Top 10 Labor & Employment Law Stories of 2008: Nos. 2 and 1

Today brings us to the end of our countdown, and the top two labor and employment law stories of the year. Each of these stories will have far reaching implications into 2009:

2. The economic downturn and the proliferation of layoffs and shutdowns: It’s no secret that our economy is in the toilet, and will continue to be at least in the short term. Companies have been and will continue to shed employees and operations as they try to stay afloat or fail. Unemployment insurance systems will continue to be stressed to the max. As employers continue to feel economic pressure, acronyms like OWBPA and WARN will continue to be on the tips of their tongues and at the core of employees’ fears. This story very well could climb to number in 2009 as the economy is predicted to continue to suffer, and employment lawsuits are expected to continue to rise.

1. The election of President Obama: In the last two years, the Democratic majorities in the House and Senate have proposed a cornucopia of new labor and employment laws – Employee Free Choice Act, Employment Non-Discrimination Act, Ledbetter Fair Pay Act, Arbitration Fairness Act, Working Families Flexibility Act, Independent Contractor Proper Classification Act, RESPECT Act, Equal Remedies Act, Civil Rights Act of 2008, and the Health Families Act. While jump starting the economy should preoccupy the new administration, we cannot overlook that Senator Obama sponsored most if not all of these bills. With the Democrats in charge of the White House and Capitol Hill for the first time in 14 years, there is a real chance that we will see the most sweeping changes to our nation’s labor and employment laws in decades. This story is number one in 2008, and very well could repeat as the top story of 2009, 2010, 2011, 2012, and beyond.

Top 10 Labor & Employment Law Stories of 2008: Nos. 4 and 3

Today brings us numbers 4 and 3 of our countdown of the year’s top labor and employment law stories:

4. President Bush signs the ADA Amendments Act: The ADA Amendments, which go into effect Jan. 1, will undo several employer-friendly Supreme Court decisions that limited who could qualify as “disabled” under the statute. These amendments will make it easier for an employee to qualify for protection under the ADA, and make it harder for employer to get cases dismissed on summary judgment on the issue of whether an employee is disabled.

3. President Bush enacts new FMLA provisions for military leave, and the Department of Labor publishes new FMLA regulations: Thanks to the National Defense Authorization Act for FY 2008, the FMLA now provides for additional unpaid leave for family members to care for a servicemember with a serious illness or injury suffered in the line of duty, and for employees to take FMLA leave for certain emergencies stemming from a family members’ active duty. In a few weeks, the DOL’s regulations interpreting these new provisions and reinterpreting the original FMLA will go into effect. Covered employers will have to re-learn the FMLA in light of these new regulations, which, while being employer-friendly, significantly change how the FMLA operates. An already confusing statute is going to become that much more confusing, at least in the short-term.

Top 10 Labor & Employment Law Stories of 2008: Nos. 6 and 5

Our year-end countdown the year’s top 10 labor and employment law stories continues with numbers 6 and 5:

6. The Ohio Supreme Court holds that retained memories can qualify as trade secrets: In Al Minor & Assocs. v. Martin, the Ohio Supreme Court held that a customer list compiled by a former employee strictly from retained memory can form the basis for a statutory trade secret violation. According to the Court, information that constitutes a trade secret does not lose its character by being recreated from memory. In doing so, it not only greatly expanded the scope of statutory trade secret claims, but also expanded the class of employees against whom a non-competition agreement can be held to be enforceable.

5. The Ohio Healthy Families Act crashes and burns as its supporters pull it off the November ballot: The Ohio Healthy Families Act, if passed, would have provided 7 annual days of paid sick leave to employees of all Ohio employers with 25 or more employees. Thanks to an 11th hour compromise struck by Gov. Strickland and Sen. Brown, the SIEU agreed to remove this measure from November’s ballot. Had this measure been on the ballot, it would have likely passed, making Ohio the first state to mandate such a paid benefit. The last thing Ohio’s economy needs is a disincentive for businesses to call our state home. Thankfully, common sense prevailed.

Top 10 Labor & Employment Law Stories of 2008: Nos. 8 and 7

We continue our year-end countdown of 2008’s top 10 labor and employment law stories with numbers 8 and 7:

8. Wage and hour lawsuits continue to dominate federal court filings: Few if any companies do wage and hour perfectly. Save yourself the headache of defending a class action for misclassified employees or off-the-clock work and make 2009 the year your business audits its wage and hour practices.

7. The Genetic Information Nondiscrimination Act becomes law: In May, President Bush signed GINA into law, one of several significant statutory employment law changes during the year. GINA adds “genetic information” to the list of classes of employees protected by the federal employment discrimination laws. It makes it unlawful for an employer to fail or refuse to hire, or to discharge, any employee, or otherwise to discriminate against any employee with respect to the compensation, terms, conditions, or privileges of employment of the employee, because of genetic information with respect to the employee. Expect the EEOC to issue regulations interpreting this statute at some point in 2009.

Top 10 Labor & Employment Law Stories of 2008: Nos. 10 and 9

A couple of Sundays ago, the New York Times suggested that more and more companies will be flat out shutting down for the last week of the year as a cost-savings move:

Normally, the unfortunate people who are stuck at work during the molasses-slow week between Christmas and New Year get to know its spooky charms. Corridors and conference rooms lie empty, the telephone on the desk sits as quiet as a headstone.

But this year, a week that is usually just carefree and unproductive is likely to be positively dead. Companies in industries like high technology and manufacturing, pressed to the wall by the recession, are forcing workers to take the week off for accounting reasons as well as to reduce lighting and heating bills. Other people will also be taking the week off for the first time — not to dash off to ski at Killington, Vt., but because they lost their jobs.

I normally don’t like to be labeled a bandwagon jumper, but I happily will be joining this trend by taking off for the remainder of the year. Let me take this opportunity to wish everyone Happy Holidays (whatever your holiday of choice happens to be) and Happy New Year. I’ll see everyone back with fresh content in 2009.

Fear not, however, I will not leave everyone without something to read between now and Jan. 1. For the rest of the year, I will be counting down the top 10 labor and employment law stories of the year. We start today with numbers 10 and 9:

10. The 6th Circuit recognizes a claim for associational retaliation: In Thompson v. North Am.Stainless, the 6th Circuit expanded Title VII retaliation liability to cover adverse actions taken against those "who are so closely related to or associated" with employees who engage in protected activity. The question of how close is close enough is still open, and subject to lots of debate.

9. The 6th Circuit sets a very low bar to survive summary judgment in a mixed motive discrimination case: In White v. Baxter Healthcare Corp., the 6th Circuit held that the traditional McDonnell Douglas burden-shifting framework does not apply to the summary judgment analysis of a Title VII mixed-motive claim. Instead, to survive a motion for summary judgment, a Title VII plaintiff need only show: (1) that an adverse action occurred, and (2) some evidence that the protected class was a motivating factor for that adverse action. This is a very low threshold to meet, and will lead to fewer summary judgments being granted in this circuit.

Do you know? The FLSA’s Executive Exemption

Do you know? What does it take for an employee to qualify as exempt under the Executive Exemption of the Fair Labor Standards Act? Yesterday, we examined a $35.5M verdict in a wage and hour collective action over certain management-level employees misclassified under the FLSA’s executive exemption. As that case illustrates, job titles do not determine exempt status. For an exemption to apply, an employee’s specific job duties and salary must meet all the requirements of the DOL’s regulations.

Today, we’ll examine exactly what it takes for an employee to qualify under the executive exemption. Over the next several weeks, we’ll also look at exemptions for administrative, professional, computer, and outside sales employees.

To qualify for the executive employee exemption, all of the following tests must be met:

• The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $455 per week;

• The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;

• The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent (such as one full-time and two part-time employees, or four part-time employees); and

• The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

“Primary duty” means the principal, main, major or most important duty that the employee performs, with the major emphasis on the character of the employee’s job as a whole.

“Management” includes, but is not limited to, activities such as interviewing, selecting, and training of employees; setting and adjusting their rates of pay and hours of work; directing the work of employees; maintaining production or sales records for use in supervision or control; appraising employees’ productivity and efficiency for the purpose of recommending promotions or other changes in status; handling employee complaints and grievances; disciplining employees; planning the work; determining the techniques to be used; apportioning the work among the employees; determining the type of materials, supplies, machinery, equipment or tools to be used or merchandise to be bought, stocked and sold; controlling the flow and distribution of materials or merchandise and supplies; providing for the safety and security of the employees or the property; planning and controlling the budget; and monitoring or implementing legal compliance measures.

“Customarily and regularly” means greater than occasional but not necessarily all the time. For example, work normally done every workweek is customarily and regularly, but isolated or one-time tasks are not.

Factors to be considered in determining whether an employee’s recommendations as to employment decisions are given “particular weight” include whether it is part of the employee’s job duties to make such recommendations, and the frequency with which such recommendations are made, requested, and relied upon. An employee’s recommendations may still be deemed to have “particular weight” even if the employee is not the ultimate decisionmaker.

Make a list and check it twice – FLSA exemptions

At the end of last year, I made a list of New Year’s resolutions for everyone. Number 4 on that list was, “Audit your wage and hour practices.” Morgan v. Family Dollar Stores (11th Cir. 12/16/08) provides a not-so-subtle reminder that it’s never too late to make good on this resolution.

In Morgan, the 11th Circuit affirmed the trial court’s $35,576,059.48 judgment against Family Dollar in a wage and hour collective action. The class consisted of 1,424 store managers, who claimed that Family Dollar improperly classified them as exempt and paid them a salary, while requiring 60 and 90 hours of work each week and refusing to pay overtime. According to the plaintiffs, store managers were managers in name only, and actually spend the almost all of their time performing manual labor, such as stocking shelves, running the cash registers, unloading trucks, and cleaning the parking lots, floors, and bathrooms. 

If you need any better reason why a company should not ignore these wage and hour issues, consider that the court found Family Dollar’s violation to be willful, which extended the statute of limitations (and therefore the damages) from two to three years. Family Dollar’s ignorance of it’s employees’ exemption loomed large in the willfulness finding:

Family Dollar raises several challenges to the jury’s willfulness finding. All fail. First, the evidence, detailed above, was legally sufficient to support the jury’s finding that Family Dollar’s FLSA violations were willful. For example, the Plaintiffs presented testimony from Family Dollar executives that it never studied whether the store managers were exempt executives. Executives also testified that Family Dollar’s company-wide policy was that store managers were exempt from FLSA overtime requirements, but they had no idea who made that policy.

FLSA exemptions are usually fact specific and almost always a judgment call. Because it is a subjective decision, classifications may not always be correct. However, if you have a rational basis for making the decision (such as hiring an outside professional to analyze and classify employees) and implementing a policy, you may not always win the exemption battle, but you will put your business in a much better position to avoid a finding of willfulness.

Come back tomorrow for a closer look at the executive exemption, and what factors businesses should be considering in classifying managerial employees as exempt or non-exempt.

WIRTW #60

What I’m Reading This Week will be taking the rest of the year off to recharge it’s batteries. After today’s column, this feature will return January 2 with a special round-up of the best from the blawgosphere's holiday season. As for this week’s most interesting posts…

An Op-Ed in today’s Wall Street Journal by University of Chicago law professor Richard Epstein poses that the Employee Free Choice Act is unconstitutional.

The Connecticut Employment Law Blog provides some pointers on handling your workforce in bad weather.

The Pennsylvania Labor & Employment Blog has some more information on wage and hour issues with year-end bonuses.

The Delaware Employment Law Blog gives some tips on avoiding problems at office holiday parties when alcohol is involved.

The Labor and Employment Blog suggests who should be conducting workplace investigations.

World of Work reports on a big win for Starbucks in a class action lawsuit that challenged its employment application as unlawful.

Law.com draws some employment law lessons from the presidential campaign.

HR World points out that the number of employment lawsuits filed is inversely proportional to the health of the economy.

George’s Employment Blawg has the top 10 things someone doesn’t want to do during a job interview.

Finally, two bits of positive news on the Employee Free Choice Act:

• EFCA Updates reports that Rev. Al Sharpton has come out against the EFCA.

• Also from EFCA Updates comes news that at least a few Democratic Senators are starting to have doubts about the EFCA.

I’ll be back next week with the latest from the world of labor and employment law, in addition to starting my countdown of the top 10 labor and employment law stories of 2008.

Presented by Kohrman Jackson & Krantz

An early holiday gift from the Department of Labor – Revised FMLA forms for the new FMLA regulations

Hot off the presses from the Department of Labor are the following documents to use when the new FMLA regulations go into effect on January 16, 2009, linked for your holiday enjoyment:

• A revised Family and Medical Leave Act (FMLA) poster.

• Certification of Health Care Provider form for an Employee’s Serious Health Condition (WH-380E).

• Certification of Health Care Provider form for a Family Member’s Serious Health Condition (WH-380F).

• The DOL’s Notice of Eligibility and Rights and Responsibilities form (WH-381).

• Designation Notice to Employee of FMLA Leave (WH-382).

• Certification of Qualifying Exigency for Military Family Leave (WH-384

• Certification for Serious Injury or Illness of Covered Servicemember for Military Family Leave (WH-385).

For information on what all these forms mean and how they should be put into practice beginning on Jan. 16, click on over to New FMLA Regulations: What do they mean to notice and designation obligations to employees?

“Ugly” as a protected class? Let’s get real.

Let’s review the currently protected classes. Under the current state of the law, it is illegal to discharge, to refuse to hire, or otherwise to discriminate with respect to hire, tenure, terms, conditions, or privileges of employment, or any matter directly or indirectly related to employment because of: race, color, sex, religion, national origin, ancestry, age, disability, genetic information, military status, and veteran status. I am fairly confident that 2009 will add sexual orientation, and possibly gender identity, to this list.

According to Workplace Prof Blog, some researchers are beginning to suggest that we also add “ugly” to this list:

Researchers, including lawyers and economists, have begun examining ugliness, suggesting that the subject has been marginalized in history and that discrimination against the unattractive is a silent, widespread injustice…. "Beauty and the Labor Market," a study published in the American Economic Review in 1994, estimated that unattractive men and women earn five to ten percent less than those considered attractive or beautiful, and that less attractive women marry men with less money. Another study conducted by Tanya Rosenblat, an associate professor of economics, said "people who are physically attractive might develop better communication skills because the tendency is that from an early age they get more attention from all their caregivers, including their own mothers onward. The conclusion: discrimination based on looks occurs across occupations….

Steadily playing off of insecurities and implications, Dr. Synnott states: "Beautiful people are considered to be more intelligent, sexier, and more trustworthy.  And this implies that ugly people are assumed to be less trustworthy and less intelligent."

He notes that while few current laws prohibit employment discrimination based on lack of attractiveness, at least two California cities (San Francisco and Santa Cruz) have such a law on their books.

Let’s get real for a second – nothing is more subjective than beauty. Voltaire said, “Ask a toad what is beauty....; he will answer that it is a female with two great round eyes coming out of her little head, a large flat head, a yellow belly and a brown back.’” If we engaged this folly and legislated ugliness as a protected class, whose eyes would be the judge and jury?

Folly aside, this notion nevertheless serves a good reminder that we, as employers, should be making employment decisions based on ability and merit, not innate characteristics over which a person has no control, whether it’s a protected class such as race or an unprotected class such as attractiveness. Consistent merit based decisions not only serve as the best defense against lawsuits, but also save us from the notion that we need more protected classes.

How to avoid a discrimination lawsuit in 5 easy steps

1. Don’t change your explanation about why an employee was fired mid-stream while in the midst of defending a discrimination claim.

2. Don’t refuse to assign meaningful work to a Muslim employee while at the same time keeping non-Muslim employees busy, or fire an employee for alleged lack of work, while at the same hiring others to perform the same exact assignments.

3. Don’t suggest to others that you speak over the phone about the employee, which suggests that you are trying to avoid a written record that can later be used against you.

4. Don’t tell people on 9/11 that “those people don’t belong
   here.”

5. Finally, and most importantly, don’t refer to a meeting about a Muslim employee’s supposed poor performance and termination as a “sand-nigger pile on.”

One Chicago law firm, in Hasan v. Foley & Lardner LLP (7th Cir. 12/15/08), failed to follow this advice. Remarkably, the district court, when faced with this mosaic of evidence, granted summary judgment to the employer. The 7th Circuit, however, reversed and sent the case back for trial:

Mr. Hasan submits that the facts in the record, while possibly weak proof of discrimination individually, together would allow a jury to infer that Foley terminated his employment because he is Muslim and of Indian descent…. Those facts include Simon’s and Hagerman’s anti- Muslim comments, Mason’s warning to Jaspan about Mr. Hasan’s religion, the suspicious timing of the downturn in his hours and evaluations following September 11, one partner’s testimony that Foley fired no other associates for economic reasons and did well financially in 2001 and 2002, the Business Law Department’s treatment of its other Muslim associates and Foley’s shifting justifications for firing Mr. Hasan….

The record shows that Simon attended the meeting at which the partners decided to fire Mr. Hasan and that he participated in that decision. That others were also involved in making that decision does not make Simon’s participation irrelevant…. There is also evidence in the record that Simon’s criticisms at that meeting incited anti-Muslim and racially charged commentary from other partners. Vechiola’s description of the meeting as a “sand-nigger pile on” suggests as much, as does Pfister’s comment that Simon had targeted Mr. Hasan just as he had targeted another lawyer, albeit unsuccessfully. Viewing the facts in the light most favorable to Mr. Hasan, the record would allow the rational inference that Simon not only participated in the decision to fire Mr. Hasan but also may have instigated it.

This case might not necessarily break new legal ground, but it is a good reminder that even those that should know better sometimes slip, and how a lapse in judgment can come back to bite an employer.

[Hat tip: MMMG Law Blog]

Do you know? Ohio’s Civil Theft Statute

Do you know? Ohio has a specific statute that allows for one to sue civilly for theft. Not only can one recover the amounts stolen, but also three-times that amount as liquidated damages. Because of this penalty provision, Ohio’s civil theft statute is a powerful tool to combat employee theft.

Ohio Revised Code 2307.61 is Ohio’s civil theft statute. It permits recovery for theft and willful damage of property. In addition to compensatory damages for the value of the property stolen or damaged, it also allows for the recovery of three times the value of the property as liquidated damages.

Moreover, it the amount at issue is less than $5,000, the owner of the stolen property is also entitled to recover costs (which includes the cost the written demand for payment, postage, and court costs) and attorneys’ fees if the following three conditions are met:

1. A written demand, via certified mail, for payment must be made at least 30 days prior to filing suit.

2. The written demand must identify the alleged theft offense, inform that suit will only be brought if repayment is not made within 30 days, and advise that the suit could result in a potential judgment that could include costs and attorneys’ fees. 

3. Repayment is not made or an agreement to repay is not reached within the 30-day period.

Pursuing a claim under this statute is not without some risk. If the defendant (for example, the employee accused of theft) prevails, he or she is entitled to recover the cost of defending the civil action plus any compensatory damages that may be proven. Because of this risk, it is important that an employer considering pursuing a civil theft claim has conducted a full investigation and is reasonably confident in its right to recover.

‘Tis the season… for employee theft

According to last week's Wall Street Journal Career Journal, theft by  employees may be reaching epidemic proportions.

In the wake of the recession, more businesses are facing a growing financial threat: employee theft. New research shows that employers are seeing an increase in internal crimes, ranging from fictitious sales transactions and illegal kickbacks to the theft of office equipment and retail products meant for sale to customers.

Employers suspect that workers are pilfering from them to cope with financial difficulties at home or in anticipation of being laid off.

What's more, it's often the most trusted workers who are committing the thefts….

Employers are hot targets for theft because workers “know their systems, controls and weaknesses, and they can bide their time waiting for the right opportunity,” says Mark R. Doyle, president of Jack L. Haynes International Inc., a provider of workplace crime-prevention services based in Fruitland Park, Fla.

Consider the following statistics:

• 20% of employers say workplace theft has become a moderate to very big problem recently.
• 18% have noticed a recent rise in monetary theft among employees, such as fraudulent transactions or missing cash.
• 24% have detected an increase in stolen nonmonetary items, such as retail products and office supplies.
• 25% of all reported internal frauds are committed by senior-level employees with an average tenure of 7½ years.
• In 2007, 1 out of every 28 employees was caught stealing, an 18% increase from the prior year.

What can employers do to curb this disturbing trend? I suggest a five-step attack:

1. Communicate: Employees need to know that theft of any nature and in any amount simply will not be tolerated. This message should be delivered in writing through the employee handbook or a stand-alone corporate ethics policy. Also, it is incumbent upon the highest levels of management to set a good example for all employees to follow. The best defense against employee theft is fostering an environment of ethics and integrity.

2. Investigate: Proper investigation requires having the tools in place to detect theft or fraud and acting swiftly when misconduct is discovered. Proper tools include surveillance cameras, tracking devices, and routine audits of books and records. Also, if something just doesn’t look right (has an employee started submitting unusually large expense reports without sufficient documentation, for example?) ask questions. Don’t just assume that a good employee cannot succumb to temptation. A company may also want to consider bringing in a third-party to conduct the investigation, depending on the sophistication and amount of the theft.

3. Document: Once a theft is detected, a company has to act swiftly to complete a full investigation. This investigation includes interviewing any potential witnesses and gathering all necessary documents to support to a case against the employee. Documentation is key both to support a termination decision and to go after an employee for restitution. Companies should also consider filing a police report in cases of employee theft.

4. Terminate: No other form or discipline should be an option. Theft is a serious offense. It represents a total breakdown of trust between a company and an employee. If an investigation concludes that an employee has stolen from the company, that employee should be immediately fired.

5. Litigate: Employers have two choices – filing a civil lawsuit to recover the stolen funds or property, or seeking criminal prosecution. Companies can run these options in tandem, but in my experience overburdened prosecutors’ offices are less likely to pursue an indictment if a civil case is pending, since the company already has a way to be made whole. In considering whether the pursue legal action against an employee, companies have to balance the potential deterrent effect on current employees versus the potential negative effect on employee morale. Because of these concerns, litigation will not be appropriate in all cases of employee theft.

Tomorrow, we’ll examine one of the best tools Ohio employers have to combat employee theft through the courts, Ohio’s civil theft statute.

WIRTW #59

I had planned on doing an elaborate post on the inherent risks to employers from holiday parties. The Connecticut Employment Law Blog and the Pennsylvania Labor & Employment Blog beat me to it. Click on through for some timely and helpful tips on managing liability risk at your holiday party.

Staying on the holiday theme, the Delaware Employment Law Blog asks if employees with families receive better treatment at work during the holiday season.

A few posts this week follow-up on earlier posts of mine:

• Last month I reported on Anheuser-Busch, an NLRB decision that held that an employer can discipline employees for misconduct even though the employer learned of the misconduct by unlawful means (in that case, security cameras that the employer installed without bargaining with the labor union. Workplace Prof Blog reports that the D.C. Circuit has affirmed the NLRB’s decision.

• Workplace Prof Blog also reports that the Republic Windows sit-in strike has ended, with each employee receiving eight weeks’ severance, all accrued vacation pay, and two months’ health care. For my earlier thoughts on this issue, go to Union sit-in illustrates WARN Act.

• Last week’s WIRTW talked about the 10 things you should never put in an email. Roger Matus’ Death by Email follows up on his earlier list by giving us a checklist of 36 things to consider before hitting send.

The HR Lawyers Blog retorts that the bad economy has shifted employment lawyers from the employment agreement business into the severance agreement business. If you’re considering severance pay, also consider some severance benchmarking data presented by Compensation Force.

Workplace Privacy Counsel presents the first federal appellate court to uphold a termination based on content found on MySpace.

George’s Employment Blawg tells how to provide reasonable accommodation for employees with hearing impairments.

World of Work reports that Walmart has settled its Minnesota wage and hour case for $54.25 million.

The Evil HR Lady points out the dangers of operating without a written leave policy.

Finally, I present what has become a weekly roundup of Employee Free Choice Act posts:

• LaborPains.org tells us that the SEIU has set aside an astounding $10 million to “unelect” any politician that changes his or her position on the EFCA. I’ll probably have more thoughts on this issue next week.

• Workplace Horizons presents President Obama’s top 10 list for labor (are you surprised that the EFCA is number 1?).

More on “do overs”: the unconditional offer of reinstatement

As I mentioned on Monday (Do-overs), an unconditional offer of reinstatement can be a useful tool to minimize or even avoid liability in a discrimination lawsuit. To be effective, however, the offer must truly be unconditional. In other words, the reinstatement offer should:

• Return the employee to the former position, with the same responsibilities, compensation, and benefits.

• Make clear that the employee is free to continue pursuing any and all claims against the company, and that the employee is not required to sign a release or give up any rights as a condition of reinstatement.

• Emphatically state that the employer will neither retaliate nor tolerate any retaliation against the employee.

• Create an open door for the employee to discuss any concerns about returning to work, or issues that arise after the employee returns to work.

Once the offer is made, the employer must be prepared to take the employee back if the offer is accepted. Thus, before making such an offer, it is important to consider if, in fact, an employer really and truly wants the employee back. Was the employee a good, worthwhile, productive employee that provided an asset to the company? Or, did the employee have serious performance, conduct or attendance problems? Are managers and supervisors wiling to take the employee back despite the lawsuit? Are you reasonably confident that the employee will not be retaliated against, and is the company prepared to act quickly and deal decisively with anyone found to have retaliated?

These questions must be considered before deciding whether to offer to bring back an ex-employee. Otherwise, the potential of limiting back pay and front pay may not be worth the cost of brining back an unworthy employee.

Union sit-in illustrates working of WARN Act

Last week, Republic Windows and Doors, a Chicago manufacturer, announced that because Bank of America had cancelled its line of credit, it would be closing immediately. Since last weekend, its employees have been staging a mass sit-in inside the factory in protest the company’s lack of notice of the shut-down. They claim that federal law entitled them to a minimum of 60 days’ notice. (See In Factory Sit-In, an Anger Spread Wide). The employees claim that they will continue to occupy the factory until a resolution is reached.

The federal law that spurred the workers protest is the Worker Adjustment and Retraining Notification Act, which is more commonly known as the WARN Act. The WARN Act generally applies to any employer with 100 or more employees, not counting employees who worked less than 6 months in the last 12 months and employees who work an average of less than 20 hours a week.

It requires a covered employer to give affected employees 60 days’ notice of any plant closing or mass layoff. It is common misconception that WARN requires severance pay. In fact, all it requires is 60 days’ notice to affected employees. However, an employer can bypass the notice by paying employees in lieu of the WARN notice. For example, if a plant shuts down immediately without any notice, all affected employees would be entitled to 60 days’ pay in lieu of WARN notice.

The Republic Windows story raises an important exception under the WARN Act: the unforeseeable business circumstances exception. When the closing or mass layoff is caused by business circumstances that were not reasonably foreseeable at the time that 60-day notice would have been required (i.e., a business circumstance that is caused by some sudden, dramatic, and unexpected action or conditions outside the employer's control), 60 days’ notice under WARN is not required. Instead, the employer is only required to give as much notice as is practicable in light of the unforeseen circumstances.

There is little doubt that Republic Windows is relying on the unforeseeable business circumstances exception for its lack of WARN notice to its employees. Despite (or maybe because of) the current credit crunch, a court would most likely not require Republic Windows to accurately predict Bank of America’s actions. The issue for Republic Windows and its employees will most likely hinge on two facts: when did it first learn that its specific line of credit was in jeopardy, and how long could it have continued operating before shutting its doors. Public and political pressure may end up winning the day for the employees, but my best guess is that Republic Windows is probably on right side of the unforeseeable business circumstances exception.

More Employee Free Choice Act ads

Business organizations have decided to fight fire with fire, putting out their own advertisements on the dangers of the Employee Free Choice Act. Below is a very clever advertisement put out by UnionFacts.com, a non-profit union watchdog organization:

Click here for more information on the Employee Free Choice Act.

Do you know? Child labor rules

While I was watching Rudolph the Red Nosed Reindeer with my family and something struck me. The elves making toys for Santa looked awfully young. Is it possible that the North Pole lacks child labor laws? Is this how Santa keeps his costs down? After all, he needs toys for hundreds of millions, if not billions, of children.

Do you know? What are Ohio’s child labor laws?

Ages 14 and 15

• When school is in session: i) they cannot work between the hours of 7 p.m. and 7 a.m.; ii) they cannot work for more than 3 hours on any school day; and iii) they cannot work more than 18 hours during any school week

• When school is out of session: i) they cannot work between the hours of 9 p.m. and 7 a.m.; ii) they cannot work more than 8 hours per day; and iii) they cannot work more than 40 hours per week.

Ages 16 and 17

• When school is in session: i) 11 p.m. before a school day to 7 a.m. on a school day (6 a.m. if not employed after 8 p.m. the previous night); and there are no limits on hours worked per day or week.

• When school is not in session, there are no limits on starting or ending times, or hours worked per day or week.

Unlike adult workers, all minors are required to have a 30 minute uninterrupted break when working more than 5 consecutive hours.

Prohibited Occupations

All minors are prohibited from working in the following occupations:

• Slaughtering, meat-packing, processing rendering
• Operation of power driven slicers; bakery machines; paper product machines; metal forming; punching or shearing machines; circular and band saws; guillotine shears; woodworking machines
• Manufacture of brick, tile, and kindred products
• Manufacture and storage of chemicals or explosives, or exposure to radioactive and ionizing radiation substances
• Coal mining and mining other than coal
• Logging and saw milling
• Motor vehicle, railroads, maritime , and longshoreman occupations
• Excavation operations, wrecking, demolition, and shipbreaking
• Power-driven and hoisting apparatus equipment
• Roofing operations

Only 14 and 15 year olds are prohibited from the following occupations:

• Manufacturing and warehouse occupations (except office and clerical work)
• Public messenger services occupations
• Work in freezers; meat coolers and all preparations of meats for sale (except wrapping, sealing labeling, weighing, pricing and stocking)
• Transportation; storage, communications, public utilities; construction and repair
• Work in boilers or engine rooms; maintenance or repair of machinery
• Outside window washing from window sills, scaffolding, ladders or their substitutes
• Cooking, baking, operating, setting up, adjusting, cleaning, oiling, or repairing power-driven food slicers, grinders, food choppers cutters, baker type mixers
• Loading or unloading goods to and from trucks, railroad cars or conveyors
• Work with cars and trucks involving pits, racks, or lifting apparatus
• Inflation of tires mounted on rimes equipped with a removable retaining ring
• For-profit door-to-door employment (unless the employer is registered with the Ohio Dept. of Commerce Division of Labor & Worker Safety)

Court allows a “do-over” to defeat discrimination claim

I vividly remember playing baseball in the street in front of my house as a child. Every once in a while something would interfere with the game (a stray dog, a car) and the effected team would call for a do-over. A do-over would wipe the play as if it never happened. In Jackson v. UPS (8th Cir. 12/4/08), the 8th Circuit inserts the rule of do-overs into employment discrimination law.

Jackson worked at UPS as an hourly employee. In May 2006 she received a promotion. On her first day in the new position she caused an accident, after which UPS demoted her back to her prior position with the corresponding reduction in pay. Jackson immediately challenged the demotion through both a union grievance and an EEOC charge. Within three months, UPS decided that it had erred in demoting Jackson. It settled the grievance with the union and reinstated Jackson to the higher paying position with full back pay.

In the ensuing discrimination case, UPS argued that Jackson did not suffer an adverse employment action because it reversed its decision and reinstated her with full back pay and no loss of seniority or any other employment benefit. Jackson argued that UPS’s initial decision constituted an actionable adverse employment action.

In affirming the district court’s summary dismissal of Jackson’s discrimination claim, the 8th Circuit held that “a demotion or denial of a promotion, even when accompanied by a loss in pay, is not an adverse employment action when it is corrected in a timely manner”:

In the present case, UPS recognized its mistake, took corrective action, and reinstated Jackson with full back pay and no loss of seniority or any other employment benefit. During her three-month period of disqualification, Jackson performed her prior work as a shuttle driver and was compensated accordingly. The only damages that might remain are interest on Jackson’s back pay and stress that Jackson alleges accompanied her disqualification. This court has consistently held that “[an] adverse employment action must be one that produces a material employment disadvantage.” … The small amount of interest Jackson might recover does not constitute a material disadvantage.

It’s unclear whether this rule is good law in the 6th Circuit or Ohio, but the lesson to take from this case is a good one. If you’ve been sued and you’re reasonably confident that your company messed up, don’t be afraid to at least consider an offer to bring the person back to work, to the same or equal position, and with full back pay and restoration of other lost benefits. It’s called an “unconditional offer of reinstatement.” It may not bar liability like the Jackson case, but if done correctly it will cut-off economic damages such as back pay and front pay (while making it very hard for a plaintiff to prove a right to punitive damages), and go a long way to convincing a judge and a jury that your company might just not be the evil malicious discriminator the plaintiff is trying to paint you as. Come back tomorrow for a quick lesson on the mechanics of an unconditional offer of reinstatement.

WIRTW #58

Or what I’ve been reading for the last two weeks, thanks to last week’s Thanksgiving hiatus.

According to Roger Matus’ Death by Email, there are 10 things you should never put in an email, for fear they will come back to haunt you in litigation. For example, “10. Is this actually legal.” Click on over for the entire list.

The Labor & Employment Law Blog provides a thorough summary of the Employee Free Choice Act and its dangers, and lists some basic union avoidance tips companies can use to prepare for the prospect of card check union recognition. In other EFCA news, EFCA Updates suggests that President Obama might consider facing down the unions on the EFCA in light of our current economic mess, and Point of Law gives some thoughts on the lesser publicized, but equally dangerous, mandatory arbitration provision of the EFCA.

Another popular topic is firing and layoffs. If you need them, HR World has some basic tips on how to fire employees. BLR’s HR Daily Advisor notes that with layoffs usually bring them two other dreaded l-words, litigation and liability. By way of illustration, the Wall Street Journal Law Blog has an interesting post on laid off law firm associates turning to the courts for help. Finally, for those who’ve survived a layoff, George’s Employment Blawg asks the important questions – what’s your plan now to help the company thrive and survive.

Overlawyered brings the story of the Canadian Supreme Court’s ruling that an obese airline passenger has a right to two airline seats for the price of one.

The Delaware Employment Law Blog updates us on the travails of Robert Irvine, the displaced Food Network host fired earlier this year for resume fraud (see Firing of Food Network host illustrates resume fraud). It looks like all is forgiven, and he is headed back to his old show to re-take the reigns from Cleveland’s Michael Symon.

The Connecticut Employment Law Blog reports on a 2nd Circuit case discussing the meaning of “similarly situated” in discrimination cases.

The Pennsylvania Labor & Employment Blog points out an interesting anomaly about 2009 – it will have 27 bi-weekly pay periods instead of the customary 26.

Jottings by an Employer’s Lawyer reports on a $1.8M verdict awarded by a federal court jury in Pittsburgh to a women who was fired after she failed to return from her maternity leave. She received this astronomical verdict even though the company had rehired her at her former salary. In fact, she took a four day vacation from the defendant to attend the trial.

Work Matters asks if all we need is love vacations.

Corporate Voices for Working Families discusses workplace lactation programs.

What's New in Employment Law? reminds us that discrimination laws do not protect against bad managers, only decisions and actions with a discriminatory basis.

Settle It Now Negotiation Blog brings us a timely post about holiday party liability.

Human Rights in the Workplace presents six ways to avoid age discrimination liability.

Trading Secrets comments on a trade secret dispute between IBM and Apple, and the effect of the inevitable disclosure doctrine.

World of Work distinguishes between cosmetology teachers and day care teachers for purposes of overtime eligibility under the FLSA. According to the Department of Labor, the former are exempt, while the latter are non-exempt.

The Privacy Law Blog questions what privacy rights will look like in President Obama’s administration.

Workplace Prof Blog reports on an NLRB Administrative Law Judge’s finding that CNN committed “widespread and egregious misconduct” in terminating a subcontractor to avoid its employees’ labor union.

Ex-employees are not covered by the ADA for handling of post-employment benefits

In McKnight v. General Motors (6th Cir. 12/4/08), the 6th Circuit was presented with the question of whether disabled former employees have standing under the ADA to bring suit against their former employers for discrimination with respect to the payment of post-employment fringe benefits. At issue in the case was whether GM’s pension plans give equal access to disabled and non-disabled employees.

In ruling for GM, the Court adopted the reasoning of a 9th Circuit decision, Weyer v. Twentieth Century Fox Film Corp. (9th Cir. 2000):

Title I says that “[n]o covered entity shall discriminate against a qualified individual with a disability because of the disability of such individual.” A “qualified individual” is someone who “can perform.” That definition uses the present tense. Thus, one must be able to perform the essential functions of employment at the time that one is discriminated against in order to bring suit under Title I. In addition, one must be discriminated against “because of the disability”—which requires that the disability exist at the time of the discrimination and be the motivation for the discrimination.

Thus, the Court concluded “that disabled former employees are not ‘qualified individuals’ with a disability under Title I of the ADA.”

This decision, while significant, has limited applicability to most employers. For example, one should not interpret this decision to mean that no ex-employee has standing to sue under the ADA. To the contrary, an employee who could perform the essential functions of the job at the time of the challenged decision still has standing to sue. This decision has no impact on the run of the mill ADA plaintiff who claims a denial of a reasonable accommodation or a termination from employment because of a disability. This decision only impacts those decisions that affect an individual after an individual ceases employment – pension and benefit decisions, for example.

Governor’s gaffe and family responsibilities

I’m a huge fan of Pennsylvania Governor Ed Rendell. We share a common passion – Philadelphia sports teams. Although, I’ve never been involved in beaning Jimmy Johnson with a snowball.

Earlier this week at the National Governors Conference, he made a huge gaffe when a microphone picked up the following comment about President-elect Obama's choice for Secretary of Homeland Security, Arizona Gov. Janet Napolitano:

Janet's perfect for that job. Because for that job, you have to have no life. Janet has no family. Perfect. She can devote, literally, 19-20 hours a day to it.

On cnn.com, Campbell Brown correctly points out that if a man had been Obama’s choice, family responsibilities would never have been raised by anyone as an issue.

Gov. Rendell’s off-the-cuff comment runs in stark opposition to President-elect Obama’s own goals. The following comes from the President-elect's website, as one of the key policy points for his administration:

Protect Against Caregiver Discrimination: Workers with family obligations often are discriminated against in the workplace. Barack Obama and Joe Biden will commit the government to enforcing recently-enacted Equal Employment Opportunity Commission guidelines on caregiver discrimination.

For employers, Gov. Rendell’s comment illustrates that we still have a long way to go to eliminate unconscious biases that form the maternal wall. To combat these biases, decisionmakers need to ensure that all employment decisions are based on ability and performance, free from preconceptions about an employee’s outside responsibilities.

Take care in submitting health insurance applications

In Medical Mutual of Ohio v. k. Amelia Enterprises (6th Circuit 12/2/08), the 6th Circuit dismissed a claim brought by Medical Mutual against an employee, his employer, and the employer’s CFO after the insurance company discovered that the employee had failed to disclose his son’s pre-existing condition on his insurance application. The Court dismissed the claims because Medical Mutual had not timely filed them within the statute of limitations.

Even though Medical Mutual’s late filing of the claims let the employer and its CFO off the hook, an important lesson can still be learned from the genesis of this case. Like all group insurance applications, Medical Mutual required k. Amelia employees to complete Medical History Questionnaires as a condition of coverage by the group health insurance plan. k. Amelia’s CFO signed the Group Application, which included the Medical History Questionnaires. Medical Mutual terminated the employee’s coverage and sued for prior paid benefits after it discovered that the employee had not disclosed his son’s pre-existing hemophilia.

The employer should not be liable unless it knew or should have known that an employee had submitted false information. The question for k. Amelia is whether it knew of the son’s hemophilia when it submitted the questionnaire. If it had such knowledge, for example, through the processing of a prior health insurance application or through an employee’s use of FMLA leave for the excluded condition, then it could be on the hook for the misrepresentation. An employer should not be required, though, to independently verify each and every employee’s insurance applications for veracity and completeness. An employer should be entitled to rely on its employees’ honesty, unless it knows or has reason to know that false or misleading information has been submitted.

The lesson for employers is not to blindly submit an insurance application without first reviewing the information provided by employees. If an employee submits information that an employer knows or should know is false, the employer has a duty not to submit the application without correcting or removing the information. A little due diligence on the front end could save a company years of litigation on the back end.

Do you know? EEOC filings reach a record number

Do you know? In 2008, the EEOC received 95,402 private sector charges of discrimination, which is a 15.2% increase from 2007. Given the current state of the economy, it is fair to assume a larger percentage increase for 2009, brining the EEOC’s charge processing well into six digits for next year.

The information comes from the EEOC’s Fiscal Year 2008 Performance and Accountability Report, which is akin to its annual report if it was a publicly traded company. Other highlights:

• In 2009, the EEOC will publish regulations providing guidance to employers and employees on the Genetic Information Non-Discrimination Act (GINA), which prohibits public and private employers from using genetic information in employment decisions.
• The EEOC will issue regulations implementing the Americans With Disabilities Act Amendments Act of 2008, which changes the way EEOC will be evaluating charges of discrimination received under Title I of the ADA.
• The EEOC will continue to pursue its E-RACE Initiative by taking a hard look at issues that impact race and color discrimination.
• The EEOC will focus its resources on combating systemic workplace discrimination.

What does this mean for you? For one thing, there is a good chance that a terminated employee who belongs to a protected class will pursue a claim at least via the filing of an EEOC or OCRC charge. Secondly, employers will get much needed guidance on how the EEOC will interpret GINA and the ADA Amendments. While this guidance is not binding on courts, it is very persuasive and will provide employers with a great jumping off point on how to put these new laws into play in the workplace. Finally, if your company has a policy or practice that systemically targets a protected class, there is a decent chance you will find yourself on the EEOC’s radar, if not in 2009 then at some point.

The Employee Free Choice Act publicity machine ramps up

Last week, I was jarred out of a comfortable evening of family television by the following commercial:

We’ve grown accustomed to endless political ads after a presidential campaign that seemed to go on forever. It’s one thing to see an ad for a ballot measure that we all get to vote on. It’s another to see an ad for a bill on which only 435 Representatives and 100 Senators will have any say-so. It’s a testament to how well-funded and savvy this union-backed campaign is.

There is a very compelling story to tell on why the ECFA is simply bad policy. It’s un-democratic in doing away with secret ballot union elections. It’s draconian in imposing first contracts through binding arbitration. It’s bad economic policy in adding significant costs to companies that are struggling to make it by as is. Does anyone doubt for a second that huge labor costs built into collective bargaining agreements are a big part of the Big 3’s big problems? I’ve yet to hear one person express why the EFCA is good policy for anyone other than the labor unions. I’ve also yet to hear one EFCA supporter in Congress explain why it’s okay to oppose NAFTA provisions that did not mandate secret ballot union election in Mexico, but it’s not okay to have the same protections for our own workers.

It is important to contact your Representative and Senators to tell them to vote against the ECFA. (How to contact your Senator; Write your Representative). The EFCA is not a done deal just because we have a Democratic President and Democratic majorities in both houses of Congress. Let our elected officials know that a yes vote for the EFCA as quid pro quo for union support will result in a vote for the other party in the next election.