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.