Author: Site Staff

In its first chance to apply a pay discrimination law that Congress approved in reaction to one of its previous rulings, the Supreme Court side-stepped the issue and potentially saved companies millions of dollars.

The decision illustrates how unpredictable the panel can be on employment law and why it is difficult to project how Sonia Sotomayor may change the court’s approach if she is confirmed by the Senate to replace retiring Justice David Souter.

Souter wrote the opinion for the 7-2 decision holding that AT&T did not violate federal pregnancy leave laws when it failed to award full seniority credit to women who left work to have children before the Pregnancy Discrimination Act went into effect in 1979. Since then, AT&T has changed its policy to be in compliance.

Noreen Hulteen, who retired after being laid off in 1994, says her pension benefits have been reduced because 210 days of her pregnancy leave were defined by AT&T as personal leave that did not count toward seniority. The PDA puts pregnancy on par with other types of leave.

The Supreme Court ruled that AT&T’s seniority calculation was legal when it was in effect prior to 1979. The court did not support Hulteen’s assertion that her current pension payments are a violation of the pregnancy law.

Lilly Ledbetter made a similar argument when she said that she suffered discrimination each time she received a paycheck from Goodyear reflecting her supervisor’s move decades ago to diminish her wages.

In 2007, the Supreme Court ruled, 5-4, that Ledbetter violated the statute of limitations by failing to file her claim within 180 days of the original discriminatory act. Earlier this year, Congress passed a bill that renews the suit deadline after each paycheck.

The Supreme Court majority in the Hulteen case held that AT&T was “insulated from challenge” because it did not intentionally discriminate in its pre-1979 seniority system.

“They took an offramp even before Ledbetter,” says Mark Meyerhoff, a partner with Liebert, Cassidy, Whitmore in Los Angeles. “It was a pretty strict reading of the law. If they got to the Ledbetter decision, the case would have turned out differently.”

It’s possible that the court considered the financial implications of ruling in favor of Hulteen, according to Sherril Colombo, a partner at Cozen O’Connor in Miami.

“It would have a potentially devastating effect on pension plans,” Colombo says. “The money has to come from somewhere. Other people would get less.”

Although he wrote the Hulteen opinion, Souter was one of the four justices who voted in favor of Ledbetter. Justice Ruth Bader Ginsburg, who urged Congress to pass the Ledbetter law to undo the court’s decision in that case, dissented from the Hulteen majority.

Sotomayor, a judge on the New York-based 2nd U.S. Circuit Court of Appeals, is likely to align with Ginsburg and other Supreme Court liberals.

“I don’t see a giant shift,” Meyerhoff says. “You might see a tick to the left. She’ll be a little more liberal than Souter, who was middle of the road, but unpredictable.”

Recent news of an antitrust probe into recruiting practices among tech firms is shining a spotlight on employee poaching in Silicon Valley.

The federal investigation is said to explore whether tech mainstays including Google, Apple and Yahoo have agreed not to actively recruit talent from one another.

But firms acting alone have good reason to steer clear of key partners and customers when hiring, says Gary Reback, an attorney at Palo Alto, California-based law firm Carr & Ferrell. And in some situations, such as a joint venture, companies might legitimately make a pact not to recruit from each other, Reback says.

“There’s some circumstances under which even that might work,” he says.

Libby Sartain, who served as human resources head at Yahoo from 2001 until early last year, says she was not aware of any agreements with other firms with respect to where Yahoo should recruit or who should recruit from Yahoo.

The one exception, she says, was when Yahoo was in negotiations to acquire a company. When due diligence began, she says, both companies would formally agree not to recruit from each other during the process.

“Silicon Valley experiences the most intense competition for talent of any talent marketplace in the world,” she said in an e-mail interview.

Reports surfaced in early June of a Department of Justice probe into recruiting at some of the largest tech firms in Silicon Valley. Agency officials declined to comment on the matter.

A Yahoo spokeswoman said her company had been contacted by the Department of Justice and that Yahoo is cooperating. A Google spokesman also confirmed the investigation and said Google is cooperating.

“Our understanding is that a number of companies received this request for information from the U.S. Department of Justice,” biotechnology firm Genentech said in a statement. “Genentech is cooperating and will respond to the request in due course.”

Agreements to not recruit from one another could reduce competition and wages, yet there is significant churn among tech firms. A few years ago, Microsoft and Google fought in court over Kai-Fu Lee, a former Microsoft executive who defected to Google.

There’s a gentlemen’s agreement that Silicon Valley companies will not recruit from key partners, says Tim Farrelly, principal at Coit Staffing, a San Francisco-based staffing firm. For example, if a firm has a product that depends on the Facebook site, the firm won’t poach employees from Facebook.

“It’s not anything written,” Farrelly says. “You don’t want to bite the hand that feeds you.”

Sartain says she occasionally contacted an HR executive at another firm when Yahoo thought that organization employed “predatory” practices, such as holding open houses just for Yahoo employees. But, she says, “there was no agreement made not to hire, just a discussion about professionalism in recruiting practices.”

Sartain also says no company could restrict its employees from contacting Yahoo.

“We all have employee referral programs and bonuses,” she says. “So of course our employees reached out to each other.”

—Ed Frauenheim

Workforce Management’s online news feed is now available via Twitter.

A class-action lawsuit was filed against Snelling Staffing Services alleging unfair business practices and other claims. The representative plaintiff in the suit is Nick Zanze, who was previously employed as a recruiter at Snelling, according to court filings.

The suit, filed in March, claims Snelling deprived former internal personnel of money earned because of rules for payment of commissions.

The suit cites the company’s employment contract that states workers must be employed with Snelling on the last day of the month for which the monthly commission is to be paid in order to receive the commission. For direct hire placements, commissions aren’t paid to internal workers if a client pays after the staffing firm internal worker has left the employment of Snelling, according to the lawsuit.

It also claims Snelling wrongfully has noncompete clauses in its employment contract in states where such clauses aren’t allowed, including California, Colorado, Montana and Hawaii.

Attorneys for Snelling, headquartered in Dallas, have filed a motion to dismiss the case, which is scheduled to be heard in court July 6.

—Staffing Industry Analysts

Workforce Management’s online news feed is now available via Twitter.