JULY 2010 – Issue 3
In This Issue
CONTRIBUTOR PROFILE: ATTORNEY ROBERT T. SHANNON
GUARDING AGAINST A HOSTILE WORK ENVIRONMENT
THE CHICAGO HEAD TAX
CITY COUNCIL ACTIVITY
Contributor Profile: Attorney Robert T. Shannon Each edition of the 121 Report will feature an article from Chicago attorney, Robert T. Shannon highlighting current legal issues of interest to the retail community. Bob is a member of CRMA and has been involved in retail-related issues for many years. He has worked as a prosecuting attorney for the City of Chicago and currently represents retailers large and small that have claims against the city. Bob’s diversity of experience and high level of skill and respect in the legal community make him a welcome addition to CRMA. We hope that you find his articles as intriguing as they are informative. Please find his formal biography below:
Robert Shannon is a partner with the full service law firm of Hinshaw & Culbertson LLP, where he serves on the firm’s Executive Committee. Hinshaw has eight (8) offices located in Illinois that allow it to service clients throughout the entire state. Shannon specializes in the representation of retail business in litigation and regulatory matters. Specifically, he defends businesses in employment, code enforcement, premises liability, contractual and licensing matters.
Shannon brings unique experience to his retail clients given his background serving as a prosecutor for the City of Chicago’s Municipal and Special Prosecutions Divisions. Before joining Hinshaw in 1999, Shannon handled prosecutions for several City of Chicago Departments including Health, Environment, Consumer Services and Revenue. He also served as a prosecutor before the Mayor’s License Commission.
Shannon recently served as Co-Chair of the City of Chicago’s Retail Advisory Committee, where he represented the interests of the retail industry. He is a member of the Advisory Board for the Illinois Restaurant Association and serves on that organization’s Government Relations Committee. He has been recognized as a Leading Lawyer in the areas of Municipal and Commercial Litigation.
Shannon may be reached at 312-704-3901 or by emailing him at
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*LEGAL HOT TOPIC*
GUARDING AGAINST A HOSTILE WORK ENVIRONMENT
As some retailers know all too well, employment lawsuits and EEOC complaints can be extremely frustrating, costly and time consuming. “Hostile work environment” claims are particularly onerous, can disrupt day-to-day business operations and create public relations problems. However, a retailer may significantly insulate itself from legal exposure if it has a formal policy in place to investigate and remedy complaints of harassment.
Typically, a successful hostile work environment claim is “composed of a series of separate acts that collectively constitute one ‘unlawful employment practice.’” However, such an environment exists only where harassing conduct is “sufficiently severe or pervasive to alter the conditions of the worker’s employment and create an abusive working environment.” Although there is no mathematically precise test to define conduct that creates a hostile work environment, the courts do provide some guidance. Specifically, the inquiry becomes whether a “reasonable person” would find the atmosphere abusive with particular attention on: 1) the frequency of the challenged conduct; 2) its severity; 3) whether it is physically threatening or humiliating or whether it is a mere “offensive utterance;” and 4) whether it interferes with an employee’s performance.
Courts have held that the more severe the conduct, the less pervasive or frequent the conduct need be to satisfy the threshold question of whether it alters a condition of employment. By the same token, the more frequently the conduct occurs, the less severe the conduct needs to be for courts to find that it sufficiently alters a condition of employment. The United States Supreme Court has held that “teasing, offhand comments, and isolated incidents (unless extremely serious) will not amount to discriminatory changes in the terms and conditions of employment.” 524 U.S. 775 (1998). However, an “unambiguously racial epithet” is considered “unquestionably serious and offensive.” 121 Fed.Appx. 148 (7th Cir. 2005).
Hostile work environment claims often arise in sexual harassment cases, and in such cases physical assaults are not always necessary. Courts have found that a “sustained campaign of taunts, directed at [an employee] and designed to humiliate and anger him, [are] sufficiently severe and pervasive to alter the terms and conditions of his employment.” 256 F.3d 864 (9th Cir. 2001). Each case must be put in context, however. For instance, a high-end clothing retailer in New York was found not liable for harassment where the store manager continually commented on the employee’s “elegant and sexy appearance.” There, the court determined that the employee’s claims were undercut by the fact that positive comments about appearance would have been normal in the context of a high-end fashion store. 2005 WL 1162450.
Acts of supervisors and co-workers are not the only conduct that can result in retailer liability, rather some courts have imposed liability based on customer conduct. For example, in a case involving a restaurant, a waitress asked her supervisor if someone else could wait on two men who had been into the restaurant before and had made sexually offensive comments to her. 162 F.3d 1062 (10th Cir. 1998). The supervisor initially denied her request, and after being informed that the customers had just grabbed her by the hair, the supervisor again denied the waitress’ request. When she returned to the table with a pitcher of beer, one of the customers pulled her to him by her hair, and sexually assaulted the waitress. The waitress then quit and filed suit. The federal court ultimately held that the supervisor knew of the offensive conduct, and even though the customers were not employees, the supervisor failed to take remedial steps to protect his staff. The case proceeded to trial before a jury, which awarded the waitress $200,000 in compensatory damages and over $37,000.00 in plaintiff’s attorney’s fees.
In another case involving a retailer, a female employee was sexually harassed by a male customer who had entered the locked cooler area where she was stocking items. 2008 WL 183699 (D. Utah). The customer had requested the key for the cooler from another employee, who previously had seen the two chatting and assumed that they were friends. In that case, the retailer was found not liable because it never was informed by the employee of any prior advancements made by the customer.
Where retailers can show that they have taken effective remedial actions to deal with complaints, these measures can be raised as a defense to a hostile work environment claim. To avail itself of this defense, a retailer must show (1) that it exercised reasonable care to prevent and promptly correct harassing behavior, and (2) that the plaintiff unreasonably failed to take advantage of any preventive or corrective opportunities provided by the retailer or unreasonably failed to otherwise avoid harm. 524 U.S 775. The flip side is that a retailer may be held liable in circumstances where it “fails to remedy or prevent a hostile work environment of which management-level employees knew, or in the exercise of reasonable care should have known.” As one court found, “‘[o]nce an employer knows or should know of [co-worker] harassment, a remedial obligation kicks in,’ [and] [a]n employer is liable for the hostile work environment created by a co-worker unless ‘the employer … take[s] adequate remedial measures in order to avoid liability.’” 256 F.3d 864. A retailer’s policy must be reasonably calculated to end the harassment, and the reasonableness of the policy turns on its ability to stop the harassment and to deter future harassment.
As a result, the best policy is for retailers to take seriously their duty to guard against harassment. Clear procedures should be promulgated and available to employees who feel that they have been subjected to inappropriate conduct at work. Where questionable conduct is discovered, the events underlying that conduct should be investigated and, if appropriate, remedial actions should be taken against supervisors, subordinates and customers alike. The failure to accurately recognize or remedy harassing behavior ultimately can cause a retailer to find itself on the hook for a violation of federal employment statutes.
Robert T. Shannon is a partner in the law firm of Hinshaw & Culbertson LLP, and can be reached at 312.704.3901 or rshannon@hinshawlaw.com.
THE CHICAGO HEAD TAX – A BRIEF INTRODUCTION
If you operate a business in Chicago with at least 50 full-time employees and/or commission merchants, then you are familiar with the Employer’s Expense Tax, generally referred to as the “Head Tax.” The tax was first adopted in 1974 by Mayor Richard J. Daley, and stands today albeit with a $1.00 per month reduction passed in 1994 by the current Mayor Daley, and some recent modifications.
Each employer that is required to pay the head tax must remit $4.00 per month for full-time employees or commission merchants on staff, that are actually working in the city of Chicago. The city collects the tax quarterly for every month that an employer is eligible, and the employer is prohibited from transferring the tax to employees. The revenue generated from the tax goes to the city’s corporate fund which is its general fund for all major operations of the city.
Since its inception, the head tax has been unpopular with Chicago’s business community. There have been many calls for lowering or eliminating the tax altogether over the years. In April 2009, Alderman Tom Tunney (44) introduced a proposal to gradually eliminate the head tax. Although the idea gained traction among many of the aldermen, it wasn’t until this year, in an effort to address the severe economic downturn and support growing businesses, that the city passed legislation to give certain businesses temporary relief from the head tax for the next two years. If a business was not required in the 2009 or 2010 tax years, and the business grew to over 50 full-time employees making them eligible for the Employer’s Expense Tax, they would be given a reprieve from having to pay the tax for the current tax year.
In addition, for those businesses that paid the head tax in either 2009 or 2010 and the amount owed to the city increased due to the growth of the number of employees, the business would not have to pay the tax owed on the new employees, keeping the tax equal to the prior year’s tax. Similarly, if a business merged or acquired another business causing it to have an increase in the amount of head tax owed to the city, it would also only be required to pay the amount of tax owed in the previous year.
To date, only one other city has attempted to follow Chicago’s lead and implement its own version of a head tax. In July 2007, Seattle, Washington passed the Employee Hours Tax (EHT). Although the incidence of the tax fell to employers, the tax was levied on every employee hour worked regardless of the number of workers employed by the company. A reduction could be claimed for each employee that chose a mode of transportation to and from work which did not include a car/truck/motorcycle at least 80% of the time. The EHT was applied regardless of the number of workers employed by a business. The funds collected from the tax were used for infrastructure improvement. After a few years of collecting the tax, in January of 2010, the city of Seattle repealed the EHT citing difficulties in collecting the tax, the high number of employees eligible for the alternative transportation exemption, and higher than anticipated revenues collected from their commercial parking tax.
Other jurisdictions have either implemented or attempted to pass legislation for head taxes on specific industries or categories of residents. In 2006, Alaska introduced a head tax on cruise ship passengers which was lowered this year from $46.00/person to $34.50/person. The state is currently being sued by the Alaska Cruise Association over the constitutionality of such a tax and is dealing with the loss of cruise ships that have since decided to dock in non-Alaskan ports. On the other side of the country, both the cities of Providence, RI and Pittsburgh, PA attempted to charge a head tax to full-time, private college students in their respective cities in 2009. Both proposals were eventually pulled back in an attempt to pursue other options and, in part, due to fierce public opposition.
In all three cases, there was a very compelling argument by the opposition to the head tax that when cruise ships dock or when students are in school, they spend money and are major contributors to the local and state economy. Although Chicago and Alaska decided not to repeal their respective head taxes, they did agree that reducing them, even on a temporary basis, would encourage the growth of business, industry and of the local economy. In times like these, a little help goes a long way.
CITY COUNCIL MEETING JUNE 30, 2010
INTRODUCTIONS – ORDINANCES AND RESOLUTIONS
This introduction clarifies that the Commissioner of Zoning and the Zoning Administrator shall be the same person with two distinct responsibilities. The commissioner will enforce the provisions of the Zoning Ordinance as well as administer and review all planned development ordinances. The Commissioner of the Department of Environment will review the environmental impact of all projects waiting for Plan Commission approval. Floor Area Bonuses will now, in some cases, be approved by the Zoning Administrator, the Plan Commission, or through the Planned Development process.
Nuisance Abatement – Ald. Suarez, Ald. Fioretti and others – Joint Housing and Buildings Committees
This introduction raises the fine for failure to abate a nuisance from a minimum of $25.00 to a minimum of $250.00 for each violation. Also raises the weeds abatement penalty from a minimum of $100.00 to a minimum of $500.00 and from a maximum penalty of $300.00 to $1000.00. Lots where weeds have grown over 10 inches can be declared a public nuisance and owners will be fined up to three times the amount of the costs incurred by the city to abate the nuisance. Nuisances which pose an imminent threat to public health, safety or welfare can be abated by the city at any time without notice and can also be abated in the instance of an emergency. Ill-maintained lots that contain refuse, ashes, waste or other debris can become a public nuisance, and fines have been raised from a minimum of $500.00 to $750.00 and a maximum of from $1000.00 to $1500.00. Fines for illegal dumping, accumulation of materials or junk and lot maintenance will be set at a minimum of $250.00 to a maximum of $500.00 for each offense.
PASSED LEGISLATION
Appointments
Robert S. Hoff – Commissioner – Department of Fire
Driveway Permit Fees – Mayor Daley – Transportation Committee
This ordinance sets flat fees for the annual commercial driveway permit fee for driveways greater than 25 feet wide. Currently, the permit fee is $100.00 plus an additional $2.00 for every foot in excess of 25 feet. The ordinance will separate driveways into categories according to their width with a flat fee assessed according to size.
Effective Date: July 27, 2010
Open Excavations – Mayor Daley – Buildings Committee
Excavations or foundations that are open, unsecured, or filled with water causing hazard to the public, can be declared a public nuisance. A penalty is established for nuisance abatement. Upon the finding of such a nuisance the Commissioner of either the Department of Buildings or Streets and Sanitation can order the owner to abate the nuisance by a specified time. The city could also abate the nuisance itself in an emergency situation.
Effective Date: July 27, 2010
Contact Information:
Tanya Triche
Senior Counsel
312/726-4600
ttriche@irma.org
