Alabama Employment Law Report : Alabama Employment Lawyer & Attorney : Daniel J. Burnick : Sirote & Permutt Law Firm

Last week, I attended the 6th Annual American Bar Association's Annual Labor and Employment Law conference.  It was attended by lawyers from around the world, and focused on the current state of labor and employment law and what the hot topics of today and the immediate future.  In no particular order, here are some of the topics talked about:

1.  The National Labor Relations Board has been very active pushing it's agenda, and focusing on policies and procedures.  Remember that the National Labor Relations Act provides protection to employees who engage in protected concerted activity as it relates to the terms and conditions of employment, in both union and non-union settings.  The NLRB has recently addressed polices concerning social media, at will employment, and the confidentiality of investigations as the result of allegations of harassment and discrimination.

2.  Retaliation charges filed with the EEOC are now number one in that 37% of all charges filed contain allegations of retaliation.  This is a higher percentage then race and sexual harassment charges.

3.  The Fair Labors Standards Act continues to account for a great deal of litigation, both for overtime and misclassification of workers as either exempt or as independent contractors.

4.  The improper use of computers can lead to both criminal and civil liability under the Computer Fraud and Abuse Act, the Electronic Espionage Act (criminal only), the Electronic Communications Privacy Act, the Stored Communications Act, and various state laws.  The local U.S. Attorneys' office has a Computer Hacking and Intellectual Properties (CHIP) lawyer, and can be contacted should there be any issues.  You can visit Cybercrime.gov, for more information and resources from the Department of Justice.

5.  The EEOC continues to be busy, but like most governmental agencies claims a budget shortfall.  The EEOC will continue to be active in issuing regulations and enforcement guidance, but will be more selective when filing lawsuits. According to one of the attorneys for the EEOC, they are "trying to push the envelope" in certain areas, including same sex harassment, gender stereotyping, and in the LGBT arena.

6.  Social Media continues to raise concerns in the workplace.  In the U.S., 163 million people, or 53% of the population, use Facebook.  Globally, there are over 1 billion users of Facebook, and there are 2.5 billion posts a day.  There is an average of 3,000 tweets a second, with the record being set during the last presidential debate, with 100,000 tweets per second. The use of other SM sites continues to grow.  

7.  Workplace bullying, both in person and cyber-bullying is growing.

Practice pointer.  As we approach the end of the year,  now is a good time for employers to review and/or have an audit done of their policies and procedures, and revise them as necessary to comply with the changes that have occurred over the past year.  Make sure there is proper classification of employees for FLSA purposes, that the NLRA is not violated, and that other policies are current and up to date.  Now is also a good time to train all workers, including supervisors, on various employment related issues, including harassment, discrimination, social media policies and other workplace rules and regulations. 

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FLSA continues to be a problem for employers. 

The Harvard Club (not affiliated with Harvard University) is an exclusive club in Boston with approximately 5,000 members.  When a member orders drinks or food, a 17% gratuity is added to every bill.  The club has a no-tipping policy.  The staffers make more than most hospitality workers.  State law provides that when a customer pays a "service charge", the customer would reasonably expect the money to go to the server in lieu of a tip.  In reality, the servers were not given the 17%.  The waitstaff sued the Harvard Club, and a settlement has been reached, pending court approval.

Meanwhile, in Alabama, there have been numerous lawsuits (although I have not counted, I would guess at least 100) against Honda Manufacturing.  These individual lawsuits are all claiming violations of the FLSA.  The time and expense that will be incurred in defending these lawsuits will be enormous.  FLSA cases continue to be among the most common filed in Federal court. As we are about to enter the fourth quarter of 2012, now is a good time for employers to review the classification of their employees and make sure they are being properly compensated.

Twitter leads to arrest and indictment of Birmingham man.

 Another stupid social media update.  According to Al.com, Jarvis Britton of Birmingham apparently tweeted, on June 28, "Free Speech? Really?  Let's test this! Let's kill the president".  Later that same day, he tweeted "I'm going to finish this, if they get me, they get me! #ohwell.  I think we could get the president with cyanide.  #MakeitSlow".  On June 29, he allegedly tweeted "Barack Obama, i wish you were DEAD!".  Secret Service agents met with him to advise him as to the seriousness of what he did, but no further action was taken. On September 14, Britton allegedly tweeted "Let's kill the president. F.E.A.R.".  He was arrested last week, and was indicted this week for threatening the life of the President. Another instance of stupidity with social networking. 

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Recently, I wrote about a logger who got bit by a rattlesnake and had his workers' compensation claim denied.  This week, we switch gears to talk about exotic dancers and their misclassification as independent contractors.  Karenza Clincy, with other dancers, sued the Onyx, an adult club in Atlanta for wage and hour violations:  i.e. seeking minimum wage and overtime.  Ms. Clincy and her co-workers danced, in the nude, in an exotic fashion.  According to TLNT some of the pertinent facts are:

     * Nude dancing is featured at Onyx

     * Dancers on the main stage are visible throughout most of the club

     *  The dancers are assisted by "House Moms" hired by the club

     *  Rules of the house are provided to dancers in a "Dance Packet"

     * The adult entertainment licenses are paid for by the dancers

     *  Onyx is paid a fee by the dancers

     * The money thrown on stage by the customers is divided evenly between the dancers and the house gets a cut

     *  Dancers have limited discretion over scheduling and are fined for missing work or violating certain house rules.

TLNT sums up the finding by the court  holding the dancers are employees, not independent contractors, by quoting from the Overtime Law Blog as follows:

     "However, based on evidence that the defendants set the prices for tableside dances and how much of their gross receipts dancers were required to turn over in the form of "house fees" and disc jockey fees, as well as the fact that the defendants set specific schedules for the dancers, created rules of conduct (subject to discipline), check-in and check-out procedures and otherwise controlled the method and manner in which plaintiffs worked, the court held that the defendants were plaintiffs' employers under the FLSA."

The entire order entered by Judge Story can be read here. For a very funny, clean and explanatory video see YouTube.  Although I do not know the terms of the settlement, the case was resolved in June, 2012. 

Practice pointers.  Although Judge Story entered his order last year, the facts of this case can be instructive for any business.  If the employer controls the time and manner of work, the worker is an employee, not an independent contractor, no matter what you call them.  This is a very complex and fact specific area of the law, there continue to be many cases filed in Alabama alleging violations of the FLSA.

Social Media Update.    BirminghamMedicalNews.com is a website that refers to itself as "your primary source for professional healthcare news."  They have a blog, and I was asked to submit an entry on the impact of social media in the medical profession.  The blog entry can be viewed here.  The lessons learned in the medical profession apply as well in any work setting.  People continue to do very stupid things on social media sites, and their conduct can have an adverse impact on their employment status. 

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In a major ruling, the Supreme Court, in a 5-4 vote, found that pharmaceutical reps are not entitled to overtime payments for time worked in excess of 40 hours a week.  In the Christopher v. SmithKline Beecham opinion, released earlier this week, the Court found that the sales reps, who provide information to doctors about the company''s products were outside salespeople, not entitled to overtime.  Knowing several pharma reps, they do work long hours, including many  nights making presentations to doctors.  In 2009, the Department of Labor first asserted that pharma reps were not exempt, and reiterated this position in several other cases since then.  Although courts often defer to the interpretation of a department's own regulations, the Court found that the DOL's interpretation would create massive liability for the companies, and that the DOL never took this position until 2009.  Although the reps do not actually sell the drugs to doctors, they try to obtain commitments to prescribe the drugs they promote.  This is the most they can do, based on the heavily regulated industry.  The Court found that the reps "bear all of the external indicia of salesmen", with their experience, training, work in the field and incentive compensation.  In fact, the Court noted that the average income for a rep is $90,000/year. The dissent maintained that the reps were merely promoting their drugs, not selling them. 

Practice Pointers.  Although this decision is relatively narrow due to the special nature of the pharmaceutical industry, the Court rejected the DOL's interpretation of it's own regulations.  This may have a major impact with other agencies, such as the EEOC.  Time will tell.  Additionally, this is another stinging defeat for the Department of Justice, which has lost a number of high profile cases in the recent past, from the Montgomery Bingo trial to John Edwards to Roger Clemens.  There are 2 more important decisions that should be issued very shortly concerning Obama Health Care and Arizona's Immigration law.  We will see how the DOJ fares in these cases. 

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FLSA. The last month was particularly hard on restaurants and bars.  First, a restaurant owned in part by celebrity chef Mario Batali agreed to a $5.25 million FLSA settlement.  The case arose from a number of his New York restaurants, including Babbo, Casa Mono, the Spotted Pig and Tarry Lodge.  Servers at these restaurants sued in 2010, claiming violations of the FLSA including allegations that the restaurants were keeping up to 5% of wine and alcohol sale gratuities, failed to pay minimum wage, and other allegations.  Eleven waiters and bartenders were the named plaintiffs in this collective action. 

Title VII.  In Chicago, 19 women filed a sexual harassment lawsuit against the Tilted Kilt, which has a location in Birmingham.  The suit alleged that the managers created a "sexually hostile, offensive, humiliating and degrading work environment" that was "frequent, severe, on-going and lasted" the entire time the plaintiffs worked there.  The lawsuit contained almost 30 examples of improper conduct, including making comments such as "You don't know what I'd like to do to you" and sticking"g a straw full of water inside outfits, and saying "I'm trying to get your panties wet."  The parent company of the Tilted Kilt  said that  the location in Chicago  is an independently franchised business.  Allegations also include retaliation and intentional infliction of emotional distress.

In Florida, the EEOC announced a settlement against the Hurricane Grill and Wings Restaurant in West Palm Beach for $200,000.  The lawsuit alleged that the company allowed a class of female servers to be sexually harassed by a customer, who happened to be a Palm Beach County Sheriff's Deputy.  The suit alleged that the servers were "frequently grabbed on their breasts and buttocks and humiliated by sexual innuendo, as well as direct invitations to join the harasser and his wife in menage a trois." The EEOC issued a press release, saying, in part, that "A high percentage of sexual harassment charges are filed by women in the restaurant industry and this decree will serve to protect the rights of a particularly vulnerable segment of the work force." 

Practice pointer.  As pointed out by the EEOC, the restaurant industry has a large number of complaints concerning sexual harassment, as well as FLSA problems.  Any employer in this industry must be vigilant to make sure the employees are treated properly and paid according to the law. 

Title VII: Religious Discrimination.  The EEOC announced a $125,000 settlement with the Menorah House, a nursing and rehabilitation facility in Boca Raton, Florida.  For at least 8 years, the Menorah House had accommodated 2 Seventh-Day Adventists by allowing them to not work on Saturdays. Management instituted a policy that required all employees to work on Saturday, regardless of their religious beliefs.  The EEOC filed suit on behalf of the 2 employees after they were fired because their religion prohibited them from working on Saturdays.  According to the EEOC press release, Title VII "prohibits religious discrimination and requires employers to make reasonable accommodations to employees' sincerely held religious beliefs so long as this does not poses an undue hardship."

Workers' Compensation.  The Alabama Court of Civil Appeals issued a decision last week involving the right of  a workers' compensation carrier to recover funds from a third party tortfeasor.  Mongham was injured at work, and recovered a "large amount" in workers compensation benefits. He also sued a number of third parties, alleging that they caused the accident, and entered into settlement agreements with the third parties, in which they agreed to pay a lump sum and purchased an annuity to pay Mongham over time.  The employer asked the trial court to recover from the settlement funds the amount it paid in workers' compensation benefits.  The trial court ordered that they employer receive an initial lump sum payment, and a portion of the annuity payments until it was fully reimbursed.  On appeal, the Alabama Court of Civil Appeals found that an employer's right to recover from third party funds has priority over the employee's right to recover those funds, and order that the employer should receive the entire monthly payments until it was fully reimbursed. 

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Happy New Year to everyone.  2012 begins with more weird stuff in the employment world, which is actually pretty normal. 

Lady Gaga sued for overtime.  In New York, Lady Gaga has been sued by her ex-personal assistant for overtime.  Jenifer O'Neill sued Mermaid Touring, Inc, Lady Gaga's company, on December 14, 2011, seeking almost $380,000 in unpaid overtime for 4 weeks in 2009 and 52 weeks in 2010 and 2011.  The allegations in the suit are Ms. O'Neill was responsible for attending to Lady Gaga's needs "not only in her home, but also during her travels for her global concert tours, from city to city throughout the world, at locales, including stadiums, private jets, fine hotel suites, yachts, ferries, trains and tour buses. Plaintiff was always behind the scenes, and figuratively, if not literally, always at her side."  Her job duties included confirming Lady Gaga's schedule, reviewing and reconciling her credit card statements, "ordering meals and ensuring that they were correctly prepared and served at specific times; maintaining the principal's personal supplies, ensuring the availability of chosen outfits; ensuring the promptness of a towel following a shower; and serving as a personal alarm clock to keep [Lady Gaga] on schedule".  Ms. O'Neill is alleging that she was on call 24 hours a day, seven days a week:  she was responsible for "maintaining [Lady Gaga] on her desired schedule from the earliest waking hour, for being responsive to the slightest need throughout the day, and for addressing spontaneous, random matters in the middle of the night."    O'Neill was paid a salary of $75,000 per year.  This lawsuit sheds some light into the glamorous life of a pop star, and it will be interesting to see how it is resolved.

President Obama announces 3 recess appointments to NLRB.   On a more serious note, the NLRB issued a press release on January 4 announcing President Obama's intent to recess appoint Sharon Block(a democrat), Terence Flynn(a republican) and Richard Griffin(a democrat) to fill the 3 vacant seats on the NLRB.  Ms. Block worked for Senator Kennedy, was a senior attorney at the NLRB for a number of years, and currently serves as Deputy Assistant Secretary for Congressional Affairs at the U.S. Department of Labor.  Mr. Flynn is currently serving as Chief Counsel to NLRB Board Member Brian Hayes.  Mr. Griffin is General Counsel for the International Union of Operating Engineers.  Since 1983, he has served on the board of directors for the AFL-CIO Lawyers Coordinating Committee.

Practice pointer.  These appointments will give the Board it's 5 members, 3 democrats and 2 republicans.  Over the past year, the NLRB has been very active and, in my opinion, very pro-Labor.  I anticipate these recess appointments will be contested, but if they stand, the NLRB will continue to be active and pro-Labor.

Did ICE Mistakenly Deport a 14 year old runaway?  WFAA in Dallas broke a story this week about 14 year old Jakadrien, a 14 year old who ran away from her Dallas area home in the fall of 2010.  She ended up in Houston, where she was arrested by police for theft.  She provided the police a fake name, and when the name was run through the computer system, it was the name of a 22 year old illegal immigrant from Colombia, who had outstanding warrants for her arrest.  ICE was called in, and although she spoke no Spanish, she was deported to Colombia.  Upon her arrival in Colombia, she was provided a work card by the government and released.  U.S. authorities got involved, and asked the Colombian police to pick her up.  She is currently in a Colombian detention facility, and the Colombian government won't release her at this time. 

Practice pointer.  Although this story is just breaking and a lot of information is still sketchy, questions are being raised over how and why ICE deported a 14 year old U.S. citizen to Columbia.  You can read more about it at WFAA, NY Daily News, andUSA Today.

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Before I get started, I would like to thank all of our Veterans and active service members, and their family members,  for their service to our country and the sacrifices they have made to make our country a better and safer place. 

You can now follow me on Twitter  @DanielBurnick.

FLSA Issues continue to plague employers.  Over the years, I have written about the problems associated with employers not properly paying their employees.  (October 18, 2011, May 10, 2011, August 17, 2010, July 2, 2010, June 3, 2010 and February 21, 2010).  Recently, the Mobile Press Register ran a story pointing out that wage and hour litigation was up 18% in 2010, and the upward trend is expected to continue during 2011 and into 2012.  The problems include misclassification of employees as exempt when they should be non-exempt, the misclassification of employees as independent contractors, and failure to pay overtime for any work performed in excess of 40 hours a week.  As pointed out in the Mobile Press Register's article, "review your compensation practices", "verify your record keeping", make sure your records are accurate, and make sure overtime is paid properly. 

Practice pointer.  As we head towards the end of another year, now is the time to do an audit of your policies and procedures to verify compliance with the FLSA, and train all your employees on these issues.

E-VERIFY and unintended consequences.  Recently, Bloomberg Businessweek ran an article entitled "A Verification System for New Hires Backfires".  In this article, a number of examples are given where employers who have enrolled in the E-Verify system have had trouble finding enough workers to do the work.  About 5% of the companies, around 300,000, use E-Verify.  This number will go up as states around the country implement the mandatory use of E-Verify for all employers.  In North Carolina, a local flower wholesaler implemented E-Verify, and the owner reports that he could not find enough workers:  "Those who want to work fail to pass E-Verify, and those who pass fail to work."  In Arizona, which made E-Verify mandatory in 2008, worker shortages have been reported in the construction industry and the food service industry.  One way employers are trying to avoid the mandatory use of E-Verify is to misclassify workers as independent contractors.  A Congressional Budget Office report from 2008 estimates that the mandatory use of E-Verify on a national basis would result in the loss of over $17 billion in federal tax revenue. 

Practice pointer.  Employers who attempt to avoid the mandatory use of E-Verify in Alabama are subjecting themselves to potential exposure under many different laws:  Alabama's Immigration law, which may result in the loss of business licenses, claims for overtime under the FLSA, and tax liability under both state and federal laws. 

Unusual excuses to take a sick day.  CBS Moneywatch had an interesting article discussing the most unusual excuses to take a sick day.  Some of them I have actually seen being used.  The article refers to a CareerBuilder survey showing that 29% of employees admitted to calling in sick when they were fine.  I expect the actual number to be higher.  The study also showed that 15% of employers have fired an employee for calling in sick when they were not, and 28% of employers admitted to checking up on employees who they thought may not have been sick.  Checking up included requiring a doctor's note (69%), calling the employee at home (52%), having another employee call (19%), and driving by the employee's house (16%).  Some of the unusual excuses listed included a deer bite during hunting season, the kidnapping of a relative in Mexico, drinking anti-freeze by mistake and going to the hospital, and an employee's 12 year old daughter stealing a car so the employee could not get to work.

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Since we have all been overloaded with immigration issues, I will be looking at 3 separate issues in this post.  First,  the Georgia Supreme Court adopted an opinion issued by the Georgia Bar Standing Committee on the Unlicensed Practice of Law (UPL) finding that responding to a garnishment by a corporation is a legal proceeding, and corporations must be represented by counsel in doing so.  Employers in Georgia have 30 days to serve and file an answer to a garnishment, and must respond every 30 days during the life of a continuing garnishment.  If a response is not timely filed, the employer may be found in default and may be liable for the entire debt of the employee.  In Georgia, as in Alabama, a corporation cannot represent itself in a judicial proceeding.  Georgia has an exception for cases involving claims of less than $15,000, which are filed in Magistrate Court, where any full time officer or employee of a corporation may represent the corporation. 

Practice pointer.  Using an attorney to respond to garnishments in Georgia will result in additional costs to corporations.  However, not using an attorney may result in civil and/or criminal charges for the unauthorized practice of law, and may result in a default being entered against the corporation for the entire amount of the employee's debt.

Effective January 1, 2012, the minimum wage in Florida will increase from $7.31 per hour to $7.67 per hour.  This increase is the result of 2004 constitutional amendment that requires a new wage calculation every year on September 30, based on the Consumer Price Index.

Practice pointer.  Effective January 1, it will cost more to pay employees in Florida, and I expect that there will be a roll-up, although slight, for workers who are making more than minimum wage as new employees are hired.

The IRS recently announced that is is offering a new "Voluntary Classification Settlement Program" (VCSP) allowing employers who agree to reclassify their improperly classified "independent contractors" as "employees" in exchange for paying significantly reduce penalties.  Aimed at small employers, but open to all, the VCSP allows employers to treat their misclassified independent contractors as employees going forward and the IRS will assess employment taxes, at a reduced rate, only for the tax year before the agreement was entered into, with no penalties, interest or audits.  There are some hidden pitfalls that employers must be aware of.  First, the IRS has entered into a Memorandum of Understanding with the Department of Labor concerning referrals and sharing of information in worker classification cases.  The DOL, or the employee, may come in seeking back benefits and wage and hour benefits (either minimum wage and/or overtime) against the employer.  This is after the employer admits to the IRS that it has misclassified it's employees as independent contractors.  The Office of Federal Contract Compliance Programs and the Occupational Safety and Health Administration will also be receiving and sharing this information.  There may also be potential ERISA violations, unemployment compensation issues, workers' compensation insurance issues and other hidden landmines for employers.

Practice pointer.  As I have written before, it is important for workers to be properly classified, either as employees or independent contractors.  Whether or not an employer decides to take part in the VCSP program, workers need to be properly classified.  The IRS's VCSP sounds good, but there are dangers involved in participating in it.  Before doing so, it would be wise to consult with legal counsel and/or an accountant. 

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The Department of Labor and Apple have teamed up with a new app for the I-Phone to keep track of hours and pay.  According to the Itunes website, the app is described as follows:  "This is a timesheet to record the hours that you work and calculate the amount you may be owed by your employer. It also includes overtime pay calculations at a rate of one and one-half times (1.5) the regular rate of pay for all hours you work over 40 in a workweek. "  There is a link on the Itunes app page to the DOL Wage and Hour Division webpage.  The app is free. 

Practice pointer.  Of course, it is too early to tell if this will result in an increase, in an already busy area of the law, in claims filed for overtime.  My initial feeling is that the app is only as good as the user:  if accurate time is entered, the app will be useful.  Unfortunately, oftentimes, information kept by employees is not always accurate.  This app will make it more difficult to dispute the hours employees claim they work.  Now is a good time for employers to review their time keeping devices to make sure they are used by everyone, and review their policies and procedures about clocking in and clocking out. 
 

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On March 22, 2011, the United States Supreme Court issued a 6-2 decision in the case of Kasten v. Saint-Gobain Performance Plastics Corp.  Kasten worked for Saint-Gobain and orally complained about the location of the timeclocks, which were located in the area between where Kasten and other workers put on and take off their work related protective gear, and the area where they carry out their assigned tasks.  Kasten argued that the timeclock location prevented the workers from being compensated for the time they spent donning and doffing work clothes.  In a related suit, the District Court agreed and found that the workers were not properly compensated under the FLSA for the donning and doffing.  Kasten was discharged, and he alleged that it was in retaliation for his repeated oral complaints about the location of the time clock in accordance with Saint-Gobain's internal grievance resolution procedure.  Kasten alleged that he reported the problem to his shift supervisor, an HR employee, his lead operator and the HR manager.  Saint-Gobain maintained that Kasten was terminated because, after repeated warnings, he failed to record his comings and goings on the timeclock.

The District Court granted summary judgment in favor of Saint-Gobain, concluding that the FLSA's anti-retaliation provisions did not cover oral complaints.  The Seventh Circuit Court of Appeals affirmed.  The Supreme Court, in finding that the sole question presented on on appeal is "whether an oral complaint of a violation of the Fair Labors Standards Act is protected conduct under the [Act's] anti-retaliation provision", concluded that it is.  The Court examined a number of factors to determine if  "filed" includes oral notification,  including dictionary definitions, legislative history of both the FLSA and other Acts that contain antiretaliation provisions,  administrative law history and case law.   As the Court noted, when the Act was passed, Franklin Roosevelt pointed out that  at the time, the workers who were in most need of the Act's help were those who were illiterate, less educated or overworked, and would find it difficult to reduce complaints to writing.  Both the Department of Labor and EEOC hold the view that complaints can be filed orally.  Finally, the Court noted that requiring written notice would prevent Governmental agencies (and employers) from using hotlines, interviews and other oral methods to receive complaints.

Practice pointer.  FLSA cases continue to be one of the most commonly filed lawsuits in Alabama.  As with other employment related cases, the retaliation claims that often accompany them are just as dangerous, if not more dangerous to employers then the underlying claims themselves.  Employers must take seriously and investigate both oral and written complaints concerning possible violations of the FLSA .  Those making the complaints, orally or in writing, are protected by the antiretaliation provisions of the Act.

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"Son" and "daughter" under the FMLA

The DOL  recently gave a broad definition to "sons and daughters" under the FMLA.  The DOL subtitles the announcement by saying "Interpretation is a win for all families no matter what they look like."  Secretary of Labor, Hilda Sols, is quoted as  saying  "No one who loves and nurtures a child day-in and day-out should be unable to care for that child when he or she falls ill.  No one who steps in to parent a child when that child's biological parents are absent or incapacitated should be denied leave by an employer because he or she is not the legal guardian. No one who intends to raise a child should be denied the opportunity to be present when that child is born simply because the state or an employer fails to recognize his or her relationship with the biological parent. These are just a few of many possible scenarios. The Labor Department's action today sends a clear message to workers and employers alike: All families, including LGBT families, are protected by the FMLA."

Practice pointer.  Although courts have not yet had time to determine if the DOL's broad definition of son and daughter will be applied, it is likely to lead to litigation throughout the country.  Employers should examine carefully requests for FMLA leave by non-biological and non-legal parents on a case by case basis.

More Strange Stories

On June 2nd, I published an entry entitled"Two discrimination complaints where truth is stranger than fiction" which addressed a woman's claim that she was fired because she was too hot and an ex-football coach, who is white, suing the historical black university that dismissed him.  This week, Susan Antilla, with Bloomberg, published an article entitled "Sex harassment at work gets weirder, scarier."  She reviewed EEOC press releases, and come up with some of the stranger complaints made by employees.  I cannot do justice to them, so I would recommend that you read her article. 

Practice pointer.  Truth is stranger than fiction.  I routinely see allegations that make you go Duhhhh.  HR professionals need to continue to monitor the workplace, train the entire workforce on a regular basis, and take every complaint seriously, no matter how strange it may seem.

BlackBerries and Overtime

Last year, I wrote about the possible exposure to claims for overtime pay for the use of PDA's outside the regular 40 hour workweek.  A suit had been filed by various T-Mobile employees claiming that they were entitled to overtime pay since they had to use their PDA's after regular work hours.  NPR recently ran a story about a new class action lawsuit filed in Chicago by police officers.  Cheryl Corley's article, entitled "Using Your Blackberry Off-Hours Could Be Overtime" discusses a lawsuit filed by Sgt. Jeffrey Allen against the Chicago Police Department  alleging that he, together with other officers, had been given BlackBerries by the department and were using them routinely while off duty at the behest of the department, and not being compensated for it.  While using the BlackBerry for a minimal amount of time while off duty may not result in overtime, using 15 minutes a night may, and adds up in a hurry, especially in a class action suit.  Mayor Daley's reaction, as quoted in the article, is somewhat concerning, as he said the suit is "silliness in time of economic crisis" and "We're public servants.  If I asked for that, I'd be paid millions of dollars.  We'd have to take all the BlackBerrys away from the workforce."  Mayor Daley's quote is followed by a quote from Sean Rogers, an arbitrator who happens to be a former Washington D.C. police officer and is now the head of an arbitration firm:  "I don't think that any mayor would say that anti-discrimination laws are silly.  There are similar laws....I had one arbitration that involved 7,000 employees and they ultimately settled for something over $23 million."

Practice pointers.

As I have written and talked about in the past, it is important for companies to have electronic communications policies, including the use of PDA's away from work.  Companies that permit, or even require the use of PDA's away from work may be subjecting themselves to overtime claims by non-exempt employees.

Additionally, employers should have a policy concerning who will deal with the press.  In my opinion, I would not want a corporate CEO making the statements that were attributed to Mayer Daley: they may come back to haunt him as this case progresses through the court system. 

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I have regularly reported that FLSA overtime cases continue to be filed in large numbers.  Recently, the New York Times published an article addressing overtime issues in hospitals and nursing homes.  Robert Pear wrote that the Obama administration is looking into pay practices throughout the health care industry.  The investigation was prompted after a finding that many hospitals and nursing homes do not properly pay overtime to nurses and other employees who work in excess of 40 hours per week.  The Department of Labor has recently recovered more than $1.7 million in back wages for approximately 4,000 employees of SSM Health Care, a Roman Catholic system.  Partners HealthCare System in Boston paid more than $2.7 million in back overtime wages to 700 employees.  There is a proposed class action settlement in California involving Kaiser Permanente, requiring payment of $7.25 million to hundreds of medical workers who were allegedly classified as exempt.  Mr. Pear notes that "The Labor Department has hired 250 new wage-and-hour investigators, representing a staff increase of one-third.  The government wants to make sure workers get "every penny they earn," said Kenneth Stripling, a Labor Department official leading enforcement efforts in Birmingham, Ala.....Nursing assistants, licensed practical nurses, janitors and cooks "are particularly vulnerable to wage violations," Mr. Stripling said."   The president of the Greater New York Hospital Association is quoted as saying: "Hospitals are complicated organizations, and record-keeping for employees is astronomically complicated...Workers cannot just drop patient care when the lunch hour arrives.  We are not like an assembly line, which can shut down at lunchtime, or a bank, where people work 9 to 5."

Practice pointer.  As the DOL continues to increase enforcement of the FLSA, especially as it pertains to overtime, many industries, including health care, will be subject to increased scrutiny.  Now is a good a time as any for employers to review the classification of their employees to make sure that those entitled to overtime receive it if they work over 40 hours per week. 

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Americans With Disabilities Act Turns 20

This week marks the 20^th anniversary of the passage of the Americans With Disabilities Act. According to the Washington Post, the EEOC released a report indicating that “workers with targeted disabilities – including deafness, blindness, missing extremities, mental retardation, and partial and complete paralysis – represent less than 1% of the federal work force.” Based, in part, upon this report, President Obama issued an executive order requiring federal agencies to increase their efforts to hire 100,000 disabled employees over the next five years. “The order directs the office of Personnel Management, in consultation with the Labor Department, the EEOC and the Office of Management and Budget, to design strategies within 60 days for recruiting and hiring disabled workers. Personnel Managers at government agencies must be trained in employing the disabled. Agencies will then be required to development plans for recruiting and keeping the workers.” Also, this week, the House of Representatives passed legislation making the Internet and television more accessible to the disabled. The Bill, which now goes to the Senate, would require the telecommunications industry to caption on-line television programs and that telecommunications equipment that is used over the Internet be compatible with hearing aids. 

Practice pointer.  There has been quite a lot of recent activity concerning the accessibility of web sites for visually and hearing impaired individuals.  As with many laws, technology moves faster then the law can.  Businesses with web sites should be prepared to address these issues in the near future.

Update on Nursing Mothers

The U.S. Department of Labor, Wage and Hour Division, issuedFact Sheet No. 73 providing general information on the breakdown requirement for nursing mothers in the Patient Protection and Affordable Health Care Act which became effective on March 23, 2010. The DOL states that “employers are required to provide a reasonable amount of break time to express milk as frequently as needed by the nursing mother. The frequency of breaks needed to express milk as well as the duration of each break will likely vary.” The DOL further points out that a bathroom is not a permissible location even if private. The location provided must be functional as a space for expressing breast milk. The DOL believes that “a space temporarily created or converted into a space for expressing milk or made available when needed by the nursing mother is sufficient provided that the space is shielded from view, and free from any intrusion from co-workers and the public.” The break time only applies to employees who are not exempt from the FLSA’s overtime pay requirements. Employers with fewer than 50 employees are not subject to the FLSA break time requirements if compliance with the provision would impose an undue hardship. An undue hardship “is determined by looking at the difficulty or expense of compliance for specific employers in comparison with the size, financial resources, nature, and structure of the employer’s business.” The DOL further finds that “employers are not required under the FLSA to compensate nursing mothers for breaks taken for the purpose of expressing milk. However, where employers already provide compensated breaks, an employee who uses that break time to express milk must be compensated the same way that other employees are compensated for break time.”

Home Depot Male-on-Male Sexual Harassment Case Settles

I recently reported on the Home Depot case involving  store manager David Corbitt.  While on appeal before the 11^th Circuit in a rare en banc session, the case settled and the appeal was dismissed before the court could enter a ruling. In light of the fact that the 11^th Circuit decided to hear the case en banc, the December panel opinion was vacated.

Practice pointer.  In light of the 11th Circuit's granting of an en banc hearing, the issues raised in this case peaked the interest of the judges.  Since the case was settled before a decision was released, the 11th Circuit will need to find another case with similar issues in order to address the issues raised in this case. 

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Recently, the 2nd Circuit Court of Appeals, which governs New York, Connecticut and Vermont, found that pharmaceutical reps employed by Novartis are not exempt under the FLSA and are entitled to overtime for any hours worked exceeding 40 in a week.  The court, on the same day, ruled against Schering on the same issue.  The court found that these reps are not exempt from overtime as outside sales persons or as administrative employees under the FLSA.  Earlier this year, the 3rd Circuit Court of Appeals, covering Delaware, New Jersey, Pennsylvania  and the US Virgin Islands, found that a pharmaceutical sales rep for Johnson & Johnson and AstraZeneca reps were exempt under the administrative exemption.  The 3rd Circuit did not address the outside sales exemption.  A key factor in the 2nd Circuit's decision was the fact that the Department of Labor filed an amicus brief, arguing that the pharmaceutical reps were entitled to overtime.  The court granted "controlling deference" to the DOL's position since it was not "plainly erroneous or inconsistent with" the DOL's regulations on the issue.  It is important to keep in mind that the pharmaceutical industry is somewhat unique since the reps are barred by federal law from making actual sales to physicians.  They can give samples to physicians, but cannot take orders for the purchase of drugs, and they cannot obtain a binding commitment from a physician to prescribe their particular drug.  The 3rd Circuit, in reaching the opposite conclusion, found that pharmaceutical reps "make sales in the sense that sales are made in the pharmaceutical industry" and were entitled to overtime.  Having been married to a pharmaceutical sales rep, I know that they do work long hours, usually over 40 per week, and their income is quite substantial, with many experienced and successful reps making over $100,000.  The amount of overtime they would be entitled to, if the 2nd Circuits opinion stands, will be astronomical. 

Practice Pointer.  Although these cases deal with a very specific and highly regulated industry, there may be implications for other marketing jobs where actual sales are not made: such as those who may promote products sold by others, or marketing type employees who may not fall under the FLSA's administrative exemption.  I anticipate that with the split among the circuits, and the wide ranging implications of the split, there is a good chance that this issue will make it's way to the Supreme Court, although it may take a number of years. 

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The EEOC announced another large settlement involving a large Alabama company.  The EEOC issued a press release on July 1 announcing a $100,000 settlement with McGriff Industries, a Cullman company, to settle a racial harassment and retaliation lawsuit filed by the EEOC.  According to the EEOC, "certain employees and managers in the Cullman facility routinely  used racially derogatory comments, slurs, and insults directed at or about African-Americans. The racial  misconduct escalated to threats and intimidation, including a derogatory threat  to cut one of the black employees. White  and black employees were offended by the racial misconduct, but were rebuffed  and retaliated against -- one employee was terminated and another had  his work assignments changed -- when they complained."

Practice pointer.  Training.  Training.  Training.  Supervision.  Supervision.  Supervision.  I don't need to say any more. 

Health Care Reform amends FLSA to require breastfeeding breaks.  Nursing mothers are now allowed to take a reasonable break when they need to express breast milk, and employers are required to provide a private location, other than a bathroom.  This applies for up to one year after the child's birth.  Employers with less than 50 employees are exempt if "an undue hardship" would be imposed by causing the employer significant difficulty or expense. 

Practice pointer.  As the Obama administration continues to put it's mark on the workplace with new laws and regulations, this is just another one that is now in place and imposes new obligations on employers.

FMLA claim for depression rejected.  The 8th Circuit, in the case of Kobus v. The College of St. Scholastica, Inc. found that  an employer has no obligation to reasonably accommodate an employee under the ADA when the employee did not inform the employer that he needed an accommodation.  Kobus was a painter for the college, and due to personal and family issues, was diagnosed with depression and prescribed Paxil.  He told his supervisor that he was suffering from stress and anxiety, but did not mention the diagnosis of depression.  When he told his supervisor that he needed time off work to deal with his stress, the supervisor placed a FMLA from Kobus's mailbox.  Kobus responded that he did not need leave.  Shortly after, Kobus was written up for excessive absenteeism.  Kobus then asked for "mental health leave" and his supervisor again asked if he wanted FMLA leave, and Kobus advised him that he did not have a doctor to fill out the FMLA form.  Kobus submitted a letter of resignation and received 2 weeks severance.  Kobus never mentioned depression or his medications and did not mention his condition or FMLA leave during his exit interview.  Kobus then sued the College claiming he was forced to resign and he was denied his FMLA rights and was discriminated against under the ADA.  The trial court dismissed these claims on summary judgment, finding that Kobus did not pursue FMLA leave and  "in fact, expressly rejected it", and that the ADA claim was due to be dismissed since he never informed the College that he needed a reasonable accommodation due to a disability. 

Practice pointer.  This decision demonstrated the need to train supervisors on various laws that apply in the workplace, including FMLA and ADA.  The supervisor, even though no mention was made by Kobus for FMLA leave, offered to treat it as such, and Kobus refused.  The Court further found that the ADA was not violated since Kobus never informed the College that an accommodation was needed. 

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Tyson Foods entered into an agreement with the Department of Labor to settle a a lawsuit filed in 2002 on behalf of the workers in the Blountsville plant according to Al.com.  The agreement calls for Tyson to pay $500,000 to approximately 3,000 workers for overtime wages under the FLSA for "donning and doffing" and for the time spent washing and sanitizing themselves and the items they work with.  Tyson also agreed to enter into a nationwide injunction requiring them to pay poultry processing workers for donning and doffing time.  Secretary of Labor Hilda Solis is quoted as saying "I am pleased that , as result of this agreement, poultry processing employees at Tyson Foods plants will receive the full wages that they rightfully earn and deserve."  Tyson spokesman Ken Kimbro is quoted as saying "We've decided to resolve this case and modify our pay practices for certain jobs in order to avoid the continued expense and disruption of further litigation."

Practice pointer.  There continues to be a large number of FLSA cases being filed in Alabama.  Employers should review their classification of employees and their pay practices on a regular basis to comply with the FLSA. 

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Last Wednesday, Sirote & Permutt hosted a seminar that addressed issues surrounding the legality of unpaid summer interns.  On Friday, Roy Williams, with the Birmingham News, published a story entitled "Grads may face hard lesson as they join job market", writing that "Continued weakness in the entry-level job market could force many newly-minted grads to accept lower-paying service sector positions or forsake income entirely by volunteering or accepting unpaid internships, according to" Challenger Gray & Christmas, a Chicago based outplacement firm.

Last month, the Department of Labor published Fact Sheet 71, entitled "Internship Programs Under the Fair Labors Standards Act".  The fact sheet sets forth the test for unpaid interns in the for profit sector:

1.  The internship, even thought it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

2.  The internship experience is for the benefit of the intern;

3.  The intern does not displace regular employees, but works under close supervision of existing staff;

4.  The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

5.  The intern is not necessarily entitled to a job at the conclusion of the internship; and

6.. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If all 6 factors are met, the intern can be an unpaid "trainee".  The DOL takes the position that if ALL 6 factors are not met, the person is an "employee" and should be paid at least minimum wage pursuant to the FLSA.

There have been a great number of articles published about summer internships and whether or not they should be paid.  In the New York Times , Nancy Leppink, the acting director of the DOL's wage and hour division, was quoted as saying "If you are a for-profit employer or you want to pursue an internship with a for-profit employer, there aren't going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law."  The article notes that at Stanford University, there were 643 postings for unpaid internships for this past academic year, more than triple the number posted 2 years ago.  In 1992, 9% of graduating students held internships, compared to 83% of graduating students in 2008.  It is estimated that 1/4 to 1/2 of the internships are unpaid.  Two examples of questionable unpaid internships set forth in the New York Times article are:

1.  "One Ivy League student said she spent an unpaid three-month internship at a magazine packaging and shipping 20 or 40 apparel samples a day back to fashion houses that had provided them for photo shoots"; and

2.  "At Little Airplane, a Manhattan children's film company, an N.Y.U. student who hoped to work in animation during her unpaid internship said she was instead assigned to the facilities department and ordered to wipe the door handles each day to minimize the spread of swine flu."

An interesting rebuttal to the DOL's position was published in Swarthmore College's  Daily Gazette.  Soren Larson wrote that "It definitely makes me feel all fuzzy inside to know that people at the Labor Department believe that someone in the world should pay unpaid interns a living wage.  But the Labor Department has no business telling young Americans that they cannot exchange free labor for profitable market skills, connections, and impressive resume filler vital for getting that next job."

Articles on this topic have also been written in Time, The Wall Street Journal, and USA Today.  The Beasley Allen law firm, based out of Montgomery, in it's most recent "The Jere Beasley Report", May 2010, had an entry entitled "Having unpaid interns is not always legal".  In this entry, the firm states: "The abuses we are seeing is where an intern is hired and is doing the exact same job that other paid employees are doing.  In fact, many of them are separately assigned work and have minimum oversight.  Similarly, if an intern is simply making coffee, running errands and cleaning all day, without receiving any educational experience, then the internship probably violates federal law and should be paid."  Beasley Allen is one of the most successful plaintiff's firms in Alabama, and is apparently trying to generate interest in handling these types of cases.

Practice pointer.  The issue of unpaid interns is high on the list of the DOL.  It is also generating interest in the plaintiff's bar.  Most interns and most companies will not complain to the DOL or to a law firm: both receive benefits from the relationship.  But with numerous employers posting unpaid intern positions in public places, such as college campuses, it is easy for the DOL to determine which companies are using unpaid interns.  Also, some of the unpaid interns may become disillusioned with the position, such as those mentioned above, and may actively seek out legal advice.  With all the publicity about this topic in numerous publications, I anticipate that there will be an increase in FLSA claims over the unpaid intern issue. 

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PREGNANCY CLAIMS.  A study of EEOC statistics shows that the number of pregnancy discrimination claims are on the rise.  Since 2005, the number of pregnancy discrimination claims have risen 31%.  This pace is 7% higher then the 24% rise in all job-bias claims filed during this time.  For FYE 2009, there were 6,196 pregnancy claims filed, and a total of $16.8 million was paid to settle pregnancy claims during 2009.  The EEOCwebsite defines pregnancy discrimination as : "Pregnancy discrimination involves treating a woman (an applicant or employee) unfavorably because of pregnancy, childbirth, or a medical condition related to pregnancy or childbirth." 

Practice pointer.  Why is there an increase in pregnancy discrimination claims?  I believe there are a number of factors, including the fact that the depressed economy has resulted in more pregnant women working for fear of losing their jobs or because their spouse may have lost his job, there are more single mothers, and more women are willing to bring  a claim because they have nothing to lose.  I anticipate a continued rise in pregnancy discrimination claims for 2010.

EMPLOYEE MISCLASSIFICATION.  I have written before about the increased scrutiny the government is placing on the correct classification of employees: either as employees or independent contractors.  Congress has now gotten involved, with the proposed Employee Misclassification Prevention Act, introduced last week, that would amend the FLSA to specifically prohibit the misclassification of employees and place additional requirements on employers for record keeping purposes.  Some of the proposed requirements include providing written notice to employees of their particular status, and keeping records for each contractor hired that are similar to employee records.  The current proposal gives employers 6 months from the bill's effective date to notify existing employees/contractors of their classification.  There is a proposed civil penalty of $5,000 per violation if the employer does not comply with the record keeping requirements of the proposed law.  Treble damages would be available if there is a wilful violation of the proposed law.

Practice pointer.  The DOL has already hired numerous Wage and Hour Division investigators, and if this proposed legislation passes, there will be additional burdens placed on businesses to comply with the law.  Now is the time to review how your employees/contractors are classified to make sure that employers are in compliance with the law. Misclassificaiton of workers will continue to be a major focus of the DOL, and perhaps other governmental agencies, such as the IRS.  If the proposed law passes, the scrutiny will be even greater.  The best way to avoid adverse consequences is for employers to properly classify their workers, as either employees or contractors. 

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On March 9, 2009, the 11th Circuit decided the case of Sahyers v. Prugh, Holliday & Karatinos, and this week, the 11th Circuit denied a request for rehearing en banc.  In the Sahyers case, Ms. Sahyers worked as a paralegal for the Prugh law firm.  After she left the firm, she retained a lawyer and sued alleging she was not paid overtime for working more than 40 hours a week.  Before filing suit, no written demand was made seeking a resolution of the dispute, and her lawyer made no attempt to inform the defendants of the claim.  During the course of litigation, although disputed, a settlement demand was made for either $35,000 or $25,000.  After discovery was completed, Prugh tendered an offer of judgment for $3,500, plus any attorney's fees and costs awarded by the court. Prugh accepted the offer, and applied for attorney's fees and costs.  The trial court scheduled oral argument on its own, and Sahyers's lawyer admitted that there was no notice of the claim made to Prugh before the lawsuit was filed, and did so at the direction of his client.  The trial court concluded that Sahyers had prevailed on the case, but found that "there are some cases in which a reasonable fee is no fee" and did not award Sayhers attorney's fees or costs.  On appeal, the 11th Circuit affirmed the trial court's decision, finding that "Defendants are lawyers and their law firm.  And the lawyer for Plaintiff made absolutely no effort-no phone call; no email; no letter-to inform them of Plaintiff's impending claim much less to resolve this dispute before filing suit.  Plaintiff's lawyer slavishly followed his client's instructions and without a word to Defendants in advance-just sued his  fellow lawyers.  As the district court saw it, this conscious disregard for lawyer-to-lawyer collegiality and civility caused...the judiciary to waste significant time and resources on unnecessary litigation and stood in stark contrast to the behavior expected of an officer of the court."

Practice pointer.  As I have blogged about before, there are many cases being filed in the Federal Courts throughout Alabama making claims for overtime under the FLSA.  Many of these claims are nominal ones, such as in Prugh, which settled for $3,500.  Yet many of the plaintiff's attorneys do not notify the defendants until the lawsuit is filed, while seeking attorney's fees.  Perhaps if the logic of the Sahyers' decision was followed in cases that did not involve claims against law firms, many of the FLSA cases would be resolved quicker, without the necessity of filing a lawsuit and wasting a great deal of time and resources of the courts. 

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The President.  The Department of Labor.  The IRS.  There is a great deal of pressure being exerted on employers to properly classify workers as either employees or independent contractors.  According to Inc.  President Obama's 2011 budget includes funding for an additional 100 IRS employees to help crack down on the misclassification of workers as independent contractors.  It is estimated that this will add an additional $7 billion in revenue over the next 10 years for the government.  The IRS is also beginning a 3 year audit of 6,000 companies chosen by random, rather than issues with the company's returns.  The use of independent contractors can save companies as much as 30% in costs since they don't have to pay for social security and medicare taxes, workers' compensation, unemployment compensation, health insurance, vacation or sick leave.  Last week, USA Today ran an article entitled IRS, States crack down on independent worker status abuse.

The New York Times published an article on February 18 entitled "U.S. Cracks Down on 'Contractors' as a Tax Dodge".  The story referred to a federal study that concluded that 3.4 million workers were illegally misclassified as independent contractors instead of employees.  The attorney general from Ohio believes that there are 92,500 misclassified workers in Ohio alone, costing the state over $363 million in lost unemployment insurance taxes, workers' compensation premiums and income tax revenue.  The article notes that the most frequently misclassified workers are "truck drivers, construction workers, home health aides and high-tech engineers."   Misclassification of workers as independent contractors also prevents those contractors from receiving overtime if they would have been entitled to it if they were properly classified as non-exempt employees. 

Finally, closer to home, a study in Tennessee found that 20% of construction workers in Tennessee were either misclassified as independent contractors or paid under the table. 

Practice pointer.  I routinely am involved in representing clients who misclassify employees, usually unintentionally.  With the looming crackdown in misclassification by the federal government, now is a good time to review the classification of workers to make sure that they are being properly identified as either employees or independent contractors.  Companies that are caught misclassifying employees as independent contractors face enormous financial penalties, including income tax, medicare and social security with holdings, and claims for overtime.

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The case of Ricci v. Destafano continues to make the news.  I have reported on this case in several blog entries, and the most recent activity involves the white and Hispanic firefighters filing papers to pursue their claim for back pay, interest and attorney fees.  This case started in 2003 when the city refused to promote the 14 white and Hispanic firefighters: even though the test they took was race neutral, the city felt the results discriminated against black firefighters since none of the black firefighters who took the test scored high enough to get promoted.  The Supreme Court, in June, ruled in favor of the white and Hispanic plaintiffs, finding that New Haven violated their civil rights by disregarding the test results.  Recently, the plaintiffs received their promotions, and the black firefighters filed suit claiming they were discriminated against.  Now, the attorney for the plaintiffs is pursuing claims for back pay, interest and attorney fees.  According to theAP, Karen Torre, the attorney for the plaintiffs, they were subject to "the humiliation and economic hardship of prolonged career stagnancy in a rancorous atmosphere fostered by raw racial divides."  I will continue to keep you posted as this case progresses. 

Also in the news, President Obama signed into law the 2009-2010 spending bill for the Department of Defense, which includes a provision prohibiting most military contractors from enforcing mandatory arbitration provisions in their employment contracts.  The provision prohibiting arbitration came about as the result of a female employer of a defense contractor, working in Iraq, who claimed she had been raped by co-workers, and the employer attempted to enforce the arbitration provision in her employment contract.  In 6 months, this restriction will also apply to subcontractors. 

Finally, on the overtime front, the New York Times  reported this week that a lawsuit filed on behalf of 27 Mexican farm workers in Mississippi for overtime has been settled.  The employees were working under the federal H-2 Visa program, and claimed they were not paid for hours worked in excess of 40 hours a week.  The amount of the settlement was not disclosed.

I hope all of you have a Joyous Holiday Season and a Happy New Year. 

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A number of issues continue to arise in the employment context.  I expect you will be seeing more of these in 2010.  They include the following:

Overtime.  A California court preliminarily approved a $12.8 million settlement involving 650 potential class members claiming overtime.  According to Law.com, Lynn Farris ""who is lead counsel in a similar case against FedEx Ground in the Northern District of Indiana, said companies considering whether to classify people as independent contractors "are likely to take this settlement as further indication that that's a risky business choice."" 

City of New Haven.  I have previously written about the City of New Haven fire department case, Ricci v. Destafano.  The City of New Haven has promoted the 10 firefighters (white and Hispanic)based on a 2003 test and the Supreme Court's decision.  Now, an attorney for New Haven's black firefighters is quoted by the AP  as saying that "the fight is not over because the black firefighters were not heard."  I cannot even imagine the amount of legal fees incurred in taking the case to the Supreme Court and now it will have to be fought all over again by the city.

Jury Duty.  Since I just received my own notice to appear for jury service the first week in January, I found the following case interesting.  In Florida, a supervisor for a security guard company was awarded $150,000 by a jury who found that she was wrongfully terminated after serving on a jury, not being paid $400 for the first 3 days she missed from work(pursuant to county law) and the judge gave the plaintiff a copy of the law protecting jurors and a letter vouching for her jury service.  The jury awarded $30,000 for lost wages emotional distress and $120,000 in punitive damages.

Cool website.  Ebosswatch.com has published it's Worst Bosses of 2009 list.  Included on the list is Mike Swindle, who, while working at Hyundai Motor Manufacturing Company in Montgomery, was found to have harassed a female subordinate, resulting in a verdict in excess of $5 million.  I wrote about this case in my blog on May 4, 2009.

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Wal-Mart agreed to settle a class action suit by as many as 87,000 current and former associates in Massachusetts for $40 million.  The suit, filed in 2001, alleged that Wal-Mart refused to pay overtime, denied rest and meal breaks, and changed time cards.  Each class member will receive between $400 and $2,500.  This settlement comes on the heels of Wal-Mart agreeing to settle 63 other state and federal class actions suits for up to $640 million. 

Practice pointer.  As the world's largest retailer, Wal-Mart's settlement numbers are extremely large.  However, as I have discussed before, there are numerous lawsuits being filed weekly in Alabama against much smaller companies claiming overtime is due to employees.  I am involved in a number of these cases, and they are worrisome to small business's because of the time it takes to gather information, the potential for liquidated damages, and the fact that plaintiff's are entitled to attorney's fees if they are successful.  I would strongly urge all companies to audit how they classify their employees to make sure they are in compliance with wage and hour laws.

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Many of us have read or heard about a number of the big box stores, such as Wal-Mart and Dollar General, that have been sued for overtime by managers and assistant managers.  These suits have resulted in judgments or settlements in the millions of dollars.  Recently, I have noticed a great deal of FLSA overtime lawsuits being filed in Alabama against "mom and pop" stores: such as small or medium size restaurants, many of which are franchisees of larger chains.  Several plaintiff's law firms are specializing in filing these suits.  In fact, during this week alone, I have seen at least 10 such suits that have been filed this week against such businesses as Flying J, Tire Engineers, Hambo Inc. dba Hamburger Heaven and Stough Convenience Store, Inc..  In these businesses, many managers, and especially assistant managers, are misclassified as exempt and are not being paid overtime when they work more than 40 hours a week.  These cases can be crippling for small businesses: liability is often fairly easy to prove, it takes a great deal of time to review payroll records for several years, attorney's fees can be assessed if the case is tried and lost, and there is the possibility of liquidated damages.  For a small business in these economic times, it is difficult to come up with several thousand dollars just to attempt to settle the case, let alone litigate and incur a great deal more in attorney's fees and expenses just to get the case to trial.

Practice pointer.  As we reach the end of the year, now is a good time to review the classification of employees to make sure that they are properly classified as exempt or non-exempt.  Merely calling a person a manager or assistant manager does not, in and of itself, make that employee exempt.  This can be a very complicated area of the law, and legal counsel is recommended when classifying employees for FLSA purposes.

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According to Roy Williams of the Birmingham News, the Supreme Court today let stand a $35.6 million judgment against Family Dollar for not paying overtime to more than 1,400 employees who routinely worked 60-70 hours a week.  The jury found that Family Dollar mis-classified the workers as exempt managers, rather then non-exempt hourly employees entitled to overtime, and awarded overtime pay over an 8 year period of time.

Practice Pointer.  Misclassification of employees, under the FLSA, resulting in claims for overtime, is one of the most common employment claims being filed by employees or ex-employees.  Employers must be sure that their employees are properly classified to avoid damages if the FLSA is violated, which include back pay, liquidated damages and attorneys fees.

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On Monday, August 10, Michael Sanserino wrote an article for the Wall Street Journal entitled: "Lawsuits question after-hour demands of email and cellphones".  In it, Mr. Sanserino examines the T-Mobile case that I addressed on my July 20th blog entry. He also reports on a second case, out of California, where the appellate court recently reinstated a case involving an employee of Lincare who is claiming he is owed compensation for responding to customer's telephone inquiries while on call.  The Lincare case is just another example of how technology has outpaced the law in this area.  Ashby Jones also addressed the T-Mobile case for the Wall Street Journal Law Blog on August 10th.  Although the courts have not yet reached a final decision on whether employees such as those working for T-Mobile and Lincare are entitled to overtime for working with their cellphones, blackberries, I-phones, personal computers, etc., employers must be prepared to address these issues now.  I anticipate that it will be many more months, and maybe even years, before these questions are resolved by the courts.  In the meantime, employers must make the decision to compensate non-exempt employees for time spent on after hour conduct beneficial to the employer, or face the risk of a lawsuit seeking overtime compensation. 

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Last month, on June 24th, I wrote about possible unintended consequences of social networking, and the possible claim for overtime.  Now, a recent proposed class action is being pursued against T-Mobile in New York.  According to Law.com, non-exempt sales associates and supervisors  of T-Mobile were issued  smartphones and "were required to review and respond to numerous T-Mobile-related e-mails and text messages both day and night, whether or not they were logged into T-Mobile's computer based timekeeping system."  The complaint, filed in federal court in the Eastern District of New York, also alleges that these employees were required to participate in various employment related activities, such as participate in conference calls and receive and make work related telephone calls without getting paid.  It is also alleged that employees were required to work off the clock during scheduled meal breaks. Once again, it appears as if technology is moving faster than the law.

Practice Pointers.  Employers should have clear policies and guidelines to ensure that all work related time is captured, even if working at home with  smartphones or personal computers.  The workforce should be trained as to what is and what is not acceptable to the employer in regards to working away from the office: is it permissible?  Does overtime need to be approved in advance by supervisors? Who owns the information? Is it confidential?  Supervisors should be trained to never instruct non-exempt employees to work off the clock.

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The third and final increase in minimum wage over the past three years will become effective on Friday, July 24, 2009.  Yes, only the government can implement such a major change to become effective on a Friday.  The minimum wage is going from $6.55 to $7.25 an hour for non-exempt workers.  This will result in an annual increase of nearly $1,500 per minimum wage worker, if there is no overtime.  As the country continues to work its way through these tough economic times, I believe that the $.70 an hour increase will put an additional financial strain on many small, medium and even large businesses. 

Practice pointer.  Now is a good time for employers to review the classification of their employees  for FLSA purposes.  One of the most frequent problems I see, and one of the most frequent type of lawsuits being filed, involve claims for overtime. 

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On May 1, I published an entry addressing social networking in the workplace.  Subsequent to that time,  I had the opportunity to give another presentation on social networking.  Some interesting questions were asked by attendees that raised additional issues that need to be considered by employers when their employees are using social networking sites for business purposes.  One company permits its workers to use social networking sites to communicate for business purposes after regular business hours.  This raises questions concerning the FLSA and overtime: if non-exempt employees are conducting company business from their personal computers/PDAs, after regular business hours, are they entitled to compensation, including overtime if they work more than 40 hours a week?  Are the employees "on call", thus entitling them to compensation?

Another issue is the ownership of the information exchanged between an employer and an employee on personal computers/PDAs: should someone leave their employment, can they use information on their personal computers/PDAs when they start working for someone else who is a competitor?  Is the information confidential if no steps are taken to make it confidential?

One question that was asked had ADA implications:  a supervisor learned from a social networking site that one of the employees was suffering from depression.  Did the supervisor have an obligation to report this to HR?  If so, did HR have an obligation to go through the interactive process with the employee to determine if the depression was impacting his ability to work?  If so, were there any reasonable accommodations that could be made?

Practice Pointer.  Technology is moving too fast for the courts to keep pace.  Answers to these questions, and many others, will take years to wind their way through the courts.  In the meantime, it is recommended that employers adopt appropriate policies and procedures concerning the use of social networking sites for company business, and confidentiality and ownership of information that may be on personal computers/PDAs. 

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The National Council of EEOC Locals, the union representing EEOC employees, filed a grievance against the EEOC in 2006 regarding overtime disputes that dated back to 2003.  This week, an arbitrator found that the EEOC's practice of not paying overtime, and paying compensatory time instead, was a willful violation of the FLSA.  Steve Vogel, with the Washington Post, reports that the EEOC, which is "responsible for ensuring that the nation's workers are treated fairly, has itself willfully violated the Fair labor Standard Act on a nationwide basis with its own employees..."  The arbitrator's ruling held that the EEOC, which offered compensatory time off instead of paying for overtime, was "forced volunteering" and "demonstrates action that went beyond mere negligence."  The arbitrator further found that the EEOC pressured it's employees to work extra hours, but did not offer extra pay.  According to an attorney for the union, "The unfortunate reality is that EEOC continues its deplorable overtime violations to this day". 

As I anticipate that the case load for the EEOC will continue to rise from previous years (it was up over 15% from 2007 to 2008),  this ruling will extend the time it takes the EEOC to investigate charges filed by workers.  This will delay the resolution of many cases already filed as well as those that will be filed in the near future.

Practice Pointer.  The use of compensatory time in lieu of overtime, with a few exceptions, is prohibited by the FLSA.  For example, employers cannot require workers to work 60 hours one week, and then 20 the next, and not pay overtime for the 20 extra hours worked during the first week.  As a general rule, if a non-exempt worker works more than 40 hours in a week, overtime should be paid for the extra hours. 

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Over the last several weeks, both the Alabama Court of Civil Appeals and the 11th Circuit Court of Appeals have issued a number of cases that impact the employment arena.  In my opinion, the most important ones are the following:

1.  Duran v. Goff Group:  Silva was working in Alabama for Jarman Construction when he died as the result of an on the job accident in 2003.  He was survived by a wife and two minor children, both of whom resided in Mexico at the time of his death.  The workers' compensation carrier, Goff Group, filed for a declaratory judgment that death benefits were not payable to Silva's dependents because they were nonresident aliens.  The Court of Civil Appeals found that since the dependents were neither citizens nor resident aliens in the United States, they were not afforded Constitutional guaranties to equal protection and due process.  The Court further found that the rights of dependents are separate and distinct from the rights of the deceased employee rather than derivative of the employee's rights.  As such, the non-resident alien dependents were not entitled to death benefits under Alabama's workers' compensation statute. 

2.  Allmond v. Akal Security Inc.:  Allmond applied for a job with Akal Security Inc. which, among other things, provided security officers at federal courthouses under contract with the U.S. Marshals Service.  Allmond was employed as a security officer in Columbus, Georgia.  One of the prerequisites of holding this job was to pass a hearing test, without the use of a hearing aid since the security officers must "be able to clearly understand directions in time of crisis....must be able to hear communication at a level of sound that does not inform persons causing an incident of the [officers'] response plans...[and] must be able to discern the direction of a disturbance or detect an approaching threat".  The hearing aid ban ensures that the officers can perform their job duties in the event the hearing aid fails or becomes dislodged.  Allmond failed the hearing test, and filed his lawsuit under the ADA and Rehabilitation Act.  The 11th Circuit, upholding the trial court's granting of summary judgment against Allmond, found that the hearing aid ban was job related and was consistent with a business necessity.  "When considered in the light of the tremendous harm that could result if a security officer could not perform the essential hearing functions of his job at a given moment, we accept this justification as legitimate and wholly consistent with business necessity".

3.  Gregory v. First Title of America Inc.:  Gregory worked as marketing representative for First Title, a title insurance company.  After she left her employment, she sued for overtime pay under the FLSA, seeking $10,000 in unpaid overtime compensation.  Her allegations included the fact that she never consummated a sale, that she was employed only to promote the company's services and to stimulate sales.  At her deposition, she testified that she did in fact obtain orders for title insurance and was paid a commission on her successful sales.  The 11th Circuit found that she was exempt under the FLSA as an oustside sales employee:  she was customarily and regularly performing her duties away from her employer's place of business, free from direct supervision,  that her primary duty was to obtain orders for title insurance, and her income was directed related to the number of orders she brought in or obtained. 

Seminar Update.  Due to an overwhelming response, my firm, Sirote & Permutt will conduct a second seminar addressing actual and anticipated changes in employment law on March 11, 2009 at Vulcan Park in Birmingham.  If you are interested in attending please contact ewilbourne@sirote.com or call 205.930.5494 to RSVP.

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Last week, Wal-Mart announced that it is going to pay approximately $640 million  to settle the majority of the 76 FLSA lawsuits pending against it the Wall Street Journal reported.  The allegations included forcing employees to work off the clock, prohibiting employees from taking breaks and changing time records.  Some commentators believe that the settlements may have an ulterior motive: to help prevent the unionization of Wal-Mart employees and to help Wal-Mart's fight against the Employee Free Choice Act.

Interestingly, last week, I received a letter from an Alabama law firm entitled "New Favorable Rulings Under FLSA".  The letter mentioned three particular types of claims under the FLSA, misclassification of employees as exempt when they are not,  classifying employees as independent contractors when they should be classified as employees, and forcing workers to work "off the clock".  The firm is interested in looking at cases involving these issues.  FLSA cases are alive and well in Alabama, and with more attorney's pursuing these cases, I anticipate the number of FLSA cases that are filed will continue to rise.

Practice Pointer.

As we enter 2009, now is a good time to review your classifications for FLSA purposes to make sure that your employees are properly classified, either as exempt or non-exempt.  It is also a good time to review with your managers and supervisors the importance of proper time keeping for non-exempt employees, and that they must be paid overtime if they work over 40 hours a week.

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