On February 26, 2008, in Sprint/United Management Co. v. Mendelsohn, the United States Supreme Court clarified and broadened the scope of evidence that can be considered relevant to a plaintiff's discrimination claim to include evidence of discrimination against non-parties by supervisors who played no role in making the adverse employment action challenged by a plaintiff. The court also considered the proper role of the district and appellate courts in evaluating the admissibility of such evidence.

The case involved an age discrimination claim brought by a former employee who had been terminated as part of a reduction-in-force. The plaintiff sought to introduce testimony at trial from five non-party witnesses who were each expected to testify regarding instances of age discrimination they experienced or observed during their employment with the employer. Notably, none of the witnesses were similarly situated to the plaintiff — having worked for different departments and for different supervisors than she — nor had they observed any instances of discriminatory conduct perpetrated by the supervisor involved in the plaintiff's termination decision. In the prior proceedings, the District Court had excluded the testimony of those witnesses and indicated that the plaintiff could only offer evidence of discrimination against employees who had the same supervisor or could otherwise show that they were similarly situated to her. The Court of Appeals for the Tenth Circuit, however, reviewed the evidence and concluded that the District Court had abused its discretion by applying a per se rule that evidence from employees who had not been supervised by the plaintiff's supervisor is irrelevant to proving discrimination.

The Supreme Court made two significant holdings with respect to this case. First, the Court concluded that the admissibility of evidence of discrimination from employees with other supervisors cannot be per se admissible, or per se inadmissible, but must be determined on a case-by-case basis. The Court stated that, "[t]he question of whether evidence of discrimination by other supervisors is relevant depends on many factors, including how closely related the evidence is to the plaintiff's circumstances and theory of the case." The Court also stated that the relevance of such evidence must be determined by a "fact intensive, context specific inquiry."

Second, the Court held that, because the District Court had not provided sufficient insights concerning the rationale for its decision to exclude the evidence, the Court of Appeals erred in not only evaluating and weighing the evidence, but also in presuming that the District Court reached an incorrect legal conclusion. Instead, the Court of Appeals should have requested clarification from the District Court regarding the rationale behind its decision because the District Court was best suited for making a determination regarding the relevance of, or prejudice caused by, evidence before it.

While the full impact of this decision is unclear, the holding potentially broadens the range of information that may be deemed relevant in discrimination cases. It also reaffirms the role the district and appellate courts should play with respect to determining the admissibility of such evidence. Please contact any member of Schiff Hardin's Labor and Employment Group if you have any questions about this decision.

A recent decision from the Illinois Court of Appeals highlights the importance of clear and effective disclaimers in employee handbooks. In Ross v. May Company, the plaintiff had been employed by the defendant company for more than 40 years. After the plaintiff was terminated, he filed suit claiming that his termination without cause was a breach of his employment contract. He claimed that a 1968 employee handbook, which articulated a progressive discipline policy, had created an implied-in-fact contract. The defendant argued in response that the handbook had been revised several times since 1968, with disclaimer language being inserted into the handbook in either 1987 or 1989, thereby precluding the creation of any employment contract.

The court held that the 1968 handbook, which did not contain a disclaimer, had in fact created a contractual relationship between the plaintiff and the company. Further, the court held that the company's attempts to revise the handbook since 1968 — and thereby return the employees subject to the 1968 handbook to at-will status — failed for lack of a bargained-for exchange and insufficient consideration. Despite the fact that the company had provided increased benefits to its employees in conjunction with the handbook revisions (including paid personal days, disability benefits, and a retirement savings plan), the court found that these benefits were not sufficient consideration because they were offered to all employees, not just those who were purportedly giving up their contractual rights because of the revisions.

In order for the revisions to effectively return the employees to at-will status, the court held that the company should have bargained with each affected employee, reached agreement, and provided consideration for the loss of those contractual rights. While the court provided no specifics as to how this process should play out or what would constitute sufficient consideration, the court did note that mere continued employment would not be consideration sufficient to support such a contract modification.

Older handbooks that lack clear, effective disclaimers regarding the creation of an employment contract could potentially pose problems for employers. If those handbooks set forth any policy regarding progressive discipline or provide for termination only "for cause," employees who were subject to that handbook may have an argument that a contractual relationship was created by that handbook, and that they are no longer at-will employees. A review of past employee handbooks, reaching back as far as your longest-tenured employee, could reveal the potential for such issues. Please contact any member of Schiff Hardin's Labor and Employment Group if you need help assessing potential issues or risks caused by an old handbook or have related concerns.

A majority of states have enacted laws requiring businesses that maintain Social Security numbers of employees (or others) to keep those numbers secure and confidential. The Federal Trade Commission, pursuant to the Federal Trade Act, also requires companies to take reasonable measures to protect personal information, such as Social Security numbers. Although the laws vary from state to state, as a general policy, Social Security numbers should not be collected or maintained unless there is a business necessity to do so. When it is necessary to collect or maintain Social Security numbers (such as for employment tax and other reporting purposes), they should be protected to the fullest extent possible. When handling documents that include Social Security numbers, the shown numbers should be redacted so that no more than four sequential digits are shown.

By following the policies and procedures set forth below with respect to the Social Security numbers that an organization must collect and maintain, an organization should be able to comply with the state laws and Federal Trade Commission guidelines:

The privacy policy should be published in the employee handbook or similar document, which may be made available electronically.

Arbitration agreements, in an employment setting, have increasingly proven not to be the panacea employers had hoped for in resolving disputes with former employees. Higher than expected costs, along with the lack of procedural protections found in the judicial system, have made mandatory arbitration a less appealing choice.

In continued efforts to streamline dispute resolution (and minimize costs), employers may wish to explore the potential for including jury waiver agreements in employment agreements. Such waivers eliminate the risk and uncertainty juries can bring to the litigation process, while allowing employers to retain the benefits of that process, including structured discovery and the potential for summary judgment. Jury waivers are, however, far from a certain solution at this point. State and federal courts have reached disparate results regarding their enforceability, and case law regarding such agreements in the employment setting is to date rare.

Courts appear to subject such agreements to a "knowing and voluntary" standard for enforceability. Factors considered by the courts include whether the terms of the agreement were negotiated (or negotiable), the conspicuousness of the jury waiver within the agreement, the relative bargaining power of the parties, and the business acumen of the party challenging the agreement (here, the employee). Negotiation appears to be of particular importance; inclusion of such a provision in a company's stock agreement may not be enforceable. In addition, courts look to see how much bargaining power the employee had; agreements that are presented as "take it or leave it" and which are required for continued employment may again be found to be unenforceable.

In the right situation, a jury waiver provision in employment agreements may help employers to control the risk faced when a former employee engages in litigation against the company. Such provisions will require careful thought and execution, however, to maximize their enforceability.

February 1 , 2008
President Signs Expansion of FMLA Leave
A Refresher on State Voting Leave Laws
The NLRB Weighs In on E-mail Policies

December 18, 2008
Ring in the New Year with a Close Look at Employment Practices
Add Another Statute to the List of (Potentially) Un-Releasable Laws: USERRA
Harassment Policies Must Be Understandable to the Workforce to be Effective