally offered a total of $320,000 to the four plaintiffs to settle.

The former employees initially filed a class action in federal court, but the U.S. Court of Appeals for the First Circuit upheld the district court's decision not to certify the class. The U.S. Court of Appeals for the First Circuit held that employees who alleged class-wide violations of the Age Discrimination in Employment Act ("ADEA") could not use previously filed ADEA class suits against Ground Round in order to remedy their failure to file suit within the Act's 90-day statute of limitations. Basch v. The Ground Round Inc. In so holding, the First Circuit joined in the U.S. Court of Appeals for the Fifth Circuit's view that ADEA plaintiffs "may not stack one class action on top of another and continue to toll the statute of limitations indefinitely." The U.S. Supreme Court has refused to hear the case.

At the Board

NLRB Denies Certification of Teamsters