A profusion of often conflicting state and federal court rulings leaves a company with a Web site vulnerable to having to defend itself in court anywhere, even in a place it may have done little or no business and even if no evidence exists that anyone there saw the Web site.
For now, the way a business uses the Internet affects how likely it is to be sued. Consider the following:
Companies that use Web sites primarily for advertising wont likely be sued in a given location unless that advertising is coupled with more traditional contacts in that location.
For companies that use the Internet to facilitate sales, the chances of lawsuits in distant places will increase in proportion to their customer base.
Those operating largely on the Internet, providing essentially electronic products or services online, should expect to be subject to jurisdiction anywhere on the globe unless they specifically restrict access from places where they want to avoid being sued.
A business thinking about venturing into e-commerce can minimize the risk of exposure to litigation far from its home base by consulting its attorney.
Mark A. Willard
No benefits for unmarried heterosexual live-ins
According to a recent ruling by a federal court in New York, a company offering benefits to unmarried same-sex domestic partners but denying them to unmarried heterosexuals does not violate civil rights law.
In Foray v. Bell Atlantic, a male employee sued the telephone company for sex discrimination when it denied benefits to his live-in girlfriend. He argued that, if he were female, his female live-in partner would be entitled to benefits. Thus, he was a victim of gender discrimination.
The court ruled that his claim under Title VII of the Civil Rights Act of 1964 was invalid because the company did not treat him differently from a similarly situated person of the opposite sex, i.e., a woman with a live-in boyfriend. A woman with a female domestic partner, the court reasoned, is differently situated from the male employee because, unlike the male employee, she cannot legally marry her partner.
Foray v. Bell Atlantic provides further support for employers who wish to extend to employees with same-sex domestic partners those benefits which traditionally have been offered only to married employees.
William E. Adams
Good intentions count in discrimination cases
The U.S. Supreme Court has ruled that employers cannot be forced to pay punitive damages in discrimination suits if a managers discriminatory behavior runs counter to the employers good-faith efforts to comply with the law and run a bias-free workplace.
In Kolstad v. American Dental Association, a female employee sued her employer for sex discrimination after being denied a promotion. Although the trial court ruled that she was the victim of discrimination and awarded her back salary, the trial judge refused to consider punitive damages because she had not shown that her employers conduct was egregious, as required by the Civil Rights Act of 1964.
The court of appeals affirmed the trial courts decision, holding that Title VII of the Civil Rights Act of 1964 requires a showing of egregious conduct. The Supreme Court rejected the appeals courts ruling, holding instead that the employee must prove only that the employer acted with malice or reckless indifference to the employees federally protected rights.
However, it also gave well-intentioned employers a break, stating that an employer will not have to pay punitive damages for a managers discriminatory conduct when such conduct is contrary to the employers good-faith efforts to comply with Title VII. An employers good-faith efforts may be demonstrated, for example, by an employers implementation and enforcement of anti-discrimination policies, including education of all personnel on Title VIIs prohibitions.
All employers, therefore, should, at a minimum, adopt and distribute to all employees a clear policy against discrimination which includes a procedure for complaining about discrimination.
William E. Adams
Harassment liability guidelines
In June 1998, the U.S. Supreme Court issued two important decisions which held that employers will be liable for sexual harassment by supervisors resulting in a tangible employment action (e.g., termination, failure to promote, undesirable reassignment) unless they can prove that 1) they exercised reasonable care to prevent and promptly correct any harassing behavior; and 2) the employees unreasonably failed to take advantage of preventive or corrective opportunities provided by the employers or failed to otherwise avoid harm.
In the wake of these landmark decisions, the Equal Employment Opportunity Commission has issued guidance that provides its interpretation of the Supreme Courts decisions and how it will apply those decisions to its investigations of harassment charges. The EEOC clarified that the rule regarding employer liability for a supervisors harassment applies not only to sexual harassment, but also to harassment based on race, religion, national origin, age or disability.
The EEOC suggests the following measures as reasonable action to prevent and correct harassment:
- Have a written policy prohibiting harassment of any kind and disseminate it to all employees.
- Have an effective complaint procedure that provides more than one person with whom to lodge complaints and assures employees that no adverse action will be taken against an employee for making a good-faith complaint.
- Conduct harassment training for all employees once a year.
- Investigate complaints or other evidence of harassment promptly and thoroughly and document the investigation.
- Take immediate and effective corrective action when a complaint is substantiated and follow up with the victim to establish that the problem has been remedied.
Businesses might not have to implement a formal complaint procedure as long as they have effective informal mechanisms to prevent and correct harassment. Regular staff meetings where anti-harassment policies and procedures are discussed might qualify as such a mechanism. Employers should nevertheless be sure they document such meetings, including the date, attendees and subjects discussed.
William E. Adams
Cash options and overtime pay rates
A recent decision by the Federal District Court in the Eastern District of Pennsylvania has raised significant concerns regarding the calculation of overtime pay for those employers who maintain a cafeteria benefit plan under which employees can elect to receive cash.
In Madison v. Resources for Human Development, Inc., the court held that, because of the cash option, the companys cafeteria plan was not a bona fide plan, and therefore, an employees regular rate of pay must include contributions made by the employer to the cafeteria plan, regardless of whether the employee selects the cash option.
For such a plan to be bona fide, the cash option must be:
- An incidental part of the plan;
- Available under circumstances specified in the plan;
- Consistent with the purpose of the plan in providing benefits;
If your cafeteria plan contains an option to receive cash in lieu of benefits, discuss the implications of the Madison case with your attorney.
Paul M. Yenerall
Look, regulators, no paper...
The U.S. Internal Revenue Service and Department of Labor have issued proposed regulations on the use of electronic media in administering employee benefit plans. The regulations permit electronic delivery of certain notices and distributions to employees and set minimum standards for benefit records maintenan ce and retention.
The regulations require that the electronic media:
- Be reasonably accessible;
- Be no less understandable than the paper documents they replace;
- State that a paper version of the document is available on request.
The proposed regulations are effective the first day of the first plan year beginning on or after June 18, 1999. Plan sponsors and administrators may rely on the proposed regulations until the final ones are issued.
Paperless administration promises considerable cost savings for businesses; it will speed completion of transactions and make record keeping easier and more efficient. Business owners should keep in mind that both federal agencies continue to require that certain documents be distributed and maintained in paper form.
Paul M. Yenerall
You can suspend workers comp. payments
The US Supreme Court has affirmed the constitutionality of the 1993 amendment to Pennsylvanias Workers Compensation Act, which allows insurers to suspend payments for medical treatment during an independent utilization review to determine if the treatment provided to an employee is reasonable and necessary.
In American Manufacturers Mutual Insurance Company v. Sullivan, employees of a school district sued state officials, the school district, and private workers compensation insurers. The employees claim, brought under 42 USC 1983 alleged that the Acts utilization review procedure guaranteed by the law deprived them of property (i.e., medical treatment) without due process under the Constitution because they did not receive notice, nor were they given an opportunity to present their side, before payment was suspended.
The court disagreed, holding that employees are entitled not to all medical treatment once the employers initial liability is established, but only to reasonable and necessary treatment. The court held that an employer is not obligated to pay for employees medical treatment until the reasonableness and necessity of the treatment have been established.
The Supreme Court, consequently, has left in place a mechanism intended to help Pennsylvania employers control burgeoning insurance costs.
James G. Seaman
Law Briefs is written by attorneys from Eckert, Seamans, Cherin and Mellott, LLC, a national law firm based in Pittsburgh.