Judge Dismisses Challenge to New Jersey's Casino Hiring Requirements

A federal judge in New Jersey recently dismissed a white employee's challenge to state regulations requiring casinos to take affirmative action in hiring. The court suggested that the casino had not violated the employee's civil rights by hiring an African-American and a Hispanic for the two positions sought by the employee. Under the New Jersey State Casino Control Commission regulations, casinos are required to take affirmative action to recruit and employ women, minorities, and persons with disabilities at all levels of the operations. The U.S. District Court for the District of New Jersey held that the manner in which the casino implemented its affirmative action policies did not violate Title VII of the Civil Rights Act of 1964. Schurr v. Resorts International Hotel Inc.

Karl C. Schurr, a white male, challenged the affirmative action regulations after he applied for a full-time job at the Resorts International Hotel Inc. and was passed over for an equally qualified African American applicant. The hotel had asked the union to refer qualified minority and female applicants for the position and the hotel's hiring supervisor then selected the minority candidate because the hotel supervisor "mistakenly believed" that the job had to be awarded to any qualified minority, according to the court. However, the court found that neither the hotel nor the New Jersey Casino Control Commission had a policy requiring that a qualified minority or female applicant be preferred over a qualified non-minority or male candidate. Thus, the affirmative action policies were not struck down. Further, the court held that Schurr had been passed over for another job, which went to a Hispanic male applicant, because the Hispanic male was the best qualified and Schurr was a "no-show" for the interview. | Back to top

Restaurant's Tip-Pooling Policies in Line with FLSA

Outback Steakhouse of Florida Inc.'s policy, under which servers share their tips with hosts and hostesses, bus persons, and bartenders, does not offend the Fair Labor Standards Act ("FLSA") the U. S. Court of Appeals for the Sixth Circuit held. Kilgore v. Outback Steakhouse of Florida Inc. However, the restaurant must inform employees that it plans to take a "tip credit" toward its minimum wage obligations.

The Sixth Circuit determined that the restaurant could use a tip credit in calculating the minimum wage for hosts and hostesses, who were "tipped employees" for the purposes of the FLSA. The court also decided that the FLSA contains no limitation that tip-out requirements only apply to amounts that are "customary and reasonable." However, the court remanded the case for further fact-finding to determine whether Outback told three of the four plaintiffs that it would take a tip credit toward its minimum wage obligation.

The plaintiffs were servers, hosts, and hostesses at Outback, claiming that they were not properly informed of the tip-pooling policy, that hosts and hostesses should not have their tips included in the minimum wage calculation, and that servers should not be required to contribute 3 percent of their gross sales to the pool.

The FLSA permits employers to take tip credits toward wages paid to "tipped employees," - employees "engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips." Additionally, according to the court, FLSA only authorizes tip pools between those employees who "customarily and regularly receive tips." Further, Department of Labor regulations indicate that tips received from a tip pool are "tips" for the purposes of defining "tipped employees" under the FLSA. Therefore, hosts and hostesses are "tipped employees" regardless of whether they receive tips directly from customers. In addition, the court found that hosts and hostesses were part of an occupation that customarily and regularly received tips, because they interact with customers in an industry where undesignated tips are common. | Back to top

Arbitration Pact Does Not Bar Sexual Harassment Claims Against Hooters

An arbitration agreement signed by employees of Hooters of America Inc. is an unenforceable contract of adhesion. Thus, employees who signed it did not waive their right to bring sexual harassment claims under Title VII of the Civil Rights Act of 1964, the U.S. District Court for the District of South Carolina has ruled. Hooters of America Inc. v. Phillips.

Hooters of America Inc., the parent company for Hooters of Myrtle Beach Inc., developed an alternative dispute resolution ("ADR") program and included an explanation in its employee handbook. The three-prong ADR program is comprised of an informal consultation in which the employee could discuss a complaint with a supervisor; a "compliance resolution procedure" in which employees and managers conducted peer review of any dispute, except for charges of harassment, intentional legal violations, or discrimination; and lastly, third-party arbitration to adjudicate claims. The ADR program was introduced to employees at a meeting, before the Myrtle Beach, N.C., Hooters restaurant opened, and a manager announced that the employees must acknowledge, in writing, their receipt of the agreement. While restaurant employees were given an opportunity to consult with an attorney before signing the agreement, the employees would have to meet with the manager within five days and sign the arbitration agreement or be barred from receiving future jobs at Hooters.

The court found that, at the time of the presentation, the Myrtle Beach facility lacked access to a complete copy of the rules to be enforced through the ADR procedure outlined to employees, and that the "failure to distribute the rules to the employees . . . is circumstantial evidence that Hooters knew that the employees would likely object to the . . . terms of the rules if they were disclosed." Further, the concealment and multiple conflicting provisions within the "Hooters Rules" prevented a workable interpretation of the agreement. Finally, the court found that the agreement was an unlawful contract of adhesion, because the agreement contained a provision that Hooters would control the composition of the panel and all decisions were unappealable. | Back to top

Taco Bell to Defend Against Class Action on Overtime Claims

In a suit by Oregon Taco Bell employees alleging failure to pay overtime, an Oregon trial judge rejected Taco Bell Corp.'s attempt to avoid class certification and ordered the parties to mediation. Brandi Bravo v. Taco Bell Corp., Ore. In Oregon, if a defendant identifies the class, notifies class members that it will pay compensation upon request, pays any requested compensation in a timely manner, and discontinues improper practices, the courts will not certify a class. In this case, the court held that Taco Bell had not provided class members with adequate compensation or halted the illegal practices. The court was scheduled to reconsider Taco Bell's arguments at a later time and to hold a hearing on class certification. The case involves allegations of overtime pay and minimum wage violations for a large number of the 17,000 current and former Taco Bell employees in Oregon. Taco Bell has already paid well over $750,000 to around 250 current and former employees in connection with the case, but liability for compensation and penalties may total as much as $26 million. | Back to top

Michigan to Allow Food Service Employers to Require AIDS Testing

The Michigan Supreme Court has decided that restaurants and other food service employers can require employees suspected of having AIDS to submit to testing without violating state civil rights law. Sanchez v. Kostas Lagoudakis.

In the decision, based upon Michigan's Handicappers Civil Rights Act ("HCRA"), the court held that food service employers can require employees reasonably suspected of having AIDS to submit to testing. Plaintiff Dorene Sanchez worked as a server at the Paradise Family Restaurant, owned by Kostas Lagoudakis. During her employment, a rumor began (possibly by Sanchez herself) that Sanchez had AIDS. Lagoudakis required Sanchez to prove that she was "healthy" before she could return to work. Sanchez claimed that this constituted a discharge. Sanchez returned with proof that she did not have AIDS, and Lagoudakis allowed her to return to work. Sanchez filed suit alleging discrimination in violation of the HCRA.

At the outset, the court emphasized that its focus was not on the transmission of AIDS, but rather that "one accepted definition of AIDS is that it involves certain associated diseases, some of which are infectious and possibly food-borne or airborne," and food service employers must "avoid significant health risks to the public while protecting the handicapped from sweeping generalizations based on prejudice or unfounded fears." The court agreed with the lower court that AIDS is unrelated to an individual's capability to perform waitress duties. However, "there is only one method by which a typical restaurateur will be able to determine reliably whether an employee's condition is `accompanied by an opportunistic infection in a communicable form that can be transmitted through contact with food.' That method would be to send the employee to a physician for testing." The court noted that this would be consistent with the Americans with Disabilities Act ("ADA"), which allows employers to require a job-related medical exam.

Under Michigan's health regulations, employers are required to exclude from the premises anyone who the employer suspects has a "communicable disease." The court determined that in order to comply with both the HCRA and health regulations and "considering the fact that AIDS, by destroying the immune system, renders those affected highly susceptible to some communicable diseases that may be spread through food, the only way an employer can attempt compliance with both obligations is by sending the employee for a physical examination and testing where the employer reasonably suspects the presence of AIDS or any other medical condition, that, by definition, might render a food-service employee highly susceptible to such infections." The court found that the employer here reasonably requested Sanchez to prove she was healthy. | Back to top

Flamingo Hilton Need Not Bargain with Steelworkers

In Flamingo Hilton - Laughlin v. NLRB, the District of Columbia Circuit Court of Appeals overturned a bargaining order issued by the National Labor Relations Board ("NLRB") which required that the Flamingo Hilton - Laughlin bargain with the United Steelworkers of America, AFL-CIO (the "union") concerning the wages, hours, and terms and conditions of employment of its employees.

In 1993, the union filed a petition to be certified as a representative of a bargaining unit of the hotel that included all full-time and part-time employees in the departments of housekeeping, custodial, food and beverage, slots, coin room, hotel services, bellmen, front desk, valet, and cage employees. The NLRB then issued a decision and direction of election which excluded the slot machine and coin room employees from the bargaining unit of approximately 1,000 employees. In the election, the employees rejected the union by a vote of 495 to 389 and the union filed unfair labor practice charges with the NLRB. In 1996, the charges resulted in an administrative law judge ("ALJ") finding more than 40 unfair labor practices by the hotel and ordering the hotel to bargain with the union.

In evaluating the bargaining order on appeal, the court noted that a bargaining order is an extreme remedy. The court found that a bargaining order may not be appropriate when circumstances such as the passage of time, changes in management, and employee turnover exist. The D.C. Circuit found that the ALJ ignored the fact that nearly three years had passed from the election to the ALJ's decision. The D.C. Circuit also rejected the conclusion that management turnover could not affect the validity of a bargaining order and, finally, the ALJ's position that summary dismissal of the fact that 50% of the work force had changed by April 1995.

The court also found that two of the forty unfair labor practices were not supported by the ALJ's findings. In the first case, the ALJ had found an unfair labor practice existed when the hotel's Assistant Director of Housekeeping had allegedly threatened employees at a meeting that their pay would be reduced and they would lose benefits if they voted in favor of the union. The threats were the result of a mistranslation by a bilingual guest room attendant. The court found that the guest room attendant's mistranslation could not be attributed to the employer. Further, the court found that the hotel president's comment that negotiations of any contract would be prolonged for years, did not constitute an unfair labor practice because "an employer is free to communicate to his employees any of his general views about unionism or any of his specific views about particular unions so long as his communications do not contain `threat of reprisal or force or a promise of benefit.'" | Back to top

Restaurant Need Not Assume Risk of Cook with Epilepsy

The U.S. Court of Appeals for the Eleventh Circuit determined that a restaurant cook, who was terminated because of epileptic seizures, is not protected by the Americans with Disabilities Act ("ADA"), because he could not show that with reasonable accommodation the kitchen could have been a safe place for him to cook. LaChance v. Duffy's Draft House, Inc. The plaintiff was hired as a line cook for Duffy's in South Florida, but was terminated after he had several epileptic seizures while working. LaChance filed suit under the ADA, alleging that the restaurant had failed to reasonably accommodate his disability by assigning him to kitchen duties not requiring the use of a flat top grill, deep fryers or slicing machines, such as prep work, despite the fact that prep work only takes two or three hours per shift and is not performed by line cooks. However, the court held that even with a reasonable accommodation, LaChance could not have performed the essential functions of a line cook. | Back to top

White Clerk at Motel Chain Awarded $2 Million After Complaining of Racial Bias

A federal jury in Florida awarded $2 million in punitive damages to a white Motel 6 desk clerk alleging he was terminated after complaining that African-American guests were denied lodging, given inferior rooms, and charged more for similar accommodations. Petaccia v. Motel 6, G.P. Inc. The jury also awarded $50,000 in compensatory damages for mental suffering. Motel 6 also faces a separate lawsuit brought by African-American guests.

Petaccia sued Motel 6, under 42 U.S. Code 1981 and Title VII, when he was fired in 1995 after filing a complaint with the Justice Department about the motel chain's alleged discriminatory treatment of African-American guests and employees. According to the plaintiff, Motel 6 managers at two Florida motels told him to book African-American guests into a part of one motel known as the "ghetto" and to charge African-Americans a double-room rate for occupying a single. The plaintiff claimed that managers also denied rooms to African-American customers, when vacancies existed, and labeled keys to indicate specific rooms to rent to minority guests.

The company, on the other hand, argued that it investigated the plaintiff's complaints and was not able to turn up evidence that substantiated them. The company plans to appeal the jury's award. | Back to top

New York Caterer Stipulates to Earnings Parity in Settling Sex Discrimination Lawsuit

Recently, a New York City caterer agreed to pay $425,000 to several hundred waitresses as part of a settlement of claims that it denied the women opportunities available to waiters. In the settlement, the caterer also agreed to bring the mean earnings of waitresses into "parity" with those of waiters. The Women's Rights Project at the American Civil Liberties Union had filed the suit on behalf of approximately 400 former and current female employees. Weigmann v. Glorious Food. Glorious Food further agreed not to engage in sex discrimination and to maintain a staff composed of at least one-third women. The caterer also agreed to begin recruiting women into maintenance jobs, to provide extra earnings. Finally, Glorious Food will report to the ACLU on a semi-annual basis, the events it catered, pay to staff, and any gifts, stipends, or awards its wait staff receives. | Back to top

Hotel Not Liable for Sexual Assaults by Masseurs

A hotel is not liable, under the theory of respondeat superior, for sexual assault of clients by hotel masseurs during massages at a hotel spa, according to the Illinois Appellate Court for the First District rules. Stern v. Ritz Carlton Chicago. The court held that the employees' conduct was outside the scope of their employment because it could not be considered therapy and did not further the hotel's business interests. Thus, while the court recognized that massage involves physical contact with a client, sexual assault by hotel masseurs was not within their job duties and was unforeseeable. | Back to top

Benihana Settles Harassment Claims by Former Servers

Benihana Inc. has entered into a consent decree and agreed to pay $130,000 to three former servers who alleged that they were exposed to a hostile work environment, and to one server who alleged that she was sexually assaulted by their general manager at a New York restaurant. Benihana has also agreed to provide sexual harassment training for all of its managers, train its top management to better investigate sexual harassment complaints, and do a live dramatic presentation concerning sexual harassment and retaliation for employees at the restaurant involved in the allegations. EEOC v. Benihana Inc.

Benihana had defended against the suit, claiming that its corporate office in Florida had thoroughly investigated complaints about the general manager's conduct. Despite this, the Equal Employment Opportunity Commission ("EEOC") alleged that the Benihana investigators had not properly compared witnesses' testimony or followed up on statements that suggested sexually explicit conversation and behavior took place at the restaurant. The EEOC also claimed that Benihana had failed to take a second complaint about the restaurant seriously.

The consent decree does not require Benihana to admit liability. Instead, Benihana has agreed to restructure its training and investigation programs and is making expenditures not required under the agreement. Benihana will also present a dramatized training play about sexual issues to employees in the New York restaurant, which will be videotaped, and distributed to all 48 Benihana restaurants nationwide. | Back to top

Hotel Ordered to Employ Gardener While ADA Case is Pending

The Saipan Grand Hotel, in the Northern Mariana Islands, was recently ordered not to terminate a gardener while the Equal Employment Opportunity Commission ("EEOC") investigates the employee's discrimination charge. The employee complained about the hotel's policy of testing of nonresident employees for the AIDS virus and then posting the test results. EEOC v. Micro Pacific Development Inc. d/b/a/ Saipan Grand Hotel.

The EEOC went to federal court on behalf of the gardener to seek an injunction preventing the hotel from terminating the gardener. The gardener, a nonresident contract gardener at the Grand Hotel for more than eight years, had been told that his one-year contract would not be renewed. This decision came after the gardener had filed an EEOC charge alleging that the hotel's HIV testing and reporting policies violated the Americans with Disabilities Act ("ADA"). After the hotel decided not to renew his employment contract, the gardener filed a second EEOC charge in which he alleged retaliation.

The hotel's stated reasons for not renewing the gardener's contract were a very poor performance evaluation, an economic downturn, and the gardener's refusal to accept reduced work hours, which were a condition of the new contract. The hotel also argued that Commonwealth law requires HIV testing for nonresident employees. In addition, the hotel's public test result posting policy only applies to nonresident employees working in the hotel's restaurant, not gardeners.

In ruling on the injunction, the court noted that the day that the gardener's supervisor submitted his negative evaluation of the gardener was the same day the gardener was at the hotel circulating a union petition. The court found this troubling, although the hotel asserted that the supervisor was unaware of the gardener's activity on the day he submitted the evaluation. The court ordered the Saipan Grand Hotel to renew the gardener's contract and continue to employ him pending final resolution of his EEOC charges, "including any litigation concerning said charges and resultant appeals." In reaching its conclusion, the court applied a more relaxed standard applicable to requests for preliminary injunctions in cases under the ADA. Under this standard, the moving party does not need to show that irreparable harm will be done if the injunction is not granted. | Back to top

Jury Finds For Coffee Company in Spill Trial

In a verdict for the defense, a jury found that Starbuck's was not liable to a man who purchased a cup of coffee from Starbucks and suffered second and third degree burns when the coffee he placed in his van fell after he braked suddenly. Starbucks argued that the coffee was within industry standards and that it is a widely understood fact that hot coffee can burn. | Back to top

Three Chicago-Area Casinos Face Class Action Sexual Harassment Suits

In three separate class actions filed in federal district court, plaintiffs seeking to represent hundreds of current and former female employees of riverboat casinos in the Chicago area, allege they were subjected to continuous and severe sexual harassment by co-employees and supervisors. The women claim that management had knowledge of the hostile work environment and failed to take action. Walsh v. Harrah's Illinois Corp., Denson v. Trump Indiana Inc., Swing v. Empress Hammond Casino Corp.

The women have named nine supervisors employed at the three casinos as defendants, as well as Harrah's Illinois Corp., which operates the Harrah's Joliet Casino in Joliet, Illinois, Empress Casino Corp., which operates the Empress casinos in Hammond, Indiana and Joliet, Illinois, and Trump Indiana Inc., which operates the Trump Casino in Gary, Indiana, as defendants.

Women in the suits assert sexual harassment, retaliation, battery, and intentional and negligent infliction of emotional distress claims. The plaintiffs allege they were subjected to crude and sexually explicit comments, threats, and inappropriate touching by male supervisors and co-employees.

In the suit against Harrah's, the plaintiffs claim that a group of 15 to 20 cocktail servers brought complaints about their treatment by male co-employees and certain supervisors to a female supervisor who seemed disgusted but did nothing to handle the problem.

In the suit brought by female dealers and floor supervisors against Trump, the plaintiffs claim that male supervisors begged for dates and attempted to kiss and fondle them. One particular plaintiff alleges that she complained to another supervisor approximately 20 times about vulgar sexual solicitations by her supervisor and that the supervisor's response was that she should "just ignore him."

The suit against Empress claims that male supervisors frequently directed sexually graphic language at female dealers. In response, Empress said it had thoroughly investigated the complaints raised by the two named plaintiffs and concluded that their claims were meritless. The company asserts that it has strict sexual harassment policies and procedures.

Harrah's has said that it was not aware of the harassment charges until it received notice from the Equal Employment Opportunity Commission. The casino then investigated and found no merit to the claims of the three named plaintiffs. Harrah's argues that it has personnel policies dealing with sexual harassment and conducts sexual harassment training for its supervisors. The company claims that the women failed to use its reporting procedures. | Back to top

Illinois Law Allows EEOC to Pursue Owners of Defunct Restaurant

The owners of a defunct restaurant have agreed to pay $40,000 to settle an Equal Employment Opportunity Commission ("EEOC") lawsuit. The suit alleged that the restaurant refused to reinstate a female manager after maternity leave in retaliation for having previously filed a sex discrimination charge. EEOC v. JRG Fox Valley Inc., d/b/a Maxwell'n Millie.

Under the consent decree filed with the U.S. District Court for the Northern District of Illinois, the owners will comply with the non-retaliation provisions of Title VII of the 1964 Civil Rights Act and use alternative dispute resolution as a first attempt to resolve disputes under the settlement.

The district court agreed that the EEOC could pursue the individual owners of the defunct restaurant under an Illinois corporate survivorship statute allowing creditors, including Title VII plaintiffs, to recover assets of dissolved corporations that were distributed to shareholders prior to the dissolution. The corporate survivorship law apparently does not conflict with the U.S. Court of Appeals for the Seventh Circuit's finding that individuals are not subject to personal liability under Title VII. | Back to top

Jury Awards $650,000 Verdict Against Restaurant

A Los Angeles jury recently awarded $650,000 in a case alleging that a waitress was subjected to a hostile work environment, was wrongfully terminated in breach of public policy, and was subjected to intentional infliction of emotional distress. Iris Mueth v. The Brass Monkey, Inc. et al. The plaintiff claimed that The Brass Monkey Restaurant & Lounge terminated her after she complained about sexual harassment. The plaintiff alleged that a 50 percent owner of the defendant restaurant and individual defendant, required the plaintiff to start wearing provocative clothing, fraternize with male customers, and to suffer sexually suggestive comments, including asking plaintiff to have sex with him. The plaintiff further claimed that the individual defendant subjected her to unwanted touching. The plaintiff argues that her complaints were ignored and that, after another touching incident, she was terminated. The plaintiff then filed suit based on wrongful termination, sexual harassment and hostile work environment theories of recovery. She sought $900 in medical costs, $84,000 in lost earnings, and was awarded $650,000. The jury trial lasted five days and resulted in a unanimous verdict on liability and an 11-1 verdict on damages after three hours of deliberation. Before trial, the plaintiff made a settlement demand for $15,000 and the defendants made an offer to compromise for $12,500. | Back to top

No Discrimination Claim for HIV Positive Server

In Doe v. Denny's Inc. the plaintiff claimed that the day after she told her supervisor that she was HIV positive, he told her that a regular customer had threatened to boycott the Denny's Restaurant where she worked and to tell other patrons about her HIV status. The supervisor also allegedly told the employee that he could not legally terminate her or lay her off, but that her continued employment would destroy the restaurant's business. The employee then offered to resign and the parties agreed that her separation would be deemed a layoff in order to allow her to receive unemployment benefits. The employee then filed suit against the restaurant and another manager, alleging that they had violated the Oregon Fair Employment Practice Act.

After Denny's won summary judgment, the employee pursued her appeal up to the Oregon Supreme Court, which affirmed the summary judgment award. The court held that by telling the employee that customers were hostile to her HIV status and might boycott the restaurant, the Denny's manager had neither created an intolerable working condition that would cause her to resign nor discriminatorily altered her working conditions. The court rejected the employee's contention that the conversation with the supervisor constituted a constructive discharge. Further, the discussion itself could not be considered a discriminatory action because it did not alter a "term, condition, or privilege" of employment. The court found that orally acknowledging the hostility of customers towards plaintiff due to her disability was not an evaluation of Doe's ability to be a server | Back to top

Restaurant Chain Faces ADA Trial

A federal judge in Illinois allowed the claims of a Denny's waitress, who alleged that she was verbally and physically abused after she was treated for breast cancer, to proceed to trial after denying Denny's motion for summary judgment. Olbrot v. Denny's Inc. The court found that the waitress produced enough evidence to show that her managers might have perceived her as having a physical disability after she began a course of chemotherapy, which would give her the protections of the Americans with Disabilities Act ("ADA"), even though she did not meet the ADA's definition of having a disability. The court noted that under Equal Employment Opportunity Commission regulations interpreting the ADA, an individual is substantially limited in the major life activity of "working" if she is "significantly restricted in ability to perform either a class of jobs or a broad range of jobs in various classes as compared to the average person with comparable training, skills, and abilities. The inability to perform a single, particular job does not constitute a substantial limitation in the major life activity of working."

The court also rejected Denny's argument that the waitress had voluntarily resigned from her job. The court was persuaded by the waitress' testimony that she suffered verbal and physical abuse, because she had cancer, and that she was denied opportunities and training. The waitress also alleged that the restaurant ignored her efforts to report the harassment. The court that "a reasonable jury could conclude, based on plaintiff's evidence, that her working conditions were so intolerable as to force a reasonable employee to leave." | Back to top

EEOC Brings Suit on Behalf of Developmentally Disabled Employee

The Equal Employment Opportunity Commission ("EEOC") has filed a federal lawsuit against Chuck E Cheese pizza parlor in Wisconsin, alleging that the restaurant violated the Americans with Disabilities Act ("ADA") by terminating a developmentally disabled employee. The EEOC claims that the employee was terminated from his job at Chuck E Cheese because of his mental disability. The employee was a custodian who was placed in the job by an outside agency providing job assistance for the disabled. A sworn statement to the EEOC by the employee's former supervisor alleges that two days after the employee was hired, a district manager for Chuck E Cheese told the supervisor, "We don't need those kind of people" working for the company and ordered the supervisor to terminate the employee. When the supervisor refused, the district manager terminated the employee himself and the supervisor quit in protest. CEC Entertainment, Inc. is the national parent company of the Chuck E. Cheese chain. | Back to top

Restaurant Does Not Qualify for New Defense to Sexual Harassment Claims

Shoney's was unable to establish the affirmative defense set forth in the U.S. Supreme Court's recent decisions in Burlington Industries and Faragher, according to a federal district court in West Virginia. Corcoran v. Shoney's Colonial, Inc. Although the employer took immediate action to investigate the alleged sexual harassment after the plaintiff complained, the court held that the plaintiff had not unreasonably failed to take advantage of Shoney's preventive or corrective measures, as required by the Supreme Court.

The plaintiff worked for Shoney's as a dining room manager and alleged that the assistant manager of the restaurant made unwanted sexual remarks to her and engaged in lewd gestures and unwanted touching. After approximately six months, the plaintiff reported the conduct to the general manager, who took immediate action to investigate and took steps to minimize any contact between the plaintiff and the assistant manager. When the general manager confronted the assistant manager with the allegations, he promptly resigned. Two weeks later, Shoney's was contacted by an attorney representing the plaintiff. Then, two days later, Shoney's terminated the plaintiff for three incidents of tardiness/absenteeism.

Under the Supreme Court's decisions in Burlington Industries and Faragher, an "employer is subject to vicarious liability to a victimized employee for an actionable hostile environment created by a supervisor." However, where the supervisor does not take a tangible employment action against the employee, the employer remains vicariously liable, but can establish an affirmative defense by showing (1) that it exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and (2) that the plaintiff unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.

First the court assumed that the assistant restaurant manager was the plaintiff's supervisor and addressed the issue of whether Shoney's was vicariously liable for his conduct. Since the affirmative defense is not available where the supervisor takes a tangible employment action, the court held that Shoney's first had to show that the assistant manager took no such action. While the plaintiff was terminated, she was terminated by someone other than the assistant manager. The court noted that the Supreme Court did not address whether the harassing supervisor must be the one to take the tangible employment action, but concluded that that was the most logical interpretation. Here, therefore, the employer could attempt to take advantage of the affirmative defense.

The court then concluded that the affirmative defense was inapplicable. The first prong--the reasonableness of the employer's action--was met. Shoney's had an express policy prohibiting harassment and the policy was posted in all of its locations. The company's actions after the plaintiff complained was appropriate. However, the second prong--the plaintiff's failure to take advantage of the procedures in place--was not met. The court concluded that in this case, the plaintiff acted reasonably. Although she did not promptly complain about the unwelcome sexual remarks, it was not uncommon for those subjected to such remarks to ignore them at first and only report the conduct later, after a second incident. Considering the "totality of the circumstances," the plaintiff's actions did not make it possible for the employer to establish the affirmative defense. Therefore, it remained vicariously liable for the actions of the restaurant manager, and summary judgment was improper.

The court also denied summary judgment to Shoney's on the plaintiff's retaliation claim. The court held that Shoney's rebutted the plaintiff's prima facie case by citing only three specific incidents of tardiness/absences, all occurring after the plaintiff's complaint and none occurring during her 15 year employment. In addition, the plaintiff offered explanations for each incident, and giving plaintiff the benefit of conflicting inferences, there remained a genuine issue of fact whether "but for" her filing an EEOC charge, she would have been terminated. | Back to top

Supervisor Assault Case Ends in Verdict Against Motel

A federal jury in New Hampshire has awarded $637,500 to a former waitress who was harassed and assaulted by her supervisor, the food and beverage manager, holding the Best Western's absentee owners liable for sexual harassment. Means v. Shyam Corp. The jury's award includes $37,500 in compensatory damages for psychiatric care and $600,000 in punitive damages. However, the total award will be capped at $50,000, the amount established for employers with fewer than 100 employees under the Title VII of the 1964 Civil Rights Act. The plaintiff plans to make a constitutional challenge to imposition of the cap.

At the time of the sexual harassment trial, the supervisor had already accepted a plea bargain under which he pled guilty to two counts of misdemeanor sexual assault. The plea bargain sent the supervisor back to prison to serve a two-year term. The supervisor had been out on parole after a negligent homicide case involving drunk driving.

The motel is owned by Shyam Corp., which is a closely held private corporation with rights to a number of motels. Shyam Corporation's two owners do not live in New Hampshire, where the Best Western is located. Thus, the only person to whom the waitress could have complained was the general manager, who happened to be the supervisor's wife. The owners had no sexual harassment policy other than the posting of their telephone numbers in their motel office. The owners also admitted that they did not investigate the matter, which involved the police, and never contacted the waitress. | Back to top

23,000 Service Employees at Disney World Under New Contract

After protracted negotiations and three votes, Disney's service employees approved a new contract with the company. While the contract represented Disney's final offer and was similar to two earlier proposals that contained both wage and insurance premium increases, union negotiators had urged approval of the proposal, after Disney indicated that it would unilaterally implement parts of the proposal, if it was rejected by union membership. The proposal was negotiated by six unions, including the United Food and Commercial Workers Local 1625, International Brotherhood of Teamsters Local 385, Hotel Employees and Restaurant Employees Local 737, Service Employees International Union Local 362, Theatrical and Stage Employees Local 631, and the Transportation Communications Union, that bargain together as the Service Trades Council and represent 23,000 Disney World employees, less than half of whom are union members.

Under the new agreement, employees receive a 3-5% wage increase, retroactive to November 1998, in the first year of the contract, and the same increase again in November 1999. The average hourly rate for employees in the SEIU bargaining unit was $8.15, before implementation of the new contract. The new agreement requires employees to increase their share of their health care premiums. Formerly, employees who joined the health maintenance organization paid no premiums. These employees now pay between $1.50 and $7.00 per week, depending on their number of dependents. Employees in the indemnity plan also saw increased premiums. Employees in the indemnity plan now pay approximately $40.00 per week, which reportedly doubles their previous premium rate. These increases were a major sticking point during negotiations. The new contract will expire on April 28, 2001. | Back to top

Union Certified at One Canadian McDonald's While Teamsters File NAFTA Complaint Involving Another

The British Columbia Labor Relations Board recently certified the Canadian Auto Workers ("CAW") to represent 83 McDonald's employees at a restaurant in Squamish, B.C. The restaurant is the chain's only unionized location in all of North America.

The Labor Relations Board granted the certification approval after the CAW and the franchise's owner agreed on the number of employees that would be included in the bargaining unit. The union dropped its unfair labor practices complaint against the restaurant after the franchise owner removed the names of 28 new hires from its employee list.

On a related note, as previously reported in the HIQ, the Canadian arm of the International Brotherhood of Teamsters as certified as the bargaining representative for 62 employees at a Montreal franchise, but the restaurant closed before certification was officially granted to the union. To challenge the action, in the first complaint of its kind, the Teamsters filed a complaint accusing the provincial government of Quebec of violating international labor principles under the North American Free Trade Agreement's ("NAFTA") labor side accords. The Teamsters requested that the U.S. National Administrative Office ("NAO") investigate issues raised by the union's attempt to organize McDonald's employees. Specifically, the Teamsters allege that various actions violated freedom of association, protection of organizational rights, and the right to bargain collectively under NAFTA's North American Agreement on labor cooperation. Under NAFTA, the United States, Mexico, and Canada each established an NAO to investigate complaints that a NAFTA signatory had violated its own labor laws. Within 60 days, the NAO must decide whether to investigate a complaint.

In addition, hearings concerning the Teamsters' application for certification at another Montreal McDonald's have resumed after a provincial labor commissioner found that the restaurant tampered with the employee list.

Finally, the Teamsters have temporarily withdrawn their request for a representation election at the Cleveland, Ohio, McDonald's, where employees, as reported in the HIQ, staged the nation's first strike at a McDonald's. The withdrawal occurred after the two employees responsible for union organizing were dismissed for threatening a supervisor. The Teamsters admitted that the terminations hurt the organizing campaign, but noted the serious nature of threatening a supervisor. | Back to top

Wisconsin Indian Tribe Signs Neutrality and Card Check Agreement for Casino Employees

The Menominee Indian Tribe has signed an agreement with a coalition of four unions, including the American Federation of State, County and Municipal Employees, the Hotel Employees and Restaurant Employees, the United Food and Commercial Workers, and the International Federation of Professional and Technical Engineers, permitting them to attempt to organize employees at the Paradise Key Casino in Kenosha, Wisconsin. Ground has not yet been broken on the project as the proposed casino and adjoining day care center await approval by governor's office and the Bureau of Indian Affairs. The tribe hopes to open the facility early in 2000 and to employ approximately 2,500 employees.

Under the agreement, the unions agreed to not engage in a long list of activities including: strikes, sympathy strikes, work stoppages, slowdowns, picketing, sit-down strikes, sit-ins, boycotts, handbilling, refusals to handle merchandise, economic activity, protests, or demonstrations. The Menominee Tribe has reportedly waived its sovereign immunity to enter into the agreement. The tribe has also agreed to comply with and be subject to federal and state laws such as the federal Occupational Safety & Health act, the federal Fair Labor Standards Act, Wisconsin's Workers' Compensation Act, and Wisconsin's Unemployment Compensation Act.

The casino complex, which was the subject of a city referendum, will be built at the site of a current dog track, Dairyland Greyhound Park. Part of the site is being put into trust as "tribal land," over which the Menominee Tribe is to have sole proprietary interest and responsibility for the gaming.

In exchange for the neutrality agreement, the unions helped the tribe defeat the anti-gaming referendum at the polls. The four unions have also agreed on how to divide up the employees at the gaming complex for representational purposes:

AFSCME will try to organize the pari-mutuel employees, who will get a right of first refusal for positions at the new complex. AFSCME will also attempt to organize "front services" employees, including parking attendants and valets, cleaning and housekeeping employees, and child care employees.

The food and beverage employees will be organized by HERE.

UFCW will try to organize technicians, such as those who work on the slot machines.

IFPTE will attempt to organize professional and white collar employees, including the marketing, finance, and clerical staff.

Interestingly, the agreement does not cover gaming employees, such as dealers. The parties will address this issue after the casino has been in business for one year. The agreement does not require the tribe to commit to or arbitrate regarding any proposal concerning unionization of the gaming employees.

The card check provisions of the agreement require the tribe to begin to negotiate in good faith with the union(s) within 60-days of recognition. The parties then have three months within which to reach an agreement. Failure to reach an agreement will require the parties to select an arbitrator to mediate any disputes. Under the agreement, if the arbitrator is unable to mediate the dispute within one month, any unresolved issues are to be submitted to final and binding interest arbitration. The arbitrator will choose the final proposal of one of the parties. Disputes arising under the agreement are also to be submitted to final and binding arbitration.

This is the second recent neutrality agreement between unions and an Indian tribe concerning casino employees. As reported in the HIQ, the Viejas Band of Kumeyaay Indians entered into an agreement with the Communications Workers of America establishing procedures for the union to attempt to organize employees at the tribe's casino near San Diego. | Back to top

National Restaurant Association Reports Minimum Wage Increases in 1996 and 1997 Caused Loss of Jobs

As many as 146,000 jobs have been eliminated in the restaurant industry due to minimum wage increases in 1996 and 1997, says the National Restaurant Association ("NRA"). The NRA's research also indicated that restaurant operators delayed hiring approximately 106,000 employees, when the minimum wage increased from $4.25 to $5.15 an hour. Employees in the position of "cook" were most impacted by the job losses. The NRA's findings were the result of interviews with 1,001 restaurant owners and managers nationwide. | Back to top

FLSA Violations Found in Los Angeles Restaurants

The Department of Labor ("DOL") found that two hundred employees at 43 restaurants in one area of Los Angeles had been paid in violation of minimum wage, overtime, and/or record keeping requirements of the Fair Labor Standards Act ("FLSA"). The DOL investigated after it received complaints from restaurant employees that the restaurants asked them to sign independent contractor agreements exempting them from wage and hour laws. The DOL first investigated 10 establishments and found violations of the FLSA involving 49 employees owed approximately $93,853 in back wages. The investigators then met with restaurant owners' associations in the area, including mainly the Korean Restaurant Owners' Association, in an effort to explain the applicable laws. After many owners insisted that the FLSA was inapplicable to them, another 33 restaurants were investigated. Of those investigated, 28 received citations for overtime violations and 25 were cited for minimum wage violations. The restaurants have already repaid most of the $259,449 in back wages that the DOL determined was owed. | Back to top

Former H.E.R.E. General President Hanley Granted Immunity from Criminal Prosecution

Recently, Edward T. Hanley, the former general president of the Hotel Employees and Restaurant Employees International Union entered into an immunity agreement with the U. S. Department of Justice, insuring that he will not be criminally prosecuted for his conduct, including any allegations concerning corrupt practices and ties to organized crime, during his long reign over the union. In arranging the agreement, the Justice Department's Organized Crime and Racketeering Section thwarted efforts of U.S. attorneys in Chicago, Illinois, and Madison, Wisconsin, to indict Hanley. Many are disappointed with the agreement, including the union watchdog group, the Association for Union Democracy. | Back to top

Hotel Loses Bid to Have NLRB Review Second Election Results

The National Labor Relations Board ("Board") recently denied a hotel's request for review of the Regional Director's Supplemental Decision on Challenged Ballots, Objections to Conduct of Second Election, and Certification of Representative. Pacific Micronesia Corp. d/b/a/ Dai-Ichi Hotel Saipan Beach. The hotel challenged nine ballots in an election showing 131 for and 121 against the Commonwealth Labor Federation and Hotel Employees and Restaurant Employees Local 5, Saipan, Northern Mariana Islands. According to the Board, this was an insufficient number to affect the election results. The hotel requested review of its objections, which alleged the invalidity of the second election due to supervisory taint, prejudicial appeals by Local 5's business agent in a newspaper article containing inflammatory appeals to racial prejudice, and intimidation of the hotel's election observer. | Back to top

Reno Hilton Cannot Subcontract Security Officers

In Reno Hilton Resorts d/b/a Reno Hilton the National Labor Relations Board ("Board") upheld an administrative law judge's ("ALJ") holding that the hotel violated Sections 8(a)(1) and (3) of the National Labor Relations Act. However, the Board altered the ALJ's remedy and imposed a broad cease-and-desist order that required Hilton to rescind its subcontract for security officers. The Board held that its order was necessary to correct Hilton's unlawful discharge of its entire security guard force of approximately 64 employees. The Board found that Hilton's action "is not only an egregious violation of the Act, but also demonstrates Hilton's proclivity to violate the Act and its animus toward unionization in general." The Board based its finding on the fact that Hilton decided to subcontract its security work when the security officers expressed interest in becoming unionized, and after the idea of subcontracting security work had been expressly rejected during a major cost cutting effort. The Board then noted that a broad order had been imposed on Hilton in an earlier decision, just over a year earlier. Board Members Fox, Liebman, and Brame participated in the decision. | Back to top

Hotel Defends Against Charges that it Refused to Hire Union Members

In Seven Seventeen HB Denver Corporation, d/b/a Adam's Mark, the National Labor Relations Board ("Board") affirmed an administrative law judge's determination that the hotel violated Sections 8(a)(3) and (1) of the National Labor Relations Act by not hiring eight individuals, because of their union affiliation, and to avoid having to recognize and bargain with the Operating Engineers IUOE Local 1. The Board further upheld findings that the hotel violated Sections 8(a)(4) and (1) by refusing to hire one particular individual and violated Section 8(a)(1) by interrogating job applicants about their union membership. Despite those rulings, the Board simultaneously upheld a determination that the hotel had not violated Sections 8(a)(1) and (3) in refusing to hire another employee. With respect to that individual, the hotel's evidence that it would not have hired him even in the absence of his protected activity, was sufficient to prevail. | Back to top