Yesterday, a lawsuit was filed in the District Court of Delaware, alleging that Univita laid-off roughly 1,000 workers without giving them 60 days advance written notice, in violation of the Worker Adjustment and Retaining Notification Act (the “WARN Act”), 29 U.S.C. § 2101, et seq. The action seeks — on behalf of plaintiff and other similarly situated employees — a judgment for unpaid wages, salary, commissions, bonuses, accrued holiday pay, accrued vacation pay, pension and 401(k) contributions and other COBRA benefits, for 60 days, which “would have been covered and paid under the then-applicable employee benefit plans had that coverage continued for that period, all determined in accordance with the WARN Act.”
It’s a lawsuit to keep your eye on. You can view the complaint via the hyperlink above.
As we’ve often mentioned, the Department of Labor’s Wage and Hour Division is sharply focused on rooting-out alleged misclassification of employees in the workplace. The WHD is heavily scrutinizing a variety of new business models — which the WHD calls the “gig economy” — in which it’s routine for personnel to be considered contractors. Today at 5 pm, the WHD is sponsoring a Facebook Q&A session to discuss their interpretation of the law with interested parties. Here’s the email announcement.
You may have noticed a lot of discussion recently about whether certain workers are employees or independent contractors. Here at the Labor Department’s Wage and Hour Division, we’re tackling the employee misclassification issue head-on because so much depends upon the answer to that question.
We need to ensure the fundamental principal behind work in America — that a fair day’s work deserves a fair day’s pay. When employers misclassify their employees as independent contractors, often to cut their own costs, those workers are denied the protections of basic labor standards such as minimum wage and overtime, in addition to necessary safety and health protections. Competitors lose out, too, when they can’t compete with employers getting ahead by skirting the law.
Combatting employee misclassification, particularly where vulnerable workers are at risk, continues to be a high priority for the Labor Department and this administration.
This is an ongoing conversation — and one where we want to hear from you!
This afternoon is an opportunity to peek inside the WHD, and get a sense of their thinking, and their forthcoming enforcement efforts. Should be interesting. For a private, tailored discussion about how to appropriately classify personnel in your specific business, contact us anytime.
The Family Medical Leave Act entitles covered employees to twelve workweeks of leave during a twelve-month period if the employee has a “serious health condition that makes the employee unable to perform the functions of the position of such employee.” 29 U.S.C. § 2612(a)(1)(D). What counts as a “serious health condition”?1The statutory definition — “an illness, injury, impairment or physical or mental condition” that involves either inpatient care or “continuing treatment by a health care provider as defined in [29 C.F.R.] § 825.115” — fleshes out the idea some, but not enough. The regulations offer significantly more guidance, as the case discussed herein illustrates.
In Johnson v. U.S. Steel, an employee suddenly experienced blurry-vision, a stiff-neck, back-pain, and a “major” headache. He left his work-site (at a U.S. Steel facility) to go to a clinic, where a physician assistant concluded that the employee had high-blood pressure. The PA prescribed blood-pressure medication, and told the employee to stay home for several days and to follow-up with his regular physician. Some time later, the employee saw his regular physician, who found the employee’s blood pressure to be normal. U.S. Steel terminated the employee. The employee sued, contending that his absences were protected leave, and U.S. Steel’s failure to reinstate him violated the FMLA.
The Eighth Circuit concluded that the employee didn’t have a “serious health condition,” and therefore couldn’t bring an FMLA claim.2The opinion cites to numerous other cases, such as Darby v. Bratch, in which courts found that an employee “could be disciplined for taking unpaid leave not covered by the FMLA.” The regulations explain how to identify a serious (as opposed to minor) health condition.
(a) Incapacity and treatment. A period of incapacity of more than three consecutive, full calendar days, and any subsequent treatment or period of incapacity relating to the same condition, that also involves:
(1) Treatment two or more times, within 30 days of the first day of incapacity, unless extenuating circumstances exist, by a health care provider . . . ; or
(2) Treatment by a health care provider on at least one occasion, which results in a regimen of continuing treatment under the supervision of the health care provider.
29 C.F.R. § 825.115. The employee couldn’t say when he had his follow-up visit with his regular physician, so he couldn’t meet the thirty-day requirement in the “two-treatments” definition of serious medical condition. The employee couldn’t show that the medication he was prescribed was anything more than a single treatment, after which he was sent on his way, so he couldn’t meet the supervision requirement in the “regimen” definition of serious medical condition. Accordingly, the Eighth Circuit held that the employee couldn’t demonstrate that his condition was sufficiently serious to merit FMLA protection.
The opinion reaffirms the idea that FMLA leave is intended to cover serious health matters, not short-term conditions or minor illnesses. Of course, every case turns on its own facts. Employers should consult with competent counsel to determine whether an employee’s purported health condition is, in fact, serious.
|1.||↑||The statutory definition — “an illness, injury, impairment or physical or mental condition” that involves either inpatient care or “continuing treatment by a health care provider as defined in [29 C.F.R.] § 825.115” — fleshes out the idea some, but not enough. The regulations offer significantly more guidance, as the case discussed herein illustrates.|
|2.||↑||The opinion cites to numerous other cases, such as Darby v. Bratch, in which courts found that an employee “could be disciplined for taking unpaid leave not covered by the FMLA.”|
If an employer interferes — successfully — with an employee’s exercise of her rights under the Family Medical Leave Act (“FMLA”), it creates a claim for “interference” under the statute. But if an employer tries — unsuccessfully — to interfere with an employee’s exercise of her rights under the FMLA, does it also create a claim for “interference”? Last week, in Gordon v. United States Capitol Police, the District Court for the District of Columbia confronted that question for the first time, and answered it “yes.”
In Gordon, the plaintiff was a police officer who was severely depressed because of the recent suicide of her husband. She applied for pre-approval of FMLA leave from the Capitol Police’s “bank” system, in which employees seek pre-approval for FMLA leave, without identifying specific start or end dates for the leave. A captain told her that upper-level managers were “mad” about FMLA requests and vowed to “find a problem” with hers. Thereafter, the department, using her FMLA request as a basis, forced plaintiff to take a fitness-for-duty test, which she passed (plaintiff did lose a few days of pay while she was taking the test). Still later, plaintiff made an appointment with her therapist that turned out to be in conflict with a police training course. To resolve the conflict, the plaintiff made her first request to actually draw from her allotment of pre-approved FMLA leave days. At first, her supervisor was “irate,” refused the request, and demanded a doctor’s note. Later, he relented and granted her request.
Plaintiff sued for, among other things, “interference.”1To prevail on an interference claim under 29 U.S.C. § 2615(a)(1), a claimant must show that “her employer interfered with, restrain[ed], or denied the exercise of or the attempt to exercise, any right provided by the FMLA and that she was prejudiced thereby.” Plaintiff didn’t claim that her employer’s actions caused her to be actually deprived of any FMLA leave, only that her employer attempted to discourage her from seeking or using such leave and that this attempt caused her harm. Confronting this issue for the first time, the D.C. Circuit held that an employer action with a reasonable tendency to “interfere with, restrain, or deny” the “exercise of or attempt to exercise” an FMLA right may give rise to a valid interference claim under section 2615(a)(1), even where the action fails to actually prevent such exercise or attempt.
In light of rulings like Gordon, employers should act carefully, and with considerable forethought, when presented with employee requests for leave or accommodations. Sometimes, even actions that have no adverse impact on an employee can create liability exposure.
|1.||↑||To prevail on an interference claim under 29 U.S.C. § 2615(a)(1), a claimant must show that “her employer interfered with, restrain[ed], or denied the exercise of or the attempt to exercise, any right provided by the FMLA and that she was prejudiced thereby.”|
Interesting developments in employment law don’t just occur at the federal and state levels. More and more, municipalities are passing ordinances regulating the terms and conditions of work, with sometimes dramatic impacts on local businesses and residents.1For instance, at least 140 communities in the U.S. have passed living-wage ordinances over the past 20 years.
Today, the Miami City Commission unanimously passed the responsible wage law, which requires city construction contractors to pay their employees a rate set by the city (following negotiations with the union). The ordinance applies to city contracts in excess of $100,000.00. The minimum hourly rate to be paid under covered contracts will combine a basic hourly rate of pay with fringe benefit payments (for hospitalization, medical pension and life insurance benefits).2Covered employers can pay the fringe benefit payments either on the covered employee’s behalf, or directly to the covered employee. David Smiley (@NewsbySmiley) — who covers the City of Miami for the Miami Herald — reported on the vote.
There are important record-keeping and anti-retaliation provisions in the ordinance. Bidders on city contracts, and covered employers, should consult with counsel to ensure they are complying with this new ordinance.
|1.||↑||For instance, at least 140 communities in the U.S. have passed living-wage ordinances over the past 20 years.|
|2.||↑||Covered employers can pay the fringe benefit payments either on the covered employee’s behalf, or directly to the covered employee.|
Today, the Department of Labor issued a Final Rule revising the regulatory definition of “spouse” under the Family Medical Leave Act (FMLA). Under the new rule, eligible employees in legal same-sex marriages will be able to take FMLA leave to care for their spouse or family member, regardless of where they live.1The FMLA entitles eligible employees of covered employers to take unpaid leave for specified family and medical reasons. A covered employer is a private sector employer with 50 or more employees in 20 or more workweeks in the current or preceding calendar year; a public agency; or a public or private elementary or secondary school. In some ways, this is a fairly incremental change: After a 2013 Supreme Court ruling, the FMLA regulations were updated so that eligible employees could take FMLA leave to care for a same-sex spouse, but only if the employee resided in a state that recognized same-sex marriages. With today’s new rule, the regulatory definition of spouse under the FMLA is amended, so eligible employees can take FMLA leave to care for a same-sex spouse, regardless of where they live (so long as the jurisdiction in which the marriage was entered into recognizes same-sex marriages). But that’s not to minimize the significance of the regulatory change; now, even employers in states that do not recognize same sex marriages still must carefully consider whether employees in same sex marriages are entitled to FMLA spousal leave, because of the new “place of celebration” rule. The Final Rule is effective on March 27, 2015. Employers should consult with counsel to ensure that their policies comply with this important change in the law.
|1.||↑||The FMLA entitles eligible employees of covered employers to take unpaid leave for specified family and medical reasons. A covered employer is a private sector employer with 50 or more employees in 20 or more workweeks in the current or preceding calendar year; a public agency; or a public or private elementary or secondary school.|
Some employment practices are just hard to understand. Today, the EEOC sued the giant restaurant chain, Ruby Tuesday, Inc., in Oregon District Court, for discriminatory practices. According to the lawsuit and the accompanying press release, Ruby Tuesday posted an internal announcement within a 10-state region for temporary summer positions in Park City, Utah with company-provided housing for those selected. But the announcement stated that only female applicants would be considered. And, in fact, the lawsuit alleges that the temporary positions were awarded solely to females. As a result, at least two Ruby Tuesday employees — the charging party and a class member — were denied “the opportunity to earn more money and gain valuable work experience while on temporary assignment to Park City, Utah for the summer of 2013 because of [their] sex (male). [These male employees] would also have saved on rent and other expenses if Ruby Tuesday had allowed [them] to work at the Park City, Utah restaurant because Ruby Tuesday would have provided housing free of charge.” The EEOC seeks a permanent injunction against such practices, and an award of back-pay and compensation for “past and future pecuniary losses” to the two complaining male employees.
It’s possible that Ruby Tuesday’s female-only program was designed to protect employee privacy or ensure employee safety. In the EEOC’s view, however, “[t]he company could have addressed any real privacy concerns by providing separate housing units for each gender in Park City.” Some interesting issues at work in this lawsuit; it’s a case to keep your eye on.
On 01.13.15, the Florida Department of Revenue signed a Memorandum of Understanding with the US Department of Labor, allowing the agencies to cooperate in investigating alleged misclassification of employees as independent contractors in Florida. Under the terms of the MOU, the agencies will collaborate extensively:
Florida joins a number of other states who have signed similar MOUs with the DOL. The other states with an MOU, currently in effect, are Alabama, Colorado, Connecticut, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New Hampshire, New York, Utah, Washington, and Wyoming.
Interestingly, a workforce agency signed the MOU on behalf of the other states. In Florida, the signatory-agency was the FDOR, which isn’t responsible for policing violations of the minimum wage or overtime laws. On the other hand, the FDOR signing the MOU underscores a relevant, but frequently-overlooked, state concern – that misclassification of employees as independent contractors deprives a state of “unemployment insurance taxes.” This is an issue of considerable significance to the FDOR.
What will this inter-agency collaboration mean for Florida employers? Hard to say. But certainly, Florida employers should consult with counsel, to ensure that their classification of personnel is defensible, and doesn’t leave the employer exposed and vulnerable.
Okay, so the cartoon is facetious. But employees who bring FLSA lawsuits routinely argue that they were directed or coerced by supervisors to work off-the-clock, without pay. Indeed, a December 2013 GAO Report (a report that was the subject of our blog’s inaugural post) found that, in 2012, nearly 30% of all FLSA lawsuits contained allegations that workers were required to work “off-the-clock” without compensation.1The GAO report defined “off the clock” claims as those alleging that “an employer did not pay workers for all of the hours they worked within a day.” Such claims would include, for instance, unrecorded time putting on protective work-gear, or booting up a work-computer. A common — and often understandable — two-fold reaction by employers is (a) they didn’t know employees were working off-the-clock and that a supervisor was aware of it, or even encouraging it; and (b) an employee performing off-the-clock work violates company policies to record all hours and advise higher-level managers of supervisor misconduct. Do these defenses work?
In Bailey v. TitleMax of Georgia, Inc., an opinion issued last Thursday, the Eleventh Circuit seems to answer “no.” In Bailey, an employee claimed his supervisor told him to work off-the-clock because TitleMax “did not pay overtime,” and further claimed the supervisor edited Bailey’s time-records, to make it appear Bailey worked fewer hours than he really did. In response, TitleMax argued that Bailey violated three company policies: (a) by working off-the-clock, he violated a policy requiring accurate reporting of hours; (b) by not objecting to his supervisor’s abusive behaviors, he violated a policy requiring regular verification of time; and (c) by not reporting any of this, he violated a policy instructing employees who had a problem at work to notify their supervisor or, if the supervisor was part of the problem, notifying a higher-level manager or calling an anonymous employee hotline. TitleMax framed these arguments as affirmative defenses — unclean hands and in pari delicto 2Unclean hands requires a defendant to prove plaintiff’s wrongdoing is directly related to the claim and defendant was injured by it. In pari delicto requires a defendant to prove that “plaintiff bears at least substantially equal responsibility for the violations he seeks to redress,” and that barring a lawsuit brought under a federal statute would not “substantially interfere” with the policy goals of the statue. — thus creating “a somewhat novel argument.”
The Court seemed to appreciate TitleMax’s litigation creativity, but had little sympathy for TitleMax’s arguments. The Court held that “[w]here, as here, an employer knew or had reason to know that its employee underreported his hours, it cannot invoke equitable defenses based on that underreporting to bar the employee’s FLSA claim.” In so holding, the Court noted two prior cases, Allen v. Bd. of Pub. Educ. for Bibb Cnty and Brennan v. Gen. Motors Acceptance Corp., which reached similar results. In both cases, employers technically required employees to accurately report hours; despite these requirements, supervisors encouraged employees to underreport their hours, and they did. In both cases, the employers argued they lacked actual or constructive knowledge of the off-the-clock work. In both cases, the employer’s argument was rejected.
The Eleventh Circuit declined TitleMax’s invitation to “contravene those holdings under a different theory.” The Court noted that TitleMax identified no case supporting its position, although the Court goes out of its way to say that this alone doesn’t defeat TitleMax’s position. Then the Court drops the hammer.
Congress enacted the FLSA in 1938. See Fair Labor Standards Act of 1938, Pub. L. No. 75-718, 52 Stat. 1060. And federal courts are no stranger to FLSA suits: in fiscal year 2012 alone, over eight thousand FLSA lawsuits were filed in the District Courts. See U.S. Gov’t Accountability Office, Fair Labor Standards Act: The Department of Labor Should Adopt a More Systematic Approach to Developing Its Guidance 6-7 (Dec. 18, 2013). . . . In the context of such a well-worn federal statute, the dearth of precedent supporting TitleMax’s novel argument is persuasive, if not conclusive, evidence that its argument is misguided.
Now, this doesn’t mean that novel arguments aren’t welcome in FLSA lawsuits. It does mean that grounding your arguments in established case-law is especially important in the context of litigating such a “well-worn” statute. And that proposition has far-reaching implications, stretching beyond this particular case.
So is there hope, in the Eleventh Circuit, for an employer who truly didn’t know their employee underreported his or her hours, in violation of company policy? The Court offers a ray of hope, by leaving open the question of whether equitable defenses based on employee misconduct might limit (but not totally bar) remedies in FLSA actions. Such defenses can limit relief in the context of an age-discrimination lawsuit under the ADEA, but perhaps that’s because the ADEA authorizes courts to grant legal or equitable relief. By contrast, in FLSA lawsuits, the court is only authorized to grant legal relief. It’s a critically important issue for employers, one well-worth exploring. It’ll just have to wait for another day.
|1.||↑||The GAO report defined “off the clock” claims as those alleging that “an employer did not pay workers for all of the hours they worked within a day.” Such claims would include, for instance, unrecorded time putting on protective work-gear, or booting up a work-computer.|
|2.||↑||Unclean hands requires a defendant to prove plaintiff’s wrongdoing is directly related to the claim and defendant was injured by it. In pari delicto requires a defendant to prove that “plaintiff bears at least substantially equal responsibility for the violations he seeks to redress,” and that barring a lawsuit brought under a federal statute would not “substantially interfere” with the policy goals of the statue.|
Belated Happy New Year! As of January 1, the minimum wage in Florida is $8.05 per hour, with a minimum wage of at least $5.03 per hour for tipped employees, in addition to tips. Here are your new display posters and notices.
Where’s it going from here? Well, some Florida legislators at the state level, as well as the Obama Administration at the federal level, are pressing to increase the minimum wage to $10.10 an hour, so far without success. Still, something to keep your eye on.