Indiana Law Review


Survey of Employment Law Developments
FOR Indiana Practitioners

Susan W. Kline'
Ellen E. Boshkoff'

Introduction: National Trends and Developments

One immediate reaction to last year's terrorist attacks on the United States
was an upsurge in religious observance and expression.' Issues of religious
accommodation and tolerance in the workplace are therefore very much in the
public eye. Ironically, it was on September 1 1, 2000 that the Seventh Circuit
heard oral arguments in Anderson v. U.S.F. Logistics (IMC), Inc.,^ the "Have a
Blessed Day"^ case.

The controversy began when a representative of U.S.F.'s largest customer,
Microsoft, complained about Elizabeth Anderson's use ofthis phrase in business

communications."* Anderson twice ignored her supervisor's instruction not to use

the phrase in correspondence to Microsoft.^ In a meeting called to discuss the

situation, Anderson offered to refrain from using the phrase with any individuals

who took offense, but her supervisor did not respond to the proposed
accommodation.^

The next step was a written reprimand and distribution of a company policy
to all Indianapolis employees instructing them to refrain from using "additional

religious, personal or political statements" to communications with customers.^

Although the policy also prohibited such communications with co-workers,

Anderson was allowed to continue wishing her fellow employees blessed days.*
Anderson took the matter public and a local newspaper published an article

that quoted a Microsoft spokesperson as saying Microsoft had no objection to the

phrase.^ Based on her reading ofthe article, Anderson decided she could resume

using the phrase. The day after the article appeared, Anderson again used the

* Judicial Clerk to ChiefJustice Randall T. Shepard, Indiana Supreme Court. B.S., 1 980,

Butler University; M.B.A., 1992, Butler University; J.D., 2000, Indiana University School of

Law—Indianapolis.

* * Partner, Baker & Daniels, Indianapolis. B.A., 1 983, Swarthmore College; J.D., 1 990,
Indiana University; Judicial Clerk to Chief Judge J. Clifford Wallace, Ninth Circuit Court of

Appeals, 1990-91.

1

.

See Laurie Goodstein, As Attacks ' Impact Recedes, a Return to Religion as Usual, N.Y.

Times, Nov. 26, 2001, at Al.

2. 274 F.3d 470 (7th Cir. 2001).

3. Mat 473.
4. Id.

5. See id.

6. Id.

1. /c/. at 474.

8. Id.

9. Id



1370 INDIANA LAW REVIEW [Vol. 35:1369

"Blessed Day" closing in a communique to Microsoft.'^ U.S.F. did not push the
issue by imposing further discipline but did not retract the previous reprimand."

For several months Anderson refrained from using the "Blessed Day" phrase.
She then sent an e-mail to Microsoft with the phrase "HAVE A BLESSED
DAY" in capital letters, surrounded by quotation marks. She received another
reprimand.'^

More than six months later, Anderson brought suit under Title VII of the
Civil Rights Act of 1964'^ (Title VII), claiming failure to reasonably

accommodate her religious practice and seeking injunctive relief^ Judge John
Daniel Tinder ofthe Southern DistrictofIndiana denied a preliminary injunction,

concluding that it was unlikely Anderson would succeed on the merits. ^^

Anderson filed an interlocutory appeal with the Seventh Circuit, which affirmed
on December 14,2001.'^

Judges Cudahy, Easterbrook and Williams all agreed that because Anderson

used the phrase only sporadically and had no religious commitment or
requirement to use the phrase all the time, "an accommodation that allows her to
use the phrase with some people but not with everyone could be a reasonable
accommodation."^^ The court also noted that the employer had not sought "to
denigrate" Anderson's belief.'^ In fact, U.S.F. had invited her to open a

company-sponsored event by saying a prayer over the loudspeaker and allowed

her to use the "Blessed Day" phrase with co-workers, display religious sayings
in her work area, and listen to religious radio broadcasts at her work station.'^

TheAnderson decision may help employers and employees better understand
religious accommodation. An employer's obligation to provide reasonable
religious accommodations is measured differently than under the ADA.
Employers may legally refuse, as an undue hardship, religious accommodations
that would involve more than de minimis cost.^°

An important point, not raised in Anderson, is that Title VII's requirement
of reasonable religious accommodation applies to any sincerely held religious

belief, not merely traditional Judeo-Christian beliefs.^' On November 1 9, 2001

,

10. Id.

11. Id

12. See id.

13. 42U.S.C. §2000e(1994).

14. Anderson, 274 F3daX 414.

15. Anderson v. U.S.F. Logistics (IMC), Inc., 2001 U.S. Dist. LEXIS 2807, 45-46. (S.D.

Ind. 2001).

16. Anderson, 274 ¥3d at 410.

17. 7^.476.

18. Id

1 9. Id. at 476-77. Note that the court did not say these accommodations were required, but

it considered them as evidence of the employer's tolerance toward expressions of faith. Id.

20. See Trans World Airlines, Inc. v. Hardison, 432 U.S. 63, 84 (1977) ("To require TWA
to bear more than a de minimis cost in order to give Hardison Saturdays off is an undue hardship.").

21. See Bushouse v. Local Union 2209 UAW, 164 F. Supp. 2d 1066, 1072 n.l4 (N.D. Ind.



2002] EMPLOYMENT LAW 1371

the Equal Employment Opportunity Commission (EEOC) and U.S. Departments
of Justice and Labor issued a joint statement reaffirming their commitment to
combat workplace discrimination based on religion, ethnicity, national origin or

immigration status.^^ The statement urged victims ofworkplace bias to promptly
report incidents to allow timely investigation.^^ The statement specifically refers

to acts directed toward individuals who are, or are perceived to be, Arab,
Muslim, Middle Eastern, South Asian or Sikh.^'*

The EEOC has therefore put employers on renewed notice that adverse
actions or harassment based on religious or national affiliation, physical or

cultural traits and clothing, perception and association may violate Title VII.^^

As of December 6, the EEOC had already logged 166 formal workplace
discrimination complaints specifically related to the September 1 1 attacks.^^

Another tolerance-related issue on the rise is disability harassment.^^ This

has become the fourth most frequent form ofharassment claim (following racial,
sexual, and national origin harassment), with 2,400 complaints logged annually .^^

A New Jersey man with dyslexia and other neurological impairments recently
won a six-figure jury award.^^ Other cases have involved allegations of
horseplay targeting a mentally retarded restaurant worker, hostility toward and

ostracism of an HIV-infected woman, and taunting ofa man with bipolar illness

2001).

22. Press Release, U.S. Equal Employment Opportunity Commission, EEOC and
Departments of Justice and Labor Issue Joint Statement Against Workplace Bias in Wake of

September 1 1 Attacks, at http://eeoc.gOv/press/l 1-19-01.html (last visited Nov. 19, 2001).

23. Id.

24. Id.

25. See U.S. Equal Employment Opportunity Commission, Employment Discrimination

Based on Religion, Ethnicity, or Country of Origin, at http://eeoc.gov/facts/fs-relig_ethnic.html

(last visited Dec. 12,2001).

26. Press Release, U.S. Equal Employment Opportunity Commission, EEOC Confers with
Minority Groups on Combating September 1 1 Backlash Discrimination, at http://ee0c.g0v/press/l 2-

12-Ol.html (last visited Dec. 12, 2001).

27. See Reed Abelson, Employers Increasingly Face Disability-Based Bias Cases, N.Y.

Times, Nov. 20, 2001 , at CI . Note that the Seventh Circuit has yet to decide in favor of a plaintiff

on a disability harassment claim. In each case raising such a claim, the court has therefore assumed

without deciding that the claim is cognizable under the Americans with Disabilities Act (ADA).

See, e.g., Casper v. Gunite Corp., 2000 U.S. App. LEXIS 16241, * 12 (7th Cir. 2000) (unpublished

opinion); Silk v. City of Chicago, 194 F.3d 788, 803-04 (7th Cir. 1999). The Seventh Circuit has

signaled its receptivity to such claims by noting that a cause of action for disability harassment

appears to exist based on ADA language prohibiting discrimination in any "term, condition, or
privilege of employment"—language that parallels Title VII. Casper, 2000 U.S. App. LEXIS
16241 at * 12-13. During the survey period, the Fourth and Fifth Circuits, which are usually

considered relatively conservative, recognized claims of hostile environment based on disability.

See Marcia Coyle, New Toolfor Job Bias Suits, Nat'l L.J., May 14, 2001 at Al.
28. Abelson, supra note 27.

29. Id.



1372 INDIANA LAW REVIEW [Vol. 35:1369

as a "psycho" and "freak."^°

Employees who are appropriately sensitive to issues ofrace and gender may
not be as well educated when it comes to disabilities. These issues become more
complicated when an employer is entrusted with medical information about an
employee because, for example, the employee has submitted a certification in
support ofa request for leave under the Family and Medical Leave Act (FMLA).
Employers must protect the disabled individual's privacy by strictly limiting
disclosure of information regarding the disability to those with a legitimate need
to know.^'

These privacy concerns have been affected by the September 1 1 attacks. On
October 3 1 , 200 1 , the EEOC issued technical assistance to employers concerned
about special needs of disabled employees in the event of an emergency
evacuation.^^ According to the EEOC, when an employer knows ofan employee
disability, it may inquire about special emergency assistance needs. However,
the EEOC cautions that employers should not assume that all disabled
individuals require special help, but should rather consult the individuals who are
best able to assess their own situations. The information also helps employers
determine how much medical information they may request, and with whom they
may share it."

The remainder of this Article will review some of the survey year's most
significant and interesting legal developments affecting Indiana employers and

employees. It begins by looking at Title VII, the Americans with Disabilities Act

(ADA), the Age Discrimination in Employment Act (ADEA), and other federal
law developments. It continues with a summary of worker's compensation and
other state law developments, followed by a brief update on the force and effect

ofarbitration agreements. It concludes by mentioning three pending cases worth
monitoring.

I. Title VII

A. What Qualifies as an Adverse Action?

Under McDonnell Douglas' burden-shifting method of proof,^* a plaintiff
establishes a prima facie case of discrimination by showing she was a protected
class member who performed satisfactorily but suffered some adverse
employment action to which others outside the class were not subjected.^^
Similarly, a party claiming retaliation under Title VII must show that because he

30. Id

31. See 42 U.S.C. § 121 12(d)(3H4) (1994).

32. U.S. Equal Employment Opportunity Commission, EEOC Provides Technical Assistance
to Employers on Requesting Medical Information as Part ofEmergency Evacuation Procedures, at

http://eeoc.gov/press/10-3 1-01 .html (last visited Oct. 3 1, 2001).

33. Id.

34. McDonnell Douglas Corp. v. Green, 41 1 U.S. 792 (1973).

35. Grube v. Lau Indus., 257 F.3d 723, 728 (7th Cir. 2001).



2002] EMPLOYMENT LAW 1373

engaged in a protected activity he suffered an adverse employment action.^^

A key issue in several recent cases has been whether the alleged action was
legally adverse (sometimes referred to as a "tangible employment action").^^ In

Stutler V. Illinois Department ofCorrections^ the court provided a brief recap of

some Seventh Circuit holdings on this point.^* The court requires a "'significant
change in employment status, such as hiring, firing, failing to promote,

reassignment with significantly different responsibilities, or a decision causing

a significant change in benefits'" that materially alters the terms and conditions

of employment.^^ Negative performance evaluations, job title changes, greater

travel distance to work and/or loss of a telephone or workstation do not qualify
standing alone/^ Retaliatory harassment by a supervisor or co-workers may
qualify but only if it is sufficiently severe."*' Here, the court held that neither

Stutler' s lateral transfer with no loss of benefits or responsibilities nor an

"unpleasant" working environment qualified as a legally adverse action."^^

In Molnar v. BoothJ^^ the court took a more liberal view in a case involving
a junior high school principal who allegedly propositioned a teaching intern.'*'*
On the intern's first day on the job, the principal "ogled her and made
appreciative noises," then took her into his office and suggested that he could

provide permanent room space and supplies not normally available to junior
teachers."*^ In ensuing weeks he did other things that Molnar perceived as

advances, such as calling her to his office to discuss personal matters and inviting

her out on his boat."*^ Molnar's rejection of these offers led to retraction of the

art supplies and the offer of an art room, plus a negative evaluation (later

retracted) that could have kept Molnar from receiving her teaching license."*^

A jury awarded Molnar $500 in actual damages and $25,000 in punitive
damages.^* The Seventh Circuit affirmed, calling the tangible employment action
issue close but concluding that confiscation of essential supplies and a negative

evaluation were sufficiently adverse.*^ Although the criticism was temporary, it

36. Stutler v. 111. Dep't of Corr., 263 F.3d 698, 702 (7th Cir. 200 1 ).

37. See, e.g., Haugerud v. Amery Sch. Dist., 259 F.3d 678, 698 (7th Cir. 2001) (citing

Burlington Indus., Inc. v. Ellerth, 524 U.S. 742, 761 (1998)).

38. 5/«r/er, 263 F.3d at 703 (citations omitted).

39. Haugerud, 259 F.3d at 698 (quoting Burlington Indus., Inc. v. Ellerth, 524 U.S. 742, 761

(1998); citing Rabinovitz v. Pena, 89 F.3d 482, 488 (7th Cir. 1996)).

40. Stutler, 763 F.3d at 703 (citing Hill v. Am. Gen. Fin., Inc., 218 F.3d 639, 645 (7th Cir.

2000); Place v. Abbott Labs., Inc., 215 F.3d 803, 810 (7th Cir. 2000)).

41. Id.

42. Mat 702-04.
43. 229 F.3d 593 (7th Cir. 2000).

44. Id. Sit 591.

45. Id.

46. Id.

47. /^. at 597-98.

48. Id. at 599.

49. /^. at 600.



1374 INDIANA LAW REVIEW [Vol. 35:1369

threatened Molnar's career for a period oftime.^° The court was concerned about
allowing supervisors to punish employees and then avoid liability by reversing

the action later.^^

In Russell v. Board of Trustees^^ the court deemed a five-day unpaid
suspension materially adverse.^^ Plaintiff Russell claimed a spotless thirty-year

employment record.^"* Russell's problem arose when she filled out a time card
in advance, anticipating that she would be attending a full day of training." A
flat tire caused her to miss the afternoon session ofthe training, and she failed to

correct the entry when she submitted the card the next day.^^ When Russell
returned from a two week vacation, her supervisor asked how the seminar went.^^
Russell responded that she only attended the morning session, and immediately

acknowledged her error when shown the time card discrepancy.^*
Russell claimed the resulting five-day suspension was an act ofretaliation for

her complaints about her supervisor's mistreatment offemale employees.^^ The
district court held that the suspension was not sufficiently adverse to be
actionable.^^ The Seventh Circuit disagreed, finding the entry on a formerly

spotless record that Russell committed "theft ofservices" by "falsiflying]" a time

record even worse than the loss of five days' pay.^*

Other employees were less successful during the survey period in proving

adverse employment actions. In Haugerudv. AmerySchoolDistrict,^^ a longtime
custodial worker claimed that her employer tried to pressure her into resigning,

told male custodians not to help female custodians, gave her additional

responsibilities not assigned to males, and intentionally interfered with her work
performance." The court concluded that the alleged incidents could collectively
constitute a pervasively hostile environment.^ However, Haugerud was never
disciplined, demoted, terminated, denied wage or benefit opportunities or
increases, or made to perform more menial tasks.^^ The appeals court therefore
affirmed summary judgment for the school district on the sex discrimination

50. /flf. at 600-01.

51. Id.

52. 243 F.3d 336 (7th Cir. 2001).

53. Mat 341.
54. Id.

55. Mat 339.
56. Mat 339-40.
57. M at 340.
58. Id.

59. Id. Among other things, the supervisor allegedly said one female employee "dressed like

a whore," called another a bitch, and called Russell "grandma." Id. at 339.

60. M. at 341.

61. Id.

62. 259 F.3d 678 (7th Cir. 2001).

63. M. at 684-87.

64. M. at 698.

65. M. at 692.



2002] EMPLOYMENT LAW 1375

claim, although it reversed on the harassment claim.
^^

In Grube v. Lau Industries,^^ the plaintiffs complaint arose from a shift
reassignment after more than twenty years working the day shift.^* The court
said, "Title VII simply was never intended to be used as a vehicle for an
employee to complain about the hours she is scheduled to work or the effect
those hours have upon the time an employee spends with family members.

"^^

The change in working hours was not, therefore, an adverse employment action^*^
In Aviies v. CornellForge Co. ,^' the plaintiffargued that "[c]alling the police

on someone is always an adverse act."^^ The Seventh Circuit had considered this

case in a previous appeal and remanded^^ On successive appeal, Aviies
mischaracterized the earlier Seventh Circuit opinion, which held that a false

report that Aviies was armed and lying in wait outside the plant after threatening
his supervisor cow/flfconstitute an adverse action.^"* At the ensuing trial, however,
it was established that Aviies was escorted by police from the plant after he
refused to leave following a suspensions^ Aviies then ignored police instructions

not to return and parked within two blocks of the plant entranceS^

Someone from the plant telephoned the police to report Aviies' presenceS^
In response to an officer's question the caller expressed uncertainty but said

Aviies might be armed.^* The police forcibly removed Aviies from the vicinity
of the plant but did not arrest him.^^ The appeals court agreed with the district
court that Aviies suffered no adverse action, because Aviies did not prove the

report false.*° Furthermore, any injury Aviies incurred was unforeseeable
because the company caller had no reason to expect that Aviies would resist or
that the police would overreact in removing Aviies from the area.*'

B. Standards and Methods ofProof

This survey marks the first full year following the Supreme Court's decision

66. Id. at 700.

67. 257 F.3d 723 (7th Cir. 2001).

68. /c/. at 728.

69. Id. 2X129.

70. /^. at 729-30.

71. 241 F.3d 589 (7th Cir. 2001).

72. /flf. at 590, 593.

73. Ariles v. Cornell Forge Co., 1 83 F.3d 598 (7th Cir. 1999).

74. 241 F.3d at 593.

75. /£/.at591.

76. Id

11. Id.

78. Id.

79. /c/. at 591-92.

80. /c/. at 593.

81. /flf.at592.



1376 INDIANA LAW REVIEW [Vol. 35:1369

in Reeves v. Sanderson Plumbing Products, Inc.,^^ a case many believed would
have a significant impact on summary judgment practice in employment
discrimination cases.*^ In Reeves, the Court resolved a circuit split regarding the

standard of proof necessary for a plaintiff to survive a motion for judgment as a
matter of law.^ At issue was whether a trier of fact could infer discrimination
from the falsity of the employer's explanation for its action (known as the
"pretext" standard) or whether the plaintiffhad to present additional evidence of

intentional discrimination ("pretext plus").^^ Opting for the lower standard, the

Court ruled that "[i]n appropriate circumstances, the trier of fact can reasonably

infer from the falsity ofthe explanation that the employer is dissembling to cover

up a discriminatory purpose."^^

Reeves was hailed as a major victory for plaintiffs*^ and seemed to signal a
sea change in approach to dispositive motions in employment cases. Early
predictions were that Reeves would make it easier for an employment plaintiff
to get to a jury and harder for jury verdicts to be overturned.**

Actual experience, however, has proved otherwise. Based on the limited

post-Reeves data available, several authors have found no significant change in

the number of cases being resolved on motion, nor on the fate of summary
judgment rulings on appeal.*^

Seventh Circuit practice seems consistent with this finding. During the

survey period, the Seventh Circuit considered appeals of summary judgment
rulings in seventy-two employment discrimination cases. The Seventh Circuit
affirmed the entry ofsummaryjudgment in sixty-two ofthese cases, affirmed in
part in five more, and reversed outright in only five.^

An interesting point is that the Seventh Circuit rarely cited the Reeves
decision in these cases. Only twelve of the summary judgment discrimination

82. 530 U.S. 133(2000).

83. See Philip M. Berkowitz, An Early Analysis of the Impact o/ Reeves v. Sanderson,

N.Y.L.J., Sept. 28, 2000, at 5.

84. See Susan W. Kline, Survey ofEmploymentLaw Developmentsfor Indiana Practitioners,

34 IND. L. REV. 675, 678 (2001).

85. See Berkowitz, supra note 83.

86. Reeves, 530 U.S. at 147.

87. See, e.g., Tim A. Baker, Supreme Court Decision Eases Burden for Discrimination

Plaintiffs, iND. LAW., July 19, 2000, at 4.

88. See, e.g., Marcia Coyle, New High Court Bias Ruling May Spark More Jury Trials,

Settlements, Nat'l L.J., June 26, 2000 at Bl ("Employers will likely face morejury trials, increased

pressure for settlement and greater caution in making employment-related decisions because of an

age bias ruling by the U.S. Supreme Court."); Linda Greenhouse, The Justices Make It Easier to

Win Suits for Job Bias, N.Y. TIMES, June 13, 2000 at A24; Peter N. Hillman, Risks of

Discrimination Suits Increase for Employers Following Supreme Court Ruling in Reeves, Emp.

LITIG. REP., July 1 1, 2000 at 3.

89. See, e.g., Tamara Loomis, Employment Bias; After 'Reeves, ' Little Has Changed in the

Circuit, N.Y.L.J., July 5, 2001, at 5.

90. Authors' calculations.



2002] EMPLOYMENT LAW 1 3 77

cases decided during the survey period contain any mention ofReeves, and most

of those cases cite the decision only in passing.^' The explanation for this
omission may be that Reeves did not technically change the standards in the
Seventh Circuit—^which has always been a "pretext" circuit.^^ Thus, pre-Reeves
case law on summary judgment standards remains viable in this circuit.

One case illustrating the continuity of standards in the Seventh Circuit is
Pugh V. City ofAttica?^ Pugh, a former city animal control officer, sued the city,
alleging discharge due to a perceived disability and retaliation for protesting

police harassment.^"* In its motion for summary judgment, the employer
presented its explanation for the discharge—^that it believed Pugh had
misappropriated funds.^^ The trial court granted summary judgment for the
city.^

On appeal, Pugh attempted to bring the case within the Reeves framework by
arguing, among other things, that he had not actually committed the misconduct
for which he had been fired.'^ In support of this argument, Pugh relied on his
own denials and explanation of the incident.^* Pugh argued that this created a
dispute regarding whether the employer's explanation for its decision was

"unworthy of credence."^^

The Seventh Circuit summarily rejected this argument. Relying on pre-
Reeves case law, the court ruled that the issue on summary judgment was not
whether Pugh had actually misappropriated funds, but whether the city had

honestly believed that he did so:

Mr. Pugh's argument is misplaced. By arguing that he did not mishandle
funds, he has not cast any doubt on the honesty ofthe City's belief that

he had engaged in such conduct. Mr. Pugh offers no evidence to suggest
that the City had additional information or knowledge . . . which would

have indicated that the City did not truly believe that Mr. Pugh had
misappropriated funds.

'°^

Based on the city's evidence explaining its investigation and conclusions, the

Seventh Circuit easily found that the city had met this "honest belief standard.
'°^

The plaintiff in Logan v. Kautex Textron North America^^^ was similarly
unable to capitalize on Reeves. Plaintiff Logan's six co-workers evaluated her

91. Authors' calculations.

92. See, e.g., Sheehan v. Donlen Corp., 173 F.3d 1039 (7th Cir. 1999).

93. 259 F.3d 619 (7th Cir. 2001).

94. /f/. at 621, 624.

95. /flf. at624.

96. Id.

97. Id.?x621.

98. Id

99. Id

100. Id

101. Mat 629.
102. 259 F.3d 635 (7th Cir. 2001).



1378 FNDIANA LAW REVIEW [Vol. 35:1369

performance at the end of her probationary period, and four recommended that
she not be offered permanent employment. '^^ Logan attributed the decision to
retaliation for her complaints about two alleged racial comments and one alleged
threat to her job security, all made by one of the voting co-workers. '^"^ Kautex,
according to Logan, attributed its decision to Logan's "bad attitude, sabotaging

tanks, performance, and absenteeism."'®^ Logan argued that this inconsistency
would allow a jury to infer that these proffered reasons were not the actual
reasons for her discharge.'^

The Seventh Circuit disagreed, noting that all the reasons except absenteeism
were related and concluding, "no reasonable jury could find that Logan was
terminated for any reason other than that she was voted out by her team."'°^ The
court acknowledged that race discrimination may be camouflaged under the label
"attitude," but Logan failed to produce any objective evidence that Kautex was
engaging in such a subterfuge.

'°*

On the other hand. Reeves may have made a difference in a few ofthe close
cases decided during the survey period. For example, in Bell v. Environmental

Protection Agency^^^ the court showed a willingness to consider the substantive

merits ofthe employment decision in question. There, sixteen candidates applied
for four available promotions. '^^ All selectees were white, native-born

Americans.'" Two African-American applicants sued claiming racial
discrimination, and two other foreign-born applicants sued claiming national

origin discrimination."^

The selection process included a personal interview and a rating system."^
Two successful applicants achieved ratings ofsixty-nine and two scored a perfect
seventy-five."* Two plaintiffs achieved perfect scores, one scored sixty-nine,
and one scored sixty-three."^ All four plaintiffs had been employed by the EPA
for a longer time than any selectee, and each plaintiffhad received more service
achievement awards than at least three selectees."^ The plaintiffs presented

statistical data suggesting that the EPA promoted blacks and foreign-born
employees less often than non-black and native-bom employees, although only

103. /c/. at 638.

104. /^. at 638, 640.

105. /fl?. at640.

106. Id.

107. Id.

108. /J. at 640-41.

1 09. 232 F.3d 546 (7th Cir. 2000).

110. /(i. at 549.

111. Id

112. W. at 548.

113. /t/. at 549.

114. Id

115. Id

116. /f/. at 551.



2002] EMPLOYMENT LAW 1 3 79

the data on foreign-bom employees qualified as statistically significant."^ They
also presented a memorandum written before the promotion decision was made
by one ofthe interview panelists, expressing the opinion that two plaintiffs were

better qualified than two selectees."*

The court held that the comparative qualifications evidence and statistics

precluded summary judgment on the discrimination claims."^ It said, "Even if
the pieces of evidence were not conclusive by themselves, they sufficiently

countered the EPA's assertion that it honestly believed it was promoting the best
candidates."'^°

The court was similarly receptive to the plaintiffs arguments in Gordon v.
UnitedAirlines, Inc. '^' In Gordon, a probationary flight attendant on layover in

Los Angeles found his hotel room unsatisfactory.'^^ The crew desk was closed,
so he decided to return home to Chicago to shower and change clothes, then
return in time for his next scheduled flight. *^^ He checked in at the Chicago crew
desk and (by his account) offered to carry out this plan, but was excused from the
assignment.'^"* United ultimately terminated Gordon for the unauthorized

schedule deviation, and he claimed race and age discrimination.'^^

The district court granted summary judgment to United. '^^ The Seventh
Circuit reversed in a split decision. '^^ The majority focused on United's lack of
a clear definition of "unauthorized deviation" and noted that it was a rarely-
invoked infraction.'^* In addition, it was unclear who decided Gordon should be
charged with an unauthorized deviation, and the only other "unauthorized

deviation" action on record did not result in the (white female) employee's

termination.'^^ The court said:

A reasonablejury could conclude, given United's inconsistent definition
of unauthorized deviation, the rarity with which the unauthorized

deviation provision was invoked, the disparate ways it was applied when
it was invoked in Mr. Gordon's case, and United's inability to identify
the management employee responsible for characterizing Mr. Gordon's
conduct, that United's stated reason was a pretext for discrimination.

'^°

117. /flf. at 553-54.

118. Mat 551-52.
119. M. at 554.

120. Id.

121. 246 F.3d 878 (7th Cir. 2001).

122. /rf. at881.

123. /c/. at 881-83.

124. /(i. at 882.

125. Mat 880.
126. Id.

127. Mat 893.
128. Mat 890.
129. M. at 891-92.

130. M. at 893.



1380 INDIANA LAW REVIEW [Vol. 35:1369

Judge Easterbrook dissented, saying that the McDonnell Douglas approach
"has become so encrusted with the barnacles of multi-factor tests and inquiries
that it misdirects attention."'^' The proper summaryjudgment focus, he argued,
was whether a reasonable trier of fact could conclude that Gordon was
terminated because of his age or raceJ^^ Unless United's explanation for the

discharge was "a fraud on the court—not just an overreaction, but a
lie"—summaryjudgment was proper.'" Even foolish, trivial or baseless reasons
are sufficient, Easterbrook asserted, as long as they are honestly believed and

nondiscriminatory.'^'* Here, there was no evidence that United tried "to pull the
wool over judicial eyes" or "bamboozle the court," and Easterbrook disagreed
that "blunders and intra-corporate disarray support an inference ofdeceit."'^^ He
characterized the majority view as "'added vigor' in action" and noted that

"[s]ummary judgment is a hurdle high enough without 'added vigor'"'^^

The last word on the subject of summary judgment standards during the
survey period was Alexander v. Wisconsin Department of Health & Family
Services. '^^ Prompted, most likely, by Judge Easterbrook's dissent in Gordon^

the Seventh Circuit used the case as a vehicle to address the court's prior use of

the phrase "added rigor" in employment cases. '^* In 1992, the court first said it
reviewed summary judgment dispositions in such cases with "added rigor"
because intent is a central issue, and subjective issues such as good faith and

intent are "notoriously inappropriate" questions for summaryjudgment. '^' Since
1 992, the "added rigor" wording has appeared in thirty published Seventh Circuit

opinions.''*^

In Alexander, the court explained that this phrase merely emphasized that

employment discrimination cases usually involve questions of credibility and
intent, which are seldom appropriate summary judgment issues.'"*' Despite the
implication, grants ofsummaryjudgment in employment discrimination cases are
reviewed underthe same standards as all other cases in which summaryjudgment
is granted."*^

Plaintiff Alexander offered evidence of racially offensive remarks by co-

rn. Id,

132. Id.

133. /^. at 894.

134. Id. (quoting Hartley v. Wis. Bell, Inc., 124 F.3d 887, 890 (7th Cir. 1997)).

135. /£/. at 894-95.

136. /flf. at896.

137. 263 F,3d 673 (7th Cir. 2001).

138. /f/. at 680-81.

139. Id. at 681 (quoting McCoy v. WGN Cont'l. Broad. Co., 957 F.2d 368, 370-71 (7th Cir.
1992); Stumph v. Thomas & Skinner, Inc., 770 F.2d 93, 97 (7th Cir. 1985)).

140. Mat 681 n.2.
141. Mat 681.
142. Id. (citing Wallace v. SMC Pneumatics, Inc., 103 F.3d 1394, 1396 (7th Cir. 1997)).



2002] EMPLOYMENT LAW 1381

workers.''*^ He offered no evidence, however, that his five-day suspension for a
confrontation with a co-worker, his ten-day suspension for insubordination, and

his eventual termination for making a threatening gesture were either motivated

by discrimination or in retaliation for his complaints of racial discrimination."*'*

The court therefore affirmed summary judgment for the employer.
'^^

The case trend indicates that, while Reeves may have had some impact in the
Seventh Circuit, that effect appears modest and somewhat sporadic. Judge
Easterbrook's dissent in Gordon makes clear that the court is not united in its
view of the required proof for summary judgment. This area of law therefore
warrants continued monitoring.

Two other cases dealing with standards and methods ofproofare worth brief
mention, although the Seventh Circuit gave fairly short shrift to the plaintiffs

novel burden-of-proofargument in Price v. City ofChicago}^^ Price argued that

Title VII allows a plaintiffto establish disparate impact liability by showing that

the employer refused to adopt an alternative employment practice with a lesser
adverse impact.'"*' The dispute arose after Price, who is African-American,
received the same score on a qualifying examination as another older but equally

senior police officer.'"** The older officer got the only promotion available
because the city used birth dates to break such ties.'"*' Although Price argued that

this practice had a disparate impact on African-Americans, the record did not

support her assertion. '^^ Alternatively, Price argued that her employer should

have been required to promote her as well as the older officer as a less

discriminatory alternative.*^'

The court made clear that proof of disparate impact is required for the
plaintiffs prima facie case. '^^ Only after such proofmust the employer show that
the challenged practice is job-related.'" If the employer succeeds, the plaintiff

may offer evidence that the justification is pretextual because a less
discriminatory alternative is available.'^"* Price placed the alternatives analysis

at the wrong end of the process, and her claim failed.
'^^

The final survey period case worth noting dealt with comments as evidence
ofharassment. In Mason v. Southern Illinois University^^^^ an African-American

143. Id. at 683.

144. /(f. at 683-88.

145. Id. at 689.

146. 251 F.3d 656 (7th Cir. 2001).

147. Id. at 659.

148. Id. at 658.

149. Id. at 658-59.

150. Id. at 659.

151. Id. at 660.

152. Id.

153. Id.

154. Id.

155. Id. at 66\.

156. 233 F.3d 1036 (7th Cir. 2000),



1382 INDIANA LAW REVIEW [Vol. 35:1369

campus police dispatcher's claim ofsupervisory harassment was based in part on
racist comments by co-workers. *^^ The Seventh Circuit held that comments
neither Mason nor his supervisor ever heard were properly excluded at trial. '^^

The trial court did allow evidence ofcomments made by the supervisor or in the
supervisor's presence. '^^ The concurring opinion emphasized that, in orderto use
co-worker comments to prove harassment by a supervisor, the plaintiff must
show that the supervisor was or should have been aware that the words or deeds
offered as evidence would lead to co-worker misconduct.*^

C The Continuing Violation Doctrine
As a general rule, discrimination charges must be based on alleged

misconduct that occurred during specified filing timeframes. Plaintiffs

sometimes argue, however, that earlier misconduct should be considered under

the continuing violation doctrine. This doctrine allows plaintiffs to link

otherwise time-barred acts to acts within the limitations period.*^'

During the survey period, the Seventh Circuit issued two noteworthy

opinions discussing this doctrine. In Sharp v. UnitedAirlines, Inc.,^^^ the airline

offered to reinstate fourteen flight attendants who sued on grounds of sex, age,
and disability discrimination after they were terminated for exceeding weight

restrictions.'^^ Plaintiff Sharp turned the offer down because she was pregnant,
although she could have accepted and immediately taken maternity leave. '^ She

later asked United to renew the offer on the same terms, but United declined to
do so despite Sharp's ongoing efforts to persuade various United officials.

'^^

Two years after United declined to renew the offer. Sharp brought suit.'^^
The Seventh Circuit found the continuing violation doctrine inapplicable and
said, "[A]n employer's refusal to undo a discriminatory decision is not a fresh act

of discrimination."'^'

The plaintiff in Shanoffv. Illinois Department ofHuman Services^^^ was
similarly unsuccessful in invoking the continuing violation doctrine. '^^ Shanoff

157. Mat 1039-41.
158. Mat 1045.
159. M. at 1047.

160. M at 1048 (Ripple, J., concurring).
161. Shanoff V. 111. Dep't of Human Servs., 258 F.3d 696, 703 (7th Cir. 2001).

162. 236 F.3d 368 (7th Cir. 2001).

163. Mat 369.
164. Mat 370.
165. M
166. M.

1 67. Id. at 373 (quoting Lever v. Northwestern Univ., 979 F.2d 552, 555-56 (7th Cir. 1 992)).

168. 258 F.3d 696 (7th Cir. 2001).

169. M at 703. Plaintiff ShanofTdid succeed in convincing the appeals court to reverse
summary judgment for the employer, because a reasonable jury could have found that alleged

supervisory remarks made during the limitations period that expressed animosity toward Shanoffs



2002] EMPLOYMENT LAW 1383

claimed that he suffered a hostile work environment based on actions by his

supervisor such as referring to Shanoff as a "haughty Jew" and threatening to

"keep [his] white Jewish ass down."^^° Shanoff first complained internally in

November 1997, after several hostile remarks, but was told that the employer
would take no action to resolve the situation.'^' At that point, the court held,
Shanoffwas on notice that he had a substantial claim and the filing clock began
to run.'^^ Shanoff did not sue until October 1998, so the court only considered

allegations that fell within the 300 days prior to that filing dateJ^^

Different circuits have adopted varying continuing violation standards.'^'*

The Seventh Circuit holds that plaintiffs may not procrastinate; they must sue "as
soon as the harassment becomes sufficiently palpable that a reasonable person

would realize [he] had a substantial claim under Title VII" in order to base claims
on conduct prior to the limitations period.

'^^

The U.S. Supreme Court may soon shed some light on the continuing
violation question. The Court has granted certiorari in Morgan v. National
Railroad Passenger Corp. '^^ Plaintiff Morgan claimed race-based harassment
that occurred over a four-year period. '^^ The Ninth Circuit held that courts can
consider time-barred conduct if "the evidence indicates that the alleged acts of

discrimination occurring prior to the limitations period are sufficiently related to

those occurring within the limitations period."'^* It found the pre- 1 imitations

conduct at issue sufficiently related under the totality of the circumstances to

invoke the doctrine.
^^'

D. Remedies

The U.S. Supreme Court answered an important question in Pollard v. E.I.

race and religion were sufficiently severe to create a hostile work environment. Id. at 706.

170. Mat 698, 700.
171. M. at 699-700. Compare to Frazier v. Delco Elec. Corp., 263 F.3d 663, 666 (7th Cir.

2001) (allegedly harassing conduct that occurred while the company said it was investigating

Frazier's complaints not time-barred; it is "a principle more fundamental than the doctrine of

continuing violation" that an employer "cannot plead for time to rectify a situation of harassment

... but deny the time to the victim ofthe harassment to learn that the company has failed to rectify

it after all").

172. 5Aa«o/^ 258 F.3d at 703-04.

173. Id.

174. See Lisa S. Tsai, Note, Continuing Confusion: The Application of the Continuing

Violation Doctrine to Sexual Harassment Law, 79 TEX. L. REV. 531 (2000).

1 75. Shanoff, 258 F.3d at 703 (quoting Galloway v. Gen. Motors Serv. Parts Operations, 78

F.3d 1 164, 1 166 (7th Cir. 1996)).

176. 232 F.3d 1008 (9th Cir. 2000), cert, granted, 533 U.S. 927 (2001).

177. Mat 1010-13.
178. Mat 1015.
179. Mat 1017-18.



1384 INDIANA LAW REVIEW [Vol. 35:1369

DuPont de Nemours & Co. '^^ by holding that front pay is not an element of
compensatory damages under the Civil Rights Act of 1991J*' Pollard sued for
CO-worker sexual harassment and received $300,000 (the maximum
compensatory damages available to her under the Act) plus additional amounts
for back pay, benefits and attorney fees.'^^ The district court expressed the view
that $300,000 was insufficient to compensate Pollard but followed Sixth Circuit
precedent holding that front pay was subject to the cap.'^^

The U.S. Supreme Court looked to the original language ofthe Civil Rights
Act of 1964, which was very similar to the National Labor Relations Act
(NLRA) and which provided remedies of injunction and/or reinstatement with
or without back pay.'*^ The NLRA's back pay provision had consistently been
interpreted to allow compensation up to the employee's reinstatement date, even

if that occurred after judgment.^**

In Title VII parlance, post-judgment compensation is considered front pay.'*^

After the 1964 Act was expanded in 1972 to allow "any other equitable relief,"
all circuits that addressed the issue allowed front pay, including front pay in lieu

of reinstatement when reinstatement was not a viable option.'*^
The Court concluded in Pollardthait Congress intended to provide additional

remedies when it passed the 1991 Act.'** The 1991 Act therefore expands
previously available remedies by allowing compensatory and punitive damages
in addition to front pay pending or in lieu of reinstatement.'*^

The Seventh Circuit took this rationale a step farther in Hertzberg v. SRAM
Corp. '^ A jury awarded Hertzberg $20,000 in punitive damages for sexual
harassment, but found for the employer on Hertzberg's retaliatory discharge

claim. Despite the latter fmding, the district court added equitable relief in the

form of back and front pay to the award, reasoning that but for the harassment,

Hertzberg would not have left the company.'^'

The Seventh Circuit acknowledged Pollard's holding that the 1991 Act left
previously available equitable remedies undisturbed, and reasoned that the

required showing forthose equitable remedies was also unchanged. '^^ Therefore,
a plaintiff who leaves her job because of discrimination must prove actual or
constructive discharge to earn the equitable remedy ofreinstatement or back and

180. 532 U.S. 843 (2001).

181. Id. at 845.

182. Id.

183. Id at 846-47.

184. /^. at 848.

185. /t/. at 849.

186. Id

187. Id. at 849-50.

188. /t/. at 851.

189. Id at 853.

190. 261F.3d651 (7th Cir. 2001)

191. /J. at 654, 657.

192. /J. at 659.



2002] EMPLOYMENT LAW 1 3 85

front pay in lieu of reinstatement. ^^^ Hertzberg failed to do so because the only

bases for reliefshe argued were sexual harassment and retaliatory discharge, and

the jury rejected the latter claim J^"^ The appeals court therefore reversed the lost

pay award.
^^^

In reaching this conclusion, the Seventh Circuit distinguished "ordinary"

sexual harassment, defined as hostile conduct that an employee is expected to

endure while seeking redress, from "aggravated" harassment that makes working
conditions so intolerable that the employee is forced to resign (i.e., is

constructively discharged).'^ Only in the latter case may an employee who quits
his job receive post-resignation back and front pay.'^^

Another remedies issue addressed during the survey period was punitive
damages. The Seventh Circuit reheard EEOC v. Indiana Bell Telephone Co. '^^

en banc to consider whether evidence regarding arbitration and a collective

bargaining agreement is admissible on the issues of whether an employer

responded reasonably to a sexual harassment complaint and whether the

employer's state of mind justified punitive damages.'^ The district court had
disallowed the evidence for all purposes.^^

The original Seventh Circuit panel held the evidence admissible on both
points.^^' Judge liana Diamond Rovner wrote a spirited dissent in which she
deplored a "pattern of inaction in the face of . . . unrelenting misconduct" that

spanned twenty years, and concluded that "Ameritech has won ... the right to
invoke the collective bargaining agreement as an excuse for sitting on its hands

while [employee Gary] Amos kept on terrorizing his female colleagues."^°^
The rehearing inspired four different decisions, with the majority holding

arbitration and collective bargaining agreements inadmissible on the question of

liability, but admissible as a defense to punitive damages.^^^ Judge Easterbrook

wrote:

An employer is entitled to show that things were not as bad as they
appeared .... The district court's order enabled the EEOC to ask the
jury rhetorically why any conscientious employer would have acted as
Ameritech did unless it wanted harm to befall female workers, while

193. Id

194. Id. at 661.

195. Id

196. /^. at 658.

197. Id

198. 256 F.3d 516 (7th Cir. 2001) (en banc).

199. Mat 519.
200. Id

20 1

.

2 1 4 F.3d 8 1 3, 825 (7th Cir. 2000), vacated and reh 'g en banc granted by No. 99- 1155,

2000 U.S. App. LEXIS 22797 (7th Cir. Sept. 6, 2000).

202. Id. at 826, 836 (Rovner, J., concurring in part and dissenting in part).

203. Ind Bell Tel. Co., 256 F.3d at 519, 528-29, 531, 537.



1386 INDIANA LAW REVIEW [Vol. 35:1369

disabling Ameritech from giving what may have been its best answer.^^"*

Employers will no doubt take issue with some of the court's reasons for
disallowing this evidence on the liability issue. A majority of the court agreed
that collective bargaining agreements and arbitration systems are not imposed

upon employers by forces beyond their control, and called employers "wrong to
suppose that an arbitrator is some outside force even ex post its agreement to a
given arbitration clause," because the contract defines the arbitrator's

authority.^^^ Here, if Ameritech feared that Amos' discharge would be
overturned by an arbitrator, the majority suggested that it could have

"transfer[ed] Amos to an empty room and give[n] him make-work tasks" because
"[f]eatherbedding ensues from some collective bargaining agreements, and the
lateral arabesque solves many a personnel problem."^°^

Two additional Seventh Circuit survey period cases dealt with punitive
damages. In both, the court discussed and applied Kolstadv. American Dental

Association,^^^ a 1999 U.S. Supreme Court case that clarified when punitive
damages are available in Title VII cases. To justify punitives under Kolstad, an
employer must act "in the face of a perceived risk that its actions will violate

federal law," but need not be specifically aware that it is engaging in

discrimination.^^^ The plaintiff must show that the discriminatory actor was a
managerial agent acting within the scope of her employment.^*^ The employer

may avoid punitive damages by proving that it made a good faith effort to
implement an antidiscrimination policy

.^^°

In Bruso v. United Airlines, Inc.,^^^ an airline supervisor claimed he was
demoted in retaliation for reporting sexual harassment of female employees by

a fellow supervisor.^'^ The district court granted summary judgment to the
airline on the issue ofpunitives without applying the Kolstad framework.^ '^ The
Seventh Circuit reversed, noting that the managerial agents who demoted Bruso
were aware of Title VII's antidiscrimination principles and United's zero-

tolerance antidiscrimination policy.^''* Bruso presented evidence that the

investigation of the alleged harasser's conduct was merely a sham to discredit
Bruso and to cover for management's failure to address the harassment sooner.^'^

The appeals court therefore found a triable issue on the question of punitive

204. /^. at 528.

205. /cf. at 521-22.

206. Mat 524.
207. 527 U.S. 526(1999).

208. Id. at 536.

209. Id at 543.

210. Mat 545.
211. 239 F.3d 848 (7th Cir. 2001).

212. Mat 852-53.
213. Mat 859.
214. Mat 859-60.
215. Mat 860-61.



2002] EMPLOYMENT LAW 1 3 87

damages.^'^

The court was less receptive to the plaintiffs argument in Cooke v. Stefani
Management Services, Inc}^^ PlaintiffCooke, a gay bartender, was fired the day
after he rejected his male supervisor's advances.^^* Ajury awarded Cooke $7500
in back pay and lost benefits and $10,000 punitive damages.^'^

The employer appealed the punitive damage award,^^° citing Kolstad's good
faith effort defense. Stefani had sexual harassment policies, conducted

management training, and displayed an anti-harassment poster.^^' Although the
reporting policy for harassment lacked a provision allowing the complainant to

bypass his or her manager if that manager was the harasser, the court said that
Cooke should have exercised common sense and talked to someone higher in the
chain of command.^^^

Because the manager committed "rogue acts motivated by a desire to amuse
himself, not benefit his employer," the court refused to impute the manager's

knowledge of harassment to the company.^^^ The court therefore reversed the
punitive damages award based on the employer's good faith efforts defense.^^"^

Though it does not involve a substantive employment law issue, Kenseth v.
Commission ofInternal Revenue^^^ involves taxation ofattorneys' fee awards, an

issue that can significantly affect remedies available for employment
discrimination. In that case, the plaintiff settled an age discrimination suit with

his former employer.^^^ Pursuant to a contingent fee agreement, the attorney

deducted forty percent of the settlement proceeds for his fee, and paid the

remainder ofthe settlement to the plaintiff, who did not report as taxable income
the $91,800 deducted by the law firm.

^^^

The tax court ruled that the entire amount was taxable as income, and the
Seventh Circuit acknowledged a circuit split but found the tax court resolution

ofthe issue "clearly correct."^^* The court reasoned that the attorneys' fees were
simply part ofthe "cost ofgenerating income" and thus part ofgross income like

other business expenses.^^^

That attorneys' fees are part of gross income does not mean, of course, that

they are actually taxed in all cases. As the Seventh Circuit pointed out in

216. Mat 861.
217. 250 F.3d 564 (7th Cir. 2001).

218. Mat 565.
219. M. at 566.

220. Mat 568.
221. Id.

111. Id. at 569.

111. Id

114. Id. at 570.

225. 259 F.3d 881 (7th Cir. 2001).

226. Mat 882.
227. Id

228. M. at 883, 885.

229. Mat 883-84.



1388 INDIANA LAW REVIEW [Vol. 35:1369

Kenseth, a taxpayer may deduct those fees as a miscellaneous itemized
deduction.^^^ However, due to limitations on this and other deductions, it is
unlikely that the taxpayer will be able to deduct the full amount paid to his or her
attorneys. Further, attorneys' fees are not deductible for purposes of the

alternative minimum tax.^^*
The practical effect ofKenseth may be that it will become more expensive

for an employer to settle an employment discrimination case because the
employee will seek additional compensation to defray the "tax effect" of the
ruling. In Kenseth's situation, the Seventh Circuit's ruling cost the employee an

additional $26,992.^^^ Ironically, Kenseth may have its greatest impact on
"nuisance value" settlements, because the tax impact ofthe settlement may dwarf
its value to the plaintiff.

Practitioners may also wish to take note of United States v. Cleveland
Indians Baseball Co. ,^" a U.S. Supreme Court case dealing with payroll taxes on
settlements. The question there was whether Social Security and unemployment
taxes are assessed in the year a back pay award is actually paid, or the year the

wages should have been paid.^^* The answer made a $100,000 difference in that
case because in 1994 a group of former Indians players collected settlements

totaling over $2 million for violations offree agency rights that occurred in 1986

and 1987.^^^ These players all exceeded the taxable wage ceilings in 1986 and
1 987, but they were no longer team employees in 1 994.^^* The Court sided with
the Internal Revenue Service and held that the tax is assessed when the wages are
actually paid.^^^

II. Americans With Disabilities ACT

A. Substantial Limitation in a Major Life Activity

To qualify for the employment-related protections of the Americans with
Disabilities Act, a person must prove an impairment that substantially limits one

or more ofhis major life activities.^^* Regulations define a substantial limitation
as the inability to perform a major life function or a significant restriction in the

duration, manner or condition under which the plaintiffcan carry out the activity

230. U at 882.
231. Id.

232. Kenseth owed $17,000 in alternative minimum tax. In addition, his deduction was

reduced by two percent ($5298) due to the floor on miscellaneous itemized deductions and by

$4694 due to the overall limitation on itemized deductions. Id. at 882.

233. 532 U.S. 200 (2001).

234. Id. at 204.

235. /^. at 204, 207.

236. /c/. at 207.

237. /fi^. at 207-08.

238. 42 U.S.C. § 12102(2) (1994). Alternatively, a plaintiff may show a record of such an

impairment or that he was regarded as having such an impairment. Id.



2002] EMPLOYMENT LAW 1 3 89

compared to the general populace.^^^ Some examples ofmajor life activities are
walking, seeing, hearing, speaking, breathing, learning, and—^according to EEOC
regulations—^working.^'*^ A limitation on working must significantly restrict a
plaintiffs ability to perform a class ofjobs or a broad range ofjobs in various

classes.^"*'

The U.S. Supreme Court recently handed down Toyota Motor
Manufacturing, Inc. v. Williams^^^ addressing whether a substantial limitation

in performing manual tasks due to carpal tunnel syndrome qualifies an employee

for reasonable accommodation under the ADA.^'*^ Williams, an assembly line

worker, developed problems gripping tools and working with her arms elevated

and outstretched.^"*^ A reassignment to quality control temporarily resolved the
situation, but this solution broke down when additional duties were assigned to
quality control workers.^^^ Toyota refused to relieve Williams ofthese additional

duties and she sued, asserting that Toyota should have accommodated her carpal
tunnel syndrome.^"*^

The Sixth Circuit held that Williams was substantially limited in the major

life activity of performing manual tasks, and awarded her partial summary
judgment on the issue of whether she was disabled under the ADA.^'*^ Justice
O'Connor, writing for a unanimous Court, disagreed, saying "[T]he Court of

Appeals did not apply the proper standard ... it analyzed only a limited class of

manual tasks and failed to ask whether respondent's impairments prevented or

restricted her from performing tasks that are of central importance to most

people's daily lives."^"*'

In proving a substantial limitation in a major life activity—here, the activity
of performing manual tasks—^the Court said a plaintiff must offer more than
medical diagnosis of impairment.^**' The evidence must show a substantial
limitation in the context of the plaintiffs own experience, which requires
individualized assessment.^^^ This is especially true when dealing with a
condition such as carpal tunnel syndrome, which has widely varying

symptoms.^^*

In this assessment, the "central inquiry" is how well the plaintiffcan perform

239. 5ee 29 C.F.R.§ 1630.2(1) (2002).

240. 29C.F.R. § 1630.2(i)(2002).

241

.

Webb v. Clyde L. Choate Mental Health & Dev. Ctr., 230 F.3d 991 , 998 (7th Cir. 2000).
242. 534 U.S. 184(2002).

243. Linda Greenhouse, Justices Try to Determine the Meaning ofDisability, N.Y. TIMES,

Nov. 8, 2001, at A 18.
244. W^/7/wm5,534U.S.at686.

245. Mat 686-87.
246. Mat 687.
247. Mat 686.
248. Mat 690.
249. Mat 69 1-92.
250. Mat 692.
251. Mat 693.



1390 INDIANA LAW REVIEW [Vol. 35:1369

tasks that are centrally important to daily life, notjust to the plaintiffs particular

job.^^^ Here, Williams' ability to do personal hygiene tasks and household chores
was relevant.^^^ Her difficulty with repetitive work requiring elevation of her
arms and hands to shoulder level for long periods oftime was not.^^"* Williams
could still brush her teeth, wash her face, bathe, tend a flower garden, prepare
breakfast, do laundry, and tidy up her house.^^^ She avoided sweeping,

occasionally needed help getting dressed, and was less frequently able to play
with her children, garden, and drive long distances, but "these changes in her life

did not amount to such severe restrictions in the activities that are of central
importance to most people's daily lives that they establish a manual-task
disability as a matter of law."^^^ The Court therefore reversed the partial
summary judgment Williams won in the Sixth Circuit.^^^

The Court left two significant questions unanswered. First, it expressed no
opinion on whether working should be considered a major life activity.^^*

Second, the Court noted that the ADA does not authorize any agency to interpret
the term "disability," but did not decide whether the EEOC regulations are
entitled to any deference because Toyota did not attack the reasonableness of

those regulations."^

During the survey period, the Seventh Circuit dealt with three other notable

cases where substantial limitation in a major life activity was a central issue. In
Contreras v. Suncast Corp.^^ the plaintiffs back injury allegedly made him
unable to lift more than forty-five pounds for a long period oftime, do strenuous
work, or drive a forklift more than four hours daily.^^' The court "fail[ed] to see

how such inabilities constitute a significant restriction on one's capacity to work,
as the term is understood within the ADA" because they would not preclude the
plaintifffrom performing any broad class ofjobs.^^^ Other circuits have said that

a restriction on lifting as little as twenty-five pounds is not significant under the

ADA definition.^"
Contreras went on to make the novel claim that he was disabled in the major

life activities ofsexual reproduction and engaging in sexual relations because his

252. Id.

253. Id.

254. Id

255. Id

256. /^. at 694.

257. Id

258. /^. at 689.

259. Id at 689-90.

260. 237 F.3d 756 (7th Cir. 2001).

261. Mat 763.
262. Id

263. Id. (citing, inter alia, Wooten v. Farmland Foods, 58 F.3d 382, 384, 386 (8th Cir. 1995)

(holding that plaintiffwas not substantially limited in major life activity ofworking where plaintiff

was restricted to light duty with no working in cold environment and no lifting items weighing more

than twenty pounds).



2002] EMPLOYMENT LAW 1391

ability to engage in intercourse dropped from a rate of twenty times per month

before his injury to two times per month after.^^ He pointed out that in Bragdon
V. Abbott,^^^ the U.S. Supreme Court recognized that reproduction is a major life

activity and implied that engaging in sexual relations may be as well.^^^
However, Bragdon dealt with the impact ofHIV on reproductive ability.^^^ The
Seventh Circuit declined to extend that holding and rejected Contreras' argument

that his decreased capacity for sex due to his bad back qualified as an impairment

substantially limiting a major life activity.
^^

The court found the plaintiffs situation in Lawson v. CSX Transportation,
Inc}^^ more persuasive. Lawson's diabetes required him to administer insulin
injections three times a day, to test his blood sugar four to six times a day,

exercise, and to carefully monitor his diet."° The court readily determined that
this condition was a physical impairment, because it affected Lawson's joints,
eyes, and metabolic, vascular, urinary and reproductive systems. The court also
accepted that eating is a major life activity under the ADA, because it is central
to life.

The more difficult question was whether Lawson's diabetes substantially
limited him in the activity of eating, because the U.S. Supreme Court held in
Sutton V. UnitedAirlines, IncP^ that corrective or mitigating measures must be
taken into account in this evaluation."^ This did not require, as the district court

concluded, that Lawson's actual physical ability to ingest food be restricted;

rather, the analysis considers the difficulties that the treatment regimen caused

and the consequences of noncompliance."^
Even with the insulin, Lawson's "perpetual, multi-faceted and demanding

treatment regime" required constant vigilance.^^* Any breakdown in that regime
would have "dire and immediate" consequences including dizziness, weakness,
loss ofconcentration and impairment ofbodily functions.^^^ Lawson's situation

went well beyond mere dietary restrictions; in fact, the treatment itself could
cause hypoglycemia and trigger these life-threatening symptoms."^

The court acknowledged language in Sutton saying "[a] diabetic whose
illness does not impair his or her daily activities" would not qualify as disabled

264. /t/. at 763-64.

265. 524 U.S. 624 (1998).

266. Contreras, 237 F.3d at 763-64.

267. Id at 764.

268. Id.

269. 245 F.3d 916 (7th Cir. 2001).

270. Mat 918.
271. 527 U.S. 471 (1999).

272. /J. at 482.

273. 245 F.3d at 924.

274. Id

275. Id

276. /flf. at 924-25.



1392 INDIANA LAW REVIEW [Vol. 35:1369

under the ADA.^^^ It noted, however, that Sutton requires an individualized

inquiry and did not say that diabetes could never qualify as a disability.^^* Not
only w^ere Lawson's daily activities inipaired even after taking insulin treatment

into account, but the life-long duration and severity of the condition further

convinced the court that Lawson was entitled to ADA protection.^^^ The court
therefore remanded for further proceedings.^'^

A final case, EEOC v. Rockwell International Corp,^^^ provides insight
regarding the evidence required to establish that a condition constitutes a

"substantial limitation" on the major life activity of working. Rockwell

Corporation required applicants for positions in its plant to undergo "nerve

conduction tests."^'^ The tests were designed to confirm the presence of
neuropathy—^a condition characterized by sensory loss and muscle weakness.^*^
Rockwell believed that individuals with abnormal test results were more likely
to develop repetitive stress injuries, such as carpal tunnel syndrome.^^"* The
entry-level positions for which Rockwell was hiring—^trimmer, finisher, final
finisher and assembler—^all involved repetitive motion.^'^ Therefore, Rockwell
refused to hire any nonskilled applicant who scored outside the normal range on
the nerve conduction test.^'^

The EEOC brought suit on behalfof seventy-two job applicants rejected on
the bases of the test results.^'^ Notably, Rockwell stipulated that all of the

applicants were otherwise qualified for the positions they sought.^** In addition,

none of the applicants suffered from any impairments at the time that they were

turned away by Rockwell.^*' Instead, the EEOC argued that Rockwell had
perceived the applicants as disabled—in this case, as unable to perform jobs
requiring frequent repetition or the use of vibrating power tools.^'^

Although the case was based on a "regarded as" theory, this did not prove
significant to court's analysis. Instead, the court considered whether Rockwell

regarded the applicants as suffering from a condition that would, if true,

constitute a bona fide disability.^^' Thus, the court's decision turned on whether

277. Id.2LX916.

278. Id.

279. Id.

280. Id at 932.

281. 243 F.3d 1012 (7th Cir. 2001).

282. Id. at 1014. See also infra Part II.G (discussing EEOC action against employer that
conducted genetic testing of employees for susceptibility to carpal tunnel syndrome).

283. Rockwell Int'l Corp., 243 F.3d at 1012.

284. See id.

285. M.

286. Id

287. Id

288. /£/. atl015.

289. Id

290. Id. at 1016.

291. Mat 1017.



2002] EMPLOYMENT LAW 1393

the inability to perform repetitive motion jobs, such as the jobs at issue,

constituted a substantial limitation on the major life activity of working.^^^

In resolving this issue, the Seventh Circuit considered the type of evidence

required to meet this defmition of disability. Rockwell argued that the EEOC
could sustain its burden ofproofonly by presenting quantitative vocational data

regarding the jobs available in the relevant market.^^^ The EEOC, on the other
hand, suggested that it could prove that Rockwell regarded the applicants as

disabled based solely on the Rockwell's admitted perception that the applicants

could not perform four specific jobs in its plant.^^"*

The Seventh Circuit struck a middle ground between the two approaches.
The court stopped short of holding that a plaintiff "cannot prevail without
quantitative evidence of the precise characteristics of the local job market."^^^

On the other hand, the court suggested that such evidence would almost always
be necessary. In affirming the entry of summary judgment for Rockwell,^^^ the
court held that "this is not one of the rare cases in which the claimants'

impairments are so severe that their substantial foreclosure from the job market

is obvious."^^^

This conclusion seems reasonably consistent with the result of Toyota v.

Williams. The Seventh Circuit's resolution of Rockwell shows that ADA
plaintiffs seeking relief based on actual or perceived repetitive stress injuries,

particularly carpal tunnel syndrome, face an uphill evidentiary battle.

B, Attendance as a Job Requirement

During the survey period, the Seventh Circuit twice reiterated its stance that

most jobs require regular attendance. In Amadio v. Ford Motor Co.^^^ an
assembly line worker took seventy weeks ofsick leave in the three years prior to

his termination.^'^ The district court rejected his bid for ADA protection in part
because his inability to work on a regular basis made him unable to perform all
essential job functions.^°° The Seventh Circuit agreed, citing previous holdings
that work attendance is an essential employment requirement for clerical
workers, teachers, account representatives, production employees, and plant

equipment repairmen.^^* The Seventh Circuit stopped short ofsaying that every

292. Id.

293. Id. Due to the district court's rulings regarding expert reports, the EEOC was unable to
present evidence from a vocational expert. Id. at 1016.

294. /rf. at 1016-17.

295. /c/. at 1017.

296. Mat 1018.
297. W. 1017 (emphasis added).

298. 238 F.3d 919 (7th Cir. 2001).

299. Id2X92\.

300. A/, at 924.

301. Id. at 927 (citing Jovanovic v. In-Sink-Erator Div. of Emerson Elec. Co., 201 F.3d 894

(7th Cir. 2000); Waggoner v. Olin Corp., 169 F.3d 481 (7th Cir. 1999); Corder v. Lucent Tech.,



1394 INDIANA LAW REVIEW [Vol. 35:1369

job requires attendance, but easily concluded that Amadio's position should be
on that list because factory maintenance and production require employees to be
on the premises.^^^

In EEOC V. Yellow FreightSystem, Inc. ,^°^ a forkl ift driver with AIDS-related
cancer also had a "woeful" attendance record.^^"* As in Amadio, the Seventh
Circuit emphasized, "[L]et us be clear that our court, and every circuit that has

addressed this issue, has held that in most instances the ADA does not protect
persons who have erratic, unexplained absences, even when those absences are
a result of a disability."^^^ The plaintiffs job, like Amadio's, required his
presence at the employer's work site.^*^ Because he was not fulfilling the
essential job function of regular attendance, his ADA claim failed.^^^

C Reasonable Accommodation and Seniority Systems
One difficult area for employers is the interplay between reasonable

accommodation and seniority systems. The U.S. Supreme Court has granted
certiorari in USAirways, Inc. v. Barnetf^^ to address this question. In that case,
an injured cargo handler was transferred to a mailroom position that did not
require heavy lifting.^*^^ He was then bumped from that job by a more senior
employee under the airline's non-union bidding system,^

'°

A Ninth Circuit panel originally agreed with the district court that the airline
did not violate the law by following its legitimate seniority system.^ ^^ The court

later granted rehearing en banc and reversed on this issue, holding that "a

seniority system is not a per se bar to reassignment" although it is a factor in

evaluating undue hardship on the employer.^
'^

D. Direct Evidence ofDiscrimination in Training

In Hoffman v. Caterpillar, Inc.,^^^ the Seventh Circuit considered an

interesting aspect ofthe ADA: the prohibition against discrimination in "regard
to job application procedures, the hiring, advancement, or discharge of

Inc., 162 F.3d 924 (7th Cir. 1998); Nowak v. St Rita High Sch., 142 F.3d 999 (7th Cir. 1998);

Vande Zande v. Wis. Dep't of Admin., 44 F.3d 538 (7th Cir. 1995)).

302. Id. (citing Jovanovic, 201 F.3d at 900).

303. 253 F.3d 943 (7th Cir. 2001).

304. /c^. at 945-46, 949-50.

305. Mat 948.
306. /^. at 949.

307. /J. at 948-50.

308. 228 F.3d 1 105 (9th Cir. 2000), cert, granted, 532 U.S. 970 (2001).

309. /c/. at 1108.

310. Mat 1109, 1119-20.
311. Bamett v. U.S. Air., Inc., 1 96 F.3d 979 (9th Cir. 1 998), vacated and rehearing en banc

granted, 201 F.3d 1256 (9th Cir. 2000).

312. 228F.3datll20.

313. 256 F.3d 568 (7th Cir. 2001).



2002] EMPLOYMENT LAW 1395

employees, employee compensation, yo6 training, and other terms, conditions

and privileges ofemployment."^ '^ Hoffman, who is missing her lower left arm,
indexed documents in Caterpillar's optical services department.^ '^ She was able

to perform all essential functions of that job with accommodations such as a

typing stand.^'^ She requested training on a high-speed scanner upon which the

department's productivity relied.^ '^ Her supervisor denied the request because

he thought that clearing paperjams and straightening documents as they came out
of the machine required the use of two hands.^'*

Hoffman lost at the district court level because she failed to show that the
supervisor's refusal to train her affected her compensation, benefits, hours, title

or promotion potential.^'^ She therefore had not shown an adverse employment
action, which (as discussed above) is generally required in employment
discrimination cases following the McDonnell Douglas framework.^^°

The Seventh Circuit questioned the assumption that denial oftraining must
materially affect a disabled individual's employment to be actionable, noting that

Hoffman's was the rare case involvingdirect evidence ofdiscriminatory intent.^^'
The court took into account the fact that plaintiffs alleging discrimination in
hiring, termination or other statutorily listed actions are not required to separately

prove that the action was materially adverse, and concluded, "[W]ith respect to

employment actions specifically enumerated in the statute, a materially adverse

employment action is not a separate substantive requirement."^^^ It remanded the
case to allow Hoffman to prove her physical capability to operate the scanner.^^^

E. Direct Threats to Health or Safety

Another interesting ADA provision deals with employees who pose
"significant risk to the health or safety of others that cannot be eliminated by
reasonable accommodation."^^* In Emerson v. Northern States Power Co.^^^
Emerson, a customer service representative, handled mostly routine customer

calls, but also spent up to ten percent of her time fielding calls about gas and

electrical emergencies.^^^ After she fell and hit her head while rollerblading, she

experienced occasional panic attacks that required her to take breaks of

314. Id. at 575 (citing 42 U.S.C. § 121 12(a) (1994)) (emphasis added).

315. Id. at 570.

316. Id

317. Id

318. Id. Sit 511.

319. See id. at 514.

320. Id. at 514.

321. Id. at 516.

322. Id. at 575-76.

323. Id. at 576-77.

324. 42 U.S.C. § 121 11(3) (1994).

325. 256 F.3d 506 (7th Cir. 2001).

326. Id. at 508.



1396 INDIANA LAW REVIEW [Vol. 35:1369

indeterminate duration.^^^ Northern States Power Co. (NSP) rejected Emerson's
request that someone else handle safety-sensitive calls during these episodes
because it could not ensure that a co-worker or supervisor would always be
available when needed.^^* Iteventuallyterminated her employment after no other
mutually agreeable assignment could be found.^^^

NSP defended its action on the basis that Emerson posed a direct threat under
the ADA defmition."^ The Seventh Circuit agreed, looking to duration of the
risk and the nature, severity, likelihood, and imminence of potential harm.^^' It

noted that Emerson had already suffered two panic attacks on thejob and agreed
that the attacks amounted to a direct threat in a job that required prompt and

accurate response to power emergencies.^^^ NSP could not sufficiently reduce
that risk by any reasonable accommodation.^^^

F. Contingent Workers

The EEOC issued guidance during the survey period on the ADA's
applicability to workers provided by staffing firms such as temporary agencies."'*

The agency's position is that these workers frequently qualify as employees of
both the agency and the client, so both must offer ADA protections. The
guidelines cover several important questions. Disability-related questions and

medical examinations are not permissible, according to the agency, until the

individual has been offered an assignment with a particular client. Merely

adding the individual to an agency roster ofavailable staffers is not enough. The

staffing firm bears responsibility for reasonable accommodations in the

applications process, but both the firm and client may be responsible for on-the-
job accommodations. The guidelines also talk about how undue hardship is
measured if both entities provide accommodations."^

G. Genetic Testing

Another issue on the EEOC's agenda during the survey period was its first
lawsuit challenging genetic testing under the ADA."^ Burlington Northern Santa

327. /^. at 508-09.

328. Mat 509-10.
329. Mat 510.
330. Mat 513-14.
331. Mat 514.
332. Id.

333. M. at 514-15.

334. Press Release, U.S. Equal Employment Opportunity Commission, EEOC, Enforcement

Guidance: Application of the ADA to Contingent Workers Placed by Temporary Agencies and
Other Staffing Firms (Dec. 22, 2000), at http://www.eeoc.gov/docs/guidance-contingent.html.

335. Id.

336. Press Release, U.S. Equal Employment Opportunity Commission, EEOC, EEOC Petitions
Court to Ban Genetic Testing ofRailroad Workers in First EEOC Case Challenging Genetic Testing
UnderAmericans with Disabilities Act (Feb. 9, 200 1 ), at http://www.eeoc.gov/press/2-9-0 1 -c.html.



2002] EMPLOYMENT LA

W

1397

Fe Railroad allegedly tested blood samples ofemployees who filed work-related
injury claims based on carpal tunnel syndrome, without the employees'

knowledge or consent."^ The EEOC took the position that the ADA forbids
genetic testing as a prerequisite ofemployment, and that tests intended to predict

future disabilities are irrelevant to the employee's present job performance

capabilities."* On April 17, 2001, the railroad agreed to stop the testing
program, but stipulated to preserve related evidence pending resolution of

discrimination charges that were filed."^

in. AGE Discrimination in Employment Act

A, Statistical Evidence

In October 2000, inAdams v. Ameritech Services, /wc.,'^ the Seventh Circuit
issued an important decision on the role of statistical evidence in age

discrimination cases. The plaintiffs, who had been terminated during acompany-
wide reduction in force (RIF), proffered expert reports that examined correlations

between employee ages and termination rates.^"** The district court ruled that the
reports were not admissible for several reasons, including unreliability of the

underlying information, lack of causation analysis, lack of control for other

variables, and the likelihood of jury confusion.^"^^ It then granted summary
judgment to the defendants on all significant issues in the case.^^^

The Seventh Circuit remanded for reconsideration, pursuant to the Daubert
standard, of whether the expert reports were "prepared in a reliable and

statistically sound way, such that they contained relevant evidence."^^ The court
held that regression analysis is not a prerequisite to admissibility and that, if

bolstered by other evidence, a report may meet the Daubert standard even if it
merely eliminates the possibility that a RIF's disproportionately adverse effect

on Age Discrimination Employment Act (ADEA) protected employees was due
to mere chance.^^^

The Seventh Circuit handed down two other decisions during the survey
period that dealt with statistical evidence and the ADEA. In Kadas v. MCI
Systemhouse Corp.^^^ Judge Posner took the opportunity, in affirming summary

337. Id.

338. Id.

339. See, e.g.. Settlement with EEOCRequires Employer to Stop Genetic Testing, EMP.Litig.
Rep., May 15, 2001, at 4.

340. 23 1 F.3d 414 (7th Cir. 2000). The Seventh Circuit does not recognize disparate impact

claims of age discrimination. Id. at 422.

341. Id sX 425.

342. Id. at 427.

343. /^. at 417.

344. Mat 425.
345. M. at 425, 427-28.

346. 255 F.3d 359 (7th Cir. 2001).



1398 INDIANA LAW REVIEW [Vol. 35:1369

judgment for the employer, to clarify three statistical evidence issues in
discrimination cases.^"*^ First, he addressed dicta that has appeared in opinions

from five different circuits suggesting that if the supervisor who "riffed" the
plaintiff was older than the plaintiff, that fact would weigh heavily against a
finding ofage discrimination,^"** Judge Posner offered "counterdictum" that "the

relative ages of the terminating and terminated employee are relatively

unimportant" for several reasons.^^^ He noted that older people often do not feel
old and in fact prefer to work with younger people, and might wish to protect
themselves against potential age discrimination by proactively winnowing out
other older workers.^^^ He also noted that people are often oblivious to their own
prejudices.^^' In this case, the plaintiff was terminated within months of his
hiring, and arguably a discriminatory employer would be much more likely to
decline to hire older workers than to invite lawsuits by hiring and then promptly

firing them.^"

Judge Posner' s second point dealt with a circuit split on whether statistical

evidence is only admissible in proving discrimination if it reaches a five percent

significance level, that is, two standard deviations.^^^ He described the five
percent benchmark as an arbitrary measure adopted by scholarly publishers, and

said, "Litigation generally is not fussy about evidence."^^* Under the Daubert

standard thejudge must determine whether the significance level is worthy ofthe

fact-finder's consideration in the context ofthe case and the particular study.
^^^

Finally, Judge Posner discussed another circuit split, on whether statistical

evidence alone can establish a prima facie case of intentional discrimination if

it is deemed sufficiently significant.^^^ He concluded, "Although it is unlikely
that a pure correlation, say between age and terminations, would be enough . .

.

it would be precipitate to hold that it could never do so.""^ He offered the
example ofa RIF of 1 00 out of 1 000 employees, where all 1 00 were age forty or

347. Mat 361-63.
348. See id. at 361 (citations omitted).

349. Id.

350. Id

351. Id

352. /t/. at 361-62.

353. /(i. at 362.

354. Id

355. Mat 362-63.
356. Mat 363.
357. Id. See also Bell v. EnvtI. Prot. Agency, 232 F.3d 546 (7th Cir. 2000). The plaintiffs

alleged disparate treatment in promotions based on race and national origin discrimination in

violation ofTitle VII. Id. at 548. Their statistical evidence was too broad to establish a prima facie

case of systemic disparate treatment, but was admissible as probative evidence of pretext. Id. at

553. The national origin data was statistically significant and *'suggest[ed] a general pattern of

discrimination toward the foreign bom." Id. at 553-54. The data examining differences based on

race was not statistically significant but was nonetheless admissible as circumstantial evidence of

possible discrimination. Id. at 554.



2002] EMPLOYMENT LAW 1399

older and all those retained were under forty, as a case where the statistics alone

might justify shifting the burden to the employer to explain.^^*

B. Disparate Impact Claims

The disparate impact theory is widely accepted as a means of establishing
employer liability under Title VII, and Congress codified this theory when it
amended Title VII in 1991 .^^^ The ADEA contains no comparable language. In
Adams v. Ameritech Services, Inc. ,^^ the Seventh Circuit acknowledged a circuit
split on the cognizability of disparate impact claims under the ADEA and
reiterated its stance that "disparate impact is not a theory available to age

discrimination plaintiffs in this circuit."^^'

The U.S. Supreme Court has granted certiorari to resolve this issue in Adams
V. Florida Power Corp.^^^ a case brought by 1 1 7 former employees ofa Florida
utility company.^^^ More than seventy percent of the workers terminated in a
corporate reorganization were at least forty years old, and therefore protected

under the ADEA.^^ They claimed that the corporate environment was
"pervaded by ageism" and "subtle systemic bias."^^^ With Adams v. Florida
Power Corp. , the U.S. Supreme Court will decide whether older workers may sue
claiming that company layoffs targeted them more heavily than younger workers.
This decision could have widespread implications for employers, particularly if

troubled economic times, including layoffs, continue.

Indiana employment practitioners should watch for the decision in this case

to see if it alters the Seventh Circuit's stance by interpreting the ADEA to
prohibit policies that appear neutral but that affect older workers more harshly.

C. Tender Back Rule

On December 1 1, 2000, the EEOC issued a final regulation^^ on the ADEA
"tender back" rule, addressing the U.S. Supreme Court's 1998 decision in Oubre
V. Entergy Operations, Inc?^^ The Older Workers Benefits Protection Act of
1990 (OWBPA)^^* amended the ADEA and, among other things, permitted

358. /:arfflj, 255 F.3d at 363.

359. 5ee 42 U.S.C.§ 121 12(b)(3)(A) (1994).

360. 231 F.3d 414 (7th Cir. 2000).

361. /flf. at 422 (citing Blackwell v. Cole Taylor Bank, 1 52 F.3d 666, 672 (7th cir. 1 998) (citing

cases on both sides of issue from various circuits); Maier v. Lucent Techs, Inc., 120 F.3d 730, 735

& n.4 (7th Cir. 1997); EEOC v. Francis W. Parker Sch., 41 F.3d 1073, 1077-78 (7th Cir. 1994)).
362. 255 F.3d 1322 (1 1th Cir. 2001), cert granted, 122 S. Ct. 643 (2001).

363. Linda Greenhouse, Ju^/icia/Ca^j^/f^^/ej 'Speech to Be ReviewedbyJustices, N.Y. TIMES,

Dec. 4, 2001, at A16.

364. Id

365. Id

366. 29 C.F.R. § 1625.23 (2000).

367. 522 U.S. 422 (1998).

368. 29 U.S.C. §626(0(1998).



1400 INDIANA LAW REVIEW [Vol. 35:1369

employees to waive their ADEA rights in return for consideration such as
increased severance or early retirement benefits.^^^ Such waivers are, however,

governed by specific OWBPA requirements, such as a requirement that the
waiver be written in understandable language."^

Prior to the regulation, an employee who entered into a waiver agreement but
thereafter sought to bring suit under the ADEA faced two obstacles arising out
of traditional contract law. First, the "tender back" rule required an individual

who wished to challenge a waiver to first repay the consideration received for the
waiver.^^' Second, the "ratification" principle provided that an individual who
failed to return the payment was deemed to have approved the waiver."^

The final EEOC rule directs that neither ofthese principles applies to ADEA
waivers."^ The new rule provides that any condition precedent or penalty to
challenge an ADEA waiver is invalid, including tender-back requirements and
provisions that an employer may recover attorney's fees or damages because of
the filing of an ADEA suit.^^^ Therefore, employees who wish to challenge the
validity of their ADEA waivers may do so without first repaying the amount
received for signing the waiver. If the employee prevails in overturning the

waiver and then proves age discrimination and obtains a monetary award, the

employer may, however, be able to deduct the amount paid for the waiver in
calculating the amount owed.^^^

IV. OTHER Federal Law Developments

A. Family and Medical Leave Act

The U.S. Supreme Court has granted certiorari in its first case involving the
Family and Medical Leave Act (FMLA). In Ragsdale v. Wolverine Worldwide,
Inc.^^^ the plaintiffwas entitled to up to seven months ofmedical leave under the
employer's policy.^^^ She took time off for cancer treatment, and the company
failed to tell her that the time would count toward her FMLA entitlement.^^^
When she was unable to return to work at the end of the seven months, the
employer terminated her for exhausting all available leave, including FMLA

369. Id.

370. 29U.S.C. §626 (0(1 )(AHG)( 1998).

371. See U.S. Equal Employment Opportunity Commission, Questions and Answers: Final

Regulation on "Tender Back" and Related Issues Concerning ADEA Waivers, at
http://www.eeoc.gov/regs/tenderback-qanda.html [hereinafter Questions and Answers] (last visited

Dec. 15,2000).

372. Id.

373. 29 C.F.R. § 1625.23(a) (2000).

374. 29 C.F.R. § 1625.23(b).

375. 29 C.F.R. § 1625.23(c); see also Questions and Answers, supra note 371

.

376. 218 F.3d 933 (8th Cir. 2000), cm. ^ra/iteJ, 533 U.S. 928 (2001).

377. /</.at935.

378. Id.



2002] EMPLOYMENT LAW 1 40

1

Department of Labor regulations make it "the employer's responsibility to
designate leave, paid or unpaid, as FMLA-qualifying, and to give notice of the

designation to the employee."^*° Employees retain their rights to twelve weeks

ofFMLA leave if their employers fail to notify them that leave will count under
the FMLA.'^'

The Eighth Circuit concluded that this latter regulation creates rights not

conferred by statute, and invalidated it.^^^ The Sixth Circuit reached the opposite

conclusion in Plant v. Morton International, Inc?^^ The pending Supreme Court

decision should resolve this circuit split.

Two Seventh Circuit cases during the survey period provide a helpful
reminder that the proper focus in FMLA cases is whether the employer acted
against an employee because he took leave to which he was entitled. In Gilliam
V. United Parcel Service, Inc.,^^ the plaintiff told his supervisor that he wanted

a "few" or a "couple" ofdays tojoin his fiancee, who hadjust given birth to their
child.^^^ The supervisor allowed him to take Friday off, waiving the collective
bargaining agreement's ten-day notice requirement.^*^

Gilliam did not contact the employer again until the following Thursday,

when he heard his supervisor was trying to locate him.^*^ The union contract
required a call by the start ofthe shift on the third working day of leave, that is,

the Tuesday after the Friday he first took leave.^** UPS terminated Gilliam for
abandoning his job.^*^ Gilliam argued that he was entitled to leave of up to 120
days under the FMLA without informing UPS of his expected date of return.^^°

The Seventh Circuit affirmed summary judgment for UPS saying, "[T]he
FMLA does not provide for leave on short notice when longer notice readily
could have been given. Nor . . . does it authorize employees on leave to keep
their employers in the dark about when they will retum."^^' Because Gilliam did
not give the thirty days notice that Department of Labor regulations require for

foreseeable leaves, UPS could have insisted that he wait that long to take leave.^^^
Furthermore, he was not fired for taking leave, but for failing to let his employer

379. Id.

380. Id at 937 (quoting 29 C.F.R. § 825.208(a) (2001)).

381. Id (quoting 29 C.F.R. §§ 825.208(c), 825.700(a) (2001))

382. Id at 939.

383. 212 F.3d 929 (6th Cir. 2000).

384. 233 F.3d 969 (7th Cir. 2000).

385. Id at 970.

386. Id

387. Id

388. Id

389. Id

390. Id

391. Id. 3X911.

392. Id



1 402 INDIANA LAW REVIEW [Vol. 35 : 1 369

know on a timely basis when he expected to return to work.^^^
The plaintiff in Kohls v. Beverly Enterprises Wisconsin, Inc.^^^ was

unsuccessful for a similar reason.^^^ Kohls, an activities director at a nursing

home, took maternity leave.^^ Shortly before the leave began, she admitted to
errors in checking account records she maintained for a resident's trust fund.^^^

During her absence, her temporary replacement outshone her in several
respects.^^^ Kohls was terminated the day she returned from leave based on
alleged misappropriation of funds and unsatisfactory job performance.^^^

The Seventh Circuit affirmed summary judgment for the employer, saying
that although an employee may not be terminated for taking FMLA leave, she
may be terminated for poor performance if the same action would have been
taken absent the leave/°° This is true even if the problems for which the

employee is terminated come to light as a result of the employee's absence
during the leave/^' Kohls argued that the reasons given for her firing were

pretextual, and that the real reason was that the employer liked the temporary
replacement better/°^ The court countered by saying, "Nothing in the record
indicates that [the employer] preferred [the temporary replacement] for any

reason related to Kohls' taking of leave.'"*^^

B. State Immunity

On February 21, 2001, the U.S. Supreme Court held in Board ofTrustees of
the University ofAlabama v. Garretf^ that the Eleventh Amendment bars suit
in federal court by state employees to recover money damages for the state's
failure to comply with title I of the ADA."*^^ In the aftermath of Garrett, the
Seventh Circuit revisited its conclusion in Varner v. Illinois State University^^^

393. Id.

394. 259 F.3d 799 (7th Cir. 2001).

395. /^. at 801.

396. Id.

397. Id. at 802. While she was on leave, the employer determined that Kohls did not always

record dates and check numbers for transactions; threw away bank statements without reconciling

the account; did not record what checks written to "cash" were for; and could not account for a

$30.93 check. Id

398. See id. The replacement responded to several programming complaints by substantially

revamping Kohls' programs. Id. Numerous residents, their family members, and co-workers

wanted the temporary staff member to stay on permanently in the activities position. Id. at 806.

399. Id at 803.

400. M at 805, 807.
401. /J. at 806.

402. Id

403. Id

404. 531 U.S. 356(2001).

405. Id

406. 226 F.3d 927 (7th Cir. 2000).



2002] EMPLOYMENT LAW 1403

C'Varner IF) that the Equal Pay Act (EPA) qualifies as "remedial or preventive

legislation aimed at securing the protections ofthe Fourteenth Amendment," so
that state immunity is inapplicable/^^ In Varner II, which was decided before

Garrett, the court contrasted the EPA with statutes aimed at age and disability
discrimination/^^ The former focuses on gender-based classifications that

receive heightened constitutional scrutiny, while the latter types ofclaims receive

only rational basis review
/^^

In Garrett, the Supreme Court considered whether Congress had identified

"a history and pattern of unconstitutional employment discrimination by the

States against the disabled," and concluded that it had not/'^ In Cherry v.

University ofWisconsin System BoardofRegents,
"^^^

an EPA case, the defendant
tried to convince the Seventh Circuit that "no abrogation of States' immunity

against federal statutory claims is valid without express findings in the statute

itself, grounded in sufficient legislative record evidence, that States had engaged

in a pattern and practice ofcommitting unconstitutional conduct ofthe type being

prohibited by that statute.'"*'^ The Seventh Circuit disagreed, finding no

indication in Garrett of a bright-line rule requiring such specific findings, and

reaffirmed the holding of Varner //that state immunity does not preclude EPA
suits/^^

C The Fair Labor Standards Act "Window ofCorrection "for
Improper Deductionsfrom Exempt Employees

The Fair Labor Standards Act requires that executive, administrative, and
professional employees be paid on a salary basis in order to be classified as

exempt from overtime pay/'"* These employees must receive a predetermined

compensation amount each pay period that is not subject to reduction based on
the quality or quantity of work/'^ Department of Labor regulations offer a

"window of correction" for employers to remedy improper deductions/'^ The
Seventh Circuit reversed its position regarding when this window of correction
is available in Whetsel v. Network Property Services, LLC.^^^

407. Id. at 936 (quoting Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd., 527

U.S. 627, 639 (1999)).

408. /^. at 934.

409. Id,

410. 531 U.S. at 368.

411. 265 F.3d 541 (7th Cir. 2001).

412. /^. at 552.

413. /t/. at 553.

414. See Auer v. Robbins, 519 U.S. 452, 454-55 (1997) (citing Fair Labor Standards Act of

1938, 52 Stat. 1060 (codified as amended in sections of 29 U.S.C), 29 C.F.R. §§ 541.1-541.3

(1996)).

415. Id. at 455 (citing 29 C.F.R. § 541.1 18(a) (1996)).

416. See 29 C.F.R. § 541.1 18(a)(6) (2001).

417. 246 F.3d 897 (7th Cir. 2001).



1404 INDIANA LAW REVIEW [Vol. 35: 1369

Plaintiff Whetsel was one of sixteen employees treated as exempt/'* She
filed suit after leaving the company, claiming that she should have been paid for

overtime because the employer had an unwritten policy that subjected her and

other exempt employees to possible pay deductions for partial-day absences/'^
She cited four salaried employees allegedly subjected to partial-day deductions
on eight occasions/^*^ The employer had circulated a memo to all employees
acknowledging that partial-day deductions from exempt employee salaries
occurred on "isolated occasions," but further saying that past and current policy

was not to deduct for partial day absences ofsalaried employees, even ifthey had
insufficient benefit time available to cover the missed time/^' It also repaid the

four affected salaried employees/^^

The secretary of the Department of Labor interprets the regulation to deny
curative opportunities to employers with policies ofdeducting pay from exempt

employees as a disciplinary measure/^^ In a prior case, the Seventh Circuit had
concluded differently, although arguably in dicta/^^ In Whetsel, the court

overruled this conclusion and adopted the Department of Labor position,

"[W]hen an employer has a practice or policy of improper deductions as defined
. . . the window of correction provided in 29 C.F.R. § 541.118(a)(6) is not
available."*^^ It remanded the case to resolve the issue of whether this
employer's actions did constitute such a practice or policy/^^

V. Worker's Compensation

A. Employer-Employee Relationship

In GKNCo. V. Magness*^^ the Indiana Supreme Court clarified the analysis
for determining whether an employer-employee relationship exists for worker's

compensation purposes/^* Magness, a truck driver hired by a subcontractor,

suffered injuries while working on a highway construction project and sued

GKN, the general contractor/^^ GKN argued that Magness was its employee as
well as the subcontractor's employee, so his exclusive remedy was worker's
compensation/^^

418. /J. at 899.

419. Id.

420. Id

421. Id.

All. /^. at 899-900.

423. /^. at 900-01.

424. Id. at 903 (citing DiGiore v. Ryan, 172 F.3d 454, 465 (7th Cir. 1999)).

425. /^. at 904.

426. /c/. at 904-05.

427. 744 N.E.2d 397 (Ind. 2001).

428. Mat 402-03.
429. Mat 399-400.
430. Mat 400.



2002] EMPLOYMENT LAW 1405

The supreme court applied the seven-factor analysis ofHale v. Kemp^^^ but
emphasized that the factors must be weighed in a balancing test and not tallied

in a majority-wins approach/-^^ Furthermore, the right to exercise control weighs

most heavily, rather than intent ofthe parties, as previous cases had indicated."*"

After applying this revised approach, the court concluded that Magness was not

a GKN employee/^*
The court also clarified the burden ofproofinjurisdictional challenges where

the employer argues that the trial court lacks jurisdiction because worker's

compensation is the plaintiffs exclusive remedy/^^ The employer carries the
burden of proving that the complaint falls under worker's compensation unless

the complaint itself demonstrates that an employment relationship exists."*^^ In
the latter case, the burden shifts to the employee to show why worker's
compensation would not apply/^^ The court therefore disapproved language in
prior cases indicating that ifan employer raises the issue ofpreclusion under the

worker's compensation statute, the employee automatically assumes the

burden.^^*

The degree ofjudgment involved in this seven-factor test was illustrated in
Degussa Corp. v. Mullens.*^'* There, the court applied the analysis and split two-
to-two on the conclusion."*^^ Reasonable minds will often differ when applying
the factors to a particular set of facts.

B. Purely Emotional Injury

The Indiana Court ofAppeals held in two cases that worker's compensation
does not apply to purely emotional injuries. In Branham v. Celadon Trucking
Services, Inc.J*^^ Judge Kirsch prefaced his analysis by quoting, "The law does

not provide a remedy for every annoyance that occurs in everyday life. Many
things which are distressing or may be lacking in propriety or good taste are not
actionable."'"'

PlaintiffBranham fell asleep during a work break, and a co-worker dropped

43 1

.

579 N.E.2d 63, 67 (Ind. 1 991 ) (listing the most important factors as right to discharge,

mode of payment, supplying tools or equipment, beliefofthe parties in the existence ofemployer-

employee relationship, control over means used in results achieved, length of employment, and

establishment of work boundaries).

432. 744 N.E.2d at 402.

433. Id at 402-03 (citing Rensing v. Ind. State Univ. Bd. ofTr., 444N.E.2d 1 170 (Ind. 1983)).

434. /^. at 407.

435. Mat 403-04.
436. /t/. at 404.

437. Id

438. Id

439. 744 N.E.2d 407 (Ind. 2001).

440. Id. at 414. Justice Rucker did not participate. /^. at 41 5.

441. 744 N.E.2d 514 (Ind. Ct. App. 2001).

442. Id at 518 (quoting Kelley v. Post Publ'g Co., 98 N.E.2d 286, 287 (Mass. 1951)).



1406 INDIANA LAW REVIEW [Vol. 35:1369

his own pants so another prankster could photograph the two men in a suggestive
pose/"*^ Management found out what had happened after the picture circulated
among other co-workers/'*'* Both perpetrators received a week's unpaid
suspension, and the photographer was demoted.'*'*^ Branham was so humiliated
by the incident that he left the company/'*^

The court ofappeals observed that Indiana's worker's compensation statute
covers on-the-job injuries, defined as including disabilities resulting in an injured

employee's inability to work and impairments in the form of loss of physical
function/"*^ Branham 's injury was not physical, and he remained fully fit for
employment.'*^^ Therefore, the worker's compensation statute did not preclude

Branham 's tort claims, although those claims failed on the merits.'*'*^
A similar result was obtained in Dietz v. Finlay Fine Jewelry Corp.^^^ Dietz,

a sales clerk, sold fine jewelry for a company that leased space in L.S. Ayres
retail stores/^' She gave an unauthorized discount to a customer who had
become irritated because Dietz had to seek help in processing her transaction,
and the assistance was slow in coming/^^ The store security manager called
Dietz in for an hour-long interview during which he allegedly insisted that she

stay in the room and accused her ofstealingjewelry to support a substance abuse
problem /^^ As in Branham^ the court of appeals held that worker's
compensation did not preclude Dietz's tort claims because Dietz alleged no
physical injury or loss of physical function/^'* It remanded for consideration of

her false imprisonment and defamation charges.'*^^

C When Is Expert Testimony Required?
Two survey period cases provide guidance on the role ofexpert testimony in

worker's compensation cases. The first is Muncie Indiana Transit Authority v.
Smith,*^^ where the issue was whether Smith's carpal tunnel syndrome arose out
ofhis employment as a bus driver.'*^^ None ofthe medical records Smith offered

443. /t/. at 518-19.

444. Id. at 519.

445. Id.

446. Id

447. Id. at 520 (citing Perry v. Stitzer Buick GMC, Inc., 637 N.E.2d 1282, 1288-89 (Ind.

1994)).

448. Id

449. Id at 520-25.

450. 754 N.E.2d 958 (Ind. Ct. App. 2001).

451. /^. at 963.

452. Id

453. Id. at 963-64.

454. Id. at 965.

455. /(i. at 971.

456. 743 N.E.2d 1214 (Ind. Ct. App. 2001).

457. /c/. at 1215.



2002] EMPLOYMENT LAW 1407

as evidence contained any opinion as to the cause of this condition, and Smith

was the sole witness at the worker's compensation hearing/^^ The court
considered guidance from other states regarding what qualifies as competent

evidence of causation in worker's compensation cases and concluded that both

lay and expert evidence are admissible if "the injury was not caused by a sudden
and unexpected external event.'"*^' If, however, "the cause of the injury is not

one which is apparent to a lay person and multiple factors may have contributed
to causation, expert evidence on the subject is required.'"*^ Smith offered no

expert evidence, so his claim failed."*^*

In Schultz Timber v. Morrison,^^ a truck driver suffered broken bones and

a punctured lung when a load shifted, causing his truck to overturn."*"
Thereafter, he experienced severe headaches that were exacerbated by physical

activity/^ Schultz argued that only the testimony of a vocational expert could

satisfy Morrison's burden ofproofthat he could not obtain or perform reasonable

types ofemployment."*^^ Schultz' s vocational expert testified that Morrison could

work an eight-hour day of light or "light plus" duty/^ Morrison offered only
testimony by his two treating physicians, who said that Schultz' s expert failed to
consider Morrison's level of pain and ability to function with that pain.'*^^

The court held, "Although vocational experts are utilized in many workmen's
compensation cases, they are not a prerequisite to obtaining total permanent

disability payments.'"*^^ Here, Morrison's doctors testified that Morrison could

not stand, walk, or read for extended periods of time, could not make repetitive
motions with his shoulders and arms, and required pain medication that interfered

with cognitive functions/^^ The appeals court upheld the Worker's
Compensation Board's four-to-three decision granting Morrison total and

permanent disability
/^^

D. Acquiescence

The issue in Wimmer Temporaries, Inc. v. Massoff^^ was whether the
employer acquiesced in the claimant's violation ofa conspicuously posted safety

458. Mat 1216.
459. Mat 1217.
460. id.

461. M. at 1218.

462. 751 N.E.2d 834 (Ind. Ct. App. 2001).

463. M. at 836.

464. Id.

465. Id.

466. M. at 837.

467. Mat 836-37.
468. Mat 837.
469. M
470. Id at 836.

471

.

740 N.E.2d 886 (Ind. Ct. App. 2000).



1408 INDIANA LAW REVIEW [Vol. 35:1369

rule/^^ Massoff, a caster working on a temporary basis at a foundry, failed to

shut down a piece of equipment before cleaning a spout/^^ This was common
practice, although a posted safety notice threatened disciplinary action against

anyone found inside the safety enclosure while the equipment was running/^"*
The employer emphasized that no one specifically told Massoffto violate the

written rule/^^ The statute denies compensation ifan employee knowingly fails
to obey a conspicuously posted, reasonable rule of the employer."^^^ The court,
however, focused on the fact that before the safety rule was posted Massoffwas
trained to clean with the table in operation, and other employees continued to

follow this practice after the rule's posting/^^ Any shutdown slowed production
and increased scrap/^* Six hours before Massoffs accident, a co-worker and a
team leader saw Massoff violating the rule and, although both had disciplinary
authority, said nothing/^^ The court affirmed the award of benefits to Massoff,
finding that the employer acquiesced in the safety violation/*^

VI. State Law Developments

A. Indiana 's Wage Payment Statute

The Indiana Supreme Court has granted transfer in St. Vincent Hospital &
Health Care Center, Inc. v. Steele^^^ to decide whether the liquidated damages

provisions of Indiana's Wage Payment Statute*'^ govern the amount of pay as
well as the frequency.^*^ St. Vincent owed Dr. Steele bi-weekly compensation
under an employment agreement."**^ In years three and four ofthe agreement, St.
Vincent began to exclude payment for certain services because it believed the

payments were impermissible under proposed Health Care Financing

Administration regulations.^*^ Steele sued, and the trial court granted him
summaryjudgment. Under the Indiana Wage Payment Statute's treble damages
provision, the court awarded Steele $277,812.92 in unpaid wages and

472. /^. at 887.

473. /df. at 887-88.

474. /£/. at888.

475. 7^. at 889.

476. 7^. (citing IND. Code §22-3-2-8 (1998)).

477. 7^. at 892.

478. Id.

479. Id.

480. 7^. at 892-93.

48 1

.

742 N.E.2d 1 029 (Ind. Ct. App. 200
1 ), trans, granted and opinion vacated, 76 1 N.E.2d

413 (Ind. 2001).

482. Ind. CODE §22-2-5-2 (1998).

483. St. Vincent Hasp., 742 N.E.2d at 1032.

484. 7^. at 1030.

485. 7J. at 1031.



2002] EMPLOYMENT LAW 1409

$555,625.84 in liquidated damages, plus attorney fees/*^

St. Vincent appealed, arguing that the statute covers only the frequency, not

the amount, of payment.^*^ The statute reads, in relevant part:

Sec. 1. (a) Every person, firm, corporation, limited liability company,

or association, their trustees, lessees, or receivers appointed by any

court, doing business in Indiana, shall pay each employee at least

semimonthly or biweekly, if requested, the amount due the

employee ....

(b) Payment shall be made for all wages earned to a date not more than
ten ( 1 0) days prior to the date of payment . . ,

."***

Alternatively, St. Vincent argued that it had a good faith basis for

withholding a portion of Steele' s wages.**^

The court of appeals noted conflicting authority, and was persuaded by
Steele's argument that if the statute only deals with frequency of payment, an

employer could avoid any penalty by paying a de minimis amount at least

biweekly, regardless of the amount of salary actually due.'*'^ It also noted the

statutory language "the amount due," and affirmed the trial court's award."*^' It

rejected St. Vincent's argument for a good faith exception, because no such

exception appears in the statute."*^^

The Indiana Supreme Court granted transfer,^^^ thereby vacating this holding,
and heard oral argument on September 19, 2001 . A decision will be forthcoming
in due course.

The court ofappeals dealt with another aspect ofthe Wage Payment Statute
during the survey period in Wank v. St. Francis College.^^^ This time the
question was whether severance pay offered in connection with a reduction in
force is covered by the statute.^^^ PlaintiffWank's position was eliminated as a
result of a merger, and the college offered him a severance package in
recognition of his years of service."*^

Almost immediately thereafter, the college separately advised Wank that the
severance bonus package was contingent upon Wank's execution of an
agreement releasing the college from liability.*^^ When Wank declined to sign
the release, the college paid him only wages due, including accrued vacation

486. /J. at 1031-32.

487. /f/. at 1032.

488. /^. (citing IND. Code § 22-2-5-1 (1998)).

489. /c/. at 1035.

490. /f/. at 1033-35.

491. /flf.atl035.

492. Id.

493. St. Vincent Hosp. & Health Care Ctr., Inc. v. Steel, 761 N.E.2cI 413 (Ind. 2001).
494. 740 N.E.2d 908 (Ind. Ct. App. 2000).

495. /£/. at 909-10.

496. /flf.at909.

497. /rf.at910.



1410 INDIANA LAW REVIEW [Vol. 35:1369

pay/^^ Wank sued, but the trial court held that Wank had no employment
contract and that the severance pay was not a wage under the Wage Payment
Statute/'^

Wank argued on appeal that he earned the severance pay through his years
of service, making the amount in effect deferred compensation.^^ The court of
appeals disagreed, although it reiterated that merely calling a payment a bonus
does not automatically exempt it from the statute.^^' Compensation that accrues
during an employee's tenure is a wage, even when payment is deferred, if it
relates to work performed.^^^

Here, however, the court concluded that although the severance pay was
based on years of service, it was not connected to work performed.^^^ Also, the
college had no severance pay policy, so the offered amount was an optional
bonus in recognition of Wank's past service rather than compensation accrued
during employment.^^ Because the package was not a term of Wank's
employment, the court concluded, "absent a policy creating an entitlement to

severance pay, such compensation is not a wage for purposes of the Wage
Payment Statute. The severance package at issue . . . was a discretionary,
gratuitous benefit offered to employees as an act of benevolence."^^^

B. Enforceability of Vacation Pay Accrual Policies

Another survey period case applying Indiana law is worth noting. Damon
Corp. V. Estes^^ dealt with vacation pay liability upon termination.^^^ Damon's
employee handbook read: "Employees will receive their vacation pay, when
eligible, on the regular payday, the week following their anniversary date. An
employee does not earn vacation pay each year until his/her anniversary date."^°*

Estes, upon termination, claimed entitlement to vacation pay calculated from his

most recent anniversary date (August 27, 1999) to his termination date (May 1

,

2000).^^^ The trial court awarded him $121 .14 plus costs.^'^
The court ofappeals reversed, accepting Damon's argument that its company

498. Id.

499. Id. at 9 1 0. The trial court found genuine issues ofmaterial fact on St. Francis' promissory

estoppel claim, and denied summary judgment on that question. Id.

500. /^. at 911.

501. Mat 912-13.
502. See id 2A 913.

503. Id.

504. Id

505. /^. at 913-14.

506. 750 N.E.2d 891 (Ind. Ct. App. 2001).

507. See id at 892.

508. Id.

509. Id.

510. Id



2002] EMPLOYMENT LAW 1411

policy precluded "accrued" vacation time.^'^ The court cited Die & Mold, Inc.
V. Western,^^^ where it characterized vacation pay as "additional wages, earned

weekly" but went on to say, "where only the time of payment is deferred . . .

absent an agreement to the contrary, the employee would be entitled to a pro rata

share of it to the time oftermination."^'^ The court in Die & Mold, Inc. went on
to say that any agreement or published policy to the contrary would be
enforceable.^'"* Here, a policy Estes had acknowledged in writing clearly stated

that an employee earned no vacation pay until his anniversary date.^'^ The court
therefore reversed and upheld the policy as written.^'^

VII. The Force and Effect of Arbitration Agreements

An important and ongoing issue is how far employers may go in requiring
employees to agree to arbitrate employment disputes. On March 21, 2001, the
U.S. Supreme Court resolved a circuit split by upholding an arbitration

agreement in Circuit City Stores, Inc. v. Adams.^^^ PlaintiffAdams signed a form
as part of his application process when Circuit City hired him in 1995, agreeing
to submit all employment disputes to binding arbitration.^'* Two years later, he
brought suit in state court alleging employment discrimination under California
law.^'^ The Ninth Circuit interpreted language in the Federal Arbitration Act
exempting "contracts ofemployment ofseamen, railroad employees, or any other
class of workers engaged in foreign or interstate commerce" as excluding
virtually all employment contracts from the Act's coverage."^ It reversed the
federal district order compelling arbitration."'

The U.S. Supreme Court reversed the court of appeals in a five-to-four
decision based upon the text of the statute rather than its legislative history."^

The majority interpreted the Act's exemption narrowly as excluding only
transportation worker employment contracts from coverage."^ Justice Anthony
M. Kennedy, writing for the majority, noted, "Arbitration agreements allow
parties to avoid the costs of litigation, a benefit that may be of particular

511. /£/. at893.

512. 448 N.E.2d 44 (Ind. Ct App. 1983).

513. Damon Corp. , 750N.E.2d at 893 (quoting Die & Mold. /«c. , 448 N . E.2d at 48) (emphasis
supplied).

5 1 4. Id. (quoting Die & Moid. Inc., 448 N.E.2d at 47-48).
515. See id.

516. Id.

517. 532 U.S. 105(2001).

518. /^. at 109-10.

519. Mat 110.
520. Id. at 109 (referring to 9 U.S.C. § 1 (2000)).

521. /flf. atl24.

522. Mat 119, 124.
523. Mat 119.



1412 INDIANA LAW REVIEW [Vol. 35:1369

importance in employment litigation."^^^ The Court was not persuaded by the
attorneys general of twenty-two states, who argued as amici that the Federal
Arbitration Act should not be read to pre-empt state employment laws that
protected employees by prohibiting them from signing away their rights to pursue
state-law discrimination actions in court."^

The decision clarified the overall scope of the Federal Arbitration Act but
left many questions unanswered. The Court reiterated a prior holding that "by
agreeing to arbitrate a statutory claim, a party does not forgo the substantive

rights afforded by the statute; it only submits to their resolution in an arbitral,

rather than a judicial, forum."^^^ It remains to be seen whether workers who
agree to arbitration retain their rights to collect punitive damages and attorney
fees, and to pursue class actions. Another open question is how broadly the
classes of transportation workers specifically referenced in the statute will be

defined.

On June 20, 2001, five Democratic members of the U.S. House of
Representatives introduced legislation to amend the Federal Arbitration Act and
overturn the holding of Circuit City.^^^ Sponsor Dennis Kucinich attacked

mandatory employment dispute arbitration agreements as depriving employees,
who have inferior bargaining power, oftheir rights to due process, trial by jury,
discovery and appeal."*

In another recent development, the U.S. Supreme Court has held that an

agreement between an employer and an employee to arbitrate employment
disputes does not bar the EEOC from pursuing such victim-specific reliefas back
pay, reinstatement, and damages."^ The case arose when Eric Baker, who signed
a mandatory arbitration agreement as a condition of employment at a Waffle

House restaurant, suffered a seizure sixteen days after he began working as a grill
operator.^^° He filed a charge with the EEOC after he was discharged, and the
EEOC filed an enforcement action.^^'

Justice John Paul Stevens, writing for the six-justice majority, said that Title

VII "clearly makes the EEOC the master of its own case" and that the Federal
Arbitration Act "does not mention enforcement by public agencies; it ensures the

enforceability of private agreements to arbitrate, but otherwise does not purport

to place any restriction on a nonparty's choice ofajudicial forum."^^^ Although

the EEOC does not file many lawsuits (fewer than 300 in 2000, compared to

524. /c^. at 123.

525. /c^. at 121-22.

526. Id. at 123 (quoting Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991)).

527. Susan J. McGoIrick, House Democrats Introduce Legislation to Overturn High Court 's

Circuit City Ruling, DAILY LAB. Rep., June 21, 2001, at A-3.

528. Id

529. EEOC V. Waffle House, Inc., 122 S. Ct. 754 (2002).
530. Id at 758.

531. Id

532. Id at 762-63.



2002] EMPLOYMENT LAW 1413

nearly 80,000 discrimination complaints received),^" the Court's conclusion is

important because employees with arbitration agreements will likely continue to

file discrimination complaints with the EEOC, hoping that the agency will pursue
damages on their behalf.

CONCLUSION: The Watch List

Three noteworthy employment law cases, not discussed above, are pending

before the U.S. Supreme Court. In Edelman v. Lynchburg College,^^^ the Court

will consider the validity of the EEOC's regulation permitting individuals to
"verify" their charges by signing to affirm that the assertions are true after the

filing deadline has passed.^^^ The EEOC mailed a draft charge to plaintiff
Edelman on March 18, 1998, but he did not file the charge until April 1 5, which
was thirteen days past the filing deadline."^ Edelman pointed to a signed letter

he sent the EEOC the previous November 1 4, and an EEOC regulation saying
"[a] charge may be amended to cure technical defects or omissions, including the
failure to verify the charge, or to clarify or amplify allegations made therein.
Such amendments . . .will relate back to the date the charge was first
received.""^

The Fourth Circuit concluded that this regulation contravened statutory
language limiting the EEOC's authority and establishing certain prerequisites:
charges "shall be in writing under oath or affirmation and shall contain such

information and be in such form as the Commission requires.""*' It

acknowledged contrary authority from the Fifth, Seventh, Eighth, Ninth and

Tenth Circuits but affirmed dismissal of Edelman's charge as untimely filed.^^^

Another case worth watching is Swierkiewicz v. Sorema,^^^ which deals with

Rule 1 2(b)(6) motions. PlaintiffSwierkiewicz's national origin complaint stated

only that he is Hungarian, others employed by Sorema were French, and his
termination was motivated by national origin discrimination. He supported his
claim ofage discrimination only by asserting that the company president said he
wanted to "energize" Swierkiewicz's department.^"*'

533. /flf. at 762 n.7.

534. 228 F.3d 503 (4th Cir. 2000), cert, granted, 533 U.S. 928 (200 1 ).

535. Susan McGolrick, New Term to Begin with Bumper Crop ofEmployment-Related Cases

to Be Heard, DAILY LAB. REP., Sept. 28, 2001 , at B-1

.

536. £flfe//«a«, 228 F.3d at 506.

537. Id at 507 (quoting 29 C.F.R. § 1601.12(b) (2001)).

538. Id at 508 (quoting 42 U.S.C. § 2000e-5(b) (1994)).

539. Id at 510-1 1 (citing Lawrence v. Cooper Cmtys., Inc., 132 F.3d 447 (8th Cir. 1998);

Philbin v. Gen. Elec. Capital Auto Lease, Inc., 929 F.2d 321 (7th Cir. 1991); Peterson v. City of

Wichita, 888 F.2d 1307, 1308 (10th Cir. 1989); Casavantes v. Cal. State Univ., 732 F.2d 1441,

1442-43 (9th Cir. 1984); Price v. S.W. Bell Tel. Co., 687 F.2d 74 (5th Cir. 1982)).

540. 2001 U.S. App. LEXIS 3837 (2nd Cir. 2001) (unpublished opinion), cert, granted, 533
U.S. 976(2001).

541. Id



1414 INDIANA LAW REVIEW [Vol. 35:1369

The Second Circuit affirmed the district court ruling granting Sorema's
motion to dismiss for failure to state a plaim.^*^ The U.S. Supreme Court's
decision should provide guidance on the subject of what a plaintiff must plead
to withstand such a motion to dismiss.

The third case, Echazabal v. Chevron USA, Inc.,^^^ presents an interesting
issue of statutory interpretation under the ADA. The ADA prohibits
discrimination against "otherwise qualified" individuals, including "using

qualification standards . . . that screen out or tend to screen out an individual with

a disability."^'*'* However, the ADA provides an affirmative defense that allows
employers to adopt as a "qualification standard" the requirement that the

individual not pose "a direct threat to the health or safety ofother individuals in

the workplace."^'*^ At issue in Echazabal is whether the employer may also adopt
qualification standards to protect the disabled employee from threats to his or her

own health.^'*^ The Ninth Circuit ruled that the employer may not adopt such
standards, creating a conflict with a prior ruling from the Eleventh Circuit.^'*^

The Supreme Court has agreed to hear the case.^'*^

542. Id. (citing FED. R. Civ. P. 12(b)(6) (1994)).

543. 226 F.3d 1063 (9th Cir. 2000), cert, granted, 122 S. Ct. 456 (2001).

544. 42U.S.C. § 12112(b)(6).

545. Id § 12113.

546. Echazabal, 226 F.3d at 1064.

547. Id at 1072, 1075; Moses v. American Nonwovens, Inc., 97 F.3d 446 (1 1th Cir. 1996).

548. 122 S.Ct. 456 (2001).