The High Cost of Disobeying Idiotic Regulations, March 27, 2006
by Thomas A. Bowden
Warning: Leave your logic at the door as you enter this chamber of horrors.
California has rules requiring that employees be given meal breaks every so often. One of the rules is that if a shift lasts six hours, a company can require employees to work the whole shift without a meal break. First-shift workers at Northrop Grumman’s El Segundo, California factory routinely labored from 5 a.m. to 11 a.m. without a meal break. That’s six hours. No problem, right?
Wrong. Northrop Grumman just agreed to pay $2 million to settle a class action suit involving 900 workers on that first shift. The amount was based on the statutory penalty of one hour’s pay for each shift in which a worker labors too long without a break.
What’s the catch? Well, it seems that the regulations permit a six-hour stretch without a meal only if the entire shift totals six hours. If the shift lasts longer than those six hours (as it did in this case), the meal break must come no later than the end of the fifth hour.
So here’s the question: Why is it that six hours of work without a meal is permissible if the employee’s shift is over right away, but impermissible if he has to go on working a couple of more hours after eating? In either case, he’s presumably going to chow down immediately after the six-hour stretch, so the risk of death by starvation is minimal.
There is no logical answer, which is why we said to leave your logic at the door. The lesson is that wage and hour rules must be obeyed literally, without any attempt to inject common sense into the regulatory scheme. Failure to obey even the most idiotic regulations can cost millions.
"Northrop Grumman Settles Class Action Over Meal Break Violations for $2 million," BNA Daily Labor Report, March 24, 2006.
No Wonder Delphi Is Bankrupt, March 27, 2006
by Thomas A. Bowden
Delphi Corporation, the auto parts spin-off from General Motors, is paying its first-year unionized workers $76.00 per hour, twice what its competitors pay. What are the components of that rate? The average hourly wage is $27.00. Benefits such as health care and vacation add another $27.00. The balance of $22.00 is made up of so-called "legacy" costs, such as retirement and disability coverage that kicks in when workers compensation is exhausted.
No wonder Delphi is bankrupt.
The company has asked the bankruptcy court to slice that $76.00 rate down to $35.00. Predictably, the United Auto Workers called the proposal an "insult" aimed at "radical destruction of the living standards of America’s industrial workers."
A UAW worker blamed the situation on Delphi, for allowing overtime to be abused for many years. "It was pretty cool," said Terry Wilson. "You come in on any given Sunday, work 20 hours for $60 an hour, and not do a hell of a lot."
There you have it: the American work ethic, version 2.0.
"UAW Reaches Agreement with GM, Delphi, on Voluntary Buyouts for Hourly Workers," BNA Daily Labor Report, March 23, 2006; "Delphi Pay: $76 an hour," Detroit Free Press, November 26, 2005.
Arbitration is a Two-Way Street, March 27, 2006
by Thomas A. Bowden
Maryland employers can reduce legal expenses and eliminate jury risks by requiring employees to arbitrate any disputes, including discrimination allegations. Such a requirement will not be enforceable, however, if the company’s commitment to arbitration is "illusory." In other words, the company cannot retain the right to unilaterally end the arbitration agreement without notice to or consent from the employee.
Maryland’s highest court recently found a Circuit City arbitration clause enforceable. The employee had argued that Circuit City’s promise to arbitrate was illusory because the company retained the right, on one day out of every year, and after 30 days notice, to change or end the arbitration agreement. But that meant the company was bound to the agreement for the other 364 days. That was a real promise, the Court said, sufficient to make the agreement enforceable.
Two of the seven judges dissented, urging that the arbitration clause was unconscionable.
Because the courts closely scrutinize employment agreements in which employees waive important rights, a lawyer should be consulted to make sure the language is drafted properly. Sometimes a single word or phrase, or even misplaced punctuation, can change the legal meaning of such an agreement.
Holloman v. Circuit City Stores, Inc., No. 53, Sept. Term 2005 (Md., March 13, 2006).
Maryland Employers Face Substantial Liability Under Proposed Amendment To Discrimination Law, March 27, 2006
The Maryland General Assembly is considering a bill designed to significantly expand employer liability for employment discrimination under Maryland law. The "Civil Rights Preservation Act of 2006" (HB1034), introduced in February by Delegate Sandy Rosenberg, D-Baltimore City, would amend Article 49B of the Maryland Code to allow employees claiming discrimination to sue their employers in state court. This bill opens the door to a plethora of new claims against employers in state courts, with a potential for devastating effects on their business.
At present, employees in Maryland who believe they are the victims of discrimination have a variety of avenues to seek redress. Title VII of the Civil Rights Act and other federal anti- discrimination statutes entitle individuals to sue employers in both federal and state court. Under Article 49B, employees who work for businesses with more than 15 employees may bring a claim of discrimination to the Maryland Commission on Human Relations, which will investigate, attempt to conciliate, and if necessary, pursue enforcement through administrative remedies. In addition, four Maryland counties – Baltimore, Howard, Montgomery, and Prince George's – have anti-discrimination ordinances giving employees the right to sue their employer for violations in state court.
HB1034 would establish the additional remedy of a private lawsuit in state court, permitting successful plaintiffs to recover unlimited compensatory and punitive damages, as well as expert and attorneys fees. Under the proposed new law, employees could recover substantially more in state court than they would under Title VII, which caps damages at amounts ranging from $50,000 to $300,000, depending on the number of employees in the company. Smaller employers no doubt would feel the brunt of this law – just one claim, regardless of whether it has any merit, could put a company out of business.
HB1034 has already generated controversy. Business groups, including the Chamber of Commerce, have publicly opposed the bill; employment attorneys representing both employers and plaintiffs have sparred in editorials in The Daily Record. Plaintiffs' lawyers tout the amendment as finally giving employees in Maryland the rights they deserve. Employees, however, already have considerable rights under Title VII, the ADA, the ADEA and the EPA, which permit the filing of lawsuits in state court (subject to removal), and under Article 49B, which provides administrative remedies. The new law would be a boondoggle for plaintiffs' attorneys who view federal courts as less friendly to plaintiffs' claims.
Computer Savvy Disgruntled Former Employee Gets Slammed, March 14, 2006
Angry employees sometimes try to sabotage a company’s computer systems on their way out the door. The Seventh Circuit recently held that a managerial employee who deleted all the data on a company computer and installed a secure-erasure program to guarantee deleted files could not be found after he left the company is liable for violating the Computer Fraud and Abuse Act (“CFAA”). Int'l Airport Centers v. Citrin, No. 05-1522 (7th Cir. March 8, 2006).
The CFAA is an anti-hacking law that provides whoever "causes the transmission of a program, information, code, or command, and as a result of such conduct, intentionally causes damage without authorization, to a protected computer [a defined term]," violates 18 U.S.C. § 1030(a)(5)(A)(I). Citrin claimed that there was no "transmission" because all he did was hit the "delete" button, but the Seventh Circuit found the loading of the secure-erasure program satisfied the "transmission" requirement and fulfilled congressional intent to go after both computer viruses and disgruntled, internal programmers.
Swearing is not FMLA protected, even in the Ninth Circuit, March 14, 2006
Here’s a feel good case. A conductor who swore at his supervisor and suggested that the “take it outside” after being told that his request for intermittent FMLA leave on a holiday was denied has no FMLA claim according to the Ninth Circuit. Denny v. Union Pac. R.R. Co., No. 04-35490, (9th Cir. March 9, 2006) (unpublished). Over the dissent of one judge, the appeals court held that the conductor was fired for his bad behavior, not for his request for FMLA leave (even though an arbitrator reinstated the conductor after a union grievance).
Denny previously was granted intermittent FMLA leave to address chronic shoulder and back problems. On the Fourth of July in 1999, Denny claimed that he woke with severe back pain. When he called in to request the holiday off, Denny spoke to manager of terminal operations, who denied the request on the basis that Denny was authorized to use medical leave only for treatment by a chiropractor.
Denny called the decision “bullshit,” and apparently was well enough to come to the depot to discuss the matter personally. When the manager said that he was just following the restrictions on Denny's FMLA leave, Denny said "the fuck you're not" and turned to leave the depot. The manager thought he heard Denny say “fuck you.” The manager told Denny not to talk to him that way. Denny said he was not on duty and could speak any way he liked. The manager responded that Denny was on company property and was subject to company rules. Denny then suggested they “take it outside, off property.” The manager got permission to fire Denny that same day.
Denny's union filed a grievance and he was reinstated with back pay about nine months later (we can deal with ridiculous arbitration decisions another time). Denny then sued under the FMLA. On Denny’s retaliation claim, the Ninth Circuit affirmed the District Court’s determination that Denny was not entitled to any damages because he had been reimbursed for back pay, and ruled that he was fired for insubordination, not in retaliation for trying to use FMLA leave. Denny objected that the District Court did not determine whether he actually said “fuck you” to Ritter. Ninth Circuit noted that the question was not what Denny actually said, but only “whether [Union Pacific] fired him because of what [the railroad] believed he said, rather than for a reason prohibited by the FMLA.”
No Notice of Need for FMLA Leave? Then Don’t Send Flowers, March 10, 2006
When the need for FMLA leave is unforseen, an employee is required to give her employer notice of the need for leave as soon as practicable. But an employee does not need to use magic words. If the employer has reason to believe the FMLA might apply from the circumstances, it’s the employer’s obligation to get the FMLA forms to the employee.
A Hilton hotel in Ohio recently learned this the hard way. The hotel’s defense that it did not know an employee’s absence was due to a serious health condition possibly qualifying for FMLA leave when management knew that she had been taken by ambulance to the hospital for a nervous breakdown and sent flowers to the hospital. Robinson v. Hilton Hospitality Inc., No. 04-00092 (S.D. Ohio Feb. 28, 2006).
The Court denied the hotel’s motion for summary judgment, holding that the employee was not bound by the hotel's strict reporting rules for requesting FMLA leave. "[T]he notice may not have been in the form the hotel desired (i.e. through strict adherence to the Hotel's internal FMLA leave request policy)," the Judge explained, but “the notice was of such a nature that a reasonable jury could find that it was sufficient and timely so as to put the Hotel on notice of plaintiff's request for FMLA leave."
Court Holds That Pre-Operative Transsexual May Pursue Discrimination Lawsuit, March 9, 2006
by Pat Stewart
A federal court in Pennsylvania recently ruled that a pre-operative transsexual who was terminated shortly after announcing his condition and beginning to "present in public as a female” may proceed with a lawsuit claiming that his/her employer violated his/her rights under Title VII of the 1964 Civil Rights Act and state law. Acknowledging that several courts "have declined to extend Title VII's protection to transsexuals,’ the judge ruled that the employee should be permitted to proceed with claims that discrimination occurred based upon the employee’s "appearance and gender-related behavior. In denying the employer’s request to dismiss the case, the judge ruled that the lawsuit pled sufficient facts to show that the employee’s “failure to conform to sex stereotypes of how a man should look and behave was the catalyst" leading to the termination.
Employer Violates Law By Showing Employees A Phone Bill, March 9, 2006
by Pat Stewart
The National Labor Relations Board recently held that an employer violated the National Labor Relations Act (“Act’) by creating the impression that employee concerted activities were being monitored. The case arose when employees of an electrical contractor, which was subject to the Pennsylvania Prevailing Wage Act (PWA), complained to the contractor’s owner that he was handling the employees' fringe benefits unfairly. The owner responded that he had the right to withhold the money and not deposit it because of shoddy workmanship at other jobsites. Shortly thereafter, the contractor’s owner was informed that at least one employee had filed a complaint with the Pennsylvania Department of Labor & Industry, the agency charged with monitoring and enforcing the PWA, complaining that the company was withholding fringe benefits and not depositing employee withholdings in retirement accounts.
Upon learning of the complaint and scheduled investigation, the owner met with employees. He stated that he knew that at least one employee had called the agency from a construction trailer on company time. He held up a phone bill with highlighted phone numbers and said that there were phone numbers for the agency on the bill. He also told employees that there was a right way and a wrong way to bring things up and that "going to [the state agency] was the wrong way to do it", that the complaint was a "thorn in my side," and that "these complaints don't help us." He went on to say that employees who are "discontent with the way we do business, can just exit”, and that because of the complaint "we could see less work, and layoffs due to specific situations like this."
The Board found that the owner’s conduct was in violation of the Act because it created an impression that employee concerted activities were under surveillance when the owner held up the highlighted telephone list and told employees that he knew calls to the state agency had been made from the jobsite. The Board stated that an employer acts unlawfully when it engages in conduct that employees would reasonably conclude that their protected activities were being monitored.
It seems that the Board went a bit far in this case because there was nothing to indicate that the employer was actually monitoring phone calls--it only investigated to see if the call was made from a certain trailer after it was notified that an employee had filed a complaint.
Employee's Witchy Ways May Have Led To Illegal Termination, March 7, 2006
by Clifton R. Gray
In the realm of Title VII and its application in the workplace to religious discrimination, an employer must always be aware that the law is not meant to only protect employees who practice popularly-accepted religions (e.g., Christianity, Islam, Buddhism, Judaism), but also protects those whose religious practices can best be termed as on the fringes of society, as long as such beliefs are sincerely held. Section 701(j) of Title VII broadly defines the term "religion" as including "all aspects of religious observance and practice, as well as belief."
One such fringe religion, which has garnered more and more attention over the past decade, is the Wiccan religion. Wiccans generally practice what can be termed a neopagan spirituality, which also promotes the belief of an individual's ability to affect others through supernatural means. As with most fringe religions, society in general tends to view those practicing it with a skeptical eye.
Issues relating to a practicing Wiccan and the protections afforded to him under Title VII crossed paths in Benz v. Rogers Memorial Hospital, Inc., 2006 WL 314407 (E.D. Wis. Feb. 9, 2006), where a residential counselor at a hospital specializing in residential treatment programs for adults and children with psychiatric, emotional, and behavioral disorders (e.g., OCD, various eating disorders, drug and alcohol addiction) was discovered to be a Wiccan. The way by which this was discovered set off a chain of events that led to his termination.
One night, while working the night shift at the hospital, the residential counselor, Benz, brought with him what is called a "Book of Shadows," which is used by most Wiccans as a personal book in which they transcribe spells. Such spells found in Benz's Book of Shadows included spells to "Silence a Liar" and a "Revenge Spell." These spells did not merely require to user to speak certain words, but also required, for example, the use of urine and blood. When Benz left the hospital at the end of one of his shifts, he mistakenly left the Book of Shadows behind in a public area accessible to the residents of the hospital.
When a coworker found Benz's Book of Shadows the next morning, she immediately notified Benz's supervisor of what she had found. At first they thought it might belong to one of the residents, but then it came to light that the book was in fact Benz's. Benz was contacted about the book, and he demanded that the hospital give it back because it was, as he termed it, a "religious text." A social worker at the hospital who read through the Book of Shadows stated that she felt the book was "cult-like." No one at the hospital knew that Benz was a Wiccan until his Book of Shadows was discovered. This is important because a claim of religious discrimination cannot succeed if the plaintiff cannot prove that his employer was aware of the plaintiff's religious beliefs.
According to the hospital, Benz was terminated from his position at the hospital for leaving such a "disturbing" book out where certain already-traumatized residents could read it. At trial however, Benz pointed out that, although the hospital stated that it had a policy of keeping certain materials describing sex or violence from public areas of the hospital, this alleged policy was never enforced and that certain other religious texts (the Bible being one) were available to residents even though they contained passages referencing violence and sexual situations. This, he claimed, showed that the hospital's disapproval of his Wiccan beliefs led to his termination and not the fact that he left his Book of Shadows in a public area.
At trial, the federal district court found that summary judgment for the hospital was inappropriate, as Benz had established a "'convincing mosaic' of circumstantial evidence from which a reasonable jury could conclude that [the hospital] terminated Benz because of [his religion]." Although testimony from certain hospital officials asserted the importance of keeping materials referencing violent or sexual behavior from at-risk residents, the fact that such books as one entitled "The Devil" that contained disturbing images were allowed to be viewed by residents without staff supervision led credence to Benz's position. While this case is likely far from over, it reinforces the oft-forgotten aspect of religious protection afforded under Title VII; it not only protects those who practice the "big" religions, but also those whose religious beliefs fall outside of the mainstream.
Revised EEO-1 Forms To Become Effective In 2007, March 2, 2006
by Eric Paltell
The EEOC has announced that a revised EEO-1 form will be implemented in 2007. The new form will increase both the number of job categories and the number of racial/ethnic categories. Included in the new racial/ethnic categories will be a controversial new "two or more races" category.
The new format will be required for the first time in the 2007 survey, which is due by September 30, 2007. Employers are expected to continue to use the current format for the 2006 EEO-1 submissions.
The EEO-1 reporting requirement applies to private employers of 100 or more employees, as well as some federal government contractors with 50 or more employees. The report requires employers to break down their workforce by job category and by race, ethnicity, and gender.
FLSA'S Companionship Exemption Undergoing Review, March 2, 2006
by Eric Paltell
For three decades, the home health care industry has operated on the assumption that persons who provide companionship services to the elderly and infirm in their homes are exempt from the overtime obligations of the Fair Labor Standards Act. However, in July 2004, the United States Court of Appeals for the Second Circuit upset this assumption by finding that this overtime exemption for home health care providers did not apply to persons who work for third party employers, as opposed to persons who work directly for the individual to whom they are providing care. If the Second Circuit decision became the prevailing view, the home health care industry could be put into turmoil because of the need to pay these home health care providers overtime.
Fortunately for employers in the industry, the United States Supreme Court recently ordered the Second Circuit to reconsider its ruling in light of recent guidance from the United States Department of Labor, which took the position that the exemption still applies to third party employers of health care providers. Long Island Care v. Coke, No. 04-1315 cert. granted and judgment vacated (January 23, 2006). The basis for the Supreme Court's decision was a December 2005 advisory memorandum issued by the Department of Labor's Wage and Hour Division. That memorandum found that, when the FLSA was amended to include the companionship services exemption, the purpose was to insure that companionship services would be available, regardless of who employed the person providing the services.
Employers in New York City, which had been subject to the Second Circuit's 2004 ruling taking away the exemption, reported that the change in the law imposed an additional $279 million a year to the cost of providing personal care services to 50,000 low income residents. Other employers argued that if they were forced to pay overtime in a field where the exemption was always believed to apply, many companies would have to stop providing staff because it would be impossible to provide services under health insurance agreements.
The companionship exemption has been controversial area of the FLSA in recent years. In the waning days of the Clinton administration, proposed regulations were drafted which would have eliminated the exemption. These regulations were put on hold by the Bush administration in 2000. Hopefully, the Department of Labors advisory memorandum confirming the applicability of the exemption will help resolve the issue once and for all.
Kollman & Saucier, P.A., The Business Law Building, 1823 York Road, Timonium, MD 21093 Phone: 410-727-4300
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