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

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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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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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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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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