Your Employee Matters

The U.S. Department of Labor has launched a new Web site that reports (in a searchable format) employer violations. The site, http://ogesdw.dol.gov/, catalogues all DOL enforcement data regarding employer violations from the Employee Benefits Security Administration (“EBSA”), the Mine, Safety & Health Administration (“MSHA”), the Office of Federal Contractor Compliance Programs (“OFCCP”), the Occupational Safety & Health Administration (“OSHA”), and the Wage & Hour Division (“WHD”). The DOL’s goal in launching the site is to “make the enforcement data, collected by these agencies in the exercise of their mission, accessible and searchable, using common search criteria, by the public. It intends, also, to engage the public in new and creative ways of using this data.” The site will soon permit searches by company name. Companies should check the site frequently to ensure the accuracy of its content.

Article courtesy of Worklaw® Network firm Shawe Rosenthal (www.shawe.com)

A July 2010 Corporate Counsel article analyzed a huge discrimination verdict rendered against Novartis in a Manhattan federal district court jury trial. The jury determined that the company discriminated against its female sales representatives, creating an insensitive and hostile working environment. Instead of taking a conciliatory approach during trial, Novartis pressed hard and according to the article, responded by labeling the plaintiffs in front of the jury with demeaning and harsh stereotypes. The jury awarded $3.36 million to the 12 named plaintiffs, plus an additional $250 million to a class of additional 5,600 other plaintiffs. Of course, Novartis plans to appeal.

Interestingly, Novartis noted that Working Mother magazine had recognized the company for 10 years in a row as one of the top 100 firms for working mothers (Integrity, anyone?).

Lesson learned: Anytime an employer goes to trial justifying its conduct, and in fact, laying it on even thicker, it runs the risk of an enormous verdict. A conciliatory approach will usually result in a settlement or smaller jury verdict. Read the article here.

As part of my ongoing research efforts to help our members, I discipline myself to review Find Law’s weekly appellate court case summaries. A few weeks ago, the review summarized 29 cases – count ‘em, 29:

1. Rent-A-Center West, Inc. v. Jackson
2. Granite Rock Co. v. Int’l. Brotherhood of Teamsters
3. Rodriguez-Garcia v. Miranda-Marin
4. Malone v. Lockheed Martin Corp.
5. Zakrzewska v. The New School
6. NLRB v. Talmadge Park
7. Durakovic v. Bldg. Serv. 32 BJ Pension Fund
8. Ruiz v. Cty. of Rockland
9. Edwards v. A.H. Cornell & Son, Inc.
10. Air Line Pilots Ass’n v. US Airways Group
11. Kemp v. Holder
12. Winnett v. Caterpillar, Inc.
13. Pickett v. Sheridan Health Care Ctr.
14. Kobus v. Coll. of St. Scholastica, Inc.
15. Ringwald v. Prudential Ins. Co. of Am.
16. Jones v. Nat’l. Am. Univ.
17. Hawaii Stevedores, Inc. v. Ogawa
18. EEOC v. Peabody Western Coal Co.
19. Simonia v. Glendale Nissan/Infiniti Disability Plan
20. Medlock v. United Parcel Serv., Inc.
21. Narotzky v. Natrona Cty. Mem. Hosp. Bd. of Trustees
22. Armstrong v. Geithner
23. Schaefer v. McHugh
24. Gonzalez v. Dept. of Labor
25. Murthy v. Vilsack
26. Bifulco v. Patient Bus. & Fin. Serv., Inc.
27. Myrick v. Mastagni
28. Baker v. Am. Horticulture Supply, Inc.
29. Faulkinbury v. Boyd & Assoc. Inc.

Of course, none of these companies planned on being a defendant in an employment lawsuit. So, what were all the lawsuits about? Five were ERISA cases. We’ve had ERISA experts on some of our Webinars.

There were also five union cases, including one in which the company was suing the union under the Labor Management Recording Act for damages caused by a strike. In one of the union cases, the 2nd Circuit invalidated an NLRB Bush-era decision that only had two judges on the board. This is the beginning of the undoing of those Bush-era NLRB decisions. Again, we have had Webinar guests on union avoidance.

There were four race and discrimination cases, including an interesting one against a coal company by Hopi and other Native American, claiming that the coal company discriminated by favoring Navajo workers.

There were two ADA cases, one FMLA case, one privacy case, one breach of contract case, and one age discrimination case. Of the three wrongful termination cases, one was brought by a group of neurosurgeons who sued a hospital for “constructive discharge” in part because after the surgery operations shut down and the doctors left, the hospital claimed that they had stolen equipment and ordered a search of their lockers. Apparently, the search didn’t find any equipment, nor did the hospital claim that any of the surgeons specifically stole anything. The court held that it was reasonable for the hospital to do this search because it focused on instruments that could only be used in surgery.

There was a wage and hour class-action suit in California (no surprise there), claiming that security guards weren’t paid properly for their rest and meal periods. Another lawsuit was brought by a whistleblower who was transferred after testifying in an ethics probe.

That’s nearly 30 appellate cases decided during a single week in a country with millions of employers. Employment practices liability exposures might not be frequent. However, I can tell you from reading the results in these cases they are certainly severe. According to Jury Verdict Research, the average verdict hovers around $270,000, with million-dollar verdicts seemingly commonplace. Whether a company won or lost in any of these cases, it probably spent at least $200,000 in attorneys’ fees.

What should you make of all this? Very simple – be prepared to handle compliance basics! Get proper advice on managing your benefits. Focus on developing effective employee relationships and work with competent attorneys to prevent unnecessary union organization, as well as bargaining with an existing union. Make sure your HR folks stay abreast of the ADA, FMLA, age discrimination, race discrimination, and sexual harassment exposures. We have a ton of tools on HR That Works to help with those.

If you’re an HR That Works member and have a question in any one these areas, you can rely on the Hotline support of the Worklaw® members and yours truly to help get you through any tough spot.

TWO KINDS OF HR
(PDF)

Which kind are you? Use this form as a “head check” on how you view yourself in the HR role. This holds true for full-time practitioners, as well as for the folks wearing three hats. Even if you do HR part time, your goal should be to do it well.

JustMed v. Byce, a decision by the 9th Circuit Court of Appeals, involved whether Byce, a programmer, owned the source code of devices owned by JustMed

The court ruled that, given the facts of the case, Byce was an employee rather than an independent contractor. If the court had decided that Byce were an independent contractor, he would own the rights to the source code because it was not contracted to be a work for hire. This is one of the risks of using the independent contractor label – something many early-growth employers do to avoid the burden of managing payroll and other functions.

Lesson: If you’re going to hire an independent contractor to work on a project that you want to own, make sure that the independent contractor agreement contains “work for hire” language in it. Otherwise, it’s safer to treat this person as an employee for payroll and other purposes, so that their employment status would make their contribution become a work for hire.

Several recent events prove that the U.S. Department of Labor (DOL) is set to deliver on its previous promises that it will go to great lengths to help workers, at the expense of employers.

As we’ve informed you in previous newsletters, the DOL has received significant funding for investigating employers who misclassify workers as independent contractors or as exempt from the overtime provisions of the Fair Labor Standards Act. A DOL news release issued April 22, 2010, indicated that the DOL has requested $12 million for this initiative in 2011 alone, and that the department is working closely on these initiatives with the Vice President’s Middle Class Task Force. In the news release, Secretary of Labor Hilda Solis vowed to “help middle-class families remain in the middle class.”

Just before this, in March 2010, the DOL announced its intent to stop a longstanding practice of issuing fact-specific opinion letters to employers. For nearly a decade, employers with questions regarding federal wage and hour laws could seek the department’s opinion on whether they were in compliance, which could serve as evidence of an employer’s good faith efforts if they were sued. Now, however, the DOL will only issue opinions that “set forth a general interpretation of the law and regulations, applicable across-the-board to all those affected by the provision at issue. The DOL contends that this will be a much more efficient and productive use of resources than attempting to provide definitive opinion letters in response to fact-specific requests submitted by individuals and organizations, where a slight difference in the facts could change the outcome.” This position is set forth on the DOL Web site at www.dol.gov/whd/opinion/opinion.htm. Of course, the net effect of this shift away from fact-specific opinion letters is even less guidance for employers than before.

The department made this announcement about the same time that it issued an opinion letter finding mortgage loan officers non-exempt (despite employers’ arguments that they were white-collar administrative employees in accordance with a prior DOL opinion letter issued during the Bush administration, which found such employees exempt).

Also, in May 2010, Secretary Solis signed a Workers Rights Joint Declaration along with Ambassador Sarukhan of Mexico, committing to “inform Mexican workers in the United States about their labor rights through information sharing, outreach, education, training, and exchange of best practices.” This declaration will clearly lead to more complaints, investigations, penalties, and the use of employer resources.

Lesson: Collectively, these actions amply demonstrate that the current DOL is preparing (if it has not already begun) to get tough on employers. Consequently, you should redouble your efforts to classify workers properly and make sure that your pay practices comply fully with the law.

Article courtesy of Work law® Network firm Pilchak Cohen & Tice (www.mi-worklaw.com).

In responding to HR That Works Hotline calls over the years, one of the greatest concerns employers express involves handling the situation in which a worker is on leave when the employer discovers their inefficiencies, wrongful conduct, etc. The employers worry about the employee’s argument that any discipline or termination alleging these deficiencies is really masking retaliation for being on ADA, FMLA, or other types of leave.

In Schaaf vs. Smith Kline Beecham the United States District Court in Georgia ruled that the plaintiff’s management style, as well as deficiencies discovered in her absence, led to her being demoted from regional vice president to a district sales manager while on maternity leave. In a novel argument, the plaintiff’s claim went like this: (1) Smith Kline Beecham (SKB) learned of her shortcomings while she was on leave, and (2) the company would not have discovered these derelictions had she not taken leave. Thus, taking leave caused her demotion! In dismissing such nonsense, the court reminded the plaintiff that, “The fact that the leave permitted the employer to discover the problems cannot logically be a bar to the employer’s ability to fire the deficient employee.” Even though the FMLA leave allowed the employer to uncover prior deficiencies does not mean that the termination was because of the FMLA leave. Most telling in this situation is that the plaintiff had very little evidence to prove the motivation of the employer was discriminatory, other than her demotion while on maternity leave.

Lesson: Employers can easily fall into a trap when they discover deficiencies while employees are on leave. If you choose to discipline or terminate the employee because of these deficiencies, you might well face a claim of retaliation – unless you can prove your argument about their deficiencies to a judge or jury.

Speaking of the NLRB: On July 1, 2010, the NLRB outlined its plan for considering two-member cases in wake of the Supreme Court’s New Process Steel ruling.

In response to numerous inquiries, the National Labor Relations Board outlined its plans for handling returned cases following the Supreme Court’s recent decision in New Process Steel v. NLRB that the Board no power to decide cases when three of its five seats were vacant. [Editor’s note: This decision gave the green light to the process of dismantling the Bush era pro-employer decisions.]

During a 27-month period that ended with the recess appointments of two members last March, the Board operated with two members: Current Chairman Wilma Liebman and former Chairman and Board Member Peter Schaumber. They decided nearly 600 cases on which they could agree, while those remaining were held for additional Board members

At the time of the June 17 Supreme Court decision, 96 of the two-member decisions were pending on appeal before the federal courts – six at the Supreme Court and 90 in various Courts of Appeals. The Board is seeking to have each of these cases remanded to the Board for further consideration.

Each of the remanded cases will be considered by a three-member panel of the Board, which will include Chairman Liebman and Board Member Schaumber. Consistent with Board practice, the two other Board members not on the panel will have the opportunity to participate in the case if they so desire.

It’s unclear at this time how many of the two-member Board rulings not already challenged in the federal appellate courts can or will be contested and how many may now be moot. For the first time since December 2007, the Board is now at full strength, with the addition of Member Brian Hayes, who was sworn in on June 30. Last week, the Senate confirmed Mr. Hayes and Board Member Mark Pearce. Member Pearce originally received a recess appointment to the Board from President Obama in March, along with Board Member Craig Becker.

The National Labor Relations Board is an independent federal agency vested with the power to safeguard employees’ rights to organize and to determine whether to have unions as their bargaining representative. The agency also acts to prevent and remedy unfair labor practices committed by private sector employers and unions.

Lesson: The NLRA passed, creating the NLRB, 75 years ago to protect employees due to manipulative and abusive employer practices. Like it or not, the Bush administration was the most employer friendly in 30 years; In effect they purposely paralyzed the NLRB by not adding new appointments. Now the pendulum is swinging back. If you’re an HR That Works Member, we encourage you to watch the Webinar “Union Organizing and the New National Labor Relations Board: What You Need to Know to Be Prepared.”

Whether you love it or hate it, the NLRA created a worldwide watershed in industrial relations. They have put up an excellent website celebrating the historical event.

In Merritt vs. Old Dominion Freight Line the plaintiff claimed that the company discriminated by refusing to make her a short-haul truck driver. She argued that she was denied positions twice, when she was more qualified than the males who were hired. Then after suffering an injury on the job, she claimed the company used this injury as an excuse to terminate her as being “unfit for duty.”

Unfortunately for Old Dominion, the plaintiff’s (male) manager had made frequent statements such as “This is no place for a woman”. Eventually the manager, who had already made it known that he didn’t like women driving trucks, fired her when she failed the fit-for-duty exam which was used primarily for pre-hire physicals. Not only was the exam far too broad in scope for her injury, the company did not give it to many of the men who suffered similar injuries.

In discussing the return-to-work exam, the court stated:

“We begin by acknowledging that, if indeed, Old Dominion had such a policy (to conduct a full exam of all return-to-work employees) and faithfully abided by it, that fact would, as Old Dominion suggests, be a neutral and legitimate business practice. Old Dominion has understandable safety concerns, especially since its employees are responsible for driving large trucks and carrying heavy freight. A policy of the sort Old Dominion claims to have is sensible, because it helps prevent an injured employee from further aggravating an injury, thereby jeopardizing the eventual recovery; ensure that an employee’s job performance is not so impaired as to endanger public safety, diminish employee morale, or generate customer complaints; and limit Old Dominion’s workers compensation claims and tort liability. Moreover, it is not to say what policies a company should or should not adopt, if the policies it does adopt are gender-neutral.”

As the court stated, the problem with the policy lies not in theory but in practice.

Lesson: Whether it’s an all-male truck-driving environment or an all-female nursing environment, employers cannot create smokescreens in order to discriminate. In this case, there were no HR checks and balances on the manager’s decision to fire the plaintiff. It’s a good idea to have a policy, enforce it uniformly, and make sure someone else in the organization (preferably the HR department, if you have one).signs off on all termination decisions.