August 2009 Quick Clips

Two-Member NLRB Decisions Challenged, August 26, 2009

There have been three vacancies on the National Labor Relations Board since 2008. Normally, there are five members, and three make a quorum. The vacancies were caused by the Democrats in Congress blocking Bush appointees on various agencies and courts. The two-person NLRB acted anyway.

Action has been taken to challenge the actions of the two-member NLRB over the last 18 months. Northeastern Land Service, Ltd v. NLRB, No. 09-213 (US Sct, August 18, 2009). Therefore, many decisions of the Board could be overturned. President Obama made three appointments on July 9, but the appointments have not yet been reviewed by the Senate. Isn't bipartisanship great?

Dancing Without the Stars: Who's Your Employer? August 25, 2009

by Frank L. Kollman

A federal court in Michigan will allow a jury to decide if a group of nude dancers are independent contractors or employees of the various consulting firms that refer dancers to the strip clubs. Doe v. Cin-Lan Inc., No. 08-12719 (ED Mich., August 18, 2009). The "consultants" had set up elaborate corporate arrangements to insulate themselves from the Fair Labor Standards Act obligations of the clubs, but the Court found sufficient evidence that the consultants did, in fact, operate the clubs "as a matter of economic reality."

Whether you run a construction business, dry cleaner, insurance company, restaurant, or adult night club, you should be aware that in FLSA cases, courts will apply an economic reality test to determine if an individual is an employee or an independent contractor. The court will look at who has hiring and firing authority, who controls day to day working conditions, who controls rate and method of pay, and who maintains copies of the individual's records.

As an aside, the consultants in this case also made "secret shopper" visits to the adult nightclubs in this case. The sexual harassment implications of such visits are mind boggling.

Court Rules Furloughs Unconstitutional, August 23, 2009

by Clifford B. Geiger

On August 18, 2009, U.S. District Judge Alexander Williams ruled that Prince George’s County Maryland violated the U. S. Constitution when it furloughed employees covered by a collective bargaining agreement (CBA) during the 2009 fiscal year. Fraternal Order of Police v. Prince George's County, No. AW--08-2455 (S.D. Maryland August 18, 2009). Under the furlough plan adopted by the County Council, the work hours of each covered employee were cut by 80 hours for the fiscal year, resulting in an overall reduction of 3.85% in salary expense. While Judge Williams rejected claims that the furloughs violated the County Code, he determined that they violated the Contracts Clause of the U.S. Constitution, which provides that “No State shall … pass any … Law impairing the Obligation of Contracts.” The purpose of the Contracts Clause is to prevent governments from enacting legislation that alters, relaxes, or unilaterally modifies contractual obligations.

Judge Williams reached his decision despite pre-existing County Code provisions that permitted the County Executive to implement furloughs for County employees unless specifically prohibited by a CBA. In this case, there was no such prohibition against furloughs. In fact, while past CBAs with the involved unions contained a specific provision against furloughs, such a provision did not appear in the current CBAs.

There will be more on this case in the next newsletter.

CDC Issues Swine Flu Guidance, August 20, 2009

by Clifford B. Geiger

On August 19, 2009, the U.S. Department of Health and Human Services’ (HHS) Centers for Disease Control and Prevention (CDC) issued updated guidance on developing and updating plans to respond to the 2009 H1N1 influenza. The CDC’s recommendations are directed to employers of all sizes and cover how to respond to current outbreaks of flu as well as planning for the upcoming fall and winter flu season. To review the CDC’s guidance click here.

Federal Court Refuses To Extend Title VII, August 19, 2009

by Clifford B. Geiger

Rocco Stezzi, III, was employed by Aramark Sports, LLC as a food and beverage manager at the Philadelphia Phillies stadium. Stezzi complained to management when he thought that his boss was sexually harassing his girlfriend, who was also a coworker. Stezzi was later fired for allegedly disruptive behavior. Stezzi sued, claiming he was discharged because he was male and because of his relationship with a female coworker. In other words, Stezzi claimed that he was discriminated against because of his association with a female coworker.

Federal courts have recognized associational discrimination claims under Title VII, but such claims typically have been based on race. For example, in Holcomb v. Iona College, 521 F.3d 131 (2d Cir. 2008), the termination of a Caucasian employee who was married to an African American woman constituted discrimination based on the employee’s race. Stezzi asked the court to recognize a gender-based associational discrimination claim under Title VII. The court was not convinced that Stezzi’s difficulties had anything to do with his gender (rather than being caught up in the dynamics of workplace relationships), so it declined to recognize such a claim.

Stezzi v. Aramark Sports, LLC, E.D. Pa., No. 07-5121, 7/30/09.

Can Anyone Say, "Anti-Nepotism Policy"? August 17, 2009

by Peter S. Saucier

Mary Ann Gascho is a nurse, who worked at Scheurer Hospital, and who also happened to be married to Dwight Gascho, the President and Chief Executive Officer of the Hospital. Apparently, Dwight likes to keep his professional and personal life in the same sphere – he developed a romantic relationship with Theresa Rabideau, a Vice President of the Hospital. You see where this is going. Naturally, Mary Ann was fired and signed a release in exchange for a year's pay and benefits, following which she had second thoughts, and found a dutiful plaintiff lawyer. The battle was on in court. The Hospital has prevailed so far, but there is an adage about how one should act where one eats that leaps immediately to mind.

SAY AGAIN? August 5, 2009

by Peter S. Saucier

A former dean of Gallaudet College alleges that she was terminated for not being deaf enough to continue her job. Dean Karen Kimmel is not fully deaf, as a result of which, she contends, she was harassed and eventually discharged from employment. Dean Kimmel contends that Gallaudet maintains a Deaf Culture with capitalization of the word "deaf" as an indicator of the attitude that led to her professional demise. [N.B. capitalize words as needed to avoid being offended by the use of common English in this clip]

Worker Misclassification – Untapped Source Of Government Revenue, August 5, 2009

by Kelly C. Hoelzer

Businesses working with independent contractors should take the time to ensure that their workers really are independent contractors, not employees. With all the money pouring out of the government for "cash for clunkers" and other economic stimulus programs, Congress and many states are looking for new sources of revenue. Investigating potential misclassification of workers as independent contractors is an increasingly popular government target.

Here are a few recent examples:

Rep. Jim McDermott (D-Wash.) introduced a bill (HR 3408) on July 30 designed to clarify the tax rules regarding status as independent contractor vs. employee. McDermott's goal is to remedy the loss of "billions of dollars in tax revenue each year" resulting from misclassification of workers and to stop "unscrupulous companies" from gaining an "unfair advantage" (over what, he did not say).
Misclassification of employees may become part of the health care debate this fall. If Congress passes a plan requiring employers that do not offer health insurance to their employees to pay a tax equal to 8% of employees' wages, there are those on the Hill that fear employers will be encouraged to reclassify, or misclassify, their workers as independent contractors.
States are cracking down on the issue, too. Maryland recently passed the Workplace Fraud Act that imposes hefty penalties on construction and landscaping businesses caught misclassifying their employees as contractors. Gov. Martin O'Malley has also announced a new task force to look into the allegedly widespread, fraudulent misuse of independent contractors. Delaware just passed its version of the Workplace Fraud Act, and other states are following suit.

Taking the time and effort to conduct a worker status audit now will be worth it later to avoid increasingly costly penalties. Keep in mind that the IRS, the Department of Labor, and state unemployment, labor, and taxing authorities are looking for employers who make this mistake.

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