Don't Cross That Line!

Employment law can became surprisingly complicated once you cross jurisdictional boundaries.

If you are like many human resources professionals, you are probably surprised at the wide variety of sometimes contradictory and inconsistent laws with which you must comply. Little wonder: Various federal, state and even local laws can affect the employment arena.

But many HR professionals are unaware of another wrinkle to employment law: Federal statutes are not applied universally across the nation. In fact, different areas of the country can come to completely opposite interpretations of the exact same federal law. What's more, those areas could be only a few miles apart, separated by little more than the ethereal border between states.

Further complicating the employment law scene--and sometimes causing unwelcome surprises for HR professionals--is the fact that companies may be sued in a wide variety of locations. In some cases, your organization may be sued in states where you don't even do business and under interpretations of laws that are unfamiliar to you.

The Problem Of the Circuits

While one might assume that federal statutes are applied uniformly across the country, that is not always the case. Different federal courts can, and do, arrive at different--sometimes contradictory--interpretations of the legal obligations of companies under the same statute.

At the root of these varying interpretations is the structure of our federal legal system. Our country's federal courts are divided into "circuits." Each federal circuit comprises several states, usually in somewhat close geographic proximity to each other.

Most circuits fall within well-defined geographic regions. For example, the New England states comprise the 1st Circuit. But some circuits cross regional boundaries. The 6th Circuit, for example, includes Tennessee, Kentucky, Ohio and Michigan. (See the map of the circuits, above.)

Each circuit has district courts and courts of appeal. Normally, trials are handled by the district courts. Appeals are made to the circuit courts of appeal, which represent the highest level of federal courts within the circuits. Only the U.S. Supreme Court can overrule decisions by circuit courts of appeal. As a result, the lower federal courts within each circuit (mainly the district courts) are bound to follow the rulings of the federal circuit courts of appeal.

However, the courts in one circuit are not obligated to abide by the decisions in other circuits. In fact, circuit courts of appeal have been known to issue rulings that fly in the face of rulings from other circuits. Therein lies the problem for employers with a multi-state presence.

A prime example of this inter-circuit inconsistency involved an interpretation of the Americans with Disabilities Act (ADA). Some federal appellate courts ruled that individuals could be protected by the ADA even if they were able to control their conditions with medication or some mitigating measure. (For example, someone who could correct extremely poor vision with glasses would nonetheless be considered disabled and protected by the law.) Other federal appellate courts came to the opposite conclusion--that individuals who could control their conditions should not be considered disabled and should not be protected by the law.

The appellate courts were perfectly free to enforce their particular interpretation of this issue within their own circuits until the Supreme Court decided the issue last summer in a trio of cases. (Sutton v. United Air Lines, 119 S.Ct. 2139 (1999); Murphy v. United Parcel Service, 119 S.Ct. 2133 (1999); and Albertsons v. Kirkingburg, 119 S.Ct. 2162 (1999))

While the U.S. Supreme Court applied some consistency to the issue of mitigating measures and the ADA, federal circuit courts of appeals remain divided on many other issues affecting federal employment law. This division causes problems for employers with offices in different circuits because they could potentially face totally different legal obligations at each site.

For example, suppose a company has one facility in Tennessee, which is in the 6th Circuit, and another facility in the neighboring state of Mississippi, which is in the 5th Circuit. Depending on how those two circuits interpret various federal laws, the employer could be subject to completely different (and conflicting) legal standards.

This problem hits national companies especially hard. In Murphy v. United Parcel Service, UPS mentioned this difficulty in a legal brief, which states: "There currently is a significant split of authority in the circuits on this question [i.e., on consideration of mitigating measures], which places a national employer such as UPS in the position of attempting to comply with different legal standards depending on geographic location."

Employers with operations in more than one state should start by determining if their facilities lie in different circuits. If they do, HR must make sure it understands how the federal appellate courts in those circuits interpret federal employment laws.

The Problem of Venue

But HR professionals have other issues complicating their legal lives because, in many cases, several courts in several different locations may have jurisdiction over the same matter.

Generally speaking, the party who files a suit (usually the employee in employment law matters) has the right to choose where the suit will be heard. In some cases, employees may choose a place least convenient for the employer. Given the choice, you can expect an employee's attorney to choose the location that offers the laws or legal interpretations most favorable to the employee's case.

From what locations can an employee choose to sue your company? Federal anti-discrimination laws state that employees can file suit in any of the following locations, known as "venues":

* The state where the employment records relevant to the suit are maintained.

* The state where the employee worked for the employer.

* The state where the alleged unlawful practice took place.

The third option raises the most potential trouble for employers, as the following examples demonstrate.

First, suppose your company has operations exclusively in Colorado. Two of your employees go on a business trip to the state of New York. While there, one of the employees sexually harasses the other. Thus, the unlawful employment action (sexual harassment) takes place in New York.

Under the venue provision, the harassment victim could sue your company in New York--even though your company has no operations anywhere near that state. If that happens, the law as interpreted by the federal court of appeals in which New York is located (the 2nd Circuit) will apply, rather than that of the circuit in which Colorado is located (the 10th Circuit). Thus, your company could be hauled into court in a state where it has no operations and could be subjected to an interpretation of the law that is completely foreign to you.

A second example shows an even more extreme situation. Assume the same scenario as above, except that one employee harasses the other on the airplane en route to New York. Theoretically, under Title VII of the Civil Rights Act of 1964, the employee could file suit in whatever state the plane was traveling over at the time the harassment occurred. Although this example is rather unlikely, it does demonstrate how your company can be sued in unexpected locations.

Another problematic aspect of the venue provision, especially in these times of decentralized workplaces, is the second option, which allows employees to sue employers in the state where they worked.

Consider this scenario: A company's operations are based solely in Michigan (which is in the 6th Circuit), but it sells its product nationwide. To accomplish this, it employs salespersons who work our of their homes in various parts of the country. Two salespeople who work out of their homes in Illinois (in the 7th Circuit) go on a business trip together to Missouri (in the 8th Circuit). While there, one salesperson harasses the other one.

Under the second part of the venue provisions, the harassed employee could sue the employer in Illinois because that is where the employee works. Or the employee could sue the company in Missouri because that is where the harassment occurred. Likewise, under the first part of the venue provision, the employee could sue the company in Michigan, if that is where the employee's relevant personnel records are kept,

As mentioned previously, an alert plaintiff's attorney will likely choose the circuit with the most employee-friendly approach.

The Problem of State Laws

To complicate matters even further, virtually every state has its own anti-discrimination laws. Most state laws closely parallel federal laws on the subject, and most state courts tend to follow federal court interpretations (which, as we have seen, can vary) of the federal anti-discrimination laws.

Yet, state laws can have significant differences. Some state laws apply to companies that are smaller than those covered by federal law. For example, Title VII applies only to companies that employ 15 or more employees. Some state anti-discrimination laws apply to sign candy smaller companies.

By way of example, assume that an Arizona company has total of 14 employees, eight of whom work as salespeople at a call center in Tennessee. One of the employees in Tennessee sexually harasses another one. The Arizona company does not have enough employees to be subject to liability under Title VII; however, Tennessee has an anti-discrimination statute that applies to companies with as few as eight employees. If the Arizona company is unfamiliar with its obligations under Tennessee law, it may fail to take preventive measures--such as training supervisors or developing formal policies--that could protect it from suits.

Furthermore, some states, and even municipalities, provide greater protection against discrimination than that provided by federal laws. For example, federal law does not prohibit discrimination based on sexual orientation, but some states and municipalities do prohibit such discrimination.

The Possibility Of Removal

While the employee, as plaintiff, has the first choice of where to file suit, it is not necessarily the final choice. Here's a practical tip for companies that find themselves sued in a particularly inhospitable state court.

Typically, although not always, plaintiffs who allege violations of state employment law will also raise violations of federal employment law stemming from the same incident or set of facts. The allegation of a violation of federal law confers jurisdiction to a federal court.

Here's how it works: An employee sues his employer in a state court in St. Louis and alleges the employer violated Missouri law as well as federal law. Because of the federal claims, the employee could have filed his suit in the federal district court in St. Louis but chose not to. Perhaps he knows that in that location, state court juries tend to be more generous toward employees than federal court juries. For the same reason, the employer would rather be in federal court.

Through a relatively simple process known as removal, the employer can have its wish. Under a special federal statute, a defendant can "remove" a suit filed in state court and force the plaintiff to proceed in federal court, as long as the federal court has jurisdiction. The existence of a federal claim gives it jurisdiction. Once a case is removed to federal court, that court has authority to resolve the state claim as well.

(In doing so, the federal judge is supposed to apply the state law as the courts of that state apply it, but if a particular question has not been resolved by the state court, the federal judge must make an educated guess as to what the state court would do.)

While it is not always true, employers usually prefer federal court to state court; procedures tend to be more uniform, juries more controlled and outcomes more predictable. In addition, federal judges (who are appointed for life) are less subject to local pressures than state judges (who are often elected for limited terms and hope to be reelected).

Other Action Items

As shown above, companies could find themselves sued in a surprising variety of forums and under wideranging laws and legal interpretations. The best defensive measure a company can take is to thoroughly train employees against engaging in discrimination of any type and to make sure employees know they are to do nothing on a business trip that they do not do at headquarters.

Furthermore, employers should become well versed in employment laws, and the various interpretations thereof, in any location where their employees will conduct business. This includes not only the laws of each state in which the company has operations, but the interpretations of federal law as made by local federal courts.

Timothy S. Bland, SPHR, is a management attorney in the Memphis office of Ford & Harrison LLP and is a member of SHRM's national Workplace Diversity Committee. Thomas J. Walsh Jr. is senior counsel with the Memphis office of Ford & Harrison LLP.

COPYRIGHT 2000 Society for Human Resource Management
COPYRIGHT 2001 Gale Group