New England Biz Law Update
Plaintiffs’ attorney Douglas Wigdor did a double take when he read a confidential memo from a top Wal-Mart executive aimed at curbing soaring health care costs by discouraging unhealthy people from applying for jobs.
The memo, written by M. Susan Chambers – Wal-Mart’s executive vice president for benefits – was leaked to the New York Times in October by a labor-backed, Wal-Mart watchdog group. Its publication has sparked warnings from legal experts that the company could face disability and age discrimination charges if it implements the recommendations.
Included in what Chambers termed “bold” suggestions was a recommendation that Wal-Mart redesign benefits and job duties for associates in an effort “to attract a healthier, more productive workforce.”
Specifically, Chambers suggested designing “all jobs to include some physical activity (e.g., all cashiers [must] do some cart gathering).
“A healthier work force will lead to lower health insurance costs, lower absenteeism through fewer sick days and higher productivity. It will be far easier to attract and retain a healthier work force than it will be to change behavior in an existing one,” the memo said. “These moves would also dissuade unhealthy people from coming to work at Wal-Mart.”
Wigdor, a partner in Thompson, Wigdor & Gilly in New York, recently represented Patrick S. Brady, 21, a former Wal-Mart employee with cerebral palsy who had been hired as a pharmacy assistant, but was ordered to collect garbage and shopping carts. In February, a federal jury awarded Brady $7.5 million, ruling that he was discriminated against when he was transferred. The jury also found that a manager asked impermissible pre-employment questions concerning Brady’s disability (Brady v. Wal-Mart, No. CV 03-3843 (E.D.N.Y.).)
The verdict was later reduced to about $2.8 million.
Wigdor noted that Wal-Mart has been cited before for disability discrimination. In 2001, the company signed a consent decree as part of a $6.8 million settlement with the Equal Employment Opportunity Commission that resolved more than a dozen disability discrimination cases across the country.
When Wigdor saw the shopping cart suggestion in the leaked memo just eight months after the Brady verdict, he was stunned.
“The memo specifically mentioned collecting shopping carts. When I saw the memo, I said to myself, ‘This is unbelievable,'” Wigdor said.
“On the one hand, it’s a good thing for a company to try and instill values amongst its employees that would lead them to better health,” he said, such as providing affordable health care, having discounted memberships at gyms, or offering smoking cessation and weight loss programs.
But, said Wigdor, “when I read this memo, the thing that got me was it looks like the proposal was to try and attract healthy individuals. The problem with saying we want healthy individuals is that you’re automatically excluding people with disabilities, who unfortunately have higher health care costs, and also a disproportionate number of people over 40.”
In addition to adding a physical component to jobs, the memo suggested:
Wal-Mart spokesman Dan Fogelman did not return several phone calls seeking comment.
Barriers to Hire?
Paula Weber, who chairs Pillsbury, Winthrop, Shaw, Pittman’s employment and labor group in San Francisco, said if Wal-Mart implements the recommendations in the memo, the company “could arguably be violating the law by discriminating against people based on their disabilities.”
Wigdor agreed that excluding people on the basis of health problems could violate the ADA. “And the memo would provide very good evidence of their intent.”
The proposed policy might also have an adverse impact on older workers, according to several employment law experts.
David Deratzian, a labor attorney in Bethlehem, Pa., noted that many Wal-Mart “greeters” are over age 65 and because of their age may have infirmities. “Can they say, ‘Now it’s part of your job as a greeter to go and haul shopping carts around’?”
The legal issue, he said, would center on whether the new job duty is an essential function.
In this case, “you can easily attack a requirement that everyone move shopping carts on the basis that it’s not an essential function,” because someone else could easily do it, he noted.
Brad Seligman, an attorney with The Impact Fund in Berkeley, Calif., who is representing 1.6 million current and former female Wal-Mart employees in a gender-bias class action, called the company’s strategy “problematic.”
“It’s one thing to say these jobs do require as an essential function a certain amount of physical activity, and another thing to take a cashier job and re-engineer it for the purpose of getting rid of people,” he said.
Shared Responsibilites
Like other companies, Wal-Mart is grappling with skyrocketing health insurance costs. From 2002 to 2005, the company’s spending on health benefits jumped by 19 percent to $1.5 billion.
Chambers noted that Wal-Mart’s workers are getting sicker than the national population, particularly in the area of obesity related diseases. The company’s workers are also older than the national average.
John Hickman of Alston & Bird in Atlanta said the Wal-Mart memo merely reflects a growing trend in corporate America – sharing health care responsibility and assciated costs with employees, while providing incentives to workers to adopt a healthier lifestyle.
“Many of the goals that Wal-Mart has are laudable goals,” he said, “and they’re driven by the fact that with an oftentimes aging workforce and health costs going up so much, you’ve got to do something.”
Hickman, who advises insurers and employers on designing health and welfare benefits, noted that the memo included several progressive suggestions, such as adding health clinics at stores.
“I think 99.5 percent of the stuff that’s in here is discussed by corporations on every level in America,” said his colleague, Glenn Patton. “There are lots of positives to it. A lot of the criticisms being levied at Wal-Mart are really overblown.”
Patton characterized as absurd one commentator characterizing the memo as a “cesspool of discrimination.”
“When you read this [memo], there’s nothing that on its face is a violation of any employment law,” he said.
What has made the memorandum a lightning rod for criticism, the two defense attorneys agreed, are the sentences that suggest redefining jobs to dissuade unhealthy people from coming to work at Wal-Mart.
“Obviously, plaintiffs’ attorneys might say that’s just simply code for ‘We’re going to redefine job functions to exclude disabled employees,'” Patton said. “But that’s not what it says. There’s nothing in the memo that targets individuals who are disabled under the ADA, or that is otherwise violative of the ADA or any other law that I’m aware of.”
Many assembly line jobs, for example, require workers to perform multiple tasks, both to reduce the risk of carpal tunnel syndrome and improve performance.
Patton, who represents companies in employment litigation, said Wal-Mart could reasonably claim that it wants to redefine its sedentary jobs, like cashier positions, to include some physical activity, as a well-intentioned effort to improve employees’ health and improve employee job satisfaction.
He added, however, that he would have suggested phrasing the suggestions in the memo differently.
“If someone asked me to review this memo before it went out I would have encouraged them to focus on the positive impact these initiatives might have on the health of their current work force and future job applicants, instead of making references to ‘unhealthy’ employees that could be misinterpreted by plaintiffs’ lawyers in ADA cases,” Patton said.
