Hunton Employment & Labor Perspectives

On August 8, 2011, the Second Circuit issued a decision in Millea v. Metro-North Railroad Co., taking an expansive view of the Family and Medical Leave Act’s (“FMLA”) anti-retaliation provision.  Turning to Title VII for guidance, the Court held that the jury should have received an instruction that broadly defined the term “materially adverse action.”

On August 9, 2011, the Ninth Circuit Court of Appeals ruled that a putative class action cannot be rendered moot by a defendant’s Rule 68 offer of judgment to the named plaintiff, even when the offer of judgment fully satisfies the named plaintiffs claim.  In doing so, the Ninth Circuit joined the other three circuits that have considered the pre-certification effect of an offer of judgment on the mootness of a class action.  The other three circuits (Second, Third, and Fifth) have similarly held that a defendant cannot “pick off” lead plaintiffs with an offer of judgment in order to avoid a class action.

The national unemployment rate, as reported by the Department of Labor, has stubbornly remained at about 9% or higher for more than two years. As many of these unemployed individuals search for new jobs, some have purportedly been denied available employment opportunities simply because they were unemployed. Unemployment discrimination, as it is often called, is not currently prohibited under federal law. The EEOC and Congress, however, have taken steps focused on so-called unemployment discrimination that could affect how employers conduct their hiring processes.

In March, we reported on the increasing attention that federal and state legislatures, as well as the EEOC, were paying to employers’ use of employee credit checks in employment decisions. At the time of posting, four states had laws regulating employer use of credit history data and fourteen additional states were considering similar measures. Earlier this month, Connecticut passed Public Act No. 11-223 regulating employer use of credit reports.

The EEOC recently released an informal discussion letter suggesting that employers may be obligated to do more than just maintain a separate file for employee medical records, especially when those records are in an electronic format. Both the Americans with Disabilities Act of 1990 (“ADA”), as amended, and the Genetic Information Non-Discrimination Act of 2008 (“GINA”) require employers to maintain a confidential medical record, which is separate from the employee’s other personnel file(s), for information about the employee’s medical conditions, medical history or “genetic information.” The statutes do not, however, specify how such records are to be maintained or what level of security must be in place to protect the confidentiality of medical or genetic information.

On July 8th, partially relying on the U.S. Supreme Court’s June 20th decision in Wal-Mart Stores, Inc. v. Dukes (for an analysis of the Dukes decision, see our previous blog entry), the United States District Court for the Northern District of California decertified a class of current and former store managers who alleged that Dollar Tree Stores Inc. had misclassified them as exempt employees and denied them overtime pay.  The case, Cruz v. Dollar Tree Stores, Inc., proves that although Dukes involved discrimination as opposed to wage and hour claims, the rationale in Dukes can also be used to defeat wage and hour class actions.

The class action under the Fair Labor Standards Act arguably is the employer’s most dreaded legal claim.  In April 2011, the United States Supreme Court provided a potential escape hatch for employers.  In AT&T Mobility v. Concepcion, the Supreme Court seemed to signal -- “seemed” being the operative word -- that employers need only enter into arbitration agreements in which employees disclaim their ability to file an FLSA class action (or, as it’s actually called in the FLSA, a “collective” action).

On June 24, 2011, the Texas Supreme Court wrote the next chapter concerning the enforceability of non-compete agreements in Texas.  A company’s provision of stock options to employees was deemed satisfactory consideration for a non-compete agreement in Marsh USA Inc. and Marsh & McLennan Companies, Inc. v. Cook, --- S.W.3d ----, 2011 WL 2517019 (Tex., 2011).  The Court declared that stock options are reasonably related to the protection of a company’s goodwill, a business interest worthy of protection under the Covenants Not to Compete Act (CNCA).  Although goodwill is intangible, Texas law has long recognized that it is “a property and integral part of [a] business just as its physical assets are.” Marsh USA, Inc., 2011 WL 2517019 * 11. 

This week, the United States Supreme Court issued its decision in what has been called the “most important class action case in more than a decade.”  In Wal-Mart Stores, Inc. v. Dukes, et al., No. 10-277, 564 U.S. ___ (June 20, 2010), the plaintiffs, current and former employees of the Nation’s largest private employer, Wal-Mart, sought judgment against the company for injunctive and declaratory relief, punitive damages, and backpay, on behalf of themselves and a nationwide class of some 1.5 million female employees, alleging sex discrimination in violation of Title VII of the Civil Rights Act of 1964.

In October 2010, the National Labor Relations Board (“NLRB”) raised the eyebrows of employers and observers when its Hartford, Connecticut Regional Office issued an unfair labor practice complaint against an employer after it allegedly terminated an employee for posting unflattering statements about her supervisor on Facebook.  The NLRB and the company settled the complaint in February 2011, on condition that the company revise its rules so they do not improperly restrict employees from discussing their wages, hours and working conditions with coworkers and others while not at work.  The employer also agreed that it would not discipline or discharge employees for engaging in such discussions.

The United States Department of Labor (“DOL”) has announced the launch of its first application, or “app,” for smartphones to “help employees independently track the hours they work and determine the wages they are owed” in accordance with the Fair Labor Standards Act (“FLSA”). The application is available in both English and Spanish and allows employees to privately record regular work hours, break and meal times, and any overtime hours. The free app is currently compatible only with iPhone and iPod Touch; however, the DOL is exploring updates for compatibility with other smart phones such as Android and Blackberry phones.

By proposing to amend its Scheduling Letter and Itemized Listing, the Office of Federal Contract Compliance Programs (“OFCCP”) is at it again, imposing greater burdens on federal contractors.  Following its recent proposal to strengthen contractors’ affirmative action efforts for veterans, the OFCCP has now issued a proposal to modify its Scheduling Letter and Itemized Listing used in compliance reviews and compliance checks.  On May 12, 2011, the OFCCP published Notice in the Federal Registry requesting comments on its proposed changes.  The current Scheduling Letter and Itemized Listing are set to expire on September 30, 2011.  Comments on the proposed changes must be submitted by July 11, 2011.

A recent Tenth Circuit decision sends a strong message that the court takes seriously the jurisdictional prerequisite that plaintiffs exhaust their administrative remedies in a Title VII claim prior to taking a claim to court.  The process to do so is well-known -- before an employee can file a lawsuit alleging discrimination against his or her employer, he or she must file a charge with the U.S. Equal Employment Opportunity Commission (“EEOC”).  Requiring individuals to exhaust their administrative remedies prior to filing a lawsuit serves, hopefully, to eliminate facially meritless charges, facilitate internal resolution, and help avoid litigation.  This is often the case, as many charges filed with the EEOC never end up on a court’s docket.  But what happens if the parties are already enmeshed in litigation and the plaintiff claims that the defendant’s conduct during the course of that litigation is retaliatory?  Can the plaintiff amend his or her complaint to include that allegation?  Or must he or she go back to the EEOC and file a charge for that claim?  In McDonald-Cuba v. Santa Fe Protective Services, Inc., the Tenth Circuit held that the latter is true.  No. 10-2151 (10th Cir. May 9, 2011).  The Fourth came down the other way in a similar case.

On May 3, the Ninth Circuit ruled in Tides v. Boeing Co., No. 10-35238, that the whistleblower provisions of the Sarbanes-Oxley Act (“SOX”) do not protect employees who disclose information to the media. Although SOX bars public companies from retaliating against employees who report conduct that they reasonably believe constitutes certain types of fraud or securities violations to Congress, federal regulatory or law enforcement agencies, or a person with supervisory authority over the employee, the Ninth Circuit held that this protection does not extend to employee disclosures to the media. Federal appeals courts have previously ruled on press disclosures under other whistleblower statutes, but the Ninth Circuit’s ruling is the first to analyze such disclosures under SOX.

On April 27, the U.S. Supreme Court decided that the Federal Arbitration Act (“FAA”) preempts rules created by states, such as California, that classify most class action arbitration waivers in consumer contracts as unconscionable.  The Court’s 5-4 decision in AT&T Mobility LLC v. Concepcion, 2011 WL 1561956 (U.S. Apr. 27, 2011) could signal big changes for consumer − and potentially wage and hour − class action litigation.

The National Labor Relations Board (“NLRB”) regional offices addressing complaints involving employers’ social media policies must seek advice from the NLRB’s Division of Advice before taking any action. The memorandum, issued by the NLRB’s Office of the General Counsel on April 12th, added social media disputes to the list of matters that must be submitted to the Division of Advice.  The Division of Advice is responsible for issuing opinions on difficult or novel labor issues. 

Most of us have sent a text while driving, and we all know that this practice can be dangerous. This is as true on the rural roads of America, as it is on the busiest of freeways. It is no surprise, with all of our technological distractions, that motor vehicle crashes are consistently the leading cause of worker fatalities. It is also no surprise that OSHA has taken notice of this issue and is taking action. OSHA is prepared to start issuing citations and fines to employers for distracted driving by employees.

In recent months the federal government has announced a number of initiatives designed to increase the employment of individuals with disabilities in both the private and government sectors.  These measures send a clear message to employers: audit your practices now to ensure adequate outreach and accessibility to the disabled.

Disability discrimination claims have long been difficult for employees to pursue in court. Although employers are often grappling with reasonable accommodation and leave issues in the workplace, such issues have typically not spilled into the courtroom. One reason for that has been the difficulty in proving an employee has a “disability.” The final regulations issued by the EEOC in March 2011 could change all of that. The new regulations, interpreting the ADA Amendments Act of 2008 (ADAAA) expand the definition of “disability” and otherwise remove several impediments to pursuing lawsuits under the ADA. This should lead to an increase in ADA litigation.

The Bright v. 99 Cents Only Stores decision, issued by the California Court of Appeal for the Second Appellate District last November, illustrates a recent wage and hour class action litigation trend against retail employers in California over lack of “suitable seating” for their employees. The California Supreme Court denied review of this case in February 2011.

An employer who allegedly posted to an employee’s Facebook and Twitter accounts without her consent may face liability for its actions, according to a federal judge in Illinois. The case is Maremont v. Susan Fredman Design Group, Ltd., in the U.S. District Court for the Northern District of Illinois (2011 U.S. Dist. LEXIS 26441, March 15, 2011).

In a pro-business decision, the Los Angeles Superior Court Appellate Division recently established state standards for damages and standing for California public accessibility cases in Mundy v. Pro-Thro Enterprises, 2011 WL 600619 (Cal. App. Dep't Super. Ct. Jan. 7, 2011).

Earlier this month, the U.S. Supreme Court ruled that the “cat’s paw” theory of employment discrimination -- that an employer can be liable for the discriminatory animus of an employee who influences, but does not make, an ultimate employment decision -- applies to claims brought under the Uniformed Services Employment and Reemployment Rights Act (USERRA), the law that protects individuals called to military service during their private employment.  In a unanimous decision, the Court held that

“if a supervisor performs an act motivated by anti-military 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.”

Staub v. Proctor Hospital, 131 S. Ct. 1186 (2011).

During the past 50 years, the American workforce has changed drastically. One of the most noticeable changes has been the absorption of immigrants into the workforce who do not speak English as their first language.

In response to the increased linguistic diversity of the workforce, many employers have implemented policies that limit or completely prohibit their employees from speaking languages other than English while at work. These so called “English-only” polices may violate the national origin protections of Title VII of the Civil Rights Act of 1964. Employers that implement these policies are at risk of being sued not only by employees who feel wronged by the policy, but also by the U.S. Equal Employment Opportunity Commission.

The 2010 fiscal year was a busy one for the EEOC as employees filed a record number of charges.  See A Year In Review: EEOC Charges & Trends.  This wave of charges is historic -- not just because of the number of charges filed, but also because of the evolving trends in the types of claims made. Unfortunately for employers, these trends will likely continue in 2011 and beyond.

Historically, the most common types of claims filed were those of race and sex discrimination. Although these particular types of claims remain prevalent (the number of both race and sex discrimination claims increased in 2010), other types of claims are emerging at an alarming rate due to recent changes in the legal landscape.

A commonly used pre-employment screening method--conducting credit checks--has drawn increased scrutiny in recent months. Legislatures at the state and federal levels are considering bills that would limit employer use of credit checks. Moreover, two recently-filed lawsuits, one of which was filed by the EEOC, seek to challenge the use of pre-employment credit checks in hiring decisions. 

Only four states--Hawaii, Illinois, Oregon, and Washington--currently have laws regulating employer use of credit history data. Sparked by the downturn in the economy, fourteen additional states--California, Colorado, Connecticut, Indiana, Kentucky, Maryland, Missouri, Nebraska, New Jersey, New Mexico, New York, Pennsylvania, Texas, Vermont--are considering similar measures.

On January 4, 2011, President Obama signed the FDA Food Safety Modernization Act (FSMA), which seeks to promote food safety by enacting strict safety standards in the food industry. In addition to the enactment of safety standards, Section 402 of the FSMA ensures sweeping protections for whistleblowers in the industry. The FSMA whistleblower protection applies to any “entity engaged in the manufacture, processing, packing, transporting, distribution, reception, holding, or importation of food.” The anti-retaliation provisions protect any employee of a covered entity who provides to the employer, the federal government, or the Attorney General of a State information that the employee reasonably believes constitutes a violation of the FSMA; testifies or is about to testify about any such violation; assists or participates in any such proceeding; or objects to or refuses to participate in any activity that the employee reasonably believes is a violation of the FSMA.

In Byron Chapman v. Pier 1 Imports (U.S.), Inc., --- F.3d --- (9th Cir. Jan. 7, 2011), a unanimous Ninth Circuit en banc panel reversed the trial court finding that the plaintiff had standing to pursue claims for alleged barriers against Pier 1, instead holding that plaintiff’s complaint was "jurisdictionally defective" and that plaintiff "lacked standing at the outset of this litigation to assert the ADA claims."  "This Case is important because the decision helps to rein in ‘drive by ADA litigants’ who file multiple lawsuits for profit, but have no real stake in the matters presented,” said lead appellate lawyer Laura Franze, who is Co-Chair of Hunton & Williams' national employment group. “The Court adopted Pier 1’s position that -- in order to comply with Article III standing requirements --- an ADA plaintiff must not only clearly identify the alleged accessibility violations, but also connect the dots to show how he personally suffered discrimination under the ADA on account of his disability. ADA complainants cannot depend on formulaic recitation of the elements of a claim.”

On January 19, 2011, the United States Supreme Court issued a unanimous ruling in National Aeronautics and Space Administration v. Nelson, finding that questions contained in background checks NASA conducted on independent contractors are reasonable, employment-related inquiries that further the government’s interests in managing its internal operations.  Stating that “[t]he challenged portions of the forms consist of reasonable inquiries in an employment background check,” the Court reversed a Ninth Circuit decision that the questions NASA asked of the ...

On December 13, 2010, New York passed the Wage Theft Prevention Act (“WTPA”).  The WTPA, which amends the state’s labor law regarding wage payments, and becomes effective on April 12, 2011.  It  heightens the requirements of employers as relating to notice and the payment of wages while also stiffening the penalties for notice and payment failures.

Notice Requirements:

The law currently in effect requires employers to inform new hires in writing of their designated pay date, rate of pay, and overtime rate, if applicable.  The WTPA revises this portion of the law, placing further obligations on employers by requiring this notice to be issued not only upon hire but also by February 1 of every subsequent year.  The WTPA also expands the information to be provided to include: the employee’s rate of pay and how it is paid (hourly, weekly, commission, etc.); allowances claimed against minimum wage (e.g., tip, meal or lodging credits); the employer’s regular pay day; the employer’s name and any “doing business as” names; the address of the employer’s main office or principal place of business and mailing address if different; the employer’s telephone number, plus any other information the Commissioner of Labor deems “material and necessary.”  The notice must be provided in English, or in the employee’s primary language if his/her primary language is not English, and must be signed and acknowledged by the employee each time it is received.

The Obama Administration has addressed labor and employment issues aggressively over the past two years.  The Department of Labor, under President Obama’s direction, has articulated its “Plan/Prevent/Protect” agenda and its focus on openness and transparency in labor practices.  As a result of the steps taken by the Obama Administration in 2010, the new Republican-dominated Congress may have to decide a number of regulatory and legislative measures that will directly affect labor and employment law in 2011. The following is a list of proposed regulations and legislation that employers and their attorneys should watch this year:

Federal law requires employers to only employ individuals who are eligible to work in the United States. The U.S. Department of Homeland Security, in partnership with the U.S. Social Security Administration, has implemented an “E-Verify” system that allows participating employers to verify eligibility in a quick and cost-efficient manner. E-Verify is a free, federal database that compares information submitted by employees to Social Security and Homeland Security records. Employers who use E-Verify can quickly identify and reject persons who are ineligible to work in the United States.  Once employers hire workers, they process their information through the E-Verify database. If the submitted records match, the new employees are eligible to work. If the records do not match, the database notifies the employers, who must then give the worker eight days to provide sufficient proof of eligibility.

Recently, there has been a large amount of public commentary regarding the dangers of distracted driving, including texting while driving.  The Occupational Safety and Health Administration (OSHA), which regulates workplace safety, has now officially declared texting while driving to be a workplace hazard and an OSHA violation.  In its recent open letter to employers, OSHA explained that:

It is [the employer’s] responsibility and legal obligation to create and maintain a safe and healthful workplace, and that would include having a clear, unequivocal and enforced policy against the hazard of texting while driving.  Companies are in violation of [OSHA] if, by policy or practice, they require texting while driving, or create incentives that encourage or condone it, or they structure work so that texting is a practical necessity for workers to carry out their job.

It is not uncommon in discrimination and harassment suits for employers to battle against the admission of so called “me too” evidence.  Plaintiffs often employ the tactic of parading up other employees who claim they were discriminated against and/or harassed in the same manner as the plaintiff.  The results vary based on jurisdiction and fact pattern, and the standards can differ by jurisdiction and court.  The United States Supreme Court may soon add some clarity to this area.  The Court is considering whether to review a case involving the appeal of Billy Ray Tratree, an African-American employee who was discharged three months before he turned age 50 and was to become eligible for retirement benefits.  Tratree alleges that his employer discharged him on the basis of his race and age.  The Supreme Court soon will decide whether to review the Fifth Circuit’s opinion upholding the district court’s decision to exclude some of Tratree’s “me too” evidence.

When settling class actions, there is always a question regarding how broad the release can be, and whether an employee can stay silent through the settlement process, only to later sue for claims that arguably were not released.  A California Court of Appeal recently held in Villacres v. ABM Industries that a court-approved class action settlement can prevent a class member from filing a new lawsuit asserting claims that were brought in the previously settled class action and also claims that could have been brought in the prior action − as long as the terms of the settlement’s general release are broad enough to cover those types of claims.

Employees are increasingly talking about supervisors and other employees on social networking sites, and sometimes the talk can get nasty.  Complaining about co-workers and supervisors is not new.  However, distributing those complaints via the internet is.  Employers often seek to crack down on such negative talk via policies and disciplinary action.  However, Lafe Solomon, the NLRB’s acting general counsel, has publicly stated that employees have the right to communicate jointly about working conditions, regardless of whether those communications are made on social networking sites or at the company water cooler.  The NLRB will decide the validity of Mr. Solomon’s statement in connection with a recently-issued complaint.

It is very difficult to control everything employees say in the workplace, and to stamp out every inappropriate comment, particularly in a large workforce.  The reality is that out of place remarks happen all the time in the workplace, and every single improper comment cannot lead to legal liability for employers, or commerce would come to a complete stop.  Courts have recognized this reality and developed the “stray remarks” doctrine, which places appropriate focus on those inappropriate remarks that are made as part of an adverse employment action.  California recently declined to follow this doctrine, at least in the way other courts have.

When asked on November 2, 2010, “Shall the Constitution of Georgia be amended so as to make Georgia more economically competitive by authorizing legislation to uphold reasonable competitive agreements,” Georgia voters overwhelmingly answered “Yes.”

By this vote, the Georgia voters approved the Restrictive Covenants Act, a law that will dramatically alter Georgia’s legal landscape regarding non-compete agreements and other restrictive covenants.  The Act increases the enforceability of these agreements and allows courts to modify them to the extent reasonably necessary to enforce and protect legitimate business interests.  In order to become effective, Georgia residents had to amend the state Constitution -- an event that happened three days ago during Georgia’s general election.  Although there is a question regarding when the Act actually will become effective, by its own terms, it became effective on November 3, 2010.  Below is a summary of some of the key provisions of the new law.

Please join us for a complimentary webinar program on Thursday, November 4,  covering recent developments on:

• Enforcement
• "Grandfathered" Status
• The Immediate Group Health Plan Reforms, including
  • Adult Child Coverage
  • Retroactive Rescissions
  • Lifetime/Annual Limits
  • External/Internal Appeals Process
  • Preventative Services and Other Patient Protections
• W-2 Health Benefits Reporting
• FSA/HRA Reimbursement of OTC Drugs
• Early Retiree Reinsurance Program

With the closing of the first month of the federal government’s 2011 fiscal year, employers may be curious to know what the EEOC’s litigation landscape looks like.  For instance, what type of employers are being sued, and for what?  Importantly, what can employers learn from the EEOC’s litigation efforts?  A review of recently filed lawsuits that the EEOC has announced in its October press releases found that few claims have been brought under recently passed laws and only a small portion of the defending employers are Fortune 500 companies.

On October 13, Pennsylvania Governor Edward G. Rendell (R) signed the Construction Workplace Misclassification Act (H.B. 400), which sets forth a number of prerequisites for classifying construction industry workers as independent contractors as opposed to employees.  Under the Act, the consequences for misclassifying a worker as an independent contractor are severe.  The Act is part of a large trend, as similar legislation has been enacted or is being considered in a number of other states.

On August 25, 2010, the German government approved a draft law concerning special rules for employee data protection, originally proposed by the Federal Ministry of the Interior.  A background paper on the draft law was published on August 25, 2010.

Continue…

Please join us for a complimentary webinar program on Thursday, November 4,  covering recent developments on:

• Enforcement
• "Grandfathered" Status
• The Immediate Group Health Plan Reforms, including
  • Adult Child Coverage
  • Retroactive Rescissions
  • Lifetime/Annual Limits
  • External/Internal Appeals Process
  • Preventative Services and Other Patient Protections
• W-2 Health Benefits Reporting
• FSA/HRA Reimbursement of OTC Drugs
• Early Retiree Reinsurance Program

If an employee told you that a regular customer had a habit of making inappropriate sexual comments to her, would you think that your company could be liable to your employee for the customer’s conduct?  The answer is “yes,” your company could be liable.  A recent lawsuit filed by the U.S. Equal Employment Opportunity Commission (“EEOC”) serves as a reminder that employers may be liable for the harassing conduct of not only their employees, but also, non-employees such as customers, delivery people, copier repair personnel, and independent contractors.

Hunton & Williams announced today the launch of its new website — the Hunton & Williams Health Care Reform Center, huntonhealthcarereform.com.   The website focuses on legal developments in the area of the recent federal health care reform.

Employers who hold their breath and declare an employment position as “exempt” from the Fair Labor Standards Act’s overtime previsions − all the while knowing that the exempt v. non-exempt question is a close call − should take a simple step to save themselves substantial damages should a court later rule the position non-exempt.

When entering into an employment arrangement with the employee, the employer should obtain the employee’s acknowledgement in writing that the employee’s weekly hours may fluctuate, and that each weekly portion of the employee’s annual salary will constitute payment for all hours worked during that week.

Under the Family and Medical Leave Act ("FMLA"), not only is an "employer" responsible for compliance with the FMLA, but any "successor in interest of an employer" is responsible as well. However, the FMLA does not define the term "successor in interest." The meaning of this term is crucial because an employee who has worked for an employer for less than 12 months might still be eligible for FMLA protection if that employer is considered a successor in interest to the employee’s former employer and the employee’s combined length of service for both employers is 12 months or more.

How would you handle the following situation?  You have recently learned that one of your employees “posted” on Facebook complaining about the company, specifically commenting on work conditions and wages.  Several other employees have made comments on this employee’s Facebook page and a discussion has ensued.  These comments and complaints are damaging to the company’s reputation and portray the company in a negative light. 

Your natural inclination may be to instruct the employee to take these comments down and prohibit him from continuing to use Facebook to discuss work issues.  Yet, unions may be looking for you to do exactly that so they can try to file an unfair labor practice charge with the National Labor Relations Board (“NLRB”).  Employers have the right to protect their reputations and to prevent the possible disclosure of confidential information.  But unions may try to construe the above situation and the employer’s reaction to it as interference with an employee’s right to engage in concerted activity, a violation of Section 8 of the National Labor Relations Act (“NLRA”).  Notably, such an argument by unions could apply to both unionized and non-unionized employers. 

In yet another employee misclassification case, Kentucky Attorney General, Jack Conway, brought suit against FedEx Corp. alleging that FedEx violates Kentucky state law by misclassifying its drivers as independent contractors.  The Complaint contends that FedEx violated state law in regards to unemployment insurance, workers compensation, payroll taxes, and the Kentucky Consumer Protection Act.  The lawsuit asks the Court to order FedEx to classify its drivers as employees and to pay the contributions and penalties required by state law, which includes back pay dating to 2000 and totaling at least $10 million.

The Washington Times recently published an article by Hunton & Williams attorney Kurt Larkin regarding the impact that the Dodd-Frank Act will have on big labor's ability to infiltrate boardrooms of corporate America. To read the editorial, click here.

Our prior posts have chronicled recent attempts by Congress and state legislatures to crack down on employers who misclassify employees as independent contractors, the most notable of which was the Employee Misclassification Prevention Act that, among other things, seeks to create a cause of action under the FLSA for misclassification and to require employers to keep records of hours worked by independent contractors.  On September 15, Congress took yet another step in the enforcement direction when Senator John Kerry (D-Mass.) and Representative Jim McDermott (D-Wash.) introduced The Fair Playing Field Act of 2010 (S. 3786, H. 6128), which seeks to close a so-called “loophole” under the current tax regime.

The U.S. District Court for the Eastern District of Pennsylvania recently decertified a wage and hour collective action against Pennsylvania poultry processor Farmers Pride, ruling that a collective action is not an appropriate mechanism for resolving claims that the employer failed to fully compensate employees for time spent engaged in donning- and doffing-related activities.  The Court’s 47-page opinion reflects a thorough analysis that will serve as guidance to employers and courts around the country faced with similar collective action claims.

Set out below is a chart that describes the various notices that are required under government regulations for the group health plan reforms and related requirements that will be in going into effect for plan years beginning on or after September 23, 2010 (e.g., January 1, 2011 for calendar year plans) -- including the special notice requirement for those plans that intend to continue to maintain “grandfathered” status, along with a link to any model notice/language provided by the government.

Earlier this summer the House Judiciary Committee on the Constitution, Civil Rights, and Civil Liberties held hearings on H.R. 3721, a/k/a the “Protecting Older Workers From Discrimination Act” (POWADA), which was introduced in the wake of the Supreme Court’s controversial 5-4 decision in Gross v. FBL Financial Services, Inc.  In the decision written by Justice Clarence Thomas, the Supreme Court held that under the Age Discrimination in Employment Act (ADEA), a plaintiff pursuing a disparate treatment claim for age discrimination must prove, by a preponderance of the evidence, that the employee would not have suffered an adverse employment action “but for” his age.  The Court held that the text of the ADEA did not authorize “mixed motives” claims, and that the burden of persuasion does not shift to the employer, even when there is evidence that the plaintiff’s age was a motivating factor in the adverse decision.

Section 351 of California’s Labor Code prohibits employers from taking any gratuity patrons leave for their employees, and provides that such gratuity is “the sole property of the employee or employees to whom it was paid, given, or left for.”  A number of Courts of Appeal have consistently held that this prohibition does not extend to employer-mandated tip pooling -- where employees must pool and share their tips with other employees.  Louie Hung Kwei Lu, a former card dealer with Hawaiian Gardens Casino, Inc., decided to test these rulings.

On July 19, 2010, the United States Departments of Health and Human Services, Labor and Treasury issued interim final regulations covering the mandates under the Patient Protection and Affordable Care Act, as amended (the “Health Care Reform Act”), relating to the internal and external claims review process. These requirements, which do not apply to grandfathered group health plans, substantially expand the claims review and appeals processes that group health plans must follow in administering claims. Because the new requirements apply as of the beginning of the first ...

According to recent federal court decisions, a shareholder, director, or other individual holding a similar position in a corporation may find his or her job status disqualifies him or her from legal relief under many state and federal anti-discrimination laws should such individual believe that he or she has been the subject of unfair treatment in the workplace. In Kirleis v. Dickie, McCamey & Chilcote, P.C., No. 09-4498 (3rd Circuit July 14, 2010), the U.S. Court of Appeals for the Third Circuit affirmed a district court’s ruling that a law firm shareholder was not an “employee” of the professional corporation protected by federal and state anti-discrimination laws.

As reported on Hunton and Williams LLP’s Privacy and Information Security Law Blog, on August 10, 2010, Illinois Governor Pat Quinn signed the Employee Credit Privacy Act, which prohibits most Illinois employers from inquiring about an applicant’s or employee’s credit history or using an individual’s credit history as a basis for an employment decision. The definition of “employer” under the Act exempts banks, insurance companies, law enforcement agencies, debt collectors and state and local government agencies that require the use of credit history.

On July 20, 2010, Hunton & Williams LLP announced the release of the first edition treatise Privacy and Data Security Law Deskbook (Aspen Publishers).  The deskbook provides a detailed overview of the workplace issues affected by information privacy and data security law and is a practical one-stop loose-leaf guide for privacy professionals, compliance officers and lawyers responsible for privacy or data security.

The USDA’s Food Safety and Inspection Service (“FSIS”) is proposing an amendment to USDA regulations that would require meat and poultry processors to pay overtime to USDA inspectors who engage in donning and doffing activities that, when combined with the time spent engaged in inspection activities, result in more than 8 hours of work per day.  The FSIS claims that the amendment is necessary to achieve compliance with the Supreme Court’s decision in IBP, Inc. v. Alvarez, 546 U.S. 21 (2005), and the Office of Personnel Management’s interpretation of that decision.

The U.S. Court of Appeals for the Ninth Circuit recently held—consistent with other courts that have considered the issue—that “insurance agents are independent contractors and not employees for purposes of various federal employment statutes,” including ERISA, the ADEA, and Title VII.  In Murray v. Principal Financial Group, Inc., case number 09-16664, the panel unanimously affirmed a district court order granting summary judgment in favor of a purported employer because it found that the plaintiff was an independent contractor, not an employee entitled to the protections of Title VII.  The panel’s opinion clarifies the appropriate test for distinguishing between employees and independent contractors in the context of Title VII, and concludes that despite apparent precedent for multiple tests, there is, in fact, only one.

Though the primary focus of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) is the reduction of systemic risk in financial markets and increased regulation of large financial institutions, Dodd-Frank also contains executive compensation, corporate governance and enforcement provisions applicable to most public companies.  Some of these provisions are highlighted below.  For more insights on the full range of business and legal issues associated with current market and regulatory changes, including the Dodd-Frank Act’s executive compensation, corporate governance and enforcement provisions, please visit Hunton & Williams LLP's Financial Industry Resource Center.

An Indiana nursing home was found in violation of Title VII this month for acceding  to a resident’s request for white-only healthcare providers.  In Chaney v. Plainfield Healthcare Ctr., No. 09-3661 (7th Cir. July 20, 2010), a unanimous panel of the U.S. Court of Appeals for the Seventh Circuit reversed a lower court’s ruling in favor of the nursing home and held that this was a clear violation of Title VII.

The nursing home, Plainfield Healthcare Center (“PHC”), housed a resident who did not want assistance from black nursing assistants.  PHC complied with this racial ...

The Department of Labor’s Wage and Hour Division recently issued a fact sheet explaining employers’ obligations under the break time requirement for nursing mothers found in the Patient Protection and Affordable Care Act, which amends Section 7 of the Fair Labor Standards Act (“FLSA”).

The Dodd-Frank Wall Street Reform and Consumer Protection Act just signed into law by President Obama, H.R. 4173, 111th Cong. (2010) (“Dodd-Frank”), creates new statutory rights and incentives for whistleblowers and also expands already existing rights, such as under the Sarbanes-Oxley Act (“SOX”).  Now more than ever, clear policies and procedures backed by strong audit, compliance and investigatory functions are critical to managing the anticipated increase of regulatory enforcement and private party whistleblower litigation that this expansive legislation likely will create.

The National Defense Authorization Act for Fiscal Year 2010 further expands the recent amendments to the Family and Medical Leave Act (FMLA), which provides leave to qualified employees to care for family members with needs relating to military service.   However, for those employers who rely exclusively on the Department of Labor website for their required postings and certification forms, beware - portions of the Department of Labor’s website have not yet been updated to reflect these changes and reliance upon these outdated materials may cause an employer to inadvertently, yet unlawfully, deny an employee his or her rights under the FMLA.

As was predicted following the passage of the ADA Amendments Act of 2008 (ADAAA), which went into effect in January 2009, there has been a subsequent surge in the filing of lawsuits under the Americans with Disabilities Act (ADA).  Lawsuits brought under the ADA now comprise the highest percentage of claims filed by former employees.  When compared with the number of ADA-related lawsuits filed in the first three months of 2009, there has been a nearly 40% percent increase in the number of ADA-related suits filed in 2010  during the same period.  Moreover, the second quarter of 2010 saw the number of ADA-related lawsuits increase by 15% over those filed in the first quarter.

In Waffle House v. Cathie Williams, the Texas Supreme Court on June 11, 2010, rejected the idea that a plaintiff who prevailed on a sexual harassment claim under §21.0015 of the Texas Labor Code could instead opt to recover damages under a more generous common law scheme. The Court held that plaintiff could only recover under the Texas Commission on Human Rights Act (TCHRA).

In what has been deemed a victory for many non-traditional families, on June 22, 2010, the U.S. Department of Labor (“DOL”) issued an opinion clarifying the definition of “son or daughter” under the Family and Medical Leave Act (“FMLA”).  Now, according to the Administrator’s Interpretation Letter No. 2010-3, any employee who “intends to assume the responsibilities of a parent with regard to a child” and has either “day-to-day” responsibilities for, or “financially supports” that child, is entitled to leave under the Act -- even if that employee does not have a traditional biological or legal relationship with the child.

Who decides whether an arbitration agreement is unconscionable when the agreement explicitly delegates that decision to the arbitrator?  According to a slim majority of the U.S. Supreme Court in Rent-A-Center v. Jackson, No. 09-497, ___ U.S. ___, slip op. (June 21, 2010), the arbitrator does, if a party challenges the enforceability of the arbitration agreement.  The district court may only intervene if a party specifically challenges the validity of the agreement to delegate that decision to the arbitrator.  The decision makes it more difficult for a current or former employee who has signed an arbitration agreement with a proper delegation provision to avoid arbitration and bring a private lawsuit.  That is a positive result for pro-arbitration employers.

In a recent decision, a federal district court judge held that Abbott Laboratories, Inc.’s pharmaceutical sales representatives do not qualify for either the outside sales or administrative exemptions of the Fair Labor Standards Act (“FLSA”).  Under the FLSA, employers are required to pay overtime for hours worked over 40 in a week, unless an employee qualifies for an exemption under the Act. While the FLSA contains many such exemptions, the most commonly used exemptions are the executive, outside sales, and administrative exemptions.  Each exemption has specific requirements that must be met.

The Senate Committee on Health, Education, Labor, and Pensions has announced that it will conduct a hearing on Thursday, June 17, 2010 on the Employee Misclassification Prevention Act, which was introduced in both the Senate and House on April 22, 2010.  The Act seeks to amend the Fair Labor Standards Act so that worker misclassification is a violation of federal law.  The act also requires employers to maintain records reflecting hours worked and wages paid to independent contractors.  See our previous post for a detailed discussion of the legislation.

A recent Eleventh Circuit Court of Appeals decision upheld the validity of noncompetition and nonsolicitation covenants in an employment agreement governed by Georgia law.  In H&R Block Eastern Enterprises, Inc. v. Morris, the Eleventh Circuit reversed the United States District Court and ruled that provisions in H&R Block’s employment agreement with its former employee, Vicki D. Morris, were valid and enforceable restrictive covenants under Georgia law.  This decision provides additional guidance to employers attempting to draft enforceable employment agreements to protect legitimate business interests.  It also highlights why the Georgia General Assembly recently passed legislation attempting to offer clarity in this area of the law.

For years, employers wrestling with thorny wage and hour issues under the Fair Labor Standards Act (“FLSA”) have used the Wage & Hour Division’s (“WHD”) opinion letters for fact-specific guidance.  To the extent a particular issue was not addressed by a current opinion letter, the employer could submit a request for an opinion letter and obtain definitive guidance from WHD.  Employers who relied on opinion letters were immune from FLSA liability under the Portal Act’s safeharbor provision, which allows an employer to avoid liability for FLSA violations if the employer relied on a written interpretation of the WHD.

On Monday, the United States Supreme Court ruled that claims brought by African American firefighters who had sued the City of Chicago alleging that a hiring test was discriminatory were not time barred.  Lewis v. City of Chicago, No. 08-974, 560 U.S. ___ (2010).  The City conceded that its use of the hiring test was unlawful, but argued that the firefighters claims were untimely.  Addressing only the statute of limitations issue, the Court issued a unanimous decision in favor of the firefighters, holding that the firefighters timely filed a disparate impact claim based on the continued use of the hiring test.

The proposed 2011 fiscal year federal budget signifies a renewed commitment to combating employee misclassification, as it contemplates funding an additional 4,700 investigations into worker misclassification issues.  With penalties for worker misclassification being quite steep -- including back taxes, interest, and even punitive fines -- employers should audit their workforce to ensure that their independent contractors are properly classified.

Unfortunately, there is no bright line test to determine whether a particular worker has been properly classified as an independent contractor.  In fact, the precise definition of an independent contractor not only varies between federal and state law, but can also vary from state to state and even statute to statute.  

Continuing a trend in Congress to limit employers’ use of independent contractors, on April 22, 2010, Rep. Lynn Woolsey (CA) and Senator Sherrod Williams (OH) introduced the Employee Misclassification Prevention Act (H.R. 5107, S. 3254) (“EMPA”) in the House and Senate respectively.  The EMPA would amend the Fair Labor Standards Act (“FLSA”) and render worker misclassifications a violation of federal law.  Employers would be required to maintain records reflecting hours worked and wages paid for employees and non-employee workers.  They also would be required to provide workers a “notice” that identifies: the worker’s classification, a yet to be created Department of Labor website (containing an on-line complaint link), contact information for the applicable Department of Labor office, and other additional information as prescribed by regulation.  For workers classified as non-employees, the Notice would be required to state: “Your rights to wage, hour, and other labor protections depend upon your proper classification as an employee or non-employee. If you have any questions or concerns about how you have been classified or suspect that you may have been misclassified, contact the U.S. Department of Labor.”

In its recently published Spring 2010 Regulatory Agenda, the Department of Labor (“DOL”) announced that it plans to propose a rule that would amend the current recordkeeping regulations under the Fair Labor Standards Act (“FLSA”).  Under the proposed rule, any employers seeking to exclude workers from the FLSA’s coverage will be required to perform a classification analysis, disclose that analysis to the worker, and retain that analysis to provide to Wage and Hour Division (“WHD”) enforcement personnel upon request.  The proposal will also address burdens of proof when employers fail to comply with records and notice requirements.

Committees in both the House and the Senate heard testimony this week regarding the Protecting Older Workers Against Discrimination Act (H.R. 3721 and S. 1756).  Democrats introduced the Act last fall with hopes of restoring employees’ rights under the Age Discrimination in Employment Act (“ADEA”) by overturning the Supreme Court’s decision in Gross v. FBL Fin. Servs. Inc., 557 U.S. __ (2009).

With a dearth of job openings for recent college graduates, many have pursued unpaid internships while continuing to search for fulltime employment.  A 2008 survey found that half of all college students hold at least one internship before graduating.  In light of the 18.8% March unemployment rate for American workers aged 16-24—nearly double the 9.7% unemployment rate for the workforce at large—this practice can be beneficial for interns, who gain experience and contacts, as well as for employers, who can benefit from having eager interns ready to learn and contribute.

For an employer preparing to defend against a legal action by a disgruntled employee, few moments are as intoxicating as digging into the employee's electronic files on the company-owned computer.  The golden dirt often emerges in the form of a gossipy e-mail or an internet search for something racier than the sports scores.

Think you are doing your pregnant employee a favor by taking her off a big account to give her some time “for herself”?  Think again!  You may just be opening yourself up for a lawsuit.

Most employers have never heard of Family Responsibilities Discrimination (“FRD”).  FRD is an umbrella term for workplace discrimination based on stereotypes about how employees with family caregiving responsibilities will or should act.  For example, an employer may assume that a new mother will not be as committed to her career or as reliable as she was before she had a baby.  Or an employer might believe that a mother “should” be home with her children and may refuse to give her assignments that require travel or late hours. The discrimination arises because the employer’s actions are based on stereotypical beliefs, rather than on the individual employee’s performance or own desires.  And family caregiving is not just limited to childcare.  In fact, an increasing proportion of caregiving is devoted to the elderly and disabled. As with childcare, women are disproportionately responsible for caring for their relatives, including parents, spouses, and other relatives.

Establishing work rules and job descriptions for employees not only provides employees with a better understanding of job expectations, but also helps protect employers from liability for discrimination and other employment-related claims.  In Budde v. Kane County Preserve, No. 09-2040 (7th Cir. March 4, 2010), the U.S. Court of Appeals for the Seventh Circuit affirmed a district court’s ruling that the ADA does not protect an employee who violates workplace rules from discipline up to and including termination, even if the violation is caused by a disability.

President Obama’s recent recess appointments to the NLRB leave one Republican among three liberal Democrats.  Should the opportunity present itself, the Board’s new composition will likely result in the overturning of two employer-friendly cases, Register Guard (email policy) and Oakwood Healthcare, Inc. (supervisory status). Overturning either of these cases may produce highly unfavorable results for employers.  The Board already has such an opportunity in Register Guard.  The D.C. Circuit recently remanded Register Guard for reconsideration on a limited basis, but the Board may seize the opportunity to reverse its initial holding.

On April 1, Secretary of Labor Hilda Solis announced a new campaign aimed at enforcing federal wage and hour laws on behalf of low-wage and immigrant workers and warned employers, “A new sheriff is in town.”

In an effort to ride out the current economic storm, many businesses find themselves downsizing, conducting mass layoffs, and even declaring Chapter 11 bankruptcy in an effort to survive.  These tough decisions inevitably lead to disgruntled former employees, whose ethics tend to take a backseat when it comes to “getting even” with their employers. 

A Mississippi Bankruptcy Court recently addressed several employer defenses to liability under the Worker Adjustment and Retraining Notification Act (“WARN Act”), which is noteworthy in the context of the current economy.  In re FF Acquisition Corp. d/b/a Flexible Flyer, 423 B.R. 502 (Bankr. N.D. Miss. January 20, 2010).

In a matter of first impression, the U.S. Court of Appeals for the Ninth Circuit recently held that whether a plaintiff with a claim under the Family and Medical Leave Act (“FMLA”) can recover front pay (and how much) is a question for a judge to decide, not a jury.  Under some statutes, such as Title VII of the Civil Rights Act, courts have express discretion to “order such affirmative action as may be appropriate, which may include, but is not limited to, reinstatement … or any other equitable relief as the court deems appropriate.” 42 U.S.C. § 2000e-5(g).  It is well established under Title VII that a court can decide to substitute front pay for reinstatement in some instances, such as when there is a significant degree of animosity between the parties or when reinstatement could displace other employees.

Employers striving to comply with federal and state wage laws may soon have one more thing to worry about -- local “wage theft” laws.  In Florida, the Board of Commissioners for Miami-Dade County recently approved an ordinance that prohibits private sector employers from failing to pay employees all wages owed and gives the county authority to intervene and seek remedies on behalf of employees.  San Francisco already has a wage theft ordinance, and Los Angeles and New Orleans are considering similar measures.

Bending over backwards to help an employee with a disability can leave the employer in an awkward position.  With changes to the Americans With Disabilities Act (“ADA”) and its regulations last year, employers may be more likely to offer accommodations.  More conditions will be deemed to fall within the definition of a disability, and employers likely will err on the side of providing accommodations.  However, employers should continue to exercise sound judgment in deciding what accommodations to offer.

For those who thought the proposed Paycheck Fairness Act had faded away, here is a wake-up call.  After more than a year since the bill was passed by the House of Representatives and introduced in the Senate, the Senate Committee on Health, Education, Labor and Pensions is holding a new hearing on March 11 to focus on equal pay issues.

A new proposed rule by the Equal Employment Opportunity Commission provides new guidance in determining what constitutes a “reasonable factor other than age” in defending against a claim under the Age Discrimination in Employment Act.  The EEOC introduced the proposed rule on February 18, 2010 and is currently soliciting comments until Monday, April 19, 2010.

Both the Third and the Seventh Circuits are set to address the issue of whether collective actions under the Fair Labor Standards Act are compatible with class actions under state wage and hour laws.  In the Third Circuit, briefing is underway in Parker v. NutriSystem, Inc., No. 09-3545.  And argument is set in the Seventh Circuit for April 2, 2010 in Ervin v. OS Restaurant Servs., Inc., No. 09-3029.  Both courts will address what some have called the “inherent incompatibility” of FLSA collective actions and state law wage and hour class actions that are pursued in the same case.

California employers should take note that this week, the California Supreme Court limited benefits offered under California's kin care laws and held that kin care benefits do not apply to uncapped sick leave plans.

In an order issued on February 9, 2010, a United States District Judge in Iowa sent a stark reminder to the EEOC that its statutory obligations to investigate and conciliate Title VII claims are not to be ignored.  More than three years after the EEOC filed its complaint alleging systemic sex harassment, the court, in its February 9 order, awarded Defendant CRST Van Expedited, Inc. ("CRST") $4.5 million in attorneys' fees and $460,000.00 in expenses as a prevailing party, following a finding that the EEOC abandoned its statutory obligations under Title VII.

The Obama Administration announced on February 1, 2010, that it requested $385.3 million for the Equal Employment Opportunity Commission for fiscal year 2011.  In addition, the administration requested $162 million for the Civil Rights Division of the Department of Justice.  Significantly, the requests represent an $18 million dollar budget increase for the EEOC and a $17 million dollar budget increase for the DOJ Civil Rights Division.

In a short and simple opinion by Judge Morton Greenberg, the U.S Court of Appeals for the Third Circuit affirmed summary judgment in favor of Johnson & Johnson against pharmaceutical sales representative Patti Lee Smith, finding that the FLSA’s administrative employee exemption applied to her.  The Third Circuit is the first court of appeals to examine the FLSA exempt status of pharmaceutical sales representatives.  The ruling in favor of the employer represents a significant development for pharmaceutical companies around the country, many of whom are facing similar FLSA lawsuits brought by their pharmaceutical sales representatives.

President Obama’s proposed $3.8 trillion federal budget for 2011 includes $117 billion for the U.S. Department of Labor.  The Department’s Wage and Hour Division, which will receive $244 million under the new budget (an increase of almost $20 million from last year), pledges to use the money to increase its number of investigators, to train investigators to detect misclassification of workers as independent contractors, and to focus on industries where misclassification is most prevalent.

A panel of the U.S. Court of Appeals for the Ninth Circuit recently held in Alvarado v. Cajun Operating Company, that compensatory and punitive damages are unavailable to a  plaintiff who brings an ADA retaliation claim.  Consistent with a prior Seventh Circuit ruling  in Kramer v. Banc. of Am. Sec., 355 F.3d 961 (2004), the Alvarado Court found that the ADA specifically excludes a retaliation claim under Section 12203 from awards of  compensatory and punitive damages.  The court reasoned that Section 1981(a)(2) of the ADA does not list claims brought under section 12203 as one of the enumerated categories of claims meriting compensatory and punitive damages.  Since the statute specifically enumerated other claims under the ADA where punitive and compensatory damages are proper remedies, the court found that Congress intended for those claims, and not those under Section 12203, to get punitive and compensatory damages as a remedy.  In addition, the court held that since ADA retaliation claims are only subject to equitable relief, no jury trial is available.

In a decision issued last week, the U.S. Court of Appeals for the 11th Circuit held that gender-derogatory words and conduct that are either severe or pervasive may state a claim of a hostile work environment, even when the words at issue are not directed specifically at the plaintiff. Reeves v. C.H. Robinson Worldwide Inc., 11th Cir. (en banc), No. 07-10270, January 20, 2010.