Suits In The WorkPlace

Corporate Nap Time?

Friday the 13th

Friday the 13^th proved to be quite unlucky for Wal-Mart.  Last Friday, a state court jury in Philadelphia awarded nearly $78 million in damages to a class of current and former Pennsylvania employees of Wal-Mart Stores Inc.  (Braun v. Wal-Mart Stores Inc., No 020303127, damages award 10/13/06).  The damages award came just one day after a jury verdict finding Wal-Mart, Pennsylvania’s largest private employer, had violated state wage and break laws by failing to pay employees during rest breaks and for work they did off the clock.  The employees are expected to seek an additional $62 million in liquidated damages for willfully violating state law.  According to one former employee, the workers were expected to do “whatever it takes to get done, and if that meant missing your break, that’s what had to be done.”  Wal-Mart issued a statement on Friday indicating that it intends to appeal the jury award. The Pennsylvania verdict comes less than one year after a California jury ordered Wal-Mart to pay $172 million to a class of California employees for violation of state meal break laws.

Take-away:  It's easy to see how a manager's efforts to motivate employees could quickly become Exhibit A in a case like this.  These days, every successful business is customer-focused in one way or another, and encourages its employees to adopt that same "whatever it takes" attitude.  Employers should be careful, however, to monitor (or at least spot-check) what's being said to employees -- in training sessions and in the work environment.  Supervisors must be educated to temper their "motivational" comments so they aren't later misconstrued as an instruction to work off the clock.  On wage and hour issues, an ounce of prevention can literally be worth $78 million of cure.

We're the Government, We're Here to Help

    Employers giving sensitive or confidential data in response to an EEOC request for information need to be aware that the Commission is under no obligation to safeguard that information from later inquiries.  Venetian Casino Resort challenged the EEOC in federal court over its disclosure procedures.  Venetian's argument, reduced to its essentials, was that the EEOC is constrained by Title VII and a variety of other federal laws from releasing information designated by employers/respondents as trade secrets, confidential information, or otherwise protected business proprietary information, without notice to the business.  Venetian's focus was on a request for information relating to at least 11 hiring discrimination charges filed against the casino several years earlier.  The casino did not want to produce the charges to the EEOC because it believed that the commission would simply pipeline the information to claimants and their counsel in a current action, without the formal protections of the Freedom of Information Act process. 

     Unfortunately, the district court didn't see it that way.  The court noted that the commission has always interpreted Title VII's limitation on the commission's ability to publicly disclose facts gathered during an investigation as allowing disclosure when disclosure was deemed necessary for securing appropriate relief.  As a result, there is no protection for an employer seeking to have information it submits to the commission not disclosed to a charging party without notice to the employer.  The court also found that other federal law intended to protect trade secrets or confidential information did not apply under these circumstances. 

     What does this mean for employers?  It means that it is virtually impossible for a company, once it has released information to the EEOC, to prevent that information from falling into the hands of a charging party and her counsel.  Keep that in mind the next time you are facing a potential class action. 

Time Keeps Draggin' On

    The very first Sarbanes Oxley whistleblower case, decided by an administrative law judge, continues to drag its way through the Department of Labor and U.S. District Court in Virginia.  

     Cardinal Bank Shares' former Chief Financial Officer, David Welch, was fired by Cardinal, allegedly because of his complaints about financial mismanagement.  The termination revolved around Welch's refusal to engage in discussions with his superiors without an attorney present over his allegations that Cardinal Bank Shares was engaging in conduct that violated federal banking laws and SEC regulations.  A Department of Labor ALJ found that the bank violated Sarbanes Oxley in terminating him.  Cardinal appealed the original ALJ ruling to the DOL Administrative Review Board, and also requested an interlocutory appeal to federal court over a notice and the ALJ's order regarding appeals.  The matter floundered in federal courts for a while and then finally made its way up to the Fourth Circuit which determined that there were no appeal rights on a Sarbanes Oxley claim until a final order had been made on damages. 

     The ALJ issued a second ruling roughly one year after the initial ruling that ordered reinstatement and awarded Welch over $150,000 in damages and fees.  Cardinal went back to federal court to avoid reinstating Welch and tried to argue that the ALJ's ruling was unclear.  DOL's Administrative Review Board finally found that the initial 2004 order and the 2005 order constituted the ALJ's decision and order for reinstatement, and that the ruling was clear enough to be enforced.  The Board also dismissed Cardinal's motion to stay the reinstatement order, but continued to consider the reinstatement appeal, having taken over a year to determine that the order was actually clear enough for enforcement. 

     Welch, in the meantime, filed a motion in federal district court to enforce the Department of Labor's order to reinstate him.  But the court refused, noting that the Administrative Review Board still had its hands on the actual appeal of the case by Cardinal and said that until the Board was finished with the case, there could be no appeal to the federal courts for enforcement.

    For those of us who practice in this area, the irony is that the Sarbanes Oxley whistleblower protections were to designed to speed up the process of dealing with whistleblower cases and the remedies associated with them.  Instead, what has developed is an incredible tangle of motions, counter-motions, appeals, counter-appeals and charges as the case ping-pongs back and forth between the Department of Labor and federal court.  I think the short answer is that the federal agency must streamline its decision-making process so that these cases don't string out unnecessarily.  The federal court is exactly right -- it can't move until there is a final administrative order in place.  But it's taken more than 2 1/2 years to work through what should have been a relatively straightforward process.