Wage and Hour Settlements Galore, January 29, 2007
A federal court in California has preliminarily approved a $13.6 million settlement of an overtime lawsuit involving mortgage loan consultants. A class action had been filed on behalf of 506 such consultants claiming that they were not covered by any of the overtime exemptions available to employers. Mousai v. E-Loan Inc., No. C 06-01993 (N.D. Cal., January 11, 2007).
On the same day the federal Department of Labor announced a settlement of overtime claims involving Walmart employees in California ($33 million), the state Labor Commissioner filed suit for back pay and penalties under state law. The claims arose as a result of Walmart's computerized timekeeping system, which allegedly failed to include the value of bonuses and shift differentials when calculating overtime.
Maryland Adopts Bright Line Rule For Limitations On Discriminatory Discharge Claims, January 23, 2007
In October 1998 Suzanne Haas began work for Lockheed Martin Corporation as a Program Administrator. Haas was later diagnosed with Attention Deficit Disorder and learning disabilities, both of which were to be treated with medication. According to Haas, the medication alleviated the adverse symptoms of her condition, including a difficulty with attention to detail. Nonetheless, a conflict developed between Haas and Candice Phelan, one of Haas’s supervisors. Haas alleged that Phelan continually reprimanded her for minor performance deficiencies when the same type of errors passed without criticism when committed by other employees.
In April 2001, Haas was informed that some her responsibilities were being transferred to a new position for which she would have to apply. Haas applied, but she was not interviewed or selected for the new position. On October 9, 2001, Haas was notified that her position was being eliminated, and she would be laid off effective October 23, 2001. On October 22, 2003, Haas filed suit in the Circuit Court for Montgomery County alleging disability discrimination under the Montgomery County Code.
In Maryland, an action under a local anti-discrimination ordinance must be commenced “not later than 2 years after the occurrence of the alleged discriminatory act.” Maryland Code, Article 49B, § 42(b)(1). Lockheed argued that Haas’s claim accrued on October 9, 2001, when she was notified of the lay off. Therefore, Lockheed contended, Haas’s claim, which was filed on October 22, 2003, was barred by the two year limitation imposed by state law. The Montgomery County Circuit Court granted summary judgment for Lockheed, and the Court of Special Appeals affirmed.
The Maryland Court of Appeals reversed the lower courts, concluding that an alleged discriminatory discharge occurs upon the actual termination of employment rather than upon notification of an impending termination. Reaching this conclusion, the Court of Appeals joined a minority of states in declining to follow the U.S. Supreme Court’s interpretation, under Title VII, that a discriminatory discharge occurs when the employee is notified of the termination decision. Because Haas’s claim was made under state law, the Court of Appeals was not bound by federal law construing Title VII.
The Court of Appeals reasoned that a bright line rule, based on an employee’s last day worked, is consistent with the plain meaning of the word “discharge,” simplifies the determination of when a claim accrues for limitations purposes, and furthers the remedial purposes of Article 49B.
Haas v. Lockheed Martin Corporation, --- A.2d ----, 2007 WL 49094, Md., January 09, 2007 (NO. 5 SEPT.TERM 2006).
FLSA "Cat" Fight Thrown Out Of Court, January 19, 2007
Same-sex lovers Tammy Steelman and Michelle Hirsch decided to expand their shared living arrangement into a job that allowed them to spend all of their time together. To accomplish that, they shared obligations and duties in a dog grooming business funded by Michelle's parents. After a few years together at Hair of the Dog, Tammy and Michelle experienced a romantic falling out. Unfortunately for Tammy, Michelle was the sole proprietor of the business, so Tammy owned no part of Hair of the Dog upon the domestic dissolution. Tammy sued Michelle in federal court in Michelle's capacity as owner of Hair of the Dog. The principal basis for the federal lawsuit was a claim by Tammy for unpaid wages under the Fair Labor Standards Act. The federal court dismissed the action, holding that the FLSA was not meant to cover such an unorthodox arrangement. At least as far as federal wage law is concerned, lovers who expand their partnership into coequal directors of a business cannot later claim the protections of an ordinary wage earner. Tammy still may seek damages in state court for other claimed injuries.
Treat Panic Disorder as a Disability, January 10, 2007
by Thomas A. Bowden
A customer service worker for McKesson (ranked 16th on the Fortune 500 list) received a $19 million verdict at trial, but a California appeals court cut it to $3.4 million. Charlene Roby suffered from panic disorder, which caused frequent absences. McKesson’s absence policy recorded each absence as an "occasion," regardless of whether it was necessary to accommodate a disability. Terminated for abuse of the policy, Roby subsequently developed agoraphobia and was declared totally disabled by the Social Security Administration.
The big change on appeal was reduction of the punitive damages award from $15 million to $2 million, because the larger award was out of proportion to compensatory damages. McKesson, the court noted, was "an exceptionally wealthy corporation whose conduct wreaked havoc on a vulnerable victim’s life." The court also struck a hostile work environment claim and vacated an award against a supervisor. However, the court declined to reduce the award by the amount of Social Security benefits received, since the company defendant didn’t furnish evidence on which the jury could have calculated a reduction.
Roby v. McKesson HBOC, Cal. Ct. App., No. C047617 (Dec. 26, 2006).
"Glorified Baristas" Owed Overtime, January 10, 2007
by Thomas A. Bowden
Starbucks managers are exempt from FLSA overtime requirements, even if their work behind the counter might make them seem like "glorified baristas." A federal court in Texas held that the executive exemption applied even though the employees spent most of their time pouring coffee, waiting on customers, and cleaning up. That was because staff supervision, revenue enhancement, cost control, personnel decisions, and corporate compliance were their primary duties. Even pouring coffee served a training function, demonstrating how to please customers.
The court also found it significant that the managers were paid nearly twice as much as the regular counter workers and got bonuses, besides. Glorified baristas, indeed.
Mims v. Starbucks Corp., S.D. Tex., No. H-05-0791 (Jan. 2, 2007).
Supreme Court To Consider "Companionship" Regulation, January 10, 2007
by Thomas A. Bowden
If you are a sick or elderly person unable to care for yourself, an individual you hire to provide "companionship services" is exempt from overtime and minimum wage laws under Sec. 213(a)(15) of the FLSA. But if you call an agency to send over a companion, the situation is so unclear that the Supreme Court has agreed to examine it.
Thirty years ago, the Department of Labor issued a regulation (29 C.F.R. Sec. 552.109(a)) stating that agency employees rendering companionship services are exempt. But the Second Circuit disagreed, holding that the regulation was not consistent with the underlying statute, and pointing out that the DOL had changed its position over the years.
The Supreme Court will decide whether the customary deference owed to agency regulations should extend to this particular one. Employers fear that erasing the exemption would send costs skyrocketing. Employees see themselves as "unskilled workers, performing often physically and emotionally demanding work for elderly and disabled people in their homes" and want more pay.
Long Island Care at Home Ltd. v. Coke, U.S. No. 06-593, cert. granted Jan. 5, 2007.
Policeman Vs. Prostitute - Who Is More Credible? January 9, 2007
In January 2006, the Oklahoma City Police Department fired one of its officers for engaging in sexual activity with a prostitute while on duty, for lying to investigating officers, and for refusing to cooperate by manipulating his answers to a lie detector test. The officer protested his termination, and the grievance went to arbitration to determine whether the police department had just cause to fire him.
The case turned primarily on the credibility of a "career" prostitute, who claimed that the police officer had forced her to give him sexual favors, versus that of the officer himself. The accusing prostitute brought her complaint in a letter to the FBI written while she was in prison for other reasons. The arbitrator determined that her complaint against the officer was undoubtedly an attempt to reduce her prison sentence, because he found it "hard to believe that a 40-year old hardened prostitute would acquiesce in any threats or demands from a relatively new cop on the beat." The prostitute was hardly credible, according to the arbitrator, because she admitted "to pursuing a career of prostitution, which necessarily involves deceit and deception." Her "history of deception in word and deed" made her testimony unbelievable.
As for the officer, even though the examiner found the officer's answers to a polygraph examination to be "deceptive," the arbitrator quickly dismissed the allegations that he tried to manipulate his responses to a lie detector test and that he was uncooperative. The arbitrator believed the officer over the prostitute, the polygraph examiner, and the police department's investigators and reinstated him to his position.
In re The City of Oklahoma City and Fraternal Order of Police, Lodge 123, 123 LA 24 (BNA) (Nov. 11, 2006).
Employers Take Note – Congress Has A New "Pro-Worker" Agenda, January 5, 2007
As this new session of Congress begins, it already looks like employers are under attack. Representative Barney Frank (D-Mass.), the new Chairman of the House Financial Services Committee, has announced his new "pro-worker" agenda. In a speech to the National Press Club on January 3, 2007, Rep. Frank actually encouraged employers to open the doors to unionization of their workforces and to support the Employee Free Choice Act (H.R. 1696, S. 842). This bill proposes to expedite union organization by allowing union representation based on authorization cards signed by employees, rather than by secret elections, and to increase the penalties for alleged employer violations of the NLRA during union organization campaigns. In exchange, Rep. Frank encouraged labor organizations to back off their opposition to trade incentives that might benefit businesses. That's some bargain.
Failure To Renew Contract Is Not Wrongful Discharge, January 5, 2007
In May 2000, Northwestern University hired veterinarian Nedeljka Bajalo as a research associate. Bajalo worked there under three successive one-year contracts, the last of which was scheduled to expire on April 30, 2003. In February 2003, Northwestern decided not to renew Bajalo's contract for the following year and informed her of such. The university paid Bajalo through the term of her contract.
Bajalo then sued Northwestern in Illinois state court, claiming that the failure to renew her contract was tantamount to retaliatory discharge. She alleged that she was "fired" after making complaints to Northwestern and various federal agencies about poor treatment of laboratory animals and billing irregularities at the university.
The court did not buy her argument. Noting that the state's highest court refused to extend the tort of retaliatory discharge to "any injury short of actual discharge," the court held that non- renewal of Bajalo's contract did not equate to a discharge. Bajalo's complaint did not meet the most fundamental element of a claim for wrongful discharge – that she was actually discharged.
Bajalo v. Northwestern Univ., Case No. 1-05-3175 (Ill. Ct. App. Dec. 15, 2006).
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