Many businesses, especially small businesses, prefer to outsource independent tasks rather than add employees to the payroll. By using independent contractors, employers save the costs of tax contributions and employee benefits and insulate themselves from certain liabilities. Hiring independent contractors, however, will not protect employers from claims of race discrimination.

The Civil Rights Act of 1964, known affectionately to employers as Title VII, prohibits discrimination in employment. It also established the EEOC to provide what was intended to be a system for investigating and resolving employment complaints without litigation. The enforcement provisions of Title VII, however, are available only to bona fide employees. But, almost one hundred years before Congress passed the Civil Rights Act of 1964, it enacted the Civil Rights Act of 1866. That statute provides that “all persons . . . shall have the same right to make and enforce contracts . . . as is enjoyed by white citizens.” An action based on this statute has come to be known as a Section 1981 claim because the statute was codified at 42 U.S.C. § 1981. Section 1981 protects both employees and non-employees, and is not limited to contracts of employment.

There are a number of differences between Title VII and Section 1981. The scope of Title VII’s prohibitions is broader. It prohibits discrimination on the basis of race, religion, sex, or national origin, while Section 1981 addresses only discrimination of the basis of race. The coverage provisions of Title VII, however, are much narrower. Title VII applies only to employers in interstate commerce with 15 or more employees and excludes federal and state governments, Indian tribes, and private clubs. Section 1981 applies to any person or entity that contracts. Title VII requires filing a charge with the EEOC within a defined number days of the act complained of, while Section 1981 does not require any pre-litigation filing with a state or federal agency and allows two years in which to bring suit.

Although Section 1981 claims have been brought for well over a century, actions by independent contractors are a fairly new development. Recent cases have included claims by sales representatives, individual truckers for hire, a company providing landscaping services to a county, and a company who maintained parking lots for a retailer. In addition, Section 1981 has been interpreted to apply to claims of retaliation and hostile work environment based upon race.

The moral of this story is that you must treat those with whom you contract just as you are required to treat those who you employ. It’s the law.

By Rebecca M. Fowler, rfowler@dsda.com

In the 1990s, the ADA caused employers to invest time and money into crafting job descriptions that described the essential functions of the job. We began to use terms like “reasonable accommodation.” We understood that the law required that we engage in an interactive process with the employee to determine whether his limitations arising from his disability could be reasonably accommodated to allow him to work. We understood that we had to provide a reasonable accommodation unless it caused an undue hardship.

We also thought we understood what would be considered a disability and what would not. That was until Congress passed the ADA Amendments Act which we discussed in the October 2008 Employer’s Legal Resource.

Since that time, the Equal Employment Opportunity Commission (EEOC) has spent considerable time and energy on this law. The EEOC is the administrative agency charged with investigating complaints of discrimination of various laws, including the ADA. The EEOC can also bring a lawsuit on behalf of a person or persons aggrieved by violations of the ADA.

Indeed, the EEOC is doing just that.

Inflexible Medical Leave Policy. On August 27, the EEOC sued United Parcel Service, Inc. (UPS) claiming that its medical leave policy violates the ADA. According to the EEOC’s lawsuit, employee Trudi Momsen took a 12-month leave of absence when she began to experience symptoms from multiple sclerosis. At the conclusion of that leave, Ms. Momsen returned to work. However, shortly thereafter, she suffered negative side effects linked to her medication requiring her to be absent again. UPS discharged Ms. Momsen for violating its 12-month leave policy. According to the EEOC, Ms. Momsen could have returned to work after just two additional weeks of leave.

It is the EEOC’s position that an inflexible policy such as this (even though it allowed leave far in excess of that required by law) violates the ADA because it thwarts the interactive process between the employer and the employee.

Policy on Reporting Use of Prescription Drugs. On August 31, the EEOC filed a lawsuit against Product Fabricators, Inc., a sheet metal manufacturer. The EEOC alleges that the employer’s policy of requiring employees to disclose their use of prescription drugs violates the ADA. The EEOC is seeking to enjoin the employer from enforcing this policy and is seeking to have a former employee reinstated who was fired for violating the policy.

It is the EEOC’s position that this type of policy is not job-related in that it applies to every position and every prescription. The EEOC also maintains that requiring employees to disclose their use of prescriptions requires them (potentially) to disclose information about disabilities or impairments which constitutes an additional violation of the ADA.

New Regulations. In addition to filing lawsuits, the EEOC has been working on updating the ADA regulations in light of the ADA Amendments Act. On September 23, the EEOC published a notice with its regulations for public comment. You can find the proposed regulations here. You can submit comments about the regulations on or before November 23, 2009. At some point after that (and we are never exactly sure when), the final regulations will be published. At that time, you can bet we will be addressing them in the Employer’s Legal Resource.

Until then, proceed cautiously when dealing with medical issues and your employees. The landscape is changing. You should presume more persons will be covered by the ADA and more interactive process will be required before taking adverse employment actions against those persons or before refusing requests for accommodations.

By Kristen L. Brightmire, kbrightmire@dsda.com

Note: Ms. Brightmire will be speaking in more detail on the proposed regulations at TEEOCA’s October 7 meeting. Details below.

The American Recovery and Reinvestment Act of 2009 provides a subsidy of 65% of the COBRA health insurance premium for employees who are involuntarily terminated from September 30, 2008, to December 31, 2009. The subsidy requires only 35% of the premium to be paid for COBRA coverage for individuals, and their families, who have involuntarily lost their job and do not have coverage available elsewhere.

If an individual becomes eligible for other group coverage, either through a new job or Medicare, they should notify their plan in writing that they are no longer eligible for the COBRA subsidy. The forms for doing so should have been provided by the U.S. Department of Labor when the subsidy was approved.

If an individual continues to receive the subsidy after they are eligible for other group health coverage or Medicare eligibility, the individual may be subject to a penalty of 110% of the subsidy.

There may be circumstances when a former employee’s potential group health coverage is not as good as the subsidized COBRA coverage and the employee does not want to participate in the new coverage. The employee does not get to elect between the subsidized COBRA coverage and the new employer’s group coverage. The employee must accept the new coverage and terminate the COBRA coverage.

Although the new Internal Revenue Code section does not place a burden upon employers to monitor its former employee’s eligibility, employers should remind their former employees that they must notify you (or the benefit plan) when they become eligible for other group health coverage or they face a penalty with the IRS.

By Michael C. Redman, mredman@dsda.com

Court enters order in favor of client Kmart Corporation on claims of race discrimination, retaliation, and violations of the FMLA

Ms. Lester sued her former employer Kmart Corporation alleging that she was subjected to racial discrimination and retaliation in her position as assistant manager, and that her discharge violated the Family and Medical Leave Act. Recently, as a result of motions filed by Kristen L. Brightmire on behalf of Kmart Corporation, Judge Payne entered judgment in favor of Kmart Corporation on all claims.

Congratulations!

Doerner Saunders Welcomes Kenneth T. Short and Benjamin C. Perrine to the Firm

Kenneth T. Short received his Juris Doctor from The University of Kansas School of Law in Lawrence, Kansas with a Certificate in Advocacy. Mr. Short received a Bachelor of Arts degree in English from the University of Kansas. While in law school, Mr. Short served as a Staff Editor and then the Business Manager of the Kansas Journal of Law and Public Policy.

Benjamin C. Perrine received his Juris Doctor from The University of Oklahoma College of Law. He graduated from Villanova University with a Bachelor of Arts degree in History with a minor in English. While at The University of Oklahoma, Mr. Perrine served as the Managing Editor of the American Indian Law Review. He also worked as an extern to the Honorable Robin J. Cauthron of United States District Court for the Western District of Oklahoma.

You can reach Ken at kshort@dsda.com and Ben at bperrine@dsda.com.

Welcome!

October 7, 2009

Kristen L. Brightmire will be speaking on developments under the Americans with Disabilities Act, including a discussion of recent cases brought by the EEOC as well as the new EEOC regulations. For more information about this presentation sponsored by the Tulsa Equal Employment Opportunity Coordinators Association (TEEOCA), please click here.

October 16, 2009

Jim Milton will serve as a panelist at the Oklahoma Municipal League and Oklahoma Municipal Utility Providers' Water & Environment Summit. Mr. Milton's topic is "Rural Water Issues and Contracting Update." More information can be found here.

November 5, 2009

Courtney Bru will be a feature presenter at the Tulsa Area Human Resources Association Annual Employment Law and Practices Seminar held at the Tulsa Renaissance Hotel and Convention Center. Ms. Bru will speak on Record Retention. For more information, click here.

November 11, 2009

Elise Dunitz Brennan will be speaking at the Oklahoma Association of Health Care Providers Owners’ Meeting. She will provide an Overview of the Oklahoma Comprehensive Lawsuit Reform Act of 2009 as it applies to long term care facilities. For more information or to register, please contact Connie Cook, ccook@oahcp.org or click here.

November 12, 2009

Tom Q. Ferguson will be speaking on strategic and ethical considerations involved with preserving, finding, and producing electronic documents in litigation. The seminar, titled E-Discovery: Searching the Virtual File Cabinets, will be held at the Tulsa Doubletree Hotel Downtown. For more information, or to register, click here.

November 17, 2009

Jim Milton will be a speaker at the Tulsa County Bar Association's continuing education seminar on "Municipal Nuggets." Mr. Milton's topic is Water Contracts and Water Rights from the Municipal Perspective. More information can be found here.

November 18, 2009

Hilary L. Velandia and James R. Bullard will present a free audio conference on involuntary discharge of residents in skilled nursing facilities, nursing facilities, assisted living centers, and independent living centers. The audio conference will cover the administrative and litigation procedures involved when the need for involuntary discharge may arise, whether it be due to the need for a higher level of care or payment issues. You can also ask questions, but space is limited. For more information or to reserve a space, please email Anna at aalmanza@dsda.com.

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