Iowa Employment Law Blog : Iowa Employment Lawyer & Attorney : Patrick Smith : Bradshaw Fowler Proctor & Fairgrave Law Firm : Des Moines, Central IA Discrimination & Labor Law

Wage and hour collective actions remain active in Iowa.  A Judge in Clinton County just approved a collective action settlement in which Wal-Mart agreed to pay $11 million to settle claims that it failed to pay overtime, properly account for breaks, and altered time records.   Employees and former employees who worked for Wal-Mart in Clinton between 1999-2009 will receive between $25-300 each. 

Flu season is officially underway, and the H1N1 virus has been back in the headlines.  Ogletree Deakins has published an informative Question and Answer document concerning an employer's rights and obligations in dealing with employees who have the H1N1 virus.    In addition, the EEOC recently published a technical advisory entitled "Pandemic Preparedness in the Workplace and the Americans with Disabilities Act."

Also from the EEOC, the Agency released on October 6 an informal opinion letter concerning employee health risk assessments.   The letter, authored by EEOC assistant legal counsel Peggy Mastroianni, takes the position that requiring employees to answer personal health questions as a condition of receiving an employer provided health reimbursement expense benefit violates the ADA.  Although an informal opinion letter is not binding, it provides insight into how the Agency evaluates these issues.   For more analysis see this post at the Washington D.C. Employment Law Update.

Are you a lawyer who regularly uses motions for summary judgment in defending employment claims?  Before you file your next one, check out this post at Workplace Prof Blog.  Lawyers for United Airlines filed a motion for summary judgment in a race discrimination suit pending in California state court.  The Court noted the motion sought "adjudication of 44 issues, most of which were not proper subjects of adjudication.  Defendants’ separate statement was 196 pages long, setting forth hundreds of facts, many of them not material—as defendants’ own papers conceded.  And the moving papers concluded with a request for judicial notice of 174 pages.  All told, defendants’ moving papers were 1056 pages."   Once the plaintiff's resistance and the defendant's reply were considered, 5,415 pages of material were presented to the trial judge. The Appellate Court characterized this as  "what may well be the most oppressive motion ever presented to a superior court ".   

In reversing the trial court's ruling granting summary judgment, the Court spared no criticism of the trial judge.   The reason for the reversal: "what apparently happened is that the trial court did not read all the papers."   However, in the end, the Court gave the trial judge a break: "While not reading the papers cannot be condoned, it can perhaps be understood, as we hesitate to speculate how long it would take a trial court to meaningfully digest over 2200 pages of separate statements, analyze and rule on 764 objections set out in 325 pages, review it all in light of the applicable law, and then write a proper order."

The Court concluded with an admonition we all should heed the next time we file one of these motions: "The incredible volume of material here simply has no place in a system where overburdened trial courts labor long and hard."

Finally, Molly DiBianca at the Delaware Employment Law Blog reports on a survey of employers concerning their use of social networking media as part of applicant screening.    45% of respondents reported using social networking for background checks, with 35% of those having rejected a candidate for what they found there.   What will disqualify a potential employee?  Among other things, provocative photos or information; depiction of drinking or drug use; lying about your background or qualifications; or discriminatory comments.

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More signs this week that the federal government is ramping up enforcement of employment laws.  The Department of Justice Civil Rights Division is seeking a $22 million budget increase for 2010, and is seeking to hire 50 new attorneys.   Law Memo Employment Law Blog reports that the EEOC has been very active recently in filing lawsuits.   The Agency  filed 32 lawsuits against employers during one seven day period in September.  Add to that 13 new lawsuits filed or announced on September 29 alone.   The Department of Labor is in the process of hiring 250 new investigators to look for wage and hour violations, particularly in the areas of overtime requirements, minimum wage, and employee breaks.   If you have not done so already, now would be a good time to conduct an audit of your employment practices and procedures. 

This post on HR Daily Advisor offers practical advice on how to avoid retaliation claims.  The first rule: don't let managers or supervisors take adverse action against employees who have complained without first checking with HR.

Washington DC Employment Law Update reports that Senate Judiciary Committee Chairman Patrick Leahy (D, VT) announced his committee is going to hold a hearing to investigate whether the Supreme Court has been misinterpreting laws designed to protect workers from discrimination.  On the witness list, Jack Gross, the plaintiff from Des Moines in the case Gross v. FBL Financial Services, Inc.  (See our related post on this subject here, as well as this one from Workplace Prof Blog).   Gross held that an age discrimination plaintiff must prove that age was the "but-for" reason for the adverse employment action; in other words, the employment action would not have been taken "but-for" the employee's age.  Before Gross, most courts required the plaintiff to prove only that age was "a motivating factor".   Amending the ADEA to lower the burden of proof for employees may be added to Congress' list of pending employment legislation.

Are lawyers giving bad advice about the impact of new technology in the workplace?   In this post on the Fistful of Talent blog, Kris Dunn complains that lawyers too often advise clients only about the perils of social networking and other cutting edge communication tools.  She contends this type of legal advice only scares HR professionals away from modern technology, rather than empowering them to use it effectively.   Attorney Anthony Zaller of California Employment Law Report  proposes this solution: if you want practical legal advice about social networking technology, make sure your employment lawyer uses Facebook, LinkedIn or Twitter,  or at least uses a Blackberry or iPhone.   I'm not sure a lawyer's own use of social networking technology will allow them to give better advice on the subject;  but, the point is well taken that clients need solutions to the legal issues this technology presents, not merely warnings about the inevitable lawsuits.  

Next Friday (October 9) I will be presenting a talk entitled "the Brave New World of Employment Law: What's New in 2009 and What to Expect in the Year Ahead" at the 3rd Annual American Corporate Counsel Association (Iowa Chapter) Annual Seminar in Iowa City.  This has become a marquee event for corporate counsel in Iowa, and I look forward to seeing many of you there.

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The biggest news this week is the EEOC's release of the proposed regulations for the ADA Amendments Act of 2009.   This post from Jackson Lewis provides some of the highlights.   Note that these are proposed regulations.  There is a 60 day period during which the EEOC will receive comments.  After considering the comments, the EEOC will publish the final regulations and the date the regulations will become effective.   Stay tuned for more information and analysis.

Pop quiz: how many new federal employment laws have been passed by the 111th Congress in 2009 and signed into the law by the President?  Answer: one (the Lilly Ledbetter Fair Pay Act signed into law January 29, 2009). 

With all the buzz in the employment law community about the anticipated changes in 2009, some may be surprised by that answer. Employers should not rest on their laurels, however, because there are plenty of bills in the pipeline.   In this post, Dennis Westlind of World of Work blog identifies thirteen employment related bills that were introduced in 2009 and remain pending, including the Employee Free Choice Act (permitting union recognition by "card check", among other things;  Employment Non-Discrimination Act (prohibiting discrimination on the basis of sexual orientation or gender identity); Paid Vacation Act (mandating employers with 50 or more employees to provide paid vacation), and Paycheck Fairness Act (providing for "enhanced enforcement" of equal pay requirements between male and female employees).

Unpaid internships illegal?  In this post, Dallas Mavericks owner Mark Cuban rails against the Federal Wage and Hour Regulations that make the traditional "foot in the door" experience unlawful.  

Is there a looming crisis with wage and hour litigation?  Dan Schwartz at Connecticut Employment Law Blog and Jon Hyman at Ohio Employer's Law Blog show that, despite the buzz about wage and hour suits, the actual number of federal labor cases filed in their jurisdictions has remained steady.    The real concern is that many of these cases are collective actions, which can result in substantial monetary liability.   In May 2009, local convenience store chain Casey's General Stores paid over $11 million to settle two wage and hour collective actions filed by 7,600 former management level employees and 76,000 non-management employees.

Finally, according to the U.S. Department of Justice, the federal government has the right to read even the personal e-mail of its employees.    Notes one commenter on the ABA Journal site: "At least somebody is reading the emails I send to federal government employees…."

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Employee Availability After Hours Comes at a Price

The Wall Street Journal reports on a potential boom in lawsuits relating to unpaid overtime.  The culprit--company issued smart phones combined with lean workforces requiring fewer employees who handle more responsibility.   With new technology, employees are capable, and often expected, to handle work related communication anytime and anywhere, whether they are off the clock, sick, or on vacation.   The article reports on two recently filed lawsuits claiming unpaid overtime under the Fair Labor Standards Act (FLSA) .  In one case, retail employees of T-Mobile USA claim they were required to use company issued smart phones to respond to messages and customer complaints after hours.  In the second case, a maintenance employee for CB Richard Ellis alleges he was not paid for after hours time spent sending and receiving messages on his cell phone.

Under the FLSA, whether an employee is who is required to carry an employer issued mobile phone, pager, or smart phone after hours remains on the clock depends upon many factors, including the nature of the job and how frequently the employee actually has to use the device for work related purposes.   Depending upon the number of employees involved, failure to comply with FLSA's overtime requirements can result in substantial financial liability.  To avoid running afoul of these overtime requirements, prudent employers are urged to develop clear practices concerning employee's use of company issued technology.

Company Officers May Be Held Personally Liable for Unpaid Wages

A bankrupt company does not necessarily relieve corporate officers of liability for unpaid wages under FLSA.  So held the U.S. Court of Appeals for the Ninth Circuit in Boucher v. Shaw, decided on July 27, 2009.   In Boucher, a group of former employees of the bankrupt Castaways Hotel, Casino, and Bowling Center in Las Vegas sued the CEO, Chief Financial Officer, and manager in charge of labor relations, claiming the individual officers and managers were liable for their unpaid wages.  Rather than getting in line with other creditors in the bankruptcy proceedings, the plaintiffs decided to pursue the officers individually.

The Court noted that the definition of "employer" under FLSA is not limited by the common law understanding of the term, but "is to be given an expansive interpretation in order to effect FLSA's broad remedial purposes".    The test, according to the Court, is whether the individual exercises "control over the nature and structure of the employment relationship", or "economic control" over the relationship.   In this case, the Court noted that the CEO held 70% of the company shares, the manager in charge of labor relations owned 30%, and the CFO had responsibility for cash management.  Under these facts, the Court held the plaintiff's stated a claim against the individuals under FLSA.   The Court rejected the defendants' argument that any claims for unpaid wages by former employees belonged in the bankruptcy court. 

While there is no similar precedent in the Eighth Circuit, the Boucher case nonetheless should put company officials on notice that wage claims may exist against them individually, even after the corporation is bankrupt or otherwise defunct. 

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As we enter the traditional "dog days" of summer, the world of labor and employment law remains active.  Here are are some highlights of important and interesting news this week:

1.   Furloughs

Although there is some indication the recession is easing, many employers remain concerned about the economy.    Pay reductions and temporary furloughs provide a means by which employers can manage payroll expense while still retaining valued employees.   As we discussed in this post a couple of months ago, however, it is important to plan ahead and understand how the wage and hour laws impact your ability to use furloughs with certain types of employees.  To help employers comply with the wage and hours laws as they relate to furloughs, the Department of Labor Wage and Hour Division recently issued a memo containing many of the frequently asked questions posed to the Division.  The memo is available on the DOL website, or can be accessed here.

Employers are urged to access the DOL memo or consult with counsel before implementing any kind of furlough program, particularly if it involves exempt employees.

(Hat tip: Florida Employment and Immigration Law Blog)

2.  Other Wage and Hour Issues in the News

Speaking of wage and hour problems, the convenience store chain QuikTrip, which has a substantial presence in Iowa, recently agreed to pay 3,800 employees approximately $750,000 in back pay.   A Department of Labor Investigation revealed that the employees had not been paid an overtime premium that was due on certain performance related bonuses.  QuikTrip blamed a computer glitch for the error.  Details of the story can be found here.  

Lesson: it might be wise to audit payroll systems from time to time to ensure your employee records and payroll systems are up to date and accurate.

3.  Proposed EFCA Compromise Is Still Bad News for Employers

As a means of garnering the support of some reluctant Senators, promoters of EFCA have proposed removing the "card check" provision in law the law that would have permitted union certification without a secret ballot election.   For a discussion of the current state of EFCA, including the recently proposed compromise, see Justin Wilson's post here.  However, even in its compromise form, EFCA is still a bad deal.   Even though union interests may be willing to give up on card check, at least for now, they still are demanding the opportunity to hold an election in a shorter period of time after a petition is filed with the National Labor Relations Board than is currently available.   That means employers will have less time to provide information to their employees in response to a union campaign.  Moreover, the binding arbitration requirements of EFCA remain in the compromise legislation, which will provide an incentive for union negotiators not to compromise during the early phases of a negotiations, with the expectation an arbitrator will grant more union demands than would have been granted as part of a good faith negotiating.

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Many businesses in Iowa and elsewhere continue to experience slack demand, lower revenue, and low to non-existent profits.   Economic indicators in Iowa continue to sink.   As a means of trimming payroll expenses while avoiding long term or permanent lay-offs of employees, many employers are looking to voluntary or even mandatory unpaid furloughs.  

Employers should be cautious when implementing an employee  furlough program, particularly when it involves furloughs of professional or administrative employees who are paid a set salary regardless of the number of hours worked.   Such employees are considered "exempt" under the federal Fair Labor Standards Act (FLSA) because they are not entilted to overtime in the event they work more than forty hours per week.   On the other hand, if such an employee works less than forty hours per week because of reductions in business, the employer's right to pay the employee less than his or her regular salary is limited.   

A recent opinion from the Department of Labor purports to clarify when an employer may deduct from an exempt employee's salary because of time off work.   Generally speaking, an employer that requires exempt employees to take mandatory furloughs cannot reduce the employee's pay unless the furlough last at least one week.   Exempt employees who are required to take furloughs of less than one week are still entitled to receive their full salary.  

If the employee's leave of less than one week is truly voluntary, his or her salary may be reduced by an amount proportionate to the time off work (i.e. if the employee takes one day off, the salary paid can be 4/5 of the regular salary).  However, the employee must be off work a minimum of one full day.  In other words, if the exempt employee works part of the day and is off the rest, the employer may not reduce the employee's salary to account for the time off.    It is also critical to note that the employee must be completely free of any obligation to work on the day off--even a requirement to check voice mail or e-mail may trigger the employer's obligation to pay the full salary.

The Department of Labor has promulgated rules on this subject, but the rules are complex and sometimes difficult to understand.  Employers are advised to seek counsel before making furlough decisions about exempt employees.

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