March 2011
In a teleconference and live webinar sponsored by the American Bar Association (ABA) on March 16, NLRB Acting General Counsel indicated that the Board will be confronting controversial topics throughout the year, topics that have the potential to shake the national labor and employment landscape.
Secret ballot amendment lawsuits. Solomon confirmed that the Board has authorized him to file lawsuits against four states that have passed, or are expected to pass, constitutional amendments enshrining the right to secret ballot elections in all elections, both for public office and in representation elections. On January 14, 2011, Solomon sent letters to the Attorneys General of Arizona, South Carolina, South Dakota and Utah, informing them that their plans to revise their state constitutions to guarantee secret ballot elections in all union representation elections likely violated the NLRA because the proposed amendments did not allow for voluntary recognition; Solomon, at that time, held out the threat of a lawsuit. The attorneys general responded that, in their view, the amendments did not violate the NLRA’s protection of the right to voluntary recognition and insisted that they would proceed. During yesterday’s teleconference, Solomon announced that he would likely be filing lawsuits against those four states precisely because the amendments do not “allow for voluntary recognition.”
The states pursued the amendment strategy when the Employee Free Choice Act, which would have allowed unionization through card-check, stood a chance of becoming law. The strategy at that time seemed to be to force a preemption lawsuit that could, theoretically, lead to the US Supreme Court debating the constitutionality of EFCA. As EFCA is essentially defunct, the most likely outcome of the promised lawsuits will be federal preemption over the state amendments.
Possible cases. Solomon also confirmed that the NLRB’s Region 2 office is investigating charges filed by the National Football League against the players union that failed to achieve a new CBA, resulting in a lockout and the decision by the union to decertify. The owners have accused the union of negotiating in bad faith and of intending all along to decertify. That decertification allowed the players to file an antitrust lawsuit against the owners. If successful, the owners’ ULP charges would bar that decertification, thus depriving the players of a great deal of leverage.
Solomon also indicated that more cases similar to the recently resolved “Facebook firing” case are in the pipeline. In that case, an employer agreed to reinstate an employee who was fired after expressing criticism about the employer in a Facebook post. Solomon agreed that cases exploring protections available to employees in social media sites are likely to be prevalent in the next several years.
Solomon also stated that Board has asked him to brief whether charter schools are subject to Board jurisdiction.
U.S. House Education and the Workforce Committee Chairman John Kline (R-Minn.), and Subcommittee on Health, Labor, Employment, and Pensions Chairman Phil Roe, M.D. (R-Tenn.) have sent a letter to the Chairman and Acting General Counsel of the NLRB instructing them to explain their concerns regarding how the proposed House Republican budget plan, which would slash government spending by more than $100 billion, would affect the Board. Chairman Wilma Liebman and Acting General Counsel Lafe Solomon issued a joint statement on February 18, 2011, in which they stated that the proposed budget cuts would force the NLRB to furlough all 1,665 employees for three months between now and the end of September, when the fiscal year ends. That suggestion clearly rankled Kline and Roe, who issued a joint statement of their own on Thursday, March 3.
“It is unacceptable to allow this unsustainable federal spending binge to continue on auto pilot,” said Kline. It’s time to make the tough choices necessary to cut spending. I look forward to receiving greater detail from the NLRB about how they intend to adjust to the difficult fiscal realities the nation faces.”
“Every agency, department, and board of the federal government must work toward accomplishing the agenda mandated by the American people—getting this economy back on track and getting the unemployed back to work,” said Representative Roe. “This includes the evaluation of NLRB’s budget. Since tough questions need to be asked and tough choices need to be made, it’s essential we make informed decisions and not use inflammatory rhetoric.”
In the letter, Kline and Roe demand that Liebman and Solomon provide “all data” supporting the furlough assertion. They also demand all documents and communication relating to the Liebman/Solomon joint statement and have asked for all NLRB performance budget justifications for 1999 through 2009.
The demand for all documents and communication between the Chairman and the General Counsel is sure to raise both eyebrows and accusations that the Republican majority is attempting to intimidate and shut down a Board that has been at the forefront of the Obama Administration’s attempts to use its regulatory agencies to advance a more pro-union/worker agenda.
In the wake of a controversy of advertisements paid for by the NLRB that seemingly promoted unionization, the Board has discontinued the ads. Late last week, the National Association of Manufacturers’ blog, Shopfloor, drew attention to an advertisement on the search engine, Google. The ad, which was paid for by the NLRB and was intended to bring viewers to the NLRB’s website, contained the phrase “Find info on how to start a union.” Shopfloor questioned whether the NLRB should be taking such a pro-union position and the House Committee on Education and the Workforce fired off a letter to the Board on March 4, demanding that Chairman Wilma Liebman explain the ad and provide information relating to Google advertisements and to the NLRB’s “advertising strategy and goals.” The letter also asked for an itemized list of all advertising disbursements.
Seeking to quell the furor, the NLRB posted a comment on the “Media Fact-check” section of its website. The Board explained that the ads were provided, free of charge, by Google and that the Board had decided to discontinue the ads. Google frequently selects type and phrases at random from the websites to which it links.
Although the Board has explained the situation, the Committee’s request for all information relating to the Board’s advertising goals and disbursements hints at further difficulty for the Board. Since taking over the Committee, Representative John Kline (R-Minn) has held hearings into the Board’s direction and agenda and has demanded that Liebman and Acting General Counsel explain their opposition to the proposed cuts to the Board’s budget. Kline believes that the Board is advancing a pro-union agenda and may be seeking reasons to strip funding from the federal agency.
Last week, on March 9, legislation was introduced in the US House of Representatives that would amend the NLRA to guarantee secret ballot elections in all union representation elections. Reintroduced by Representative Phil Roe (R-TN), the Secret Ballot Protection Act, HR 972, would make it an unfair labor practice for employers to recognize or bargain with a union that was not selected through a secret ballot election. Similarly, under the law, it would be an unfair labor practice for unions not selected through that process to force, or attempt to force, an employer to recognize, or bargain with it.
Roe released a statement, in which he insisted that the bill was necessary to overcome future attempts by the current NLRB to “overturn established workers’ rights to a secret ballot.” Roe says that passage of the bill would prevent card-check laws, such as the now-defunct Employee Free Choice Act, from occurring. The bill has been referred to the House Committee on Education and the Workforce, where Roe is the Chairman of the Subcommittee on Health, Education, Labor and Pensions. The bill may achieve success in the House, but it is unlikely to even receive a vote in the Democratic-controlled Senate.
Despite the probable lack of success of both this bill and its companion bill introduced last week in the US Senate by Senator Jim DeMint (R-SC), the underlying philosophy has organized labor up in arms.
“The recent move by federal legislators to strip working families of their right to bargain for better wages, benefits and retirement is the latest attempt on the GOP’s long list of tricks to aid the ‘haves’ and disable the ‘have-nots,’” said IAM International President Tom Buffenbarger, as he attacked the Senate bill.
The Service Employees International Union has announced that Sodexo will settle a case filed against it with the NLRB over its media policy for employees. Per the agreement, Sodexo will issue a new media policy, one that allows its employees to speak about their working conditions and issues and will notify all U.S. employees about the new policy.
The agreement resolves unfair labor practice charges filed by the SEIU that accused Sodexo of intimidating workers in the exercise of their rights through the former media policy. That policy ordered employees not to “make statements or comments to the media” and to report any requests for comment on any subject to “your manager or Corporate Communications immediately.”
SEIU contends that the agreement clarifies that restrictions on employee speech are only permissible when those employees are speaking on behalf of the employer. The union notes that such incidents “rarely, if ever, happen.”
NLRB Acting General Counsel Lafe Solomon announced new guidelines to help employees who were illegally discharged to get full compensation in backpay awards. Solomon issued two memos on Friday, one outlining new methods for calculating backpay, and another in which he urged reconsideration of two 2007 Board decisions that require illegally discharged employees to start looking for a new job within two weeks of being fired. Those decisions, wrote Solomon, have shifted the burden from the employer to the General Counsel to prove that the terminated employees have diligently pursued work throughout the backpay period. Solomon then ordered the NLRB’s 31 regional offices to identify cases that could be used to ask the Board to reconsider the Board’s decisions in Grosvenor Resort, 350 NLRB No 1197 (2007) and St. George Warehouse, 351 NLRB No 961 (2007).
In Jackson Hospital Corp dba Kentucky River Med Ctr, 356 NLRB No 8 (2010), the Board crafted a new procedure for assessing interest on make-whole orders, under which interest on make-whole awards is to be compounded on a daily basis, using the established methods for computing backpay and for determining the applicable rate of interest. Solomon instructed the regional offices that, from now on, interest will begin to accrue on backpay when that backpay is due and owing. Compensation earned through other jobs following the illegal termination will continue to be collected and applied in backpay calculations on a quarterly basis in a number of ways. Gross backpay will be calculated on a pay-period basis in each quarter, while interim earnings will initially be calculated on a quarterly basis. Quarterly interim earnings will be allocated to pay periods that contain gross backpay on a proportional basis determined by the proportional distribution of pay-period gross backpay in the quarter. Additionally, pay-period net backpay will be calculated by subtracting the proportional interim earnings from the pay- period gross backpay and daily compounded interest will begin accruing on each pay- period net backpay amount on the day following the end of the pay period, and will continue to accrue until the date the backpay is paid.
Furthermore, noting that “it does not advance the purposes of the Act to require discriminatees to search for work and often incur expenses in their search and yet not reimburse them for those expenses” due to an unsuccessful search, Solomon has directed the offices that those expenses will be calculated separately from backpay and will be charged to violators, even if the employee received earnings from another job during that period. Reimbursement will not be limited to the amount of gross backpay that a wrongfully terminated employee may be entitled to, as those expenses will be added to net backpay in the payroll period when incurred and daily compounded interest will be charged on these amounts also.
Under Solomon’s new directive, the General Counsel’s office will ask ALJs and the NLRB to require employers who wrongfully discharge employees to submit the appropriate documentation to the Social Security Administration so that when backpay is paid, it will be allocated to the appropriate periods. The office will also, from now on, seek orders requiring employers to reimburse employees in amounts that are equal to the difference in taxes owed upon receipt of a lump-sum reimbursement payment and taxes that would have been owed had the employer not unlawfully terminated the employees.
The International Brotherhood of Teamsters and United Airlines have announced a tentative agreement on a new CBA for the airline’s 5,500 aircraft technicians and related employees. Although details of the contract will not be released until the membership has had the opportunity to review the agreement, both sides seem quite content with the outcome of the negotiations.
“This tentative agreement marks the start of new day for United mechanics," said IBT President, James Hoffa. Hoffa claimed that the contract reversed losses experienced by the IBT membership in recent agreements. The union and airline both highlighted the importance of the agreement to the continuing merger between United and Continental Airlines.
“This is a historic step in the continuing merger process of United and Continental Airlines,” said Airline Division Director David Bourne.
Jim Keenan, senior vice president of Technical Operations for the combined company, noted “We now have a ratified agreement with our mechanics at Continental and a tentative agreement with our United co-workers, providing a path to reaching a single, joint agreement with both groups represented by the IBT.”
In other Teamsters news, Teamsters Local 727 has joined with the International Alliance of Theatrical Stage Employees and the Illinois Production Alliance to oppose Illinois Senate Bill 4, a measure that the union claims would “severely impact” the state’s film industry. The legislation, as amended in a House version passed on March 17, 2011, would impose a five-year sunset clause upon the Illinois Film Tax Credit program. That program provides for a 30 percent tax credit based on Illinois Production Spending and also provides an additional 15 percent tax credit based on Illinois labor expenditures generated by the employment of residents from areas with high poverty or unemployment rates. The sunset clause would require the legislature to re-approve the tax credit every five years. Given the state’s economic crisis, that reauthorization is not guaranteed and, claim the unions, is putting the state’s film industry at risk.
“These productions cost hundreds of millions of dollars. Even a little uncertainty can greatly diminish our attractiveness,” asserted John T. Coli, Secretary-Treasurer of Local 727. “If the tax credit comes into question, production companies will simply take their projects elsewhere.”
The unions may be right to be concerned. In 2007, Warner Brother filmed much of their blockbuster smash, “The Dark Knight,” in Chicago. However, although that city has represented the fictional Gotham City in both 2005’s “Batman Begins” and the “Knight” follow-up, Warner Brothers opted not to film the 2012 sequel, “The Dark Knight Rises,” in Chicago.
Dana Corp. Employees of Dana Holding Corp, represented by the United Auto Workers, have ratified a new Global Framework Agreement, the union announced. The members ratified the three-year deal in voting from March 18 through today, March 22. The new agreement, which will cover roughly 2,500 workers at 13 facilities in nine states, but will not supplant the local agreements at each facility that cover plant-specific issues, including job postings, transfers, vacation and attendance. The union said that the new Global Agreement, which expires in June, 2014, gives members their first profit-sharing plan, wage increases, lump-sum bonuses, while maintaining the current benefit levels. These concessions were richly earned, claimed a union vice president, Cindy Estrada, who directs the union's Competitive Shop/Independents, Parts and Suppliers (IPS) Department.
“Our members sacrificed and stood solid with the company as it reorganized. This agreement allows our members the opportunity to share in the company's success,” Estrada said.
AT&T. AFL-CIO President Richard Trumka claims that the purchase of T-Mobile by its rival, AT&T, will benefit both employees of the companies. Trumka contends that the deal would allow tens of thousands of T-Mobile USA employees to benefit from what he called “the pro-worker policies of AT&T.” AT&T is the only unionized U.S. wireless company and employs approximately 42,000 members of the Communications Workers of America (CWA).
For his part, CWA president Larry Cohen argued that the proposed deal would “mean better employment security and a management record of full neutrality toward union membership and a bargaining voice.” Cohen also claimed that the deal would offer T-Mobile USA workers “a fresh start with T-Mobile management.”
UAW. The UAW will hold its Special Convention on Collective Bargaining this week, from March 22 through March 24, bringing over 1,200 delegates, alternates and guests to the convention. The delegates will deliberate and vote on an omnibus resolution that will establish an overall bargaining agenda for the union’s bargaining activities over the next four years. UAW President Bob King will address delegates Wednesday, March 23, while Illinois Governor Pat Quinn will address the delegates on Tuesday, March 22. Quinn has drawn some positive attention in labor circles for his close collaboration with Council 31 of the American Federation of State, County and Municipal Employees.
The Association of Flight Attendants-CWA AFL-CIO (AFA) has reached a tentative agreement with AirTran Airways, covering the approximately 2,000 flight attendants represented by the union. The agreement, which was reached through mediation overseen by the National Mediation Board, offers the flight attendants pay increases, improved benefits, and “enhanced” work rules; more specific details are being withheld until the membership reviews the tentative agreement. Following that review, the agreement will go to the membership for a ratification vote, most likely at some point during the next 30 days, as the agreement is intended to go into effect on May 1, 2011. The agreement will become amendable on April 30, 2013.
The airline expressed satisfaction with the agreement, with Bob Fornaro, the AirTran chairman saying that the agreement would “reward our flight attendants for their hard work while still allowing the airline to maintain our low-cost structure.”
While the union also said it was pleased with the outcome, Alison Head, of AFA, said that the result was due more to the union’s picketing than to the willingness of AirTran to strike a fair deal. She also said that the union is looking forward to “the opportunities ahead with Southwest Airlines.”
Those opportunities will soon be available. AirTran released a statement today, March 23, saying that its stockholders had approved the merger with Southwest.
LEADING CASE NEWS
If a supervisor performs an act motivated by anti-military animus, and if that act is a proximate cause of the ultimate adverse employment action, then the employer is liable under USERRA, the Supreme Court held today, in ruling on a case in which a U.S. Army reservist relied on the "cat's paw" theory of liability (Staub v Proctor Hosp, March 1, 2011, Scalia, A). In applying the proximate-cause tort analysis to the case, the High Court overruled a decision by the Seventh Circuit, which held that a court cannot admit evidence of a nondecisionmaker’s animus unless it has first determined whether a reasonable jury could find the nondecisionmaker exerted a "singular influence” over the ultimate decisionmaker.
Jury verdict. A jury found in favor of the reservist on his claim that he was discharged from his position as an angiography technologist at a hospital due to anti-military animus, rejecting the hospital’s assertion that he was fired for insubordination. Although the vice president of human resources, who made the discharge decision, did not harbor any anti-military animus, the reservist argued that such animus should be imputed to the employer because the vice president's decision was influenced by the reservist’s immediate supervisor and that supervisor’s supervisor (the supervisors) who did harbor anti-military animus.
Seventh Circuit decision. On appeal, the Seventh Circuit reversed the district court’s $57,640 judgment for the reservist and defined, for the first time, the division of labor between the jury and court when a "cat's paw" theory is invoked: a court cannot admit evidence of a nondecisionmaker’s animus unless it has first determined whether a reasonable jury could find the nondecisionmaker exerted a "singular influence” over the ultimate decisionmaker. The Seventh Circuit found that the vice president made her decision free of any military-based animus and the reservist's personnel file, which documented availability, attitude and communication problems predating his military-based issues, supported her action. Accordingly, the Seventh Circuit held that the hospital was entitled to judgment as a matter of law on the reservist’s USERRA claim.
Tort analysis applied. The text of USERRA forbids an employer from denying “employment, reemployment, retention in employment, promotion, or any benefit of employment” based on a person’s “membership” in or “obligation to perform service in a uniformed service,” and provides that liability is established “if the person’s membership . . . is a motivating factor in the employer’s action.” Reversing the Seventh Circuit, the Supreme Court noted that USERRA is “very similar to Title VII,” which states that discrimination is established when race, color, religion, sex or national origin is “a motivating factor for any employment practice, even though other factors also motivated the practice.” In construing the phrase “motivating factor in the employer’s action,” the High Court started “from the premise that when Congress creates a federal tort it adopts the background of general tort law.”
Proximate cause. Stating that the reservist’s USERRA claim was an “intentional tort,” the court explained that intentional torts generally require that the actor intend the consequences of an act, not simply the act itself. But the hospital was wrong, the Court said, in contending that an employer is not liable unless the de facto decisionmaker (i.e. the technical decisionmaker or the agent for whom he is the “cat’s paw”) is motivated by discriminatory animus. Animus and responsibility for the adverse action can both be attributed to the earlier agent (here, the supervisors) if the adverse action is the intended consequence of that agent’s discriminatory conduct. So long as the earlier agent intended, for discriminatory reasons, that the adverse action occur, he has the scienter required for USERRA liability, the Court found. It is axiomatic under tort law that the decisionmaker’s exercise of judgment does not prevent the earlier agent’s action (and hence the earlier agent’s discriminatory animus) from being the proximate cause of the harm, the Court wrote.
Superseding cause. Moreover, the ultimate decisionmaker’s judgment cannot be deemed a superseding cause of the harm. Otherwise, an improbable consequence would occur: “if an employer isolates a personnel official from its supervisors, vests the decision to take adverse employment actions in that official, and asks that official to review the employee’s personnel file before taking the adverse action, then the employer will be effectively shielded from discriminatory acts and recommendations of supervisors that were designed and intended to produce the adverse action,” the Court wrote (Court’s emphasis).
Independent judgment. The hospital also argued that a decisionmaker’s independent investigation, and rejection, of an employee’s discriminatory animus allegations should negate the effect of the prior discrimination. The Court, however, declined to adopt such a “hard-and-fast” rule, noting that it was not aware of a principle in tort or agency law under which an employer’s mere conduct of an independent investigation has a claim-preclusive effect. Rather, the Court held that, if the employer’s investigation results in an adverse action for reasons unrelated to the supervisor’s original biased action (which, by the terms of USERRA, is the employer’s burden to establish), then the employer will not be liable. But the supervisor’s biased report may remain a causal factor if the independent investigation takes it into account without determining that the adverse action was, apart from the supervisor’s recommendation, entirely justified.
Accordingly, the Court held that “if a supervisor performs an act motivated by antimilitary animus that is intended by the supervisor to cause an adverse employment action, and if that act is a proximate cause of the ultimate employment action, then the employer is liable under USERRA.”
Seventh Circuit to consider jury instruction. Applying this analysis to the case at hand, the Supreme Court ruled that the Seventh Circuit erred in holding that the hospital was entitled to judgment as a matter of law. Both of the supervisors acted within the scope of their employment when they took the actions that allegedly caused the vice president to fire the reservist. There was also evidence that their actions were motivated by hostility toward the reservist’s military obligations, and that those actions were causal factors underlying the vice president’s decision. Finally, the reservist presented evidence that both of the supervisors had the specific intent to cause his termination. Remanding the case to the Seventh Circuit, the High Court instructed the circuit court to consider in the first instance whether the variance between the jury instruction given at trial and the rule adopted by the Court was harmless error or should mandate a new trial.
Concurrence. Justice Alito, joined by Justice Thomas, agreed that the Seventh Circuit’s decision must
7thCir: Employer’s refusal to calculate service member’s differential pay on a per-diem basis didn’t violate USERRA
A service member who alleged his employer improperly calculated his differential pay while he was deployed to active service in Iraq was unable to state a USERRA claim, the Seventh Circuit held, affirming a summary judgment ruling that the employer’s handling of his military deployment did not violate the Act (Gross v PPG Indus, Inc, March 7, 2011, Rovner, I). Nor could the employee state a claim that PPG’s refusal to amend its pay calculations after his complaints constituted unlawful retaliation under USERRA.
Background. The employee, a former active-duty Marine who continued to serve in the reserve corps while working for PPG Industries, was called up to active duty in Iraq for almost a year. (He served subsequent tours of duty as well, but those deployments were not at issue here.) Before 2001, PPG provided employees who were serving in the National Guard or reserves up to four weeks per year of supplemental pay equal to the difference between the employee’s PPG base salary and his or her military base pay. After the September 11, 2001 terrorist attacks, PPG adopted its “Attack on America” policy, which increased the available differential pay from four weeks to 180 days, and gradually increased that amount to the point that, as of 2004, it granted 720 calendar days of differential pay.
PPG calculated differential pay by comparing an employee’s regular monthly base salary against the military pay he received (exclusive of allowances, such as housing), and then issued a payroll check in the amount of the difference. For example, if a salaried PPG employee earned $4,000 per month and received $2,000 of military pay monthly, the employee would receive a check from PPG for $2,000 per month while on military leave so that his salary would be the same as it would have been if he had worked at PPG. Under this formula, the precise number of PPG workdays in any given month was irrelevant.
The employee complained that, because he was required to work extra days during his deployment (weekends and holidays that he would not have worked at PPG), PPG should have calculated a daily military pay rate and then deducted military pay only for days in a given month that he would have worked at PPG. This per-diem method would have yielded a substantially higher differential pay rate. PPG declined to revisit its formula for calculating military pay for the employee’s 2004-05 deployment. In 2007, it did adopt the per-diem calculation urged by the employee (which was the calculation already used by PPG for short-term military leaves of absence) for future deployments. When the employer refused to apply the formula to his prior deployment, however, the employee filed suit, alleging that the manner in which PPG calculated his differential pay denied him a “benefit of employment” protected by USERRA, and also amounted to unlawful discrimination and retaliation.
No right to differential pay. Concluding that differential pay to supplement a service member’s military salary is not a benefit of employment protected under USERRA, Sec. 4311, the district court granted summary judgment to PPG. Because the employer had no obligation to offer differential pay, the court reasoned, it likewise had no obligation to calculate such pay in the manner most beneficial to the service member. The Seventh Circuit agreed.
In Crews v City of Mt. Vernon (2009), the court had considered and rejected a claim that Sec. 4311 requires employers to provide military employees benefits, like differential pay, that exceed the benefits offered to other employees generally. The employee argued that the court’s reading of “any benefit of employment” in Crews failed to account for the fact that, as an antidiscrimination provision, Sec. 4311 protects a broader category of rights than those outlined in Sec. 4316, applicable to service members on leave. However, the court explicitly considered and rejected that contention in Crews, noting that Sec. 4311’s anti-discrimination purpose serves to protect military employees from discrimination, not provide them with preferential treatment. The appeals court found no basis for overturning that holding here.
No contract breach. Even if it were to accept the employee’s interpretation of Sec. 4311, the appeals court added, the employee would still not be entitled to relief, because it was undisputed that PPG did, in fact, extend him differential pay, which guaranteed that he received the equivalent of his full PPG salary during his 2004-05 deployment. The court rejected the notion that PPG was obligated “to provide not only differential pay, but differential pay calculated according to [the plaintiff’s] specifications.” Interpreting the employee’s argument as a contract breach claim that PPG’s Attack on America amounted to an enforceable contract, the Seventh Circuit stated that, while it’s true that an employee may contract with his company for greater benefits than USERRA provides, this premise does not assist the employee here.
PPG’s differential pay benefit was a voluntary company policy, and PPG did not fail to perform under the policy or in any way rescind it, the court noted. Moreover, the specific language of its Attack on America policy says nothing about how differential pay will be calculated. The method employed by PPG to calculate differential pay ensured that the employee suffered no loss of pay or benefits on account of his military service. Thus, overruling Crews would not assist him with his argument that Sec. 4311 required PPG to pay him not only differential pay, but differential pay calculated according to the per-diem model he proposed. While PPG’s decision to adopt a more favorable pay calculation in 2007 was “laudable,” the appeals court noted, “nothing in USERRA obligates it to retroactively apply that calculation or suggests that the previous method used was unlawful or discriminatory.”
No retaliation claim. The employee also claimed that he engaged in protected activity by complaining about PPG’s calculation of his differential pay, and that PPG retaliated when it decided to “deny him differential pay.” Here, he appeared to argue that PPG’s original calculation of his differential pay was an adverse employment action, the appeals court reasoned, despite the fact that this calculation obviously preceded his complaint. However, contrary to the employee, PPG never denied him differential pay—it simply did not calculate that pay according to his preferred formula. Second, PPG’s calculated method did not amount to an adverse employment action. Thus, the employee’s retaliation claim also failed as a matter of law.
The Seventh Circuit declined to review the merits of the procedure or substance of a joint grievance committee’s decisions because the applicable collective bargaining agreement established that any resolution of a grievance by majority vote of the committee was final and binding on all parties (Merryman Excavation, Inc v Int’l Union of Operating Eng’rs, Local 150, March 21, 2011, Manion, D). Absent evidence that an employer did not receive the dispute resolution procedure to which it agreed — resolution by an equal number of voting representatives on the committee — a federal district court correctly granted summary judgment.
Background. The employer signed a memorandum agreement adopting the terms of a collective bargaining agreement between the Operating Engineers and a multiemployer association. The agreement included provisions requiring that grievances be resolved under a dispute resolution procedure, culminating in a hearing before the joint committee. The committee was comprised of an equal number of employer and union representatives. A decision by a majority of the committee was final and binding, and no appeal was permitted.
The union brought a series of grievances against the employer for violating the parties’ collective bargaining agreement, which were ultimately argued before the joint grievance committee. During the proceedings, an employer representative had to leave, and the committee unanimously agreed to proceed with only two voting members for each side. The union prevailed on nine grievances and was awarded $96,000. Two of the grievances, relating to the employer’s failure to operate machinery without contractually required laborers, accounted for most of the award. The employer sought to vacate the award.
As an initial matter, the Seventh Circuit made clear that a joint grievance committee is not a genuine arbitral forum subject to the Federal Arbitration Act; consequently, a failure to comply with a joint committee award is a breach of a federal labor contract subject to Sec. 301 jurisdiction, not an FAA action. Thus, the basic issue here was whether there were any circumstances under the contract justifying the employer’s refusal to comply with the joint committee awards.
Agreed upon procedures. In seeking review of the joint committee awards, the Seventh Circuit concluded that the only argument that the employer could properly make was that it did not receive the dispute resolution procedures to which it had agreed. With respect to the employer’s challenge to the pre-grievance procedures approved by the joint committee, the appeals court readily disposed of this argument, noting that as long as the joint committee was properly composed, it had the authority to resolve the dispute over whether the union followed the proper pre-grievance procedure. The appeals court also ruled that the employer could not argue that it was underrepresented in the ultimate vote of the joint committee where it presented no evidence that the union had more voting representatives, or that there was an unequal number of voting representatives at the executive session during which committee members cast their votes. Further, because the grievance provisions did not establish a minimum number of representatives, only equal representation, the court rejected the employer’s contention that there were an insufficient number of representatives to establish a quorum.
Additionally, the employer could not challenge the joint committee’s decision to designate certain awards to funds maintained by the union rather than to specific union members. Again, the court pointed out that because this question involved an interpretation or application of the CBA entrusted to the joint committee’s binding final decision, it was not subject to judicial review. Finally, the Seventh Circuit rejected the employer’s argument that the district court should have vacated the joint committee awards because it was biased against it. The agreement did not require representatives on the joint committee to act as neutral arbitrators. Rather, the joint committee’s balanced voting membership provided fairness to the interested parties. Because the parties agreed that the joint committee’s awards were final and not subject to review, and there was no evidence that the employer was not equally represented on the committee, the appeals court affirmed the award.
Becoming the first circuit court to rule on the issue, the Fifth Circuit has held that USERRA does not provide a cause of action for hostile work environment (Carder v Continental Airlines, Inc, March 22, 2011, Davis, W). Affirming the district court's dismissal of the class action claim, the appeals court based its ruling on the distinct text of the statute as compared to other anti-bias laws, its legislative history, and its policies and purposes.
A group of pilots brought a class action lawsuit against Continental Airlines alleging several violations of USERRA, including a claim that the airline created a hostile work environment based on their military service and service obligations. The district court dismissed the hostile work environment claim, ruling that USERRA did not provide service members with a cause of action for such a claim. The pilots appealed. At issue before the appeals court was the meaning of USERRA’s prohibition against denial of a “benefit of employment” on the basis of military service. Neither the Supreme Court nor any court of appeals has decided the issue, and while several circuit courts have assumed without deciding that USERRA does provide for such a claim while disposing of the claim on other grounds, many district courts have reached differing conclusions on the merits.
Plain language and legislative history. Interpreting USERRA's plain language, the appeals court found that Sec. 4301(3) of the Act makes clear that one of the law's purposes was to prohibit discrimination and acts of reprisal against service members because of their service. Sec. 4311(a) defines this discrimination to include the denial of any “benefit of employment,” and the language of Sec. 4303(2) defining the word “benefit” and the phrase “benefit of employment” includes the long list of terms “advantage, profit, privilege, gain, status, account, or interest.” However, Sec. 4303(2) does not refer to harassment, hostility, insults, derision, derogatory comments, or any other similar words. Thus, the express language of the statute does not provide for a hostile work environment claim, concluded the court.
But its analysis did not stop there. Since USERRA expressly prohibits discrimination against service members, the court went on to consider the legislative history and underlying policy objectives to discern whether Congress intended to create a cause of action for hostile work environment. While the court found it could not ignore the congressional mandate that the statute be broadly construed to prevent discrimination of service members, it ultimately held that Congress did not intend USERRA to encompass hostile work environment claims, based on a comparison of the language in USERRA to language contained in other federal anti-bias laws from which a cause of action for hostile work environment has been inferred.
Other anti-bias laws. The court noted that in Meritor Sav Bank, FSB v Vinson, the Supreme Court's first case to permit a Title VII hostile work environment claim, the opinion relied heavily on Title VII’s language prohibiting discrimination with respect to the “terms, conditions, or privileges of employment.” The word “conditions,” in particular, was most relied upon in inferring that Congress intended a claim for hostile work environment under Title VII. The appeals court had relied on the same phrase — “terms, conditions, or privileges of employment” — in other anti-bias laws such as the ADA, it noted, to infer a cause of action for hostile work environment. Congress passed the ADA after Meritor, and thus the court reasoned that Congress’choice to include the same phrase in the ADA that the Supreme Court relied on in Meritor supported a finding that Congress similarly intended to make harassment actionable under the ADA. Other anti-bias laws passed by Congress after Meritor have included the same or similar language.
Conversely, Congress passed USERRA in 1994, years after Meritor, yet chose not to include the phrase “terms, conditions, or privileges of employment” or similar wording. The court found this supported the conclusion that it did not intend USERRA to provide a hostile work environment claim the same way as do Title VII and other anti-bias laws containing that phrase. It reasoned that the significance that the Supreme Court placed on this phrase, and the specific word “conditions,” cannot be ignored. The fact that Congress instead chose to use the narrower phrase “benefits of employment,” indicated that Congress intended to create a somewhat more circumscribed set of actionable rights under USERRA, the court ultimately concluded.
Underlying policy. The court found further support for its position in the policies and purposes underlying USERRA. The primary purpose of the law was to “encourage people to join the reserves.” Unlike other anti-bias laws that were designed in part to prevent “invidious and irrational” discrimination and harassment of “historically disadvantaged” minorities considered in need of special protection, the court found nothing to indicate that Congress passed USERRA to combat this type of discrimination against military members. Rather, there is simply “little evidence that employers harbor a negative stereotype about military service or that Congress believes they do.”
The court rejected the pilots’ reliance on an administrative opinion and district court cases that have reached the opposite conclusion, finding that those cases erroneously drew comparisons to Title IX and the Rehab Act. While courts have permitted plaintiffs to assert hostile work environment claims under these two statutes, those laws were distinguishable because their intent and purpose were to combat harassment of women and the disabled, respectively. The court also rejected the pilots’ assertion that its ruling would allow employers to circumvent the express purposes and prohibitions of USERRA. If an employer makes service members' employment so intolerable that they feel forced to quit, they could likely make a claim under USERRA for constructive discharge, the court reasoned.
In a case on remand from the DC Circuit, a 3-1 majority of the NLRB ruled a Las Vegas casino violated the NLRB by prohibiting the off-duty employees of restaurants located inside the casino from distributing handbills on casino property (New York New York, LLC dba New York New York Hotel & Casino, 356 NLRB No 119, March 25, 2011). In so ruling, the Board adopted a new standard for balancing the rights of nonemployee handbillers and property owners based on a test applied in Hillhaven Highland House, its 2001 ruling. Applying the standard here, the majority found the casino did not demonstrate that the handbilling significantly interfered with its use of the property, or that exclusion of the handbillers was justified by another legitimate business reason, such as the need to maintain operations or discipline.
“The Liebman Board continued in its quest for decisional labor law reform with its decision in New York, New York,” noted W.V. Bernie Siebert, who practices labor law as a partner in the Denver, Colorado firm Sherman & Howard. (Siebert is a Member of the CCH Employment Law Daily Advisory Board.) “The Board conjured up another one of its balancing tests which will usually, but not always, result in contractor’s employees rights being superior to the property rights of the entity with which the contractor has contracted. While the balancing test sounds of fairness, the test will ring hollow in its application.” Click here for the rest of the story and Siebert’s additional comments.
Hot topics in WAGES HOURS – FMLA
Oral complaints are protected under the FLSA’s antiretaliation provisions, the U.S. Supreme Court ruled this morning in a 6-2 opinion authored by Justice Breyer (Kasten v Saint-Gobain Performance Plastics, Dkt No 09-834, March 22, 2011, Breyer, S). Resolving a conflict among the circuits, the majority found the scope of the statutory term “filed any complaint” found in FLSA, Sec. 215(a)(3), encompasses oral as well as written complaints. The Court vacated a Seventh Circuit decision that held a discharged employee did not engage in FLSA-protected conduct when he made a verbal complaint about the location of the employer’s time clocks, which prevented employees from getting paid for time spent donning and doffing protective gear — in violation of the Act. Justice Scalia dissented, joined by Justice Thomas. Justice Kagan did not participate. James H. Kaster of the Minneapolis firm Nichols Kaster represented the Petitioner, Kevin Kasten. Carter G. Phillips, of Sidley Austin’s Washington DC office, and Thomas P. Godar, of the Wisconsin firm Whyte Hirschboeck Dudek, represented Saint-Gobain.
Facts. In his FLSA retaliation suit, the petitioner contended that he “raised a concern” with his shift supervisor that the location of the employer’s time clocks was illegal. He told his lead operator that he “was thinking about starting a lawsuit about the placement of the time clocks.” He told an HR employee and an operations manager that, if the time clock location were challenged in court, the company would lose. In short, he made repeated (verbal) efforts to inform the employer of his concerns, in accordance with the company’s internal grievance resolution procedure, and was suspended and then discharged as a result. Saint-Gobain denied that the employee made any meaningful complaint. Moreover, it claimed the employee was fired because he failed to clock in and out, despite repeated warnings.
Seventh Circuit decision. In the decision below, the Seventh Circuit held the employee did not suffer retaliation within the meaning of the FLSA because he was not engaged in FLSA-protected activity. Addressing for the first time whether internal complaints are protected activity, the Seventh Circuit concluded, “in line with the vast majority of circuit courts to consider this issue,” that under the plain language of the Act, intra-company complaints are covered, and that protection from retaliation is not limited to formal complaints filed in court or with an administrative agency. However, unwritten verbal complaints are not covered. The appeals court rejected the Secretary of Labor's contention, in an amicus brief, that the retaliation provision should be read expansively to include such unwritten objections, reasoning instead that the provision refers to “filing” a complaint, which connotes a complaint made in writing. In a 7-3 vote, the Seventh Circuit denied rehearing.
“Filing any complaint.” The Supreme Court majority found that, while the language of FLSA, Sec. 215(a)(3), in isolation may be ambiguous, the purpose of the FLSA and the content in which it was enacted compelled the conclusion that oral complaints are protected.
Looking first to dictionary definitions of the term “filed,” the majority noted that, while there are some definitions that contemplate a writing, they don’t necessarily limit the scope of the phrase to written complaints. Moreover, the majority cited instances in which legislators, administrators, and judges have used the word “file” to include oral statements. Numerous regulations promulgated by various federal agencies permit complaints to be filed orally, and “a review of contemporaneous judicial usage shows that oral filings were a known phenomenon when the Act was passed.” The broader phrase “filed any complaint” suggests an even broader interpretation was contemplated — one that would encompass oral complaints, the majority reasoned. But the “bottom line,” the Court concluded, was that a textual interpretation was not enough to resolve the matter. Therefore, the majority considered the “functional considerations” at play.
Statutory objectives. Limiting the meaning of Sec. 215(a)(3) to written complaints “would undermine the Act’s basic objectives” of prohibiting detrimental labor conditions and promoting a minimum standard of living for workers. Illiteracy rates were high among the poor at the time the FLSA was enacted, the majority observed. “Why would Congress want to limit the enforcement scheme’s effectiveness by inhibiting use of the Act’s complaint procedure by those who would find it difficult to reduce their complaints to writing, particularly illiterate, less educated, or overworked workers?,” Breyer queried. “President Franklin Roosevelt pointed out at the time that these were the workers most in need of the Act’s help.”
Moreover, limiting the antiretaliation provision to the filing of written complaints would undermine the flexibility available to those agencies charged with enforcing the Act, the majority reasoned. “It could prevent Government agencies from using hotlines, interviews, and other oral methods of receiving complaints.” Citing the broad interpretation that the Court has afforded the NLRA’s antiretaliation provision, the similar need for effective enforcement of the FLSA argues for a broad rather than narrow reading of the word “complaint” here.
Fair notice standard. Saint-Gobain urged that the FLSA intended to establish an enforcement system that was fair to employers as well, and that to do so, the employer must have fair notice of employee complaints that might subject it to a potential retaliation claim. “We agree with Saint-Gobain that the statute requires fair notice,” the majority wrote. “But we also believe that a fair notice requirement does not necessarily mean that notice must be in writing.”
The Court then set forth the minimum requirements for an employee complaint to satisfy this fairness element: “To fall within the scope of the antiretaliation provision, a complaint must be sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute and a call for their protection.” This standard could be met by both oral and written complaints, the Court concluded, leaving it to the lower courts to decide whether the employee here will be able to satisfy this requirement.
Agency deference. The Court also gave deference to the Secretary of Labor’s consistent position that the words “filed any complaint” encompass oral complaints. The Department of Labor articulated that view in an enforcement action years ago, and has reaffirmed that view in subsequent briefs. The majority also noted that the DOL recently created a hotline to receive oral complaints, thus acting in accordance with this view. (The majority noted, for good measure, that the EEOC has set forth a similar view in its compliance manual.) Because these agency views are reasonable and — having been long-held — reflected careful consideration and not “post hoc rationalization,” they “add[ed] force” to the Court’s holding.
Dissent. Justice Scalia would have affirmed the Seventh Circuit, arguing that FLSA, Sec. 215(a)(3), does not cover internal employer complaints at all, be they oral or written — and he objected to the majority’s refusal to consider this underlying issue as having not been fairly presented by Saint-Gobain. Scalia contended that the plain meaning of “filing a complaint” and its statutory context contemplates an official grievance filed with a court of a government agency, and not complaints to an employer. He noted that every other use of the word “complaint” in the statute “refers to an official filing with a governmental body.” If the term does not connote something in writing, it “at least suggests a degree of formality consistent with legal action and inconsistent (at least in the less regulated work environment of 1938) with employee-to-employer complaints.”
Countering the majority’s sense that statutory intent weighed in favor of including oral complaints as protected activity, Scalia pointed out that the 1938 version of the FLSA did not create a private right of action for retaliation. The private right to sue for FLSA retaliation was only added in 1977; before then, only the Wage and Hour Administrator could enforce the antiretaliation provisions of the Act. “It would seem more strange to require the employee to go to the Administrator to establish, and punish retaliation for, his intracompany complaint, than to require the Administrator-protected complaint to be filed with the Administrator in the first place,” Scalia reasoned.
While he argued there was no need to rely on “abstractions of congressional purpose,” Scalia noted, nonetheless, that Congress, in enacting the FLSA, may have deliberately chosen not to protect intracompany complaints for the same reason it did not provide a private cause of action for retaliation: “because it was unwilling to expose employers to the litigation, or to the inability to dismiss unsatisfactory workers, which that additional step would entail.”
Finally, Scalia rejected as “unacceptable” the majority’s nod to more recent statutes as support for its conclusion that the FLSA covers intracompany complaints. “While the jurisprudence of this Court has sometimes sanctioned a ‘living Constitution,’” he wrote, “it has never approved a living United States Code.”
Employer ramifications. Commenting on the decision, Attorney Stacey Smiricky, Partner at the Chicago office of Wildman, Harrold, Allen & Dixon LLP and Employment Law Daily Advisory Board member, notes that the majority's broad reading of the phrase “filed any complaint” is not surprising. Further, the decision is similar to other employment-related statutes under which employees’ rights and employers’ obligations are triggered by non-written complaints. “The employer community can only hope that common sense will guide the extent to which Kasten may be deemed applicable in future cases to oral complaints such as ‘the time clock is in such an inconvenient place that we ought to be paid for walking to and from it.’ Such complaints could impose additional burdens on employers to investigate every employee gripe. Cautious employers will do so,” Smiricky stated. While the majority emphasizes that an employee’s non-written complaint must be sufficiently clear and detailed for a reasonable employer to understand it as an assertion of rights, the very nature of such oral complaints invites fact disputes: exactly what do the employer and employee each say was the content and context of the employee's oral complaint about the unpaid time? Such fact disputes may decrease employers’ ability to resolve such cases on summary judgment. As such, Smiricky recommends that employers train their supervisors and managers to be aware of these types of non-written complaints, report them immediately to the person responsible for investigating those complaints, and thoroughly document both the oral complaint and the company’s investigation of it.
The US Department of Labor has won an important victory, as the US Court of Appeals for the First Circuit confirmed the Secretary of Labor’s subpoena authority and affirmed a district court’s contempt order against Operation Management Group Co. Inc. (OMG), a contractor that supplied personnel to restaurants and other service industries in the greater Boston area, and its owner, Adilso Bosi, for their failure to cooperate with a DOL investigation. The Labor Department’s Wage and Hour Division conducted an investigation into several Boston-area restaurants to which OMG provided staffing services, but OMG refused to cooperate and failed to give investigators access to payroll and time records.
That failure, said George Ference, the administrator of the Wage and Hour Division’s Northeast Regional Office, was the employer’s crucial misstep.
“The First Circuit’s message is clear: The secretary of labor may require the production of records relevant to an investigation without first establishing that the subpoenaed party is itself covered by the Fair Labor Standards Act,” said Ference. “When parties refuse to comply with lawfully issued subpoenas, the Labor Department will use all available enforcement tools, including litigation, to require production of necessary records and testimony.”
Under the FLSA, the Secretary of Labor has the right to investigate data dealing with wages, hours and other terms and conditions of employment and has the authority to issue subpoenas for documents dealing with those subjects. The First Circuit’s ruling only reaffirms that power, as the DOL has now obtained two rulings, the first from the district court, holding that OMG violated the law when it ignored subpoenas and repeatedly denied access to its records. For these violations, thus far, OMG and Bosi have accrued more than $340,000 in fines.
An investigation by the U.S. Department of Labor Wage and Hour Division into pay practices of GeoPharma Inc. has revealed that the company failed to meet payroll for five intermittent pay periods between July and October 2010, resulting in 82 employees not receiving FLSA-required minimum wage and proper overtime compensation. The company, which manufactures pharmaceuticals and dietary supplements, will pay $136,789 in back wages to the affected employees and $15,300 in civil money penalties to the government. This is the second backpay award assessed against GeoPharma. The previous investigation found that the company had failed to properly compensate 187 employees for all hours worked over a five-month period between 2009 and 2010, and the company was held liable for back pay in excess of $1.30 million.
The U.S. DOL has announced that, following an investigation by the DOL’s Wage and Hour Division, it has recovered $219,390 in back wages and liquidated damages on behalf of 44 Boston-area restaurant workers employed by 1760 Society Inc and D’Ann’s Restaurant Inc.
Doing business respectively as The Sherborn Inn and The Sherborn Out in Sherborn, and as D’Ann’s in Abington, the employers misclassified employees as independent contractors, thereby violating the FLSA. The investigation revealed that the employers contracted with Operations Management Group, a staffing agency, to move many of their existing employees to OMG’s payroll. This move caused the employees to receive less than the required pay, as the employers would set the hourly rate that the employees should be paid and reported the hours worked to OMG. OMG paid them “straight time” at the rate set by the restaurants for all hours worked, including overtime hours, even though the employers had paid the workers overtime. OMG also failed to withhold tax deductions from their wages.
In a release, the DOL called employee misclassification an “alarming trend.”
“Misclassification is a serious threat to both workers and employers who obey the law and are undercut when others use illegal practices,” said George Ference, the Wage and Hour Division’s northeast regional administrator. “Employers who work hard to comply with the law should not be placed at a competitive disadvantage by those who don’t. Requiring the payment of liquidated damages in addition to the back wages owed should help level the playing field for those restaurant owners in the Boston area who play by the rules.”
As part of the agreement with the DOL, the employers will put the employees back on their payrolls, and will pay both back wages and liquidated damages owed to the employees under the FLSA.
OMG will also pay fines for its failure to cooperate with the investigation. During the pendency of the investigation, the DOL alleges that OMG refused to cooperate with authorities and denied them access to time and payroll records. The Labor Department served OMG with an administrative subpoena to compel disclosure of all records necessary to complete the federal investigation. The U.S. Court of Appeals for the First Circuit confirmed the validity of the Secretary of Labor’s subpoena authority, and held OMG and its owner, Adilso Bosi, in contempt of court for failing to cooperate with the investigation. OMG and Bosi are incurring a $1,000 fine for each day they remain in contempt of the court’s order.
LEADING CASE NEWS
An employee who worked full-time as a safety and security assistant for a school district was not entitled to overtime wages for his services as the coach of a high-school golf team, ruled the Fourth Circuit (Purdham v Fairfax County Sch Bd, March 10, 2011, Davis, A). The appeals court held that the school district properly deemed the employee to be a “volunteer” within the meaning of the FLSA with respect to his activities as a coach.
For approximately 20 years, the employee worked as a safety and security assistant. In addition to his regular full-time position, the employee served for the past 15 years as the golf coach at a high school. The employee’s position as a security assistant was not conditioned on his coaching activities, and he was free to relinquish his coaching duties at any time without an adverse impact on his full-time position. The employee estimated that he spent 400 to 450 hours annually on golf coaching activities. He received reimbursement for his coaching expenses and a stipend for his services.
In 2004, the school district conducted a wage-hour audit to determine whether coaches were being managed correctly. Consequently, for a brief period the school district paid its coaches overtime. In 2006, the Department of Labor issued an opinion letter about school coaching and FLSA compliance. Based on this new guidance, the school district concluded its full-time nonexempt employees could be properly deemed “volunteers” in connection with their coaching activities and so not eligible for overtime compensation.
The employee filed a collective action on behalf of nonexempt employees who also served separately as coaches of school athletics or directors of extracurricular activities, but a district court denied conditional certification. Subsequently, the district court granted the school district’s motion for summary judgment after ruling that the employee was a “volunteer” with respect to his services as a high school golf coach. The plaintiff’s coaching activities were not the same type of duties that he performed in his regular position as a security assistant, and the stipend he received was a “nominal fee” authorized by law to be paid to volunteers, the court reasoned.
Totality of the circumstances. The fact that the employee never considered himself a volunteer; he was an employee under an employment contract; the school board made retroactive payment of overtime from 2003-2005; he performed the same type of services as a coach as he performed as a security assistant; and he was paid more than a nominal fee, did not support the conclusion that the plaintiff should be deemed an employee with respect to his services as a golf coach. In determining whether the employee was a volunteer, the Fourth Circuit ruled that the totality of the circumstances must be taken into consideration.
Here, the employee was never coerced or pressured into becoming a coach, and his employment as a security assistant was not dependent on his coaching, the appeals court observed. Neither the descriptive terms used in his employment contract nor the definition of “volunteer” under state law controlled whether or not the plaintiff was appropriately deemed a volunteer under the FLSA. With respect to the payment of retroactive overtime, the appeals court noted that the school district’s change in policy was explained by its effort to ensure compliance with the FLSA and was based on then-current DOL guidance. Also, the fact that the employee was granted administrative leave from his day job when a golf event occurred during the school day did not suggest that he was paid for the same type of services as a security assistant and golf coach. Moreover, the Fourth Circuit held that a DOL opinion letter suggesting that public employers enact a blanket prohibition of administrative leave to volunteers was inconsistent with the statutory goals of encouraging volunteer activity. Finally, the court rejected the employee’s contention that his coaching stipend was more than the “nominal fee” permitted by law, since it was not intended as compensation for services rendered. Thus, the Fourth Circuit concluded that the record amply supported the conclusion that he “volunteered” to serve as the golf coach.
A former Family Dollar store manager was an exempt executive employee not entitled to overtime under the FLSA, even though she devoted the majority of her time to nonmanagerial work, ruled the Fourth Circuit, a significant victory for the retailer in the recent tide of overtime suits filed against it — and against other dollar store chains as well (In Re: Family Dollar FLSA Litig, March 22, 2011, Neimeyer, P). The employee’s primary duty was management because she was the person running the store even while she was engaged in nonmanagerial tasks. The employee also failed to acknowledge the importance of performing nonmanagerial tasks in a manner that could make the store profitable, which was the goal of her managerial responsibility.
While employed at Family Dollar, the employee worked from 50 to 65 hours per week for a weekly salary of $655. She also received a bonus each year, depending on her own performance and the performance of her store. The employee reported to a district manager who visited her store once every two or three weeks. In operating her store, the employee performed all the tasks necessary for its efficient and profitable operation, including supervising and training employees, handling customer complaints, managing inventory and completing paperwork. Her district manager followed her personnel recommendations 95 percent of the time.
The employee testified that she had the responsibility for making a profit and that she made a profit by controlling inventory, payroll, shrinkage, and safety. Moreover, she recognized that her exercise of judgment and decisions on a day-to-day basis affected customer loyalty and satisfaction, as well as profits. While the employee performed nonmanagerial tasks around the store, she concurrently performed the managerial duties necessary to run the store. This multi-tasking — doing management jobs while doing nonexempt work — is explicitly recognized by the Department of Labor’s regulations in describing the duties performed by a retail manager, observed the appeals court. Regardless of the budget given to the employee by Family Dollar, the successful management of her store within those parameters depended totally on her own decisionmaking and judgment. Thus, the Fourth Circuit concluded that the employee was performing management duties whenever she was in the store, even though she devoted most of her time to doing mundane physical activities.
Examining the remaining factors for determining whether management was the employee’s primary duty, the court concluded that in focusing on the relative importance of managerial duties as compared to other duties, all of the employee’s performance was aimed at operating the store in a manner that met her criteria for a well-run store. It was apparent that she exercised discretion virtually every day, and all day long. Moreover, she was relatively free from supervision. Finally, the employee earned significantly more on an hourly basis than her nonexempt workers, and received an annual bonus. The employee was also a “profit center,” since her performance evaluation, salary, and bonus depended on her store’s profitability. Thus, the appeals court concluded that the employee readily satisfied the factors for determining that her primary duty was management.
A federal district court improperly instructed a jury on a former city employee’s FMLA interference claim by improperly placing the burden on her to prove that she was denied reinstatement without cause, held the Ninth Circuit (Sanders v City of Newport, March 17, 2011, Paez, R). Because it concluded that the error was not harmless, the appeals court reversed the trial court’s judgment and remanded the case for trial.
Split rulings on federal and state law claims. Claiming that the city violated the federal FMLA and the Oregon Family Leave Act (OFLA), the employee sued following the city’s failure to reinstate her, and ultimately firing her, after she took an approved medical leave. At trial, the city argued that it could not provide a safe workplace for the employee because she suffered from multiple chemical sensitivity. In a bifurcated trial, the jury decided the employee’s FMLA and other damages claims, while the court decided her claims for equitable relief under the OFLA. The jury rendered a verdict in favor of the city, finding that the city did not violate the employee’s FMLA rights. However, on the basis of the same evidence presented to the jury, the court concluded that the city violated the employee’s OFLA rights and awarded monetary relief. Both sides appealed.
Employer’s burden to prove reinstatement denial was legitimate. The employee argued that the court’s FMLA jury instruction improperly placed the burden on her to prove that she was denied reinstatement without cause and that, by adopting a reasonable cause requirement, the court incorrectly stated the elements of her FMLA claim. Agreeing, the Ninth Circuit found that under the FMLA and the Labor Department’s implementing regulations, as well as Ninth Circuit precedent, the burden of proof was on the employer to show that it had a legitimate reason to deny an employee reinstatement. The Ninth Circuit noted that the Eighth, Tenth and Eleventh Circuits have agreed with it on this point. In addition, the court found that the FMLA does not allow an employer to interfere with an employee’s right to reinstatement for “reasonable cause.” As such, the court’s FMLA instruction was erroneous because it required the employee to disprove that the city had reasonable cause not to reinstate her after taking FMLA leave.
New trial required. Moreover, this instructional error was not harmless, and the employee was, therefore, entitled to a new trial. The instruction added an unnecessary element to the employee’s burden of proving her FMLA reinstatement claim, the Ninth Circuit wrote, and it was impossible to determine from the jury’s verdict and evidentiary record that the jury would have reached the same result had it been properly instructed.
OLFA claim. The erroneous FMLA jury instruction also undermined any determination of the OFLA claim. On appeal, the city argued that the trial court was bound, in ruling on the OFLA claim, by the jury’s implicit factual findings that it made in rendering a verdict for the city on the employee’s FMLA claim. The Ninth Circuit explained that, in cases like this one, where legal claims tried by the jury and equitable claims tried by the court are based on the same set of facts, the Seventh Amendment requires the trial judge to follow the jury’s implicit or explicit factual determinations. Here, because of the error in the court’s FMLA jury instruction and verdict form, the Ninth Circuit stated that it could not determine what factual findings the jury might have made with regard to the employee’s FMLA claim. It was thus impossible to determine the factual basis for the jury’s verdict and whether the district court violated the Seventh Amendment in granting the employee relief under OFLA. Indeed, the Ninth Circuit noted, that in explaining why it reached a different result on the employee’s OFLA claim, the trial court relied on the erroneous “reasonable cause” standard that formed the basis for the reversible error in the FMLA claim.
Thus, in addition to reversing the judgment on the FMLA claim and remanding that claim for a new trial, the Ninth Circuit vacated the judgment on the OFLA claim and remanded it for further consideration after the retrial of the employee’s FMLA claim.
State employment laws and regulations, wages-hours/labor relations, March update
Alaska Minimum Wages and Overtime
Rules of the Department of Labor and Workforce Development relating to minimum wages and overtime are amended to clarify overtime exemptions for certain truck drivers and hospital workers. Effective as of March 24, employers of line haul truck drivers that use alternate rates of overtime pay must provide a written explanation of the alternate rate, which must be signed by employees. The exemption for hospital employees whose employment includes the provision of medical services is clarified by adding the definition of the “provision of medical services” to mean “those necessary hands-on, medical functions, procedures and protocols that an employee renders personally to an individual patient, where such services involve face-to-face or other direct interaction between employee and patient.” 8 AAC 15.101 and 15.910 are amended effective March 24, 2011 (Register 197, April 2011). AK ¶2-41,502 and ¶2-41,519.
Alaska Prevailing Wages
“Public construction” or “public works” is defined in the Alaska Statutes under Section 36.95.010(3) to mean the “on-site” field surveying, erection, rehabilitation, alteration, extension or repair, including painting or redecorating of buildings, highways, or other improvements to real property under contract for the state, a political subdivision of the state, or a regional school board. Rules of the Department of Labor and Workforce Development are amended to revise the definition of what would be considered “on-site” in scope on a public construction project. Exceptions to what would be considered “on-site” are clarified, including exceptions for truck drivers delivering materials at a site. In addition, in determining if a site is in proximity to a public construction project, which is done on a project-by-project basis, the Department will take into account the type of the project; whether the use of a nearby site is required for completion of the project; whether the area of contract operations is developed or undeveloped; and the geographical lay of the land. 8 AAC 30.910 is repealed and readopted effective March 24, 2011 (Register 197, April 2011). AK ¶2-50,517.
Oregon Prevailing Wages
A rule establishing procedures to be used in contested case hearings is amended to correct an incorrect reference to two other rules. OAR 839-050-0445 is amended by Administrative Order No. BLI 1-2011, filed January 31, 2011, and certified effective February 1, 2011. OR ¶38-50,547.
Texas Labor Relations
Administrative rules of the Office of the Secretary of State are amended to clarify requirements relating to union organization. Section 101.110 of the Texas Labor Code requires the Secretary of State to accept applications for and issue labor organizers’ cards and Section 2001.004(1) of the Texas Government Code requires state agencies to adopt procedural rules of practice. Union organizers operating in Texas are required to apply for such cards prior to soliciting any members for a labor union organization. These rules clarify that the credentials required of an applicant under Texas Labor Code Section 101.110 means either (1) a copy of the minutes of the union meeting showing the election of the applicant as a labor union organizer or (2) if the labor organization is organized in a jurisdiction other than Texas, notification from the labor organization of the appointment of the applicant as a labor union organizer. The rules are also amended to provide that the application form can be obtained from the Secretary’s Internet website or in writing. 1 TAC Rules 73.1 and 73.2 are amended effective February 27, 2011 (36 TexReg 915). TX ¶45-63,501 and ¶45-63,502.
Wyoming Agency Change Notice
Wyoming Governor Matt Mead signed into law Senate File 120 on February 18 to officially reorganize the Department of Workforce Services and Department of Employment by merging the two agencies into one. The new agency will officially be known as the Wyoming Department of Workforce Services. In addition to the current programs offered, which include job search, vocational rehabilitation and training grants for businesses, the new agency will also administer unemployment insurance benefits, labor standards, mine safety, and labor market information (Source: Wyoming Department of Workforce Services News, February 18, 2011; S. 120, L. 2011).