Wednesday, May 15, 2013

Employee vs. independent contractor: do you know the difference


Employers take a risk when they classify someone performing services for them as an independent contractor instead of an employee. Because employers owe contractors far fewer obligations than employees, employers risk each of the following if a court determines that a mis-classification occurred:

  • Unpaid overtime.
  • Unpaid taxes.
  • Un-provided benefits.
  • A discrimination claim, or claims under other laws that protect employees but not contractors (i.e., the FMLA).

      Do you know, however, how to spot the difference? Troyer v. T.John.E. Productions, Inc. [pdf], decided yesterday by the 6th Circuit, provides some insight.

      The issue in the case was whether the company failed to pay overtime to three individuals who performed road crew services (setting up and breaking down displays) at the company’s collegiate and corporate events. The court determined that the company had mis-classified them, and owed them unpaid overtime as employees:

      Plaintiffs testified that their working relationship with Defendants was relatively permanent, they worked hundreds of hours of uncompensated overtime over several months, and that Defendants exercised strict control over their schedule and day-to-day activities while out on the road. Defendants countered that Plaintiffs worked on a job-by-job, independent contractor basis, that the Plaintiffs had a great amount of autonomy regarding how they completed their work.

      In determining whether an worker is an employee or an independent contractor, the IRS looks compares the degree of control exerted by the company to the degree of independence retained by the individual. Generally, the IRS examines this relationship in three ways:

      1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
      2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
      3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

      If you are considering classifying someone performing services for you as an independent contractor, your answers to these three questions will determine whether that individual is a bona fide contractor, or instead, is a employee. When in doubt, err on the side of caution. The government applies these tests aggressively to find employee-status whenever it can. You should too, and the risks are too high to make a mistake.

      Tuesday, May 14, 2013

      How much does it cost to defend an employment lawsuit?


      Last Friday I had the pleasure of appearing on Huffington Post Live, in a segment entitled, “You’re Fired! No really.” We discussed the current state of employment at-will, and whether American workers need greater protections from being terminated without just cause.If you’ve read my blog for any length of time, you know what I have some pretty strong feelings on this topic. Heck, I’ve even written an entire book on this issue of employer rights.

      If you missed the show, you can watch it here, or in the imbedded video below:

      Following my appearance, Texas plaintiff-side employment lawyer Chris McKinney tweeted that he was surprised at my statement that it could cost a company $250,000 to defend an employment lawsuit:

      Chris was responding to my comment that the myriad laws that already protect employees from arbitrary or capricious terminations (Title VII, ADA, ADEA, FMLA, etc.), coupled with the threat of defending an expensive lawsuit, serve as enough of a deterrent to most reasonable employers from firing an employee without a good reason.

      The reality is that defending a discrimination or other employment lawsuit is expensive. Defending a case through discovery and a ruling on a motion for summary judgment can cost an employer between $75,000 and $125,000. If an employer loses summary judgment (which, much more often than not, is the case), the employer can expect to spend a total of $175,000 to $250,000 to take a case to a jury verdict at trial.

      Most employers, if acting rationally, will chose to retain an employee instead of assuming the risk of a $250,000 legal bill with an uncertain outcome. Moreover, employers cannot avoid this risk simply by settling every claim that is filed, lest the company risk the perception of being an easy mark by every ex-employee.

      If you must terminate an employee, however, the safest, most prudent course of action is to offer a severance package—but only in exchange for a waiver and release of claims, and covenant not to sue—for all terminated employees except those terminated for some egregious or intentional misconduct. By offering severance in exchange for a release, you are capping your exposure and buying off the risk of a costly, time consuming, and burdensome lawsuit.

      Monday, May 13, 2013

      Cruise-ing for a lawsuit: EEOC sues company for forced practice of Scientology


      medium_2257532420The EEOC has filed against a Miami, Florida, medical service provider, alleging that it has violated Title VII’s religious discrimination provisions by forcing its employees to practice Scientology. According to the agency’s lawsuit, Dynamic Medical Services required its employees, as a condition of their employment, to spend at least half their work days attending Scientology courses.

      The EEOC’s complaint [pdf] details the bizarre job requirements, which included:

      • Screaming at ashtrays.
      • Staring at someone for eight hours without moving.
      • Undergoing a “purification audit” by connecting to a Scientology religious artifact known as an “E-meter.”

      Employees who refused to participate in the Scientology religious practices, or conform to Scientology religious beliefs, were terminated.

      If any of the EEOC’s allegations in the lawsuit are true, the agency is going to have an easy time winning this case, which serves a good reminder that an employer cannot force its employees to conform to, follow, or practice, the employer’s chosen religious practices and beliefs.

      Hat tip: Lowering the Bar

      photo credit: Rob Sheridan via photopin cc

      Friday, May 10, 2013

      WIRTW #273 (the “NLRB, fuggetaboutit” edition)


      Remember those posters explaining employees’ rights under the National Labor Relations Act that the NLRB wanted all employers (union and non-union) to post. Well, earlier this week, the D.C. Circuit Court of Appeals issued a broad ruling striking down the NLRB’s posting requiring as a violation both of the NLRA’s “free speech” provision and the 1st Amendment of the Constitution. Bravo D.C. Circuit. Here’s some of the commentary on this case from around the blawgosphere:

      Here’s the rest of what I read this week:

      Discrimination

      Social Media & Workplace Technology

      HR & Employee Relations

      Wage & Hour

      Labor Relations

      Thursday, May 9, 2013

      Debunking myths of a pro-business Supreme Court


      Conventional wisdom says that the current iteration of the United States Supreme Court is pro-business. In support of this position, Adam Liptak penned an article in Sunday’s New York Times, arguing that the Court led by Chief Justice John Roberts is the most business-friendly since World War II. A recent study published in the Minnesota Law Review [pdf] by Judge Richard Posner of the 7th Circuit Court of Appeals, University of Chicago economist William Landes, and University of Southern California law professor Lee Epstein (h/t ABA Journal) makes the same argument, albeit in painstaking law-review detail.

      In employment cases, however, the realities of the court’s rulings have often bucked this conventional wisdom. Repeatedly, this Court had sided with the employee in cases deciding substantive individual rights under the various federal anti-discrimination statutes:

      Mr. Liptak recognizes, “Employees suing over retaliation for raising discrimination claims have fared quite well, for example.” Yet, much of the rest of his nearly 3,000-word opus takes the Court to task for its pro-business leanings.

      The most insightful comment in the entire Times article is courtesy of Case Western Reserve School of Law Professor Jonathan Adler, who notes that the distinction is not one between business and the individual, but instead between enforcing established rights versus creating new ones. Per Professor Adler, the Roberts Court has not been “particularly welcoming to efforts by plaintiffs’ lawyers to open new avenues of litigation, but it has not done much to cut back on those avenues already established by prior cases.”

      Professor Adler is correct. Those who take too great of a license to brand this Court as pro-business are ignoring the Court’s protections of key individual liberties in employment decisions. In procedural matters, this Court has, time and again, sided with the employer (Genesis Healthcare: offers of judgment mooting wage and hour collective actions; Comcast v. Behrend: the scope of class actions for claims seeking individualized damages; AT&T Mobility v. Concepcion: the enforceability of arbitration agreements). These are procedural cases. In cases deciding the application of already established rights, such as the right to be free from retaliation by one’s employer, the Court, over and over, sides with the employee.

      There are still two key employment cases pending this term—Vance v. Ball St. Univ., which will decide the meaning of “supervisor” under Title VII, and University of Texas Southwestern Medical Center v. Nassar, which will decide the proper causation standard for retaliation claims under Title VII. These two rulings will help determine this Court’s developing legacy as either pro-individual or pro-business in deciding employment cases.

      Wednesday, May 8, 2013

      You’d think we’d all know the dangers of “reply all” by now


      Is there any more helpless feeling in today’s business world than sending an email, and then immediately realizing that you made a mistake? The biggest cause of an emailer’s stomach sinking through the floor—”reply all.” We’ve all had it happen. This story from the Toronto Star explains how a reply-all mistake brought one company an expensive wrongful discharge lawsuit:

      Maria Fernandes … accidentally received an email discussing whether or not she should be fired.

      Court documents allege that Linda Guerin, the company’s Director of Operations intended to send the email to the company’s lawyers. Too late she realized Fernandes was also on the list and she unsuccessfully sent three recall notices. She also sent an email to Fernandes asking that she delete the message without opening it.

      Fernandes read it, treated the information in the email as a constructive dismissal and hired a lawyer. She had worked for the company for over six years and was earning $145,000 a year.

      This case is a great reminder that a mis-addressed email can cost employers dearly in a wrongful discharge lawsuit. Other reply-all risks include the disclosure of trade secrets and other confidential information.

      How do you protect against this problem affecting your business? The Toronto Sun article discusses some add-ons for Outlook that will either remove the “reply all” button or require an extra confirming step to use it.

      Technology, however, will only mask the symptoms. It will not cure your workplace of this problem. To really attack the problem, you need to educate and train your employees.

      • Do you train your employees on proper email etiquette, including when to use (and, more importantly, not use) “reply all?”
      • Do you teach your employees to proofread entire emails carefully before they click “send,” including double-checking the “to,” “cc” and “bcc” boxes?

      Tuesday, May 7, 2013

      Taking issue with the term “wage theft”


      Lately, I’ve read a lot of blogs that accuse employers of committing rampant wage theft (e.g., here, here, and here).

      I have a huge problem with the term “wage theft.” It suggests an intentional taking of wages by an employer. Are there employees are who paid less than the wage to which the law entitles them? Absolutely. Is this underpayment the result of some greedy robber baron twirling his handlebar mustache with one hand while lining his pockets with the sweat, tears, and dollars of his worker with the other? Absolutely not.

      Yes, we have a wage-and-hour problem in this country. Wage-and-hour non-compliance, however, is a sin of omission, not a sin of commission. Employer aren’t intentionally stealing; they just don’t know any better.

      And who can blame them? The law that governs the payment of minimum wage and overtime in the country, the Fair Labor Standards Act, is 70 years old. It shows every bit of its age. Over time it’s been amended again and again, with regulation upon regulation piled on. What we are left with is an anachronistic maze of rules and regulations in which one would need a Ph.D. in FLSA (if such a thing existed) just to make sense of it all. Since most employers are experts in running their businesses, but not necessarily experts in the ins and outs of the intricacies of the Fair Labor Standards Act, they are fighting a compliance battle they cannot hope to win.

      As a result, sometimes employees are underpaid. The solution, however, is not creating wage theft statutes that punish employers for unintentional wrongs they cannot hope to correct. Instead, legislators should focus their time and resources to finding a modern solution to a twisted, illogical, and outdated piece of legislation.

      In my most recent book, The Employer Bill of Rights: A Manager’s Guide to Workplace Law, I summarized this issue best:

      Congress enacted the FLSA during the great depression to combat the sweatshops that had taken over our manufacturing sector. In the 70 plus years that have passed, it has evolved via a complex web of regulations and interpretations into an anachronistic maze of rules with which even the best-intentioned employer cannot hope to comply. I would bet any employer in this country a free wage-and-hour audit that i could find an FLSA violation in its pay practices. A regulatory scheme that is impossible to meet does not make sense to keep alive….

      I am all in favor of employees receiving a full day’s pay for a full day’s work. What employers and employees need, though, is a streamlined and modernized system to ensure that workers are paid a fair wage.

      Monday, May 6, 2013

      Big verdicts might grab headlines, but it’s the final judgment that counts


      I never thought I’d read about a case in which I could say to myself, “A $240 million jury verdict doesn’t seem all that out of whack.” Then I read about the EEOC’s recent $240 million jury verdict against Henry’s Turkey Service. The agency alleged that the farm subjected its 32 mentally disabled workers to decades of abuse:

      The EEOC’s press release describes the horrible working conditions to which the turkey processing plant subjected these individuals:

      Specifically, the EEOC presented evidence that for years and years the owners and staffers of Henry’s Turkey subjected the workers to abusive verbal and physical harassment; restricted their freedom of movement; and imposed other harsh terms and conditions of employment such as requiring them to live in deplorable and sub-standard living conditions, and failing to provide adequate medical care when needed.

      Verbal abuses included frequently referring to the workers as “retarded,” “dumb ass” and “stupid.” Class members reported acts of physical abuse including hitting, kicking, at least one case of handcuffing, and forcing the disabled workers to carry heavy weights as punishment.  The Henry’s Turkey supervisors, also the workers’ purported caretakers, were often dismissive of complaints of injuries or pain.

      Robert A. Canino, regional attorney of the EEOC’s Dallas District Office, which tried the case, … told the jury that Henry’s Turkey treated the men “like property.” … Canino urged the jury to think of the “broken lives of 32 hard-working but vulnerable intellectually disabled men” who were employees of Henry’s Turkey.

      For more background on the Henry’s Turkey labor camps that this case helped bring to an end, I recommend this story from the Des Moines Register, which includes a timeline summarizing the camps’ 40-year history. In this context, the $7.5 million awarded to each of the 32 disabled employees ($5.5 million in compensatory damages, on top of another $2 million in punitive damages) begins to look more reasonable.

      While the $240 million verdict is historically large (he biggest ever obtained by the EEOC), ultimately it will only serve as a symbol of the cruelty these 32 men endured. As the Des Moines Register articles points out, Henry’s Turkey’s assets cover less than two percent of the total verdict. Additionally, the Civil Rights Act of 1991 caps these non-economic damages, depending on the size of the employer:

      • For employers with 15 – 100 employees, damages are capped at $50,000.
      • For employers with 101 – 200 employees, damages are capped at $100,000.
      • For employers with 201 –  500 employees, damages are capped at $200,000.
      • For employers with more than employees, damages are capped at $300,000.

      Thus, Henry’s Turkey maximum exposure for non-economic damages is $9.6 million.

      Perhaps the lesson that employers should take away from this horrible story is that a verdict is only the first step in a plaintiff attempting to remedy a wrong. A verdict is simply the jury’s unfiltered opinion about what those eight people think the case is worth. That opinion, however, is not the final say; it is still subject to the law. A judge can lower the amount because of damage caps or for some other reason. A judge can take away the entire verdict by entering judgment notwithstanding the verdict for the defendant, or by ordering a new trial. A court of appeals can find some error in the case and reverse the judgment. Moreover, even if some or all of the verdict survives to a final judgment on which a plaintiff can execute, the plaintiff still has to be able to collect. A multi-million judgment against an insolvent defendant is not worth more than the paper on which it is printed.

      We put so much effort into, and place so much emphasis on, the jury verdict that we can lose sight that often it is merely the end of the first act of a much longer play. The verdict might grab headlines, but for a defendant, the war is not over until the final judgment is entered.

      Friday, May 3, 2013

      WIRTW #272 (the “sensual harassment” edition)


      We’ve all heard of sexual harassment. But, have you heard of “sensual harassment?”

      Here’s the rest of what I read this week:

      Discrimination

      Social Media & Workplace Technology

      HR & Employee Relations

      Wage & Hour

      Thursday, May 2, 2013

      There’s no such thing as a free lunch


      Your accounting records might soon look a little different—that is, if you provide perks at work such as free meals and if the IRS gets its way.

      According to the Internal Revenue Code, certain employer-provided meals are exempt from the definition of “gross income” and, therefore, not taxed. To be considered non-taxed, an employer must provide a meal on its premises and for its convenience. Examples that might qualify:
      • Employees working at remote sites (e.g., oil rigs).
      • Emergency workers who have to be on-call.
      • Employees whose peak work coincides with the lunch hour (e.g., bank tellers).
      Silicon Valley’s tech companies are famous for the perks they offer to lure the best and brightest employees. One such perk—elaborately gourmet free meals (how does Facebook’s spicy she-crab soup and grilled steak with chimichurri sauce sound?). Never one to leave money on the table, the IRS is reportedly examining the taxability of these meals.

      From the Huffington Post:
      The free meals that tech companies like Facebook, Google, and Yahoo provide their employees should actually be taxed. But what does that really mean? Who should be paying for these meals and where is the line drawn? According to Martin J. McMahon, Jr., professor of tax law at the University of Florida, companies like Facebook and Google report these meals as tax-free fringe benefits, when they should be considered taxable fringe benefits. The cost of these meals, McMahon explains, should be considered a part of the employee’s salary. “Let’s say that an employee gets $2,000 in free meals and makes $50,000 a year. The company should report to the IRS that it paid the employee $52,000 in compensation on which the employee would be taxed,” McMahon says….As Professor McMahon explained … : “A company cannot provide tax-free meals if workers commute from home and have the ability to bring their lunches with them.”
      I’m not a tax attorney. I don’t want to be a tax attorney. This might be the only tax-based post I will ever write. Here’s what to take away from this story. If you provide free food to your employees, however, you might soon need to start accounting for that food as a taxable benefit instead of tax-free benefit.

      This post originally appeared on The Legal Workplace Blog.

      [photo credit: Rich Anderson via photopincc]

      Wednesday, May 1, 2013

      Can we please fix Ohio’s age discrimination law?


      It’s no secret that Ohio’s age discrimination statute is a hot mess. The statute has four different ways a plaintiff can file an age claim against an employer, each with a different statute of limitations and available remedies. What’s more, the statute requires that the plaintiff elect which one of the four specific statutory provisions the claim is asserted. Filing under one provision precludes a plaintiff from asserting a claim under any of the other three. This election can have a significant impact on the litigation, because it will dictate the remedies a plaintiff can seek.

      If this scheme not complicated enough, federal law also requires that a plaintiff file an age discrimination charge with the EEOC as a prerequisite to filing a lawsuit alleging a violation of the ADEA. Because Ohio is a deferral state, any charges filed with the EEOC are automatically deemed dual-filed with the OCRC.

      Not all Ohio state-law age discrimination claims, however, require exhaustion with the civil rights agency. In fact, R.C. 4112.99, which provides the most expansive remedies, has no exhaustion requirement at all. What happens, however, if a plaintiff files an age discrimination charge with the EEOC? Does that mean that the dual filing with the OCRC asks an election by the plaintiff to pursue an administrative claim (with limited remedies) instead of a civil lawsuit with more expansive remedies?

      In Flint v. Mercy Health Partners of Southwest Ohio (S.D. Ohio 4/16/13), the district court concluded that filing first with the EEOC does not serve as an election of administrative remedies under Ohio’s age discrimination statutes:

      This Court concludes that the Ohio Supreme Court would likely rule that filing a charge of age discrimination with the EEOC does not comprise an election of remedies…. Therefore, the Court holds that Plaintiffs’ pro se filing of an EEOC charge was not an election of remedies under the Ohio statute. This result acknowledges the complementary nature of federal and state employment discrimination procedures and disarms the “minefield” Ohio’s statutory scheme creates for the litigant wanting to pursue a remedy for age discrimination — something this Court finds particularly important when an employee is attempting to navigate that minefield without the assistance of legal counsel.

      Ohio is contemplating expansive changes to its employment discrimination laws. The legislature should take the opportunity to disarm this "minefield" by creating one unified statute of limitations for all discrimination claims (I suggest one year to bring Ohio more in line with its federal counterpart), and eliminate the goofy and confusing election requirement that results from having four different types of age discrimination claims.

      Tuesday, April 30, 2013

      The legal and ethical issues of the class action “pick off”


      Have you heard that the new owner of the Cleveland Browns has gotten himself into a bit of legal trouble? It’s alleged that Jimmy Haslem’s other business, Pilot Flying J, defrauded trucking companies of fuel rebates. In an effort to head-off a stream of civil lawsuits, Mr. Haslam has been meeting with customers to settle the alleged missing rebates. One such customer sought a temporary restraining order to stop such meetings because, according to the Wall Street Journal, Pilot was “obtaining releases, and settling claims before the potential class members even know the full extent of their claims.” Yesterday, the court denied the restraining order, permitting Haslem’s company to continue attempting to settle these claims.

      Recall that just two weeks ago, the Supreme Court decided a case involving the pick-off named plaintiffs in wage and hour collective actions. In the Genesis Healthcare case, however, the employer communicated the offer to the plaintiff through her attorney. What happens, however, if the employer communicates directly with un-represented and un-named members of a yet-to-be-certified class? Is there anything prohibiting an employer from contacting them directly in an effort to obtain settlements of their potential claims? It depends.

      There is nothing inherently unethical in defense counsel contacting putative class members at the pre-certification stage. According to ABA Comm. on Ethics and Prof’l Responsibility, Formal Op. 07-445 (2007) [pdf], communications between defense counsel and putative class members does not violate the Models Rules of Professional Responsibility because there is no attorney-client relationship between plaintiffs’ counsel and members of an un-certified, putative class.

      Yet, a court still might limit such communications if they are designed to confuse or coerce.

      In Gulf Oil v. Bernard (1981), the U.S. Supreme Court rejected the argument that defense counsel are per se prohibited from contacting putative class members before a class is certified. Instead, a court can only limit pre-certification communications to address communications that misrepresent the status or effect of the case or that have an obvious potential for confusion, and must be based on “a specific record showing by the moving party of the particular abuses by which it is threatened.”

      In accordance with the Supreme Court’s Bernard decision, federal district courts have routinely refused to exercise their supervisory authority over communications with putative class members in situations where the complaining party cannot demonstrate actual abuses. Such abuses that would justify a gag order include communications that coerce putative members into excluding themselves from the class, undermine cooperation with or confidence in plaintiffs’ counsel, or suggest retaliation for participating in or assisting the class.

      For example, in Parks v. Eastwood Ins. Servs. (C.D. Cal. 2002), the named plaintiffs brought a collective action against their employer for unpaid overtime under the Fair Labor Standard Act. Prior to sending a court-approved notice to putative class members, the employer sent a memorandum to its employees asking them to contact the company’s general counsel if they had any questions regarding the case. The court concluded that a curative communication was unnecessary because the at-issue memorandum was not coercive and did not suggest that any employee would be retaliated against for joining the class.

      There are significant strategic decision that companies and their attorneys must make when defending class action lawsuits. Pre-certification communications with potential class members carries a big upside, albeit with the potential of significant risk.

      Monday, April 29, 2013

      With social media, all of your employees are brand ambassadors; train them accordingly


      A Hockessin, Delaware, restaurant has gotten itself into a bit of hot water after it was discovered that its employees posted offensive photographs to the restaurant’s Facebook and Instagram pages. The photos were of receipts of bad-tipping customers, and included offensive and racist comments, including “'#deuchbag”, “#cheapass”, “#hillbillies”, “#cheap #jerk #indian”, and “#cheap #jew”.

      While the accounts have been disabled, Daily Mail posted some of the screen-caps.

      Whether you like it or not, social media has turned each of your employees into a brand ambassador. Can you afford to have your brand sullied by the offensive or racists rants of one of your employees? More importantly, how do you undo the damage caused? While an offending employee should be fired for the transgression, the firing won’t remove the stain left on your business. In this case, the owner posted a public apology to his customers, but that apology will not undo all of the viral damage done by a rogue employee. Additionally, the power to delete the post cannot stop others from publicizing the screencap of death. For example, this restaurant deleted the posts, but they live on in the Daily Mail story and in this post.

      What is the answer?

      1. Training, training, training. Employees need to understand that they will be held accountable with their jobs if they write something online that damages the reputation of your brand. Do not entrust this issue solely to your employees’ common sense. They will disappoint you.

      2. Monitor your brand online. You do not want to find out about something like this for the first time with a reporter asking you for a comments. There are myriad tools available online to monitor your brand’s social presence. They are well worth the investment, especially when compared to the potential harm one disgruntled or renegade employee can cause. Google alerts are free, and are a great starting point. They will not, however, catch much of the social chatter. Two popular paid solutions (which I am not endorsing, but merely informing) are Radian6 and Wildfire.

      3. Secure your IT and social media accounts. According to the owner of this restaurant, the accounts were hacked because he “left [his] iPad and stuff all around.” You need to secure your technology to ensure that employees cannot appropriate social media channel to which they should not have access.

      If you want to see an example of one large scale organization trains its employees on the appropriate and responsible use of social media, specifically to address the risk of viral damage from negative or irresponsible posts, take a look at the training video Zurich Insurance has made available on YouTube:

      YouTube also has available similar examples from Citrix, Sodexo, and KPMG. As with any policy or training your are considering implementing, check first with your own legal counsel.

      Friday, April 26, 2013

      WIRTW #271 (the “too hot to work” edition)


      Do you remember the dental hygienist whom the Iowa Supreme Court declared too hot to work? Earlier this week, she attempted to “redeem” herself by appearing on a recent episode of Comedy Central’s Tosh.0 [h/t Above the Law] (NSFW):

      Tosh.0

      I’m happy to see that Ms. Nelson doesn’t perceive herself as a piece of meat to be inappropriately ogled by men. After Ms. Nelson lost her sex discrimination case I had sympathy for her because I thought the Iowa court made bad law. I still believe Nelson’s case is bad law; my sympathy for her, however, has gone down the drain.

      Here’s the rest of what I read this week:

      Discrimination

      Social Media & Workplace Technology

      HR & Employee Relations

      Wage & Hour

      Thursday, April 25, 2013

      Beware bans on pay discussions among employees


      Pop quiz. What’s wrong with the following paragraph, which appeared in the April 17, 2013, Wall Street Journal article entitled, Workers Share Their Salary Secrets?

      At Brian Bader’s orientation for a tech-support job with Apple three years ago, he says, human-resources managers ran down the list of guidelines workers were expected to follow. Don’t use explicit language on calls with customers. Treat other employees with respect. And, he says, they told the assembled recruits, don’t discuss your pay with co-workers.

      If you answered, “An employer can’t legally prohibit employees from discussing how much they make,” give yourself a prize.

      As the 6th Circuit explained in NLRB v. Main Street Terrace Care Center:

      A rule prohibiting employees from communicating with one another regarding wages, a key objective of organizational activity, undoubtedly tends to interfere with the employees’ right to engage in protected concerted activity…. [T]he fact that the rule was promulgated orally rather than written in an employee handbook, for example, makes no difference….

      Does your handbook have a policy that prohibits employees from discussing how much you pay them? If so, get rid of it.

      Do your managers and supervisor know that they cannot terminate or discipline employees for discussing how much they make? If not, train them on these rules.

      Wednesday, April 24, 2013

      NLRB confirms legality of most at-will disclaimers (and employers everywhere rejoice)


      The NLRB has confused me with its apparent reasonableness. Last week, the NLRB published an advice memorandum from its Office of General Counsel, in which it opined that the at-will disclaimer in an employer’s handbook did not violate employees’ Section 7 rights to engage in protected, concerted activity.

      Recall that last year, the NLRB launched a preliminary offensive against handbook at-will disclaimers.

      In its most recent proclamation [pdf], the Board considered the following at-will language:

      Employment with the Company is at-will which means the employment relationship may be terminated with or without cause and with or without notice at any time by you or the Company. In addition, the Company may alter an employee’s position, duties, title or compensation at any time, with or without notice and with or without cause. Nothing in this Handbook or in any document or statement and nothing implied from any course of conduct shall limit the Company’s or employee’s right to terminate employment at-will. Only the Company President is authorized to modify the Company’s at-will employment policy or enter into any agreement contrary to this policy. Any such modification must be in writing and signed by the employee and the President.

      The NLRB’s Office of GC concluded that the italicized language is lawful because it cannot reasonably be interpreted to restrict employees’ Section 7 rights to engage in concerted attempts to change the employment at-will status. The Office of GC contrasted this language with other language that an NLRB Administrative Law Judge has previously found unlawful: “I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.” The difference, according to this memo, is the ability to modify the at-will nature of the employment in the future.

      The take-aways?

      1. The NLRB will examine at-will disclaimers on a case-by-case basis, and I do not expect we will see the Board take the unreasonable position that all at-will disclaimers are unlawful.
      2. You should take a look at your current at-will language to make sure it does not foreclose the possibility of future modifications of employees’ at-will status.

      I’ll leave you with one final thought. In a footnote, the Office of GC made the following comment: “The Board repeatedly has said that potentially violative phrases must be read in context and that it will not find a violation simply because a rule could conceivably be read to restrict Section 7 activity.” If that statement is true, how can the NLRB continue to justify its over-the-top policy statements on social media policies? If the NLRB can carry its reasonable position on at-will disclaimers over to social media policies, I think we might just become friends.

      Tuesday, April 23, 2013

      Staged RIFs qualify for heightened protection from age discrimination


      Employers who eliminate headcount as part of a reduction in force receive special protection under the age discrimination laws. In a bona fide RIF, the employer has a built-in legitimate, non-discriminatory reason for a termination—the business considerations and economic necessities that caused the job eliminations. In such a case, an employee cannot establish a prima facie case of age discrimination without some additional direct, circumstantial, or statistical evidence showing that age was a factor in the termination. The mere termination of a competent employee in the face of economically based cutbacks is not enough to establish a prima facie case of age discrimination.

      What happens, though, when an employer cuts headcount in stages? For example, what if an employer facing economic distress lays off a number of employees, and a year later lays off someone else? Can the employer claim the benefit of the more stringent age discrimination test that accompanies a bona fide RIF for the later termination?

      Such was the case in Weisfeld v. PASCO, Inc. (Ohio Ct. App. 4/17/13) [pdf]. In 2009, PASCO lost a contract that accounted for 80 – 90 percent of its revenue. As a result, it laid off more than 80 percent of its employees. Most of those firings happened shortly after the lost contract. The company waited a year, though, to fire six key employees, including Todd Weisfeld, its 48-year-old director of technology, who declined a restructured job as a network coordinator.

      In his ensuing age discrimination lawsuit, Mr. Weisfeld argued that the passage of time between when PASCO terminated him as compared to the bulk of his co-workers precluded the company from claiming that Weisfeld’s termination was part of a reduction in force. The court, however, disagreed:

      Contrary to Mr. Weisfeld’s understanding, an employee is terminated pursuant to a reduction in force whenever “business considerations” are the driving force behind the company’s decision. It is immaterial that PASCO eliminated some positions immediately after losing the California contract and waited over a year to eliminate other positions. So long as the company’s decision was because of business considerations and it did not replace Mr. Weisfeld with another employee, his discharge was pursuant to a reduction in force.

      Absent any evidence that PASCO lacked a legitimate business reason for eliminating its director of technology position, Mr. Weisfeld’s age discrimination claim failed.

      This case shows the powerful advantage that employers hold in defending discrimination cases that arise out of reductions in force. It also shows that RIFs can occur in stages and over time. At least according to Weisfeld v. PASCO, an employer can retain key employees during a layoff and still claim the evidentiary benefit of the RIF when economic realities dictate a later termination of those key employees.

      Monday, April 22, 2013

      NLRB offers further guidance on confidential workplace investigations


      Last July, I cautioned employers about the NLRB’s decision in Banner Estrella Medical Center. In that case, the NLRB held that an employer’s request to employees not to discuss a workplace investigation with their coworkers while the investigation was ongoing violated the employees’ rights to engage in protected concerted activity. At the time, I wrote the following:

      By prohibiting employers from requiring that workplace investigations remain confidential, your decision in Banner Estrella neuters the ability of employers to make key credibility determinations. Limiting confidentiality in this manner will severely constrain the ability of employers to conduct thorough and accurate workplace investigations, which, in turn, limits the ability of employers to stop the workplace evils they are investigating (discrimination, harassment, theft, etc.).

      I’m not certain that the NLRB heeded my warning, but last week it did signal that it is backing off its unreasonable position. In a recently published advice memorandum, the NLRB’s Office of General Counsel clarified the Board’s position on confidential workplace investigations.

      The GC considered the following policy:

      [Employer] has a compelling interest in protecting the integrity of its investigations. In every investigation, [Employer] has a strong desire to protect witnesses from harassment, intimidation and retaliation, to keep evidence from being destroyed, to ensure that testimony is not fabricated, and to prevent a cover-up.

      To assist [Employer] in achieving these objectives, we must maintain the investigation and our role in it in strict confidence. If we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.

      In the opinion of the NLRB’s Office of General Counsel, this policy’s blanket confidentiality restrictions placed on workplace investigations violated employees’ rights to engage in protected, concerted activity. The Office of GC believed that while the first paragraph is perfectly legal, the second is overly restrictive. In its place, the Office of GC suggested provided substitute language that would pass muster under Section 7. Specifically, he suggested that replacing the last two sentences of the policy with the following language would render the policy legal:

      [Employer] may decide in some circumstances that in order to achieve these objectives, we must maintain the investigation and our role in it in strict confidence. If [Employer] reasonably imposes such a requirement and we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.

      In other words, if an employer makes confidentiality discretionary, on an investigation-by-investigation basis, the policy would pass Section 7 scrutiny.

      Some may herald this opinion as a victory for employers. To me, its a difference without a distinction. All workplace investigation should be confidential. Otherwise, an employer can lawfully carry out its obligation to conduct an untainted investigation. Even if you have the suggested “discretionary” language in your harassment or workplace misconduct policy, you should nevertheless exercise that discretion in every investigation.. So, I ask, if every investigation should be confidential, what is the harm in providing for mandatory confidentiality in a policy?

      I applaud the NLRB’s Office of General Counsel for offering employers suggested language. I still believe, however, that the NLRB fails to understand the importance of confidentiality in workplace investigations, and further fails to understand the realities of how workplace investigations work.

      [Hat tip: Lorene Schaefer’s Win-Win HR]

      Friday, April 19, 2013

      WIRWT #270 (the “… and the home of the brave” edition)


      Have you seen the video of the National Anthem at last night’s Boston Bruins’s game? Do you want to get choked up watching 17,565 Bostonians sing their collective hearts out? Well, here you go [h/t: The 700 Level]

       

      Here’s the rest of what I read this week:

      Discrimination

      Social Media & Workplace Technology

      HR & Employee Relations

      Wage & Hour

      Labor Relations

      Thursday, April 18, 2013

      There is no such thing as a “license to harass”


      To establish an unlawful hostile work environment, an employee must prove, among other factors, that the workplace was subjectively offensive. Some employers misinterpret this requirement as meaning that an employee who participates in sexual banter, off-color jokes, or shares intimate details of her personal life is asking to be harassed.

      Case in point? In EEOC v. Joe Ryan Enterprises (M.D. Ala. 3/28/13), the employer attempted to defend against a sexual harassment lawsuit by arguing that it had a “license” to harass the plaintiff, presumably because of her earlier participation in similarly offensive misconduct in the workplace. The district court was not having any of that argument, and granted the EEOC’s motion to prohibit the employer from raising that defense:

      The Court has come across no authority to support Joe Ryan’s proposition that the defenses of “license” and “ratification” apply in a sexual harassment/constructive discharge context....

      Still, even if the Court were to entertain this defense, it is clear that what Joe Ryan has argued is a far cry from the traditional defenses of “license” and “ratification.” Indeed, in its opposition brief, Joe Ryan claims that Ms. Brown’s “eager, enthusiastic and contributory participation to the acts and language she now complains of” evidences her purported “license” and “ratification” of the discriminatory conduct she endured while employed with Joe Ryan.

      In Joe Ryan, the employee allegedly hung a sexually suggestive cartoon in a work trailer. Just because an employee engages in some workplace banter, however, does not mean that she acquiesces to all forms of sexual misconduct, such as being called a “whore” (one of the allegations in the case).

      Employers need to build these concepts into their workplace anti-harassment training. Employees need to understand that some participation in sex-based workplace hijinks does not create a license to harass in perpetuity. No one can tell where someone draws his or her personal line of inappropriateness, and trying to make that decision for someone else can only result in trouble (i.e., a lawsuit) down the road.

      This post originally appeared on The Legal Workplace Blog.

      Wednesday, April 17, 2013

      SCOTUS: Picking off individual plaintiffs moots wage and hour collective action


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      The pickoff is one of the most dramatic defensive plays in baseball. It can single-handedly kill a rally. The tying run on first? One deft move by the pitcher to first base, coupled with a lead that’s one step too cocky? Rally over.

      We love baseball in part because it can be a metaphor for much that happens in our lives. Today, it’s a metaphor for wage and hour law.

      The issue the Supreme Court faced in Genesis Healthcare Corp. v. Symczyk (4/16/13) [pdf] was whether a case becomes moot when the lone plaintiff receives an offer from the defendants to satisfy all of the plaintiff’s claims. Last December, I predicted an employer loss in this case (the link also provides all the case background you’ll need).

      I’m happy to report that my prediction was very wrong. In a partisan 5-4 decision, the Court held as follows:

      Because respondent had no personal interest in representing putative, unnamed claimants, nor any other continuing interest that would preserve her suit from mootness, her suit was appropriately dismissed for lack of subject-matter jurisdiction.

      In other words, because there was nothing left for the plaintiff to litigate after the rejected offer of judgment, the plaintiff had no right to pursue the remaining collective claims.

      Here’s the money quote from the Court:

      In this case, respondent’s complaint requested statutory damages. Unlike claims for injunctive relief challenging ongoing conduct, a claim for damages cannot evade review; it remains live until it is settled, judicially resolved, or barred by a statute of limitations. Nor can a defendant’s attempt to obtain settlement insulate such a claim from review, for a full settlement offer addresses plaintiff’s alleged harm by making the plaintiff whole. While settlement may have the collateral effect of foreclosing unjoined claimants from having their rights vindicated in respondent’s suit, such putative plaintiffs remain free to vindicate their rights in their own suits. They are no less able to have their claims settled or adjudicated following respondent’s suit than if her suit had never been filed at all.

      There is perhaps no greater threat facing employers than the risk of a wage and hour collective action—both because of the difficulty in complying with the FLSA’s maze of anachronistic rules and regulations, and because of the expense incurred in defending such a claim. Genesis Healthcare confirms that employers have a powerful weapon at their disposal to cut these dangerous claims off at their knees—a Rule 68 offer of judgment.

      Much like a baserunner failing to anticipate a deft pitcher’s move to first base, the Court confirmed that a valid offer of judgment can catch your opponent off-guard and end their hopes of a successful collective action.

      For more analysis of this decision, please read the thoughts of some of my fellow bloggers:

      photo credit: Chicago Man via photopin cc

      Tuesday, April 16, 2013

      Do you have a workplace emergency action plan?


      Yesterday’s tragedy in Boston has left me speechless. I’m frankly not sure what to say, other than I’m sick of these horrible events; what to think, other than to offer prayers; or what to feel, other than sadness for those affected.

      We will search for answers (How could this happen? Who could do such a thing? How can anyone be capable of such hatred or ignorance? How do we prevent it from happening yet again?) Yet, from this tragedy we can take away one certainty—that no one can predict when or where tragedy will strike, and it pays to be prepared for the worst. Boston seems to have been prepared, and at least by early accounts, the city’s early responders helped save many from suffering a worse fate.

      Employers can learn an important lesson from these ashes and tears—the importance of being prepared. OSHA publishes a booklet entitled, How to Plan for Workplace Emergencies and Evacuations. Not all employers are required to follow it, but all employers should heed its words by taking steps to prepare for the worst.

      As OSHA explains it:

      Nobody expects an emergency or disaster—especially one that affects them, their employees, and their business personally. Yet the simple truth is that emergencies and disasters can strike anyone, anytime, and anywhere. You and your employees could be forced to evacuate your company when you least expect it.… The best way to protect yourself, your workers, and your business is to expect the unexpected and develop a well-thoughtout emergency action plan to guide you when immediate action is necessary.… Few people can think clearly and logically in a crisis, so it is important to do so in advance, when you have time to be thorough. Brainstorm the worst-case scenarios. Ask yourself what you would do if the worst happened.

      You cannot control the idiocy of others, but you can control whether you know how to respond if it happens.

      I’ll leave you with the words of stand-up comic and actor Patton Oswald, who, on his Facebook page, held out hope for humanity’s inherent goodness, and perhaps made the most poignant statement in the wake of yesterday’s horrors:

      Boston. F*cking horrible.

      I remember, when 9/11 went down, my reaction was, “Well, I’ve had it with humanity.”

      But I was wrong. I don’t know what’s going to be revealed to be behind all of this mayhem. One human insect or a poisonous mass of broken sociopaths.

      But here’s what I DO know. If it’s one person or a HUNDRED people, that number is not even a fraction of a fraction of a fraction of a percent of the population on this planet. You watch the videos of the carnage and there are people running TOWARDS the destruction to help out. (Thanks FAKE Gallery founder and owner Paul Kozlowski for pointing this out to me). This is a giant planet and we’re lucky to live on it but there are prices and penalties incurred for the daily miracle of existence. One of them is, every once in awhile, the wiring of a tiny sliver of the species gets snarled and they’re pointed towards darkness.

      But the vast majority stands against that darkness and, like white blood cells attacking a virus, they dilute and weaken and eventually wash away the evil doers and, more importantly, the damage they wreak. This is beyond religion or creed or nation. We would not be here if humanity were inherently evil. We’d have eaten ourselves alive long ago.

      So when you spot violence, or bigotry, or intolerance or fear or just garden-variety misogyny, hatred or ignorance, just look it in the eye and think, “The good outnumber you, and we always will.”