Suits In The WorkPlace

Sidley Takes Another Hit

           Those of us in large firms are following the developments in the EEOC/Sidley & Austin case in Chicago fairly closely.  The case is an age discrimination claim by former Sidley partners, and it seems to be moving toward trial directly.  Sidley has failed to get the case dismissed on the basis that its partners are not employees, and now has lost on the claim that the EEOC cannot proceed because there were no proper administrative charges of discrimination filed by the Sidley ex-partners.

             This case has important ramifications for large partnerships everywhere.  Although true partners are not considered employees, and therefore, not subject to Title VII coverage, the EEOC has alleged that the Sidley ex-partners at issue were not actual partners, despite their status and compensation.  Rather, the Commission argues that because these individuals had virtually no say in the day-to-day running of the firm, they were more like employees, and therefore, are proper participants in Title VII litigation.  Now the Commission has won on its claim that it can represent the interests of the Sidley former partners, even though most of them did not file charges of discrimination with the EEOC. 

             Perhaps this case will be resolved short of trial; it has been hotly litigated at almost every step by the parties, however.  Given what's at stake, it may not be possible for the firm to provide any kind of meaningful settlement with so many of its ex-partners/employees.

Beware the Jabberwock, er Fluctuating Workweek

            The Fair Labor Standards Act contains any number of landmines for the unwary employer.  In fact, if I have to pick a statute that is most likely being violated by employers, it's the FLSA.  On top of its frequently counterintuitive requirements, the statute contains enticing overtime reduction devices like the fluctuating workweek that seem simple enough to put into effect, but ultimately end up looking like something out of Lewis Carroll.

            A fluctuating workweek allows employers to pay a set wage for hours that vary from week to week.  The employer and the employee must have a "clear mutual understanding" of the arrangement, and the employee receives a 50% overtime premium.

            Fluctuating workweek arrangements are complicated and rarely understood by both sides.  The pitfalls of using such an arrangement are amply demonstrated in the Florida case of Teblum v. Eckert Corp. of Florida, Inc., No. 03-495 (M.D. Fla. Feb. 7, 2006).  Eckert is facing back overtime claims for approximately 2600 assistant managers because Eckert added illness, vacation and holiday time into the fluctuating workweek equation.  The addition of this "non-worked" time reduces the hourly rate under the fluctuating workweek formula, and the corresponding overtime entitlement as well.  While the employer stated that, in fact, it did properly calculate the overtime, the court found that the disagreement between the employer and the employees indicated that there was no mutual understanding of how the compensation was calculated.  Accordingly, there is a jury issue as to whether the fluctuating workweek was properly utilized.

            My experience with this payment schedule has been uniformly negative, mainly because of the difficulty in communicating the concept and its actual application to the workforce so that both sides have a clear understanding of what is involved.  It is not uncommon to have payroll, human resources and in-house counsel each end up with different results as to the amount of money employees are entitled to using the same data.  So beware the fluctuating workweek, unless your vorpal blade is particularly sharp.

Well, It Seemed Like a Good Idea at the Time

         The ongoing saga of the French workweek is an apt lesson in silly and counterproductive government interference in the employment relationship.  In 2000, it became illegal for the average employee in France to work more than 35 hours a week.  This attempt to create a workers' paradise promptly backfired, as companies with operations in France began to deal with the tremendous loss of productivity that the law required.  In fact, as indicated in this article on ABANET, French employers and the government have been continuously moving away from the 35-hour workweek since its enactment.  The efforts to correct the production losses include raising the annual overtime quota by approximately one working week, from 180 hours to 220 hours.  Other approaches include allowing employees to convert some of their many days off under the reduced hours law into money (this revolutionary concept is referred to as allowing employees "to work more in order to earn more") and shield certain overtime hours from the annual overtime quota.  The latest move to lengthen the workweek is to confront the French unions with a choice:  either agree to longer work hours by the the collective bargaining unit, or face the prospect of the employer outsourcing the work outside of France.

             These actions can hardly be considered a surprise -- most major French employers are multi-nationals that are perfectly at home working in a variety of places, including those where the employees are not restricted from "working more in order to earn more."  Capitalism rears its ugly head, yet again.

Tenth Circuit Shoots Down Challenge to Firearms Policy

Sorry for the cornball title; sometimes you just can't resist.  Professor Ross Runkel over at lawmemo.com has posted a good summary of the Tenth Circuit's decision this week in Bastible v. Weyerhaeuser, in which the court permitted the discharge of several employees who were found to have firearms in their vehicles on Company property.  The employees challenged their discharge on public policy grounds, citing the right to bear arms provision in the Oklahoma constitution.  The Court rejected that argument, primarily on the grounds that the right to bear arms could be subject to certain limitations, such as the one in question.

Interestingly, the discharges that spawned this lawsuit also resulted in an Oklahoma statute which prohibits employers from banning firearms in locked vehicles on premises.  That statute, in turn, has been challenged by several employers, including ConocoPhillips.  Read this story for more information on the current debate in Oklahoma.

Although Oklahoma seems to be leading the charge (in both directions), this issue is not isolated.  In light of growing concerns over workplace violence, more employers are implementing policies like the ones at issue here.  Thus employers outside Oklahoma should keep an eye on these developments (and so will we).  Employers in Oklahoma should . . . well, just keep your head down until the dust settles.

Who Wrote the Book/Policy of Love?

           Here's an appropriate posting for Valentine's Day.  While most employers don't write a book about love, many of them have policies regarding dating in the workplace.  According to a recent Society for Human Resource Management ("SHRM") survey, only a minority of companies address workplace romantics with some form of guidance, however. 

          The numbers cited by SHRM are noteworthy because problematic office romances have received their fair share of attention lately.  Think Boeing and the California Department of Corrections case mentioned below.  The survey notes that there seems to be an increased tolerance for workplace dating among management form previous years, noting a decrease in concern over potential sexual harassment allegations by HR professionals -- 95% were concerned in 2001, but only 77% in 2005.  However, there is an increased worry about something that I would think is much more obvious--favoritism and retaliation between coworkers who are alternatively on the receiving or losing end of a romantic relationship.   

            One area where SHRM's survey did reveal an increase in focus was on relationships between superiors and subordinates; 80% of the HR professionals said such relationships should be prohibited, up from 64% in 2001.  Thirty-nine percent of the HR professionals surveyed said that their companies require employees to inform their supervisors of workplace related romances, an increase of 16% from the 2001 survey. 

            The survey also revealed that approximately 1/3 of the respondents have what is referred to as an "office spouse," that is a "non-romantic" (but perhaps not for long) male-female exclusive relationship that takes place only within the confines of work, on breaks or at lunch, for example.  These relationships are typically characterized as superficial or harmless, but obviously have the potential to develop some real problems. 

            I tend to have a much more jaundiced view of workplace romances because I only see the ones that either end up in litigation or are the cause of litigation.  Given the expansive definitions of hostile work environment contained in recent California cases, and the normal concerns about favoritism/nepotism, there would appear to be very little upside for an employer that doesn’t pay attention to the romantic liaisons in its workforce.  Especially crucial are relationships between management and subordinate employees, even where no direct superior-subordinate relationship exists.  My experience is that coworkers will always believe that any benefit received by the lower-ranking employee in such a relationship is always a result of the relationship, and not job competence.  This perception obviously creates larger problems for everyone as a relationship continues.  I regularly counsel my clients to require disclosure of these kinds of relationships at a minimum, and, if possible, prohibit them.

Blind Patrons Sue over Website Accessibility

An advocacy group for the blind has sued retailer Target over their web site, alleging that the site is not sufficiently usable by blind patrons.  Read the full story here.  While the suit is not an employment matter, it highlights an issue we've been thumping our chest about for years:  if you recruit applicants via your web site, you should consider an audit to make sure it's sufficiently accessible to web surfers with disabilities.  The Target suit, for example, alleges that certain functions cannot be performed without a mouse, which is difficult if not impossible to emulate with the computer equipment used by blind patrons.  Another example is the allged failure of Target to make us of the "Alt-Text" option available in web programming, which substitutes a text description of graphics when the graphic itself isn't visible.  So again I say:  if you use your external web site for recruiting or accepting employment applications (or for any other HR function for that matter), you should to at a minimum assess the accessibility of the site to the disabled, or provide a reasaonable alternative for the application process.  Just a little food for thought . . .

Pushing the Edge of the Religious Envelope

In contrast to the increasing sensitivity of courts to sexual harassment, a recent New York case, Ennis v. Sonitrol Mgmt. Corp., No. 02-CV-9070 (SDNY, Jan.25, 2006) seems to raise the bar for employees confronted by "in your face religious behavior."  In this case, the employee claimed that his manager hired only people with a close religious bond to him, engaged in office prayer, gave business advantages to his Christian recruits, and sang religious songs and left religious writings and a bible on the plaintiff's desk.  The plaintiff, who was Jewish, did admit that the manager never tried to proselytize him (although I can only imagine one or two more things that the manager could have done to try to convert the plaintiff ), and did not disparage the Jewish religion, although he did make comments about the plaintiff's absences during Jewish holidays.

Apparently unimpressed by the plaintiff's claims that he was yelled at, bullied and berated, the court held that plaintiff failed to tie the conduct to some religious animus.

This case is noteworthy because the EEOC has noted an increase in the number of religious discrimination claims being filed by people who are in workplaces where there is a substantial amount of outright religious activity.  This court seems to be saying that the conduct has to be pretty obvious and very direct in its religious hostility before there will be a supportable claim of religious discrimination.

Hostile Work Environment for Female Prison Guards

The California Supreme Court's reversal of summary judgment in favor of the California Department of Corrections last summer got wide play from most of the mainstream media. The key holding -- that a supervisor's sexual favoritism toward a subordinate can play out in conduct severe or pervasive enough to create a hostile working environment based on gender -- was simplified in a number of stories to say that "a boss who has an affair with a coworker may give the other employees a basis for a lawsuit."  Actually, the facts of the case were sufficiently egregious make a good case for an illegal hostile environment under existing law, without the office romance embellishment.

On the remand, the intermediate appellate court promptly reversed itself and found more than sufficient claims to establish a hostile work environment if proved true at trial, Miller v. Dep't of Corr., Cal.Ct.App., No. C040262, unpublished opinion (Jan.19, 2006).  The court also found that certain types of conduct that are typically used to establish the hostility of a work environment also fall into the category of adverse employment actions.  Things like undermining authority, publicly demeaning an employee, subjecting an employee to "ostracism" and the like, are now adverse actions under California law.

All of a sudden, that mandatory sexual harassment training that California employers must provide begins to assume some urgency.  If employers did not have sufficient incentive to police office romances before, they certainly do now, at least on the West Coast. 

Whistleblowing on a Title VII Basis

 When Sarbanes Oxley whistleblowing provisions became law, I had a real fear that somehow, somewhere, someone would figure out a way to connect Title VII protected activity with SOX's protected activity and create a hybrid claim that would be extremely difficult to defend under normal SOX procedures.  Just such a claim was raised in Smith v. Hewlett Packard (No. 2005-SOX-00088).  The administrative law judge determined that there was no viable claim under Sarbanes Oxley, but then thoughtfully outlined how a plaintiff could make a claim if he so desired. 

 The good news is that such a claim is hard to establish -- the plaintiff must show that his employer failed to disclose either litigation or pending litigation of such magnitude that it would have an effect on a company's value on the public market.  Those types of cases should be few and far between, but one does not have to think too long or hard to envision a situation where an embattled human resources manager raises a red flag of systemic discrimination, checks the company's annual report to its shareholders to determine that his claims are not disclosed there, and then files his report with the Department of Labor after he's disciplined for some unrelated reason.  It's only a matter of time before senior management types who have access to facts that might lead to class-wide employment litigation begin crafting these kinds of claims for job security or to enhance their severance packages. 

Back Wages Collected by DOL Hit 4-year Low

Initially, we apologize for the delay in posting.  We were following the advice in our last post and trying to see how much we could leverage our sick leave.

On to the topic du jour.  The Department of Labor’s Wage and Hour Division collected more than $166 million in back wages in fiscal year 2005, marking a four-year low. Could it be that many employers are beginning to hear the cry of employment lawyers and HR consultants? Is there an increased recognition of the financial risk involved in not complying with highly complex labor laws such as the Fair Labor Standards Act and the Family and Medical Leave Act? Or is it mere coincidence – a random twist of fate? Well let’s see.

Overall, the DOL collected back wages for 241,379 employees in FY 2005, which represents a 30 percent decrease from the DOL’s peak of 342, 358 in FY 2003 and it is the lowest number since 2001. The DOL however, claims that its effort to collect back wages in the last year has not waned. In fact, wages collected on behalf of low-wage workers has increased to a record high of 45.8 million in back pay for 96,511 low-wage workers during FY 2005. What's more, the amount collected in low-wage industries such as day care, restaurants, and temporary help increased by 13 percent over figures from 2004. Well critics may differ, but for those of us who wake up in the morning wondering, “does X employee perform the requisite number of job activities directly related to management or the general business operations to qualify as exempt employees under the FLSA and corresponding state statues?” the answer is clear. Increased awareness and attention, preventative “simulated” audits, and perhaps a mortal fear of collective actions in California have guided an increasing number of employers toward safe shores.

In this area, however, the work is never done.  Thus, while numbers for 2005 have decreased, employers still need to focus on a number of areas for improvement. Notably, the largest awards were for violations of the FLSA’s overtime rules. In FY 2005, 188,954 employees received back wages totaling over $119 million dollars for unpaid overtime. This amount represented 89 percent of all wages collected under the FLSA. Of the back pay collected under the FLSA, the DOL reports that nearly $14.7 million was collected for roughly 11,000 employees as result of violations based on the 2004 changes to the overtime rules. An additional 21.4 million in back wages were collected for employees who were paid straight-time instead of overtime and 20.1 million was collected for workers who were not paid for all hours worked.

So, despite the trend, complacency is not an option.  Unless you like jury trials in California.