Waiver Of Right To Sue | Fifth Amendment | Employee Handbooks

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Employee Did Not Waive Right to Sue in Federal Court

Employee Did Not Waive Righ t to Sue in Federal Court

In Lawrence v. Sol G. Atlas Realty Co, Inc., an employee of West Indian descent brought a federal action against his employer and supervisor, alleging racial and national origin discrimination under Title VII and the New York State Human Rights Law (“NYSHRL”), and retaliation under Title VII, § 1981, the Fair Labor Standards Act (“FLSA”), and the New York Labor Law (“NYLL”). The United States District Court for the Eastern District of New York, dismissed his complaint on the employer’s application, because the collective bargaining agreement contained a clause requiring all disputes to be subject to the grievance and arbitration procedure. The employee appealed, and the Second Circuit Court of Appeals reversed, holding that the collective bargaining agreement did not contain a “clear and unmistakable waiver” of the employee’s right to pursue statutory claims in federal court.

In his complaint, the employee claimed that he (and other black and West Indian porters) was subjected to “unequal scrutiny and discipline, to harassment, and to other disadvantageous conditions of employment, and that retaliated against him when he registered complaints internally and to the EEOC, and when he opposed Atlas’s failure to pay overtime to its employees (in part by participating in a Department of Labor investigation). The alleged acts of retaliation included imposing discipline and docking his pay without basis, threatening to terminate his employment, and manipulating the time clock to create the impression that he was late.”

According to the decision, as a member of the Service Employees International Union, Local 32BJ, the employee’s employment is governed by a collective bargaining agreement (“CBA”). One particular clause in the CBA entitled, “No Discrimination,” states that there “shall be no discrimination against any present or future employee by reason of race, creed, color, age, disability of an individual in accordance with applicable law, national origin, sex, sexual orientation, union membership, or any characteristic protected by law. Any disputes under this provision shall be subject to the grievance and arbitration procedure (Article V).”

Article V of the CBA sets out the arbitration procedure. It states in relevant part that “[a] grievance shall first be taken up directly between the Employer and the Union”; that “[a]ny dispute or grievance between the Employer and the Union which cannot be settled directly by them shall be submitted to the Office of the Contract Arbitrator …”; and that “[t]he procedure herein with respect to matters over which a Contract Arbitrator has jurisdiction shall be the sole and exclusive method for the determination of all such issues….”

In addition, various provisions in CBA regulate terms and conditions of employment, including wages and hours. The Court noted that none of these provisions mention the employer’s obligation to comply with Section 1981, Title VII, the NYSHRL, FLSA, or NYLL, or with statutory law generally.

The Court recognized that claims under Section 1981, Title VII, the NYSHRL, the FLSA, and NYLL “may be made subject to arbitration,” but that “collectively bargained agreements to arbitrate statutory discrimination claims must be “clear and unmistakable.” So the issue before the Court was whether the CBA governing the employee’s employment contains a “clear and unmistakable” waiver of his right to pursue his statutory claims in federal court. The Court reasoned that in order for a mandatory arbitration provision in a CBA to encompass an employee’s statutory discrimination claims, “the inclusion of such claims must be  unmistakable, so that the wording is not susceptible to a contrary reading.” Here, the Court concluded that the CBA “does not satisfy this exacting standard. Article X, Clause 23—the ‘No Discrimination’ provision—clearly prohibits discrimination on the basis of ‘any characteristic protected by law’ and compels arbitration of ‘[a]ny disputes under [that] provision,’ unmistakably creating a contractual right of employees to be free from unlawful discrimination that is subject to arbitration. However, a contractual dispute is not the same thing as a statutory claim, even if the issues involved are coextensive.” “The ‘No Discrimination’ provision may plausibly be interpreted to require arbitration of contractual disputes only. It makes no mention of ‘claims’ or ‘causes of action.’ It cites no statutes. It refers to disputes under ‘this provision,’ not under statutes. The references to ‘law’ do no more than define the characteristics on which discrimination is contractually forbidden under the CBA. They do not suggest that statutory discrimination claims based on those characteristics are subject to arbitration.”

Therefor, “the CBA does not effectuate a clear and unmistakable waiver.” The complaint was reinstated.

The Fifth Amendment Is Not A Right To Lie

Village Law Encroached Upon First Amendment Right To Report A Crime

In Sassi v. City of Beacon, Richard Sassi, a former detective sergeant with the City of Beacon, New York brought a proceeding pursuant to CPLR Article 78 to review a determination of the Mayor of the City, which adopted the findings and recommendation of a hearing officer, finding Sassi guilty of certain charges of misconduct and incompetence, and terminating his employment. He challenged the determination, claiming the findings of guilt, based on a compelled statement, violated his Constitutional privilege against self-incrimination.

Under Civil Service Law § 75, most civil servants cannot be “removed or otherwise subjected to any disciplinary penalty…except for incompetency or misconduct shown after a hearing upon stated charges, etc.”

The Fifth Amendment (Amendment V) to the United States Constitution is part of the Bill of Rights and protects a person against being compelled to testify  against himself in a criminal case. “Pleading the Fifth” is a colloquial term for invoking the privilege that allows a witness to decline to answer questions where the answers might be self-incriminating. No adverse factual inference may permissibly be drawn for having done so in a criminal case. In a civil action, witnesses still enjoy their Constitutional right against self-incrimination. This right against self-incrimination is an important one, because if a witness fails to invoke the Fifth Amendment in a civil action and thereafter provides an incriminating answer, that answer can be used against the witness in a subsequent criminal case.

Here, the Court noted its role in an Article 78 as limited to “considering whether the determination was supported by substantial evidence.” The Court concluded that it was.

“Contrary to the petitioner’s further contention, the determination that he was guilty of misconduct and incompetence as a result of his statements, including a concededly false statement, made to the Chief of Police of the City of Beacon in response to a request for an account of the subject incident … did not violate his constitutional privilege against self-incrimination. The privilege against self-incrimination was not a bar to the disciplinary charges because the petitioner was not required to waive his immunity with respect to the use of the statements in a criminal proceeding. Moreover, ‘neither the text nor the spirit of the Fifth Amendment confers the privilege to lie.’”

As for the penalty of termination, the Court recognized its limitations in setting aside an administrative penalty – “only if it is so disproportionate to the offense as to be shocking to one’s sense of fairness, thus constituting an abuse of discretion as a matter of law.” The Court concluded that “the penalty of dismissal is not so disproportionate to the offenses as to be shocking to one’s sense of fairness.”

Employee Handbook Defeats Bonus Claim

Sexual Harassment Complaints Supported Em ployer’s Breach of Contract Action

In Newmark & Company Real Estate, Inc. v. Frischer, the Supreme Court, New York County granted plaintiff Newmark’s motion to dismiss defendant
Frischer’s counterclaims. Frischer’s counterclaims allege two oral promises to him made by Newmark: (1) a promise to pay an annual nondiscretionary bonus of $100,000 for the year of 2011; and (2) a promise to pay a portion of the proceeds derived from BGC Partners, Inc.’s acquisition of Newmark. In regard to the latter, Frischer alleged that after communicating his desire to leave Newmark prior to the acquisition, Newmark’s CEO promised Frischer he would receive acquisition proceeds in an amount no less than the amount received by the partner with the smallest partnership interest. Frischer further alleged that in reliance upon this promise, he did not seek alternative employment and took on additional acquisition-related responsibilities.

On appeal, the First Department of the Appellate Division was faced with the question of when an employee’s bonus constitutes a discretionary bonus subject to forfeiture at the will of the employer or earned compensation not subject to forfeiture. The Court found the former was the case and affirmed the dismissal of the complaint. It reasoned that the “operative employee handbook stating, inter alia, that bonuses were paid at the sole discretion of plaintiff, and the acknowledgment of the handbook’s terms signed by defendant, conclusively refute the counterclaims based on the alleged oral promise to pay an annual nondiscretionary bonus.”

“Nor was the discretionary bonus policy modified by the alleged oral agreement. As defendant’s acknowledgment makes clear, ‘[N]o supervisor, manager or other representative of [plaintiff] has the authority to make any verbal promises, commitments, or statements of any kindregarding the Company’s policies, procedures, or any other issues that are legally binding on the Company.’”

The Court further concluded that the “quasi-contractual” counterclaims based on the alleged promises were “likewise precluded by the discretionary bonus policy. The alleged oral promise to pay acquisition proceeds, however, was not established to be a ‘bonus’ within the scope of the discretionary bonus policy. The complaint alleges that the promised payment was not performance-based, but was an inducement to keep defendant from quitting. The breach of contract counterclaim based on this alleged promise is nonetheless barred because the promise was not in writing, as required by the broad language of the  acknowledgment.” This case demonstrates the strict construction courts will generally give to a well written and all-encompassing employee handbook.

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