Category Archives: Blog

Big FLSA Changes Coming in July

As we all know, the Department of Labor has been holding its significant, proposed changes to the FLSA’s “white collar” exemption over management’s collective heads for quite a while now. Due to the volume of comments the DOL received during its mandatory 60-day comment window, the previously threatened “early 2016″ implementation of these new rules came and went with nothing happening.

The new word on the street is that these changes will be put into place sometime this coming July. The DOL regulatory agenda lists the new implementation date as “07/00/2016.” This means that all employers will have to comply with the new regulations within sixty (60) days of their implementation.

Accordingly, it’s time to get your “exemption” house in order. As I noted in prior blog entries, these proposed regulations threaten to increase the minimum exemption level to an annual salary floor of $50,440. This would more than double the current rate that has been in place for years.

For both large and small employers, this presents a radical change to our upcoming payroll structures. As usual, from a risk management standpoint, it makes sense to get in front of what you know is coming, rather than wait until the last minute to figure out what to do with the “working supervisor” making 48K a year.

Give me a call to discuss. Now is definitely the time to start that internal wage / hour audit.

Luke Lindberg

So – You Ready for the New FLSA Regulations? Because I’m Not.

As you know, the Fair Labor Standards Act establishes two types of employees – exempt and non-exempt. Traditional “exempt” employees have “white collar” job duties. These are your executive, professional and administrative folks. These guys are not out performing manual labor, punching a clock or working on a line. Also – they have to be paid at least $23,660 per year ($455 per week), regardless of the number of hours they work each week.

Traditional “non-exempt” employees are basically . . . well – everyone else. “Non-exempt” folks must be paid at least the minimum wage, as well as an overtime rate for all time worked in excess of 40 hours in a single work week. Generally, OT is calculated at not less than time and one-half of a “non-exempt” employee’s standard hourly rate.

However, the foregoing is all about to change. Maybe.

Specifically, the DOL wants to increase the salary requirements for exempt employees, using the 40th percentile of weekly earnings of full-time salaried workers as a benchmark. If this proposal became law over the next six weeks, in 2016, the estimated salary requirements would be $970 a week, or $50,440 a year. Yikes.

So is this law yet? No. Is there a realistic possibility these regulations – as currently constructed – will become law? Probably not to the letter. But it won’t be surprising if the final regulations look a lot like what’s being discussed. Bottom line – the minimum salary level for exempt employees is going up. By a lot. Soon.

The solution is obvious. Just pay everyone about $500K a year. The DOL won’t bat an eye. I’m sure you can shoehorn that into your 2016 payroll . . .

What Obergefell v. Hodges means for Employers

Unless you’ve been living under a rock (and a sufficiently large rock, at that), you probably heard that on June 26th, the U.S. Supreme Court issued a little opinion called Obergefell v. Hodges.  While I would encourage anyone to read the full text (you’ll find terrific arguments on both sides), this landmark ruling – authored by Judge Kennedy –   determined that the Constitution guarantees a fundamental right for same-sex couples to marry.  Issued two years to the day of United States v. Windsor (2013) – which itself struck down a portion of the Defense of Marriage Act (DOMA) – Obergefell also determined that states must now recognize the validity of same-sex marriages entered into in other states.

So if you’re an employer, what does this mean for you?  Well – not too much . . . just yet.  After Windsor held Section III of DOMA to be unconstitutional, President Obama ordered the federal government to revise any federal statutes to comport with the Windsor decision.  As a result, the FMLA definition of “spouse” was altered to include same-sex couples who were married in states that permitted same-sex marriage.  That revision took place in February of this year (hey – no one said the feds move fast . . . ).

Accordingly, even before Obergefell, employers in Alabama were still obligated to provide FMLA leave to an employee who needed to care for his gravely ill same sex partner.

However, more changes are coming.  And probably coming fast.  Look for numerous requests to start pouring in for medical benefits for same-sex spouses.  And keep an eye out for the next big step – the State of Ohio adding in language to R.C. 4112 to make discrimination due to someone’s sexual orientation illegal.

For now – watch out for shop talk about the decision.  Whatever side of the aisle your employees happen to be on, make sure no one is getting loud and offensive with their opinions in the company break room.  As always, allowing offensive behavior to permeate unchecked is what can get you in hot water.

Luke Lindberg

 

The Importance of Planning

We often meet with clients about planning topics. Whether it’s business planning, estate planning, personal/financial planning – our goal is to help our clients be ready for what may come in life. I heard a story on NPR while driving home this past week. Kenneth Feinberg, who has administered victim funds for several of the significant crises our country has faced in recent years, was motivated to plan based on his experiences. He witnessed first hand how many of the victims of those tragedies hadn’t taken the time to plan.

Whatever your stage of life, take the time to plan. Meet with your attorney, insurance agent, financial planner, accountant – professionals who will help you limit uncertainty and manage the risks we all face every day.

To read the NPR story, click here: http://www.marketplace.org/topics/your-money/my-biggest-financial-lesson/kenneth-feinberg-placing-value-life#.VRgDxLOpfCY

Why Omitting a Word or Two from your FMLA Policy Can Be a Killer . . .

The below is a GREAT example of why it is critical for your Employment Handbook to be up to snuff.   Especially in the Sixth Circuit. . .

As we all know, the Family and Medical Leave Act (FMLA) provides your employees with up to 12 weeks of unpaid medical leave if they satisfy certain conditions of employment.  Those conditions are:

  1. He or She has been employed by a covered employer for 12 months;
  2. He or She has worked 1,250 hours during the 12-month period before his / her requested leave begins; and
  3. He or She works at a location where his / her employer employs 50 or more employees within a 75-mile radius of that location.

Pretty cut and dried, huh?  If you retain fewer than 50 people, you have no obligation to offer FMLA leave, right?  Well, as of this January, maybe not. . .

In Western Michigan, road crew employee Terry Tilley worked for the tiny Kalamazoo County Road Commission.  The Road Commission (not surprisingly) fell well below the 50-employee threshold necessary for Tilley (or anyone else for that matter) to qualify for FMLA leave.  However, Kalamazoo’s Employment Handbook (for some bizarre reason) indicated that their employees were entitled to such leave if they were full time employees and had worked 1,250 hours in the preceding year.

Tilley was terminated for taking time off for medical leave he didn’t have available to him.  He later (somewhat inevitably) filed an FMLA lawsuit.  The Road Commission responded by filing a motion for summary judgment, arguing (correctly) that Tilley was not eligible for FMLA leave as he did not work for an employer who employed the requisite amount of employees within the 75-mile radius.

Normally, this would be a winning argument.  However, in denying the RC’s Motion for Summary Judgment, the Sixth Circuit found that based on the language contained in the RC’s Employment Handbook, a “reasonable person in [Tilley’s] position could fairly have believed that he was protected by the FMLA.”  Tilley v. Kalamazoo Road Comm’n, Sixth Circuit Court of Appeals, No. 14-1679.

In a word – YikesTilley is a classic example of an employer giving its employees more rights than they are actually entitled to receive solely due to slipshod drafting in its Employment Handbook.  The lesson?  Make sure your Employment Handbook gets updated every once in a while.  You’ll end up spending far, far less having an employment attorney review your policies than you will defending the inevitable lawsuits that follow.

Posted by Luke Lindberg

 

Three Dangerous December Words: HOLIDAY OFFICE PARTY

Well, it’s that time of year again.  Christmas, New Year’s, Chanukah, Boxing Day.  . . . The list goes on and on.  While most folks consider this the most magical time of year, management attorneys generally don’t share that sentiment.  Why?  Well, the last two weeks of the year normally result in a high increase in HR call volume to our offices, where the “magical” (yet slightly terrifying) phrase “Holiday Office Party” comes up time and time again.

Most companies do something special for their employees at year’s end.  And there’s nothing wrong with that.  In fact, holiday bonuses, parties and gift exchanges are (in this humble employment attorney’s opinion) simply good HR practice.  However, before you plan a get-together for the office staff at the local watering hole, plan well and consider the following:

  1. Curb the Boozing.

It’s no mystery that allowing our employees to drink themselves silly (on your corporate dime) is asking for trouble.  Accordingly, while springing for some wine and beer is entirely appropriate, make sure you’re not turning the pleasant night out at the new Sushi place into your R&D department re-enacting Will Ferrell’s beer-bonging scene from “Old School.”

Great Idea?  Give every employee a couple drink tickets, not a key to an open bar.  If employees want to drink after using those tickets, they can buy their own for the rest of the night.  If you’re not doing a sit down dinner, spring for some appetizers to offset the alcohol.  Hire a bartender, rather than having Steve from Accounting, who knows nothing about mixing drinks, man the watering hole.  In short, make smart decisions.  Have fun, but make sure it doesn’t turn into rush week at Florida State.

2. Prevent Sexual Harassment.

The topic of the “workplace romance” is one for another blog post.  However, keep in mind that I have seen more sexual harassment claims arise from holiday office parties than from any other type of workplace related function.  Quite simply, booze + after hours get togethers can equal trouble.  Accordingly, consider the following:

* Don’t hold your party at a hotel bar.  Just trust me on this one.  Really.

* Encourage guests to attend.  While this may drive your eventual party cost up, people tend to behave when they are in front of their spouses, boyfriends and girlfriends.  It’s worth the added cost.  Plus, your employees will appreciate it.

* Make sure your Employment Handbook Addresses Off Site Conduct.  Any court is going to hold that you are liable for your employees’ bad behavior at a holiday office function.  Accordingly, make sure your handbook informs your employees that their obligation to behave in an appropriate manner extends past the four (or three) walls of their office cubicles.

I could go on and on here.  If you’d care to discuss in more detail, give me a call.  Otherwise, have fun this holiday season.  Just not too much fun . . . . .

Posted by Luke Lindberg

 

Computing Devices in the Workplace

The increasing prevalence of employer-issued electronic devices has created a host of new, emerging workplace issues.  Employers often provide their employees with PC or notebook computers, tablets or smart phones.  Often employees have access to employer-provided computing devices both during work hours and while off-duty.  The legal system is being asked to balance the privacy rights of employees with the legitimate business interests of employers.

Key Issue:   Do employees have a reasonable expectation of privacy with respect to emails, texts, tweets and internet content which using employer-provided computing devices?

Answer:   All employers should adopt computer usage policies which explicitly state that employees using company-provided computing devices or servers have absolutely no reasonable expectations of privacy with respect to any content on these devices irrespective of whether the content was created during work hours or off-duty.   Courts have uniformly held that when employers have communicated a properly drafted computer usage policy to all incumbent employees and applicants, those persons have no legitimate expectation of privacy regarding their use of employer-provided computing devises.

The Role of Computers in Employment Litigation

            Nearly every employment case now involves cloning and reconstruction of employee hard drives by forensic computer experts.  For example, in a sexual harassment case involving a plaintiff who claims she was harassed by a supervisor, it has become standard practice that both the alleged victim’s and the alleged harasser’s hard drives will be cloned and reconstructed.  The process will restore any and all deleted emails and internet content.  The lawyer representing the Plaintiff seeks sexually charged emails or other messages from the supervisor as well as sexually suggestive internet content from the supervisor’s hard drive.  The employer’s lawyer, on the other hand, hopes to find electronic evidence that demonstrates that the plaintiff was a willing participant with the supervisor, or in other words, that the attentions of the harasser were not unwelcome to the Plaintiff.

Sexually charged internet content and suggestive or sexually explicit electronic communications from a supervisor’s or manager’s computing device are often used by experienced Plaintiff’s lawyers as evidence of a hostile workplace environment.

NOTE:   Recent surveys suggest that while a high percentage of U.S. employers have adopted and communicated computing device usage policies, a far lower percentage of U.S. employers conduct systematic monitoring of employees’ computer content.

Carl F. Muller

Employees Can Sue Employers Over Harassment From Third Parties In the Workplace

In early February, a Missouri state court jury awarded a Jackson County woman a $2.5 million dollar judgment against AutoZone, where she works as a cashier.  Her story, and the seven figure verdict that resulted from it, presents a grave warning for employers.

The employee reported that she was routinely harassed on the job by two customers over a 12 month period.  The customers routinely made comments about her breasts and engaged in inappropriate touching when they visited the store.

Seems like a pretty simple problem to solve, right?  Just have her manager ban the harassers from the store: Problem solved.

Unfortunately, here’s where AutoZone drops the ball:  The employee repeatedly complained to her managers.  Instead of addressing the issue, her superiors told her to “stop being a crybaby” because they were concerned about losing the customers’ continuing business.  Yeah – obviously, not a good piece of management work there. . .

When her complaints to her managers failed to solve the problem, Diaz complained to AutoZone’s corporate HR department.

Amazingly, even corporate HR waited a full four months to respond to her complaint. FOUR MONTHS!!!!

Not surprisingly, the employee successfully sued AutoZone for sexual harassment.  In early February, a jury returned a verdict in her favor in a whopping $2.5 million dollar amount.

The message?  As an employer, you are liable for the actions of anyone who creates a knowingly hostile work environment, whether those individuals are employed by you or not.  When you learn about this type of behavior, deal with it.  Don’t pull an AutoZone.  If you do, you’ll have 2.5 million reasons why you’ll regret it.

Amazingly, Diaz continues to work for AutoZone, albeit at a different location. . .

Employment Law Update

Retaliation:  What all Employers Need to Know

  • Since 2011, retaliation claims have increased at a higher rate than any other type of EEOC charge.
  • Retaliation claims allege that an employer took an adverse action against an employee (e.g., termination, demotion, suspension) because he/she engaged in a “protected activity”.
  • What is a “protected activity”?

An employee engages in a protected activity whenever he/she files an internal complaint alleging discrimination and/or harassment, files an EEOC charge or testifies in favor of another employee who filed a lawsuit or EEOC charges alleging unlawful harassment and/or discrimination.

  • Why plaintiff’s employment lawyers love retaliation claims:
    • Retaliation claims are easier to prove that discrimination and/or harassment claims because proving the truth of the underlying harassment and/or discrimination charges is not required.
    • Retaliation claims result in higher jury verdicts and frequently result in substantial punitive damage awards.
  • The chronology underlying a retaliation claim may make it difficult to defend.  For example, if a termination comes hard on the heels of protected activity, the employer can expect to defend the retaliation claim inside its own 20 yard line.
  • Risk management of retaliation claims.

Nearly every federal and state statute governing the employment relationship prohibits retaliation against an employee when he/she engages in protected activity under the statute.  Accordingly, employers contemplating termination of an employee who has engaged in protected activity whether by filing a workers’ compensation claim, a whistleblower complaint or a complaint regarding the Fair Labor Standards Act or filing a complaint or charge alleging unlawful discrimination and/or harassment should review the facts with employment law counsel before terminating the employee in question.

If you have questions, please contact Carl Muller (cmuller@warrenyoung.com) or Luke Lindberg (jlindberg@warrenyoung.com) for further information.

Employment Disputes:   Should your company adopt a mandatory alternative dispute (“ADR”) resolution program?

Many of the nation’s major employers have adopted programs which require employees to mediate and arbitrate all employment claims, thereby by-passing the litigation system.  The U.S. Supreme Court has repeatedly upheld the legality of these mandatory ADR programs despite concerted attacks by unions and the plaintiffs’ bar.

Employers have adopted mandatory ADR programs because the litigation system is perceived as too costly, too slow, too unpredictable and unfairly biased in favor of employees.  Many employers have reported outstanding results, resolving a high percentage of employment disputes in mediation.

Most programs require mediation first.  If mediation is unsuccessful the dispute moves to arbitration, which is final and binding upon both parties. Key definitions:

Mediation:  Mediation is a negotiation process between parties, facilitated by a neutral mediator.  A mediator cannot decide the merits of the dispute but works to assist the parties in reaching a mutually acceptable settlement agreement.

Arbitration:  Arbitration is a hearing before a neutral arbitrator who will decide the merits of the dispute and issue an award or decision which is binding upon the parties.

Is a mandatory ADR program right for your company?  Compare:

PROS

CONS

1)       Mediation and Arbitration sessions are private and confidential. 1)       Lower entry barriers for employees asserting claims.
2)      Speedier dispute resolution. 2)      Parties cannot appeal an Arbitration decision except in extraordinary circumstances.
3)      Avoidance of runaway jury verdicts. 3)      Employees may resent being barred from access to the court system by the ADR program.
4)      Mediation/arbitration are less costly than litigation. 4)      Employers surrender the advantage of superior resources to litigate in the court system.
5)      A high percentage of disputes are resolved in mediation with a settlement agreement fashioned by the parties. 5)      Employers bear the costs associated with mediation and arbitration.
6)      Current case law holds that ADR programs may even bar employee class actions from the court system 6)      To be enforceable, ADR plans must afford employees full substantive legal right and remedies and not impose unreasonable procedural burdens upon employees.

Bottom Line:      Mandatory ADR programs are being validated by the courts as long as they are carefully established in accordance with prevailing case law.  Employers should seriously consider adopting a mandatory ADR program for all employment claims.  Non-union employers can unilaterally adopt such programs.  If you have a union, ADR programs may be subject to mandatory collective bargaining requirements.

Carl F. Muller, Esq.  cmuller@warrenyoung.com