Legal Report
Case Law Update
By Kira E. Loehr – Cullen Weston Pines & Bach LLP

The United States Supreme Court, the Wisconsin Supreme Court, and the Seventh Circuit Court of Appeals have issued several decisions over the past few months that could affect law enforcement officers and their families. Below is a brief summary of three of these cases.

Supreme Court’s Age Discrimination Decision a Mixed Bag for Employees over 40
Smith v. City of Jackson, 125 S. Ct. 1536 (2005)

There’s good news and bad news from the United States Supreme Court regarding claims brought under the Age Discrimination in Employment Act (“ADEA”). The good news is that the Court finally settled a dispute that had been raging for years over whether employees who are 40 years old or older can bring a claim for age discrimination under the “disparate-impact” theory of recovery (they can). The bad news is that the Court set the bar high for determining what constitutes “disparate-impact.”

The ADEA protects individuals who are 40 years old or older from employment discrimination based on age. For years, courts have recognized a “disparate-treatment” theory of age discrimination; i.e., employers may not treat an employee differently because the employee is 40 years old or older. In order to successfully prevail in a disparate-treatment age discrimination claim, an older employee must provide evidence that: the employee suffered an “adverse employment action” (usually termination); age-based animus was directed toward the older employee (e.g., supervisors were heard commenting that a 57-year-old employee was “so old he must have come over on the Mayflower,” and “he was too damn old to do his job”1); and younger employees in a similar situation were treated better than the older employee.

The courts had been split regarding whether a “disparate-impact” claim was also available to employees covered by the ADEA. “Disparate-impact” has been defined as employment practices which are facially neutral (i.e., not discriminatory) in their treatment of different groups, but which in fact fall more harshly on one group than another. Evidence in a disparate-impact case is usually statistical.

For instance, in one age discrimination disparate-impact case, a grocery store decided to start measuring the performance of its full-time stock room employees using a formula that divided the “standard minutes” needed to complete an order by the actual time expended in completing the order. Out of 1,182 attempts to meet the employer’s standard, the workers were successful only 20 times. The grocery store employed 52 stock workers, just over half of whom were 40 years old or older. Based on the results of the test, the store terminated 11 employees, of which 10 were 40 years old or older. The company discontinued the test after it terminated those employees. The court found that the grocery store had violated the ADEA because the test had a disparate impact on older workers.2

In Smith v. City of Jackson, the Supreme Court declared that employees can bring an age discrimination claim based on disparate impact. However, after declaring that the employees could bring a disparate impact age claim, the Court also found that the employees in the Smith case had not stated a valid disparate-impact age discrimination claim.

Smith involved a group of police officers, 40 years old or older, who were employed by the City of Jackson, Mississippi. The City of Jackson had revised its pay plan such that employees with less than five years of tenure received proportionally greater pay raises than those with more seniority. Although some officers over the age of 40 had less than five years of service, most of the older officers had more. A group of older officers sued the City under the ADEA claiming that they were adversely affected by the revised pay plan because of their age.

On the merits of the officers’ claim, the Court noted that it is not enough to simply allege that there is a disparate impact, or point to a generalized policy that led to such an impact; rather, an employee is responsible for identifying a specific test, requirement, or practice that has an adverse impact on older workers. The Court also noted that an employer may still defeat a disparate-impact claim by demonstrating that its decision was based on a “reasonable factor other than age.”

In this case, the Court found that Petitioners had “done little more than point out that the pay plan was relatively less generous to older workers than to younger workers.” According to the Court, Petitioners had not identified any specific test, requirement, or practice within the pay plan that had an adverse impact on older workers. The Court also found that the City had adopted its plan based on reasonable factors other than age; specifically, that the pay plan met the City’s goal of retaining and attracting employees by raising the starting salary for newer recruits to that comparable to other police departments in the area.

The Court’s decision helps older workers by opening another door to combat negative stereotypes often held by employers. However, in order for disparate-impact claims to be successful, older employees will have to point to a specific practice that affects those employees differently from younger employees, and the practice must not be based on a reasonable factor other than age.

Wisconsin Supreme Court Clarifies Application of Wage Claim Statute and Reaffirms Past Practice
Milwaukee Police Assoc. v. Hegerty, 2005 WI 28

On March 22, 2005, the Wisconsin supreme court determined that the City of Milwaukee had violated Wisconsin’s wage claim statute when it failed to pay its police officers for overtime within 12 days pursuant to provisions in the parties’ collective bargaining agreement. For thirty years, the City of Milwaukee paid its police officers’ salaries and overtime every other Thursday. In October 2002, the City experienced computer problems that delayed for several weeks payment of $824,040 in overtime. The City argued that the delay did not violate the wage claim statute because the overtime was paid within 31 days as required by Wis. Stat. § 109.03(1).

Wis. Stat. § 109.03(1) requires employers to pay employees’ salary and overtime within 31 days of the date earned unless there is a collective bargaining agreement between the parties that specifies a different frequency for payment. The police officers’ unions (the Milwaukee Police Association and the Milwaukee Police Supervisors Organization) argued that the collective bargaining agreements required quicker payment in that they contained a clause incorporating certain Milwaukee City Ordinances which allow only 12 days for the City to pay its officers. The court relied heavily on evidence of the parties’ custom and past practice to interpret the collective bargaining agreements and agreed with the unions.

Although this case is very fact-specific, thereby limiting its applicability to other situations, the decision reaffirms unions’ opportunity to ensure more prompt payment of wages, including overtime, than the statute requires, by negotiating such provisions into their collective bargaining agreements. It also provides the opportunity to resolve disputes over these provisions in collective bargaining agreements in the courts. By allowing the unions to bring this claim under the wage claim statute, the court allowed the unions to pursue penalties and attorney fees not normally available to parties seeking interpretation of collectively bargained contracts.

Seventh Circuit Makes It Even Tougher to Overturn Arbitrators’ Decisions
Intl. Union of Operating Engineers v. J.H. Findorff & Son, Inc., 393 F.3d 742 (7th Cir. 2004)

For years, judges have been reluctant to overturn arbitrators’ decisions interpreting collective bargaining agreements. However, Judge Charles Clevert in the Eastern District of Wisconsin recently vacated an arbitrator’s decision that determined certain laborers were not covered by a provision in the agreement between the International Union of Operating Engineers, Local 139, and the construction company, J.H. Findorff & Son, Inc. Specifically, Judge Clevert found that the arbitrator had neglected the “plain meaning” of the language in the collective bargaining agreement.

In no uncertain terms, the Seventh Circuit overturned Judge Clevert’s decision noting that, so long as it is clear that an arbitrator interpreted the language in a collective bargaining agreement, it does not matter whether a judge believes that the arbitrator erred in his or her interpretation, ignored the “plain meaning” of language in the agreement, or even committed a gross error in interpretation. According to the Seventh Circuit, a court can vacate an arbitrator’s interpretation of a collective bargaining agreement only if the arbitrator ignores or supersedes language in the agreement which the parties conceded is binding. The court held that, so long as the arbitrator demonstrated that he or she had actually interpreted the language in the agreement and not ignored it, it is irrelevant how the arbitrator interpreted the agreement.

This decision reaffirms the final and binding nature of arbitration concerning contract interpretation. The process is designed to provide certainty to the parties and the Seventh Circuit has made clear that, even if an arbitrator’s decision seems contrary to the “plain language” in the agreement, that decision must be upheld so long as the arbitrator interpreted the contract.

1. Excerpts from Reeves v. Sanderson Plumbing Products, Inc., 120 S. Ct. 2097 (2000).
2. See Fisher v. Transco Services - Milwaukee, Inc., 979 F.2d 1239 (7th Cir. 1992).