Friday, May 27, 2011

Newsletter - Second Quarter 2011

Business and Employment Law Update
Second Quarter, 2011

Tips and suggestions, case reports, and
other helpful information for northwest businesses.

Tip of the Day - Oregon
Oregon employers are not permitted make employment decisions based “solely” on family relationships. ORS 659A.309. Exception: The statute permits hiring decisions to avoid placing one family member “in a position of exercising supervisory, appointment or grievance adjustment authority” over the other family member.

Tip of the Day: Washington
It is a misdemeanor under Washington law to obtain employment by the use of a “false or forged letter or certificate of recommendation.” RCW 49.44.040.

Bench Notes

It’s good to keep tabs on cases in our circuit—it helps to know what not to do, and how judges and juries are interpreting the laws. Here, in no particular order, is the latest news from the courts.

Frequent Breaks. A diabetic employee who was fired for making serious medication mistakes for the youth he supervised was not “willfully or wantonly negligent in violating the employer’s expectations” so as to be ineligible for unemployment benefits, the Oregon Court of Appeals found in Griggs v. Employment Department, because his mistakes were due to low blood sugar, and the Employment Department failed to show he was able to test his blood sugar “as necessary” to avoid problems.

History of Addiction Treatment Versus History of Drug Use. The Ninth Circuit upheld an employer’s policy that refused to consider applicants who had failed a pre-employment drug screen at any prior time—a “one strike and you’re out” policy. The Court rejected the applicant’s argument that this amounted to discrimination based on a history of addiction treatment, which is prohibited by the ADA. Lopez v. Pacific Maritime Association.


Businesses open to the public may have a “No Pets” policy, but because they must make an exception for service animals, there have been some abuses—such as customers who insist on bringing noisy, disruptive, or even dangerous animals into restaurants, stores, golf courses, etc.

A new Federal rule, effective March 15, 2011, addresses this issue. “The rule defines ‘service animal’ as a dog that has been individually trained to do work or perform tasks for the benefit of an individual with a disability. The rule states that other animals, whether wild or domestic, do not qualify as service animals. Dogs that are not trained to perform tasks that mitigate the effects of a disability, including dogs that are used purely for emotional support, are not service animals. The final rule also clarifies that individuals with mental disabilities who use service animals that are trained to perform a specific task are protected by the ADA. The rule permits the use of trained miniature horses as alternatives to dogs, subject to certain limitations. To allow flexibility in situations where using a horse would not be appropriate, the final rule does not include miniature horses in the definition of ‘service animal.’”

An employee may ask the customer to remove a service animal from the premises if: (1) The animal is out of control and the animal's handler does not take effective action to control it; or (2) The animal is not housebroken.

If the animal’s services are not “readily apparent,” employees may ask “if the animal is required because of a disability and what work or task the animal has been trained to perform.”

Employees may not ask “about the nature or extent of a person's disability,” and may not “require . . . proof that the animal has been certified, trained, or licensed as a service animal.”

For more information, see

Note: This photo did not carry a copyright notice.
Please contact Northwest Employment Law, LLC, if authorization is needed.

Keep in mind the rules for housing are different. For example, the Oregon Bureau of Labor & Industries recently proposed a rule that would prohibit refusing to allow a service animal that was recommended by the tenant’s health care provided, unless the animal “poses a direct threat to the health or safety of other individuals and the threat cannot be eliminated or significantly reduced by reasonable accommodation,” and would prohibit landlords from charging extra fees for having a service animal.

HOT OFF THE PRESSES: Two years after the enactment of the Americans With Disabilities Act Amendments Act (“ADAAA”), the EEOC has issued regulations interpreting the ADAAA.

The Basics: The ADA defines “disability” as “a physical or mental impairment that substantially limits one or more major life activities, has a record of such an impairment or is regarded as having such an impairment.” The ADAAA instructed the EEOC to redefine “substantially limits” to include greater coverage under the Act. What’s New—Part 1: The EEOC “declined” to redefine “substantially limits,” other than to say it is “a lower threshold” than “prevents” or “severely or significantly restricts.” The new regulations instead set forth 9 criteria for evaluating whether a medical condition “substantially limits” one or more major life activities, with this key instruction: the primary issue “should be whether [the employer] . . . has complied with their obligations [to engage in the interactive process and provide reasonable accommodation] and whether discrimination has occurred, not whether [the employee is disabled].”

Be sure to check future newsletters for additional information on the ADAAA.

Over 600 suggestions were filed during the public comment period
for the new regulations interpreting the ADAAA

Among those rejected by the EEOC:

- A request that the rules specifically list as examples of “major life activities” keyboarding, sex, composting, “maintaining an independent septic tank,” and operating a water craft

- A request that the EEOC set a durational limit (i.e. a medical condition lasting less than 6 months is not a disability)

- A request to assert that an employee’s failure to use available mitigation could result in discipline and/or a finding that the employee is not entitled to reasonable accommodation


An ESI executive who was fired for lying to auditors was still entitled to approximately $1 million in severance, pursuant to his employment contract, because his misconduct wasn’t “willful,” according to a 5/19/11 Oregonian article. The report highlights an important concept: make sure your executive contracts articulate the organization’s expectations. A few key terms are listed below.

Best Efforts/Competition. If you expect your CEO to devote her full working time to your organization, and to refrain from moonlighting or forming a separate partnership to run a dude ranch on the side, say so. (An analysis of non-competition agreements is beyond the scope of this short article—suffice it to say you should consult your attorney!).

Work for Hire. According to copyright laws, if your VP of Sales develops a spiffy new app to track sales, that app—and the profits to be derived from it—probably belong to the employer. This is a very complex area of law, however, and you can minimize battles with careful drafting.

Confidentiality. Trade secrets are also defined by law, but to some extent information is a trade secret or otherwise entitled to legal protection only when and to the extent it is identified as such. So identify it. Although general terms can be a useful starting point, don’t rely on boilerplate language reciting a list of everything including your preferred coffee vendor; analyze what is truly confidential in your context, and specify that, as well as the expectations regarding non-disclosure, the duration of the obligations, and your remedies in the event of a breach.

Benefits. Legal prohibitions on discrimination in insurance and retirement accounts prohibit some differentiation between types of employees. Other benefits, however (paid vacation, company car, etc.), are fair game. Identify the benefits, or specify the benefits identified in the Employee Manual.

Termination. Take the time to decide what your organization considers gross misconduct, and to spell out the logistics of termination. Specify whether notice is required, whether and under what circumstances a severance will be paid, and whether you will require a release of claims to receive the severance. Also, the general rule is that bonuses, commissions, stock options, etc. are due upon termination of employment unless a contrary policy is in place—so it is crucial to note if the performance bonus will be forfeited by gross misconduct, for example.

Lastly, remember that everything is negotiable. Even if your executive agreement “normally” includes a work-for-hire clause, you can mutually agree to reduce the salary in exchange for reduced copyright protections, for instance. A contract that is negotiated between the parties will be more readily enforced than a general template presented by the company on a take-it-or-leave-it basis.

Northwest Employment Law, LLC
Shari Lane, Attorney at Law
Licensed in Oregon and Washington
Member SHRM and PHRMA
River Park Center
205 SE Spokane Street, Suite 305
Portland, Oregon 97202
T: 503.688.5162
F: 503.688.5163

Lawyerly Caveat: This newsletter is for informational purposes, and is not and should not be construed as legal advice. For assistance with specific legal issues, consult an attorney.

Thursday, May 19, 2011

To Settle or Not To Settle, That is the Question

“I’m not paying him one penny –we didn’t do anything wrong!”

That is the battle cry of every employer who has ever been served with a complaint. So why does every attorney invariably bring up the idea of settlement? It isn’t necessarily because you made a mistake (though it can be dismayingly easy to inadvertently step on the wrong side of the law), and it isn’t because the law is unfairly skewed in favor of the employee (though sometimes it is).

Here’s what happens. Before your attorney can launch a defense or even advise you properly, he’ll need to look at every document that might remotely be relevant, interview every witness, review your employee handbook, find out about past practices, and get a detailed timeline of the employment history of the complaining party. That takes time—which costs you money. Then there are depositions, discovery battles, demands for a forensic review of your electronic records, drafting an Answer to the Complaint, drafting and responding to preliminary motions, and arguing those motions before the judge. (Even with an administrative agency complaint, there are scaled-down versions of these activities). That takes time—which costs you money. At trial, witnesses change their stories, and opposing counsel comes up with evidence you didn’t even know existed—which can change a “rock solid” defense into a losing battle. Even if trial goes well, jurors are people, and that means they’re unpredictable. Ultimately, even if you win, you’ll have paid for a lot of attorney time (and hard costs, like court reporter fees, filing fees, and expert witness fees) to get there. On top of that, almost all claims an employee can bring carry attorney fees for the employee—so if she’s awarded the proverbial “one penny” you swore you’d never pay in settlement, you’ll also end up paying her attorney’s fees. Some (but not all) statutes carry attorney fees for a successful defendant, but those are rarely awarded.

There are times when fighting is necessary. Most employers are justifiably reluctant to set a precedent (“Sue us and we’ll immediately pull out the check book”). Sometimes the claimant/plaintiff isn’t interested in settlement. And sometimes you’ll decide to stand on principle to avoid giving in to what feels like extortion, on a claim you truly believe is frivolous. But because it is so expensive to fight, your attorney wouldn’t be doing her job if she didn’t let you know that settlement is probably the least expensive and least time-consuming option. At that point, you can make an informed decision: settle, or fight.