9th Circuit Says ADA Does Not Protect Medpot Users and California Court of Appeals Rules California Law Applies to Wrongful Discharge Claim of Corporate Officer

Reflecting on the employer’s perspective on two decisions with national ramifications emanating from California last week, you have an unexpected victory from the Ninth Circuit on medical marijuana and an expected loss from the California Court of Appeal on the application of California law to a California-based officer of a Delaware corporation.
 
James v. City of Costa Mesa, 10-55769 (9th Cir. May 21, 2012) — The ADA Does Not Protect Medpot Users
 
The first of these decisions from the Ninth Circuit means that California employers are now free under state and federal law to prohibit marijuana use or possession in the workplace and working while under the influence.  See also Ross v. Ragingwire Telecomms., Inc., 174 P.3d 200 (Cal. 2008) (no right to use or be under the influence of medical marijuana in the workplace under California disability discrimination laws).
 
In hearing a challenge to two California cities’ decisions to bar med-pot dispensaries within their borders, the Ninth Circuit in James held in a 2-1 vote that plaintiffs using medical marijuana under California law were not “individuals with disabilities” under the ADA and thus not entitled to its protections.  Although the lawsuit was not an employment case, it nonetheless addressed the same definition of “individuals with disabilities” used in Title I of the ADA, the act’s employment provisions.  Given a strong and reasoned dissenting opinion, one can expect a request for the Ninth Circuit to decide the matter en banc (through an 11-judge panel).
To read the  full opinion of the court click this link:  James v. City of Costa Mesa  
 
Lidow v. Superior Court (International Rectifier Corp.), B239042 (Cal. Ct. of App. May 23, 1012) — California Law Applies to Wrongful Discharge Claim of Corporate Officer
 
The second decision was far less surprising.  There, a California court held that California law applied to the discharge of a Delaware corporation’s California-based CEO, despite the so-called “internal affairs” doctrine.  Under that doctrine, matters involving a corporation’s “internal affairs” are governed by the law of the state of incorporation. In an acknowledged case of first impression, the Court of Appeal held that an employer’s discharge of its CEO for complaining about the company’s harmful or unethical policies was not an “internal” corporate matter and should be governed by California law.  While it left open the possibility that another basis for discharge may invoke application of the doctrine, it is hard to imagine a circumstance where a California-based CEO or other corporate officer/employee would not be able to claim protection under California’s highly-protective, employee-friendly laws.  The Court also rejected, on summary adjudication, the claim that the CEO was not an “employee” and merely an “officer.”
 
Corporations with California-based officers who may also be seen as employees should consider taking steps to prevent their identification of these officers as employees.
To read the opinion of the court click this link:  Lidow v. Superior Court

DOJ Extends Compliance Deadline for Means of Entry and Exit to Swimming Pools at Hotels and Other Public Accommodations

By: David H. Raizman

On the disability access front, on May 21, 2012, the DOJ issued the following regulations applicable to swimming pools at public accommodations (including hotels).  Cutting through the regulatory jargon, the DOJ’S action extended to January 31, 2013, a compliance deadline that had been March 15, 2012 and was then extended to May 21, 2012.   To read the final rule in its entirety click the below link.

http://www.ada.gov//regs2010/ADAregs2012/finalrule_existingpools_FR_may21.htm

The compliance deadline applies to rules passed in the Fall of 2010 that require hotels and other public accommodations to install pool lifts for entry and exit in new construction and alterations.  Hotels with existing pools must consider whether it is “readily achievable” to install lifts.

For more information on the substance of the rules, the DOJ recently issued guidance, which can be viewed by clicking the below link.

http://www.ada.gov//pools_2010.htm

New York High Court: No At-Will Exception For Complaining Hedge Fund Executive

By: William R. Horwitz

The New York State Court of Appeals declined this week to recognize an exception to the at-will employment doctrine for a hedge fund’s Chief Compliance Officer who alleged that he was fired for objecting to his employer’s unlawful trading practices.  In Sullivan v. Harnisch, Plaintiff Joseph Sullivan was an employee and minority owner of Defendants Peconic Partners LLC and Peconic Asset Managers LLC (collectively, “Peconic”), holding various titles including Chief Compliance Officer.  Defendant William Harnisch was the majority owner, President and Chief Executive Officer.  Sullivan filed a lawsuit for wrongful discharge, alleging that Peconic fired him for objecting, in his capacity as Chief Compliance Officer, to Harnisch’s “manipulative and deceptive trading practices.”  The trial court denied Defendants’ motion for summary judgment seeking to dismiss the claim.  The Appellate Division, First Department, reversed and Sullivan appealed.

According to the Court of Appeals, the “gist of Sullivan’s claim is that the legal and ethical duties of a securities firm and its compliance officer justify recognizing a cause of action for damages when the compliance officer is fired for objecting to misconduct.”  The Court reiterated the at-will employment doctrine, explaining that, “absent violation of a constitutional requirement, statute or contract,” an employer has the right to terminate employment at will.  The Court indicated that it has “recognized an exception” to this doctrine “only once.”

That exception arose in Wieder v. Skala, in which a law firm had allegedly fired a lawyer for insisting that it comply with the profession’s ethical obligations.  According to the Court, that decision “stressed both the ethical obligations of members of the bar and the importance of those obligations to the employment relationship between a lawyer and a law firm.”  Moreover, the decision focused on the legal profession’s “unique function of self-regulation.”

In Sullivan, the Court emphasized the narrow scope of the Wieder decision.  Although the Court left open the possibility that “there are some employment relationships, other than those between a lawyer and a law firm, that might fit within the Wieder exception,” the Court concluded that “the relationship in this case is not one of them.”  Distinguishing Wieder, the Court explained that Sullivan’s regulatory and ethical obligations were not inextricably tied to his duties as an employee.  Indeed, the Court observed, Sullivan “was not even a full-time compliance officer.”  The Court also stated that regulatory compliance was not at the “very core” and the “only purpose” of Sullivan’s employment.

The Court affirmed the Appellate Division’s decision.  In a strongly-worded dissent, Chief Judge Lippman charged that the “majority’s conclusion that an investment adviser like defendant Peconic has every right to fire its compliance officer, simply for doing his job, flies in the face of what we have learned from the Madoff debacle, runs counter to the letter and spirit of this Court’s precedent, and facilitates the perpetration of frauds on the public.”

Notwithstanding the dissent’s alarm that New York employers are now free to fire employees who allege wrongdoing, prudent employers – particularly in highly regulated fields like the securities industry – take such allegations seriously and investigate them, and are careful to avoid allegations of retaliation.

New Jersey Appellate Division Re-affirms Employers Are Not Required To Provide Indefinite Leaves Of Absence Under the New Jersey Law Against Discrimination

By: Jerrold Wohlgemuth

The New Jersey Appellate Division recently re-affirmed that an employer is not required to provide an indefinite leave of absence in order to meet its obligation under the New Jersey Law Against Discrimination (“LAD”) to reasonably accommodate the disabilities of its employees.  In Lozo-Weber v. New Jersey Department of Human Services, Plaintiff, who suffered from lupus, requested a medical leave of absence and submitted a doctor’s note indicating that she would be unable to work for at least one year.  The employer placed Plaintiff on leave pursuant to the Family and Medical Leave Act (“FMLA”).  Once she exhausted her FMLA time, the employer agreed to an accommodation of an additional six months of unpaid leave, advising her in writing that it could not continue the leave longer than that due to operational needs.  When the extended leave was about to expire, Plaintiff requested additional leave as an accommodation, but did not provide a date certain by which she would be able to return to work.  Instead, the doctor’s note stated only that she would need to be out of work for “approximately” six more weeks.  At the expiration of the approved six months leave, the employer terminated Plaintiff’s employment.

In affirming summary judgment for the employer on the claim of failure to accommodate under the LAD, the Appellate Division observed that the employer had provided Plaintiff with a reasonable accommodation by extending the FMLA leave by an additional six months.  The court further held that an indefinite leave of absence was not a reasonable accommodation where the Plaintiff admittedly could not say when she would be able to return to work.  While courts recognize that “reasonable accommodation” includes medical leaves of absence for reasonable periods of time, employers in New Jersey should look carefully at the notes submitted by doctors in support of requests for continued medical leaves, as there is no requirement to provide indefinite leave to employees who are physically unable to work and who cannot specify how long they will need to be out of work.

 

How the “Ambush” Election Process Will Work: NLRB’s Acting General Counsel Issues Guidance on New Procedures

The talk of the employer community lately has been the National Labor Relations Board’s highly controversial final rule that severely and substantially modifies certain procedures in representation cases. The Board claimed that the final rule, approved December 22, 2011, was designed to reduce unnecessary litigation in representation cases and thereby enable the Board to better fulfill its duty to expeditiously resolve questions concerning representation.

To read the full alert authored by Bruce Stickler and Mark Nelson click here.

EEOC Issues New Guidance on Use of Arrest and Conviction Records Under Title VII

On April 25, 2012, the EEOC issued its first update in 20 years of its position on employers’ use of arrest and convictions records in making employment decisions.

The EEOC’s Guidance discusses employers’ use of arrest and conviction records in the context of Title VII of the Civil Rights Act’s prohibition on race and national origin discrimination. It first makes clear what most employers already know – employers cannot require or apply criminal background checks differently for one group of employees than another protected class of employees. The  focusof the EEOC’s new Guidance, however, is that reliance on criminal records can have a disparate impact on certain protected groups and, therefore, violate Title VII.

To read our full alert authored by Mark Nelson and Frank Nardulli click here.