January 29, 2015

Conde Nast Agrees to Pay $5.85 Million to Thousands of Workers Classified as Interns

On December 29, 2014, the U.S. District Court for the Southern District of New York granted conditional certification of a class of employees who had worked as unpaid interns at Conde Nast, and gave its preliminary approval for a heavily-negotiated settlement agreement, in Ballinger et al v. Advance Magazine Publishers, Inc. Plaintiffs in the lawsuit were Lauren Ballinger and Matthew Leib, along with a class of about 7,500 class members, all interns who received either no pay or a stipend for their services.

Under the agreement, each class member will receive between $700 and $1,900, the two named Plaintiffs would each receive an additional $10,000 in service payments, and Plaintiffs' attorneys would receive a total of $660,000.

Plaintiffs argue that the two laws at issue in the lawsuit--the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL)--do not contain exceptions for interns, who therefore must be paid (1) minimum wage for all hours worked and (2) premium overtime pay for all hours worked in excess of forty per week. But many companies, Conde Nast included, hire "a steady stream of interns to perform entry-level work that contributes to its magazines' operations and reduces its labor costs." These interns are normally unpaid, and when they do receive pay it is normally in the form of a per-semester stipend that is equivalent to less than $1 per hour for the time they spend working.

Even as it approved the proposed settlement, the Court acknowledged that the central issue in this case--whether interns are employees--is "unsettled in this circuit." The Court cites two S.D.N.Y. cases in which the respective courts reached inconsistent conclusions on this issue. Since both of these decisions are currently under appeal, and forthcoming rulings on these cases could have "a devastating effect on one side's position" in the present case, "continued litigation of the issue of liability poses a substantial risk to both sides." The Court concluded that the existence of this risk is a consideration favoring the proposed settlement of the case, making it worthwhile for the class of Plaintiffs to compromise and settle for about 60% of their unpaid wages.

In certifying the class, the Court pointed out that class action was economically sensible due to the fact that members of the class were interns, generally "younger individuals at the start of their careers," who had limited resources and individually stood to gain only limited awards even if successful.

If you believe your rights under the Fair Labor Standards Act or corresponding State law have been violated, please contact The Harman Firm, PC.

January 27, 2015

Norwegian Embassy in Minnesota Owes $271,594.00 For Violating Equal Pay Act

The case Ewald v. Royal Norwegian Embassy et al is emblematic of recent equal pay cases in several disturbing ways. After it was decided to create a new "Honorary Consulate" in Minneapolis, Minnesota, the Norwegian Embassy ("the Embassy") set a budget of about $150,000 to be divided between two new expert positions to be staffed by local personnel. The purpose of both positions was to "build upon and strengthen the relationship between the Midwest and Norway through focused efforts to increase collaboration in two key strategic areas: (1) business and innovation; and (2) education and research."

The positions had different titles: one was an "Innovation and Business Development Officer," and the other a "Higher Education and Research Officer." However, the written plans for the two positions, their job descriptions, and almost all testimony about the rationale for creating these positions made clear that they were supposed to be parallel, "inextricably linked," equal-level positions with "almost identical responsibilities."

Two candidates quickly rose to the top of the two hiring pools. Anders Davidson and Ellen Ewald were informally offered the two positions, each at a salary of $60,000. There was no negotiation with either candidate, although both had earned far more in the private sector prior to accepting their new positions. In both cases, they assumed that the salary they had been offered was fixed by the Embassy's budet and not negotiable.

Shortly after they had agreed to accept their respective offers, however, something magical happened: the parties immediately responsible for these hiring decisions did some independent research and simply manufactured reasons to pay Davidson more than Ewald. The contracts they ended up offering to these two candidates, for these two ostensibly equal positions, were valued at $100,000 for Mr. Davidson and $70,000 for Ms. Ewald. To argue that this is not a clear violation of the Equal Pay Act and the Minnesota Human Rights Act, the Embassy would have needed some non-gender-based justification for it. They had none.

Officially, the reason for this salary differential was that their research had revealed that a business specialist had a higher market value than an education specialist. But the Court was extremely critical of this "research" process: the hiring managers had inquired about his prior income, but not hers; they had inquired about his need for day care for his children, but not hers; and they had based their decision on about one hour's worth of completely unspecific research about the relative compensation levels in the fields of business and education (although in fact neither of these positions was in either of those fields). Finally, the Embassy representatives had sought and received approval from high-level administrators to offer Davidson over $40,000 more than Ewald--although the Court ultimately concluded that they did this by intentionally misleading their higher-level administrators.

In addition, Davidson was provided health insurance for himself and his family, while Ewald was told that she would not get the same benefit. The official reason for this was that Ewald's spouse earned income independently, but there was no question that Davidson's spouse earned income and he was provided insurance without ever requesting it. He received reimbursement for travel expenses when she did not.

So here we have a case of two people in similar, officially equal-level positions, and the American representatives of the Norwegian Embassy making a gratuitous decision to pay a male employee much more a female employee. One further set of facts makes this situation especially ironic (and given the emotional devastation visited on Ewald through this process, also tragic): she had far more business experience than Davidson had, was more valuable than he was based on previous earnings, and by all accounts performed far better than he did on the job. She was more qualified and more skilled, but earned less and was denied many of the benefits he received. Worst of all, she was embarrassed to discover that Davidson knew that he was earning $40,000 more, and almost everyone in the organization also knew this, but she hadn't been given this information.

The Court awarded Ewald $170,594 in lost wages and $100,000 for emotional distress damages. The extent to which she will be able to recover from this experience emotionally, and overcome the damage to her reputation, remains to be seen.

Perhaps the Norwegians, who have far more gender-egalitarian policies and work culture, will see this case as a reason to think twice before trusting Americans with any hiring decisions.

If you believe your employer has discriminated against you on the basis of your sex, please contact The Harman Firm, PC.

January 20, 2015

MLK's Legacy and The Cutting Edge of the 2015 Labor Movement

It is common knowledge that the sustained political activism of Martin Luther King, Jr. over the decade leading up to the passage of the Civil Rights Act of 1964 (CRA) were crucial to its passage . Perhaps somewhat less well-known is that the Act created the Equal Employment Opportunity Commission (EEOC), or that about 12,000 to 20,000 federal civil cases are filed each year alleging employment discrimination in violation of Title VII of the CRA.

These facts alone reveal why King left an indelible mark on our nation's labor laws. With the passage of the CRA, it became illegal for employers to discriminate against employees on the basis of race, color, religion, sex, or (later) age.

Most people also do not know that Dr. King was extremely active in defense of a different law, the National Labor Relations Act (NLRA), which established the right of all workers to form unions and bargain collectively with their employers regarding their working conditions and wages. King spent much of his time joining, speaking to, and leading labor actions; in fact, this is what he was doing in Memphis when he was killed.

(Most people also probably do not know that the United Nations Universal Declaration of Human Rights states that "Everyone has the right to form and to join trade unions for the protection of his interests.")

King fought for the passage of the CRA to the end, then, and he also fought for the enforcement and the motivating principles behind the NLRA. The CRA set up a vibrant array of regulations and legal institutions for enforcing them. The NLRA set up the NLRB, which exists to protect workers' rights to organize by enforcing the NLRA, but the NLRB's regulations and legal institutions are far less effective than those of the CRA. No employer can afford to ignore actions taken against them by the EEOC, but the NLRA "gives businesses a strong incentive to ignore it." In fact, labor lawyer Thomas Geoghegan has written that an employer would have to be "what economists call an 'irrational firm' " to voluntarily obey the NLRA, given the weakness of its enforcement mechanisms, since the price of ignoring it is minimal.

To strengthen the NLRA, two U.S. Congressmen, both following in Dr. King's footsteps and acting on the same reasons that animated his efforts, proposed the Employee Empowerment Act in July 2014. The purpose of the act is to make the right of workers to organize a civil right, with the same legal status as the rights protected by the CRA of 1964.

Currently, the only remedies available to people whose employers violate their rights under the NLRA are (i) recovery of back pay, (ii) reinstatement. Beyond this, the NLRB can collect some regulatory damages, impose cease and desist orders regarding anti-union policies or actions, and so on. Complainants are also limited in two other key ways: (iii) they cannot pursue their claims independently, but must rely on the NLRB to pursue it on their behalf, and (iv) they are not offered the opportunity to seek jury trials or compel witness testimony.

All of these things are different for complaints brought under the CRA: an employee whose case succeeds can recover back pay, compensatory damages, punitive damages up to $300,000, attorneys' fees, and under some circumstances liquidated damages if the alleged violations have been shown to be willful. Generally, then, successful plaintiffs in CRA cases stand to recover much more from defendants and, because of this, companies have reason to take violations of the CRA seriously.

The Employment Empowerment Act stands little chance of passage in the short term, especially in the hands of a Republican congress. But it's a good idea, and it's something we ought to do.

If you believe your legal rights have been denied by your employer, please contact The Harman Firm, PC.

January 20, 2015

Reflections on the Reasons We Celebrate Martin Luther King, Jr. Day (Part 2)

In 2011 Washington University professor Michael Honey published a collection of Martin Luther King, Jr.'s speeches to labor unions and workers' rights coalitions, entitled All Labor Has Dignity. King's words in these speeches leave no room for doubt about his commitment to organized labor. His message to union organizers and activists was visionary and poetic, but not naive: "fighters for justice," he would tell them, "will be met with fierce resistance from the economic and political power structure and they must remain firm. They will be called reds, troublemakers, and accused of interfering with property rights..." He knew these revolutionary changes were risky, and that they could only be accomplished through collective action, because the power structure would use all its resources against both of them.

King believed that the struggle for civil rights and racial equality was deeply intertwined with the simultaneous struggle for labor rights. "Our needs are identical with labor's needs," he said, "...decent wages, fair working conditions, livable housing, old-age security, health and welfare measures, conditions in which families can grow, have education for their children, and respect in the community." In fact, King sometimes went further and suggested that civil rights victories would be hollow if not accompanied by economic actions designed to make good-paying jobs available to people. He understood that unionization was the most direct and effective way to generate those kinds of jobs. He also understood that the labor and anti-racism movements each had strong philosophical and pragmatic reasons to embrace each other's causes as part of their own.

The union movement has been beaten down in recent decades, needless to say. But a society in which 1% of the people own more than 40% of the nation's wealth, and most people see equality of opportunity as a utopian dream, seems destined for instability. And organized labor has indeed shown new signs of life recently. In fact it is quite easy to imagine Dr. King giving a speech today to the Service Employees International Union, to a packed house of fast food workers. Those in attendance would probably be mostly minorities and women--a fact that wouldn't be lost on him--but perhaps he could have convinced another generation of us that it still makes sense to believe in, and fight for, the larger cause of economic justice. It is easy to imagine him savagely criticizing the forces that promote inequality and create a class of people who work hard but cannot afford necessities, arguing for progressive social programs.

King believed that, in a society as wealthy as this one, anyone willing to work should be able to earn enough to live with dignity. The only reason this doesn't happen, when it doesn't, is that the "power structure" actively opposes any policy that would empower workers, and any effort by workers to empower themselves. In one of his final speeches to the Memphis sanitation workers, King told the workers that labor "...is not menial until you're not getting adequate wages-all jobs are important. The question is do you have dignity, and respect, and a decent livelihood, based on what you do?"

Before we get too self-satisfied about our achievements in the area of civil rights, then, or too happy about our historical connection with Martin Luther King, Jr., we should examine the inequality statistics, survey the current state of the labor union movement, and then hear the words of Michael Honey himself: "[Dr. King] would be aghast. And appalled (about our current political climate.) He had high hopes for the United States. He was really focusing on the promise of the American Revolution, and 'all people are created equal,' and the inherent rights we have...he'd be shocked and appalled at the backward direction of the thinking of so many people. How so many people fail to take in the lessons and experiences of history. We're in a pretty sad time--a lot of the unions King fought for have been destroyed."

If you believe your legal rights have been violated by your employer, please contact The Harman Firm, PC.

January 19, 2015

Reflections on the Reasons We Celebrate Martin Luther King, Jr. Day (Part 1)

Each year, this country celebrates Martin Luther King, Jr.'s Birthday on or just after his birthday, January 15. Some iconic words from King's "I have a Dream" speech are rehearsed in our churches, theaters, over the airwaves, and (if we are lucky) in our families' living rooms and at our dinner tables. It is our official annual moment to reflect on some of the worst and most shameful events in our nation's history, but also some of its greatest people and their contribution to the improvement of humanity.

We should keep in mind that the core of Dr. King's message was a profound criticism of this country: we had not lived up to our founding creed, which is that our shared goal is to care about, improve, and maximize the well-being of every person because we have a right to expect this from ourselves and each other. That these ideals cannot be reconciled with slavery or Jim Crow laws now seems almost too obvious to be worth saying. While most of us try to take this moment to reflect, we can nevertheless also detect a certain disturbing self-satisfaction in America's celebration of this holiday each year, as if the tension in the plot of our collective story was resolved and there was a happy ending.

We can be sure that, if he were still alive, Dr. King would be talking about all the work that remains to be done in our nation's historic fight against the forces of oppression on the one side, and resignation on the other. Slavery in its original form has ended. Jim Crow laws now take the much weaker, or at least less visible, form of de facto forms of discrimination that systematically grant unearned privileges to some and undeserved disadvantages to others.

These are great successes, to be sure. But in order to understand King's real legacy, we simply must understand why congratulating ourselves now for the achievements he helped us to attain would be offensive to his memory. His vision was not reformist, but revolutionary, as we can verify by studying the violence and virulence of his opponents. What he achieved, what we achieved with his guidance, were only baby steps in the direction of the revolution he envisioned and preached about.

In fact, there is a tragic version of this story, and unfortunately the tragic version is closer to the truth. In this version, Dr. King was just getting started before he died, and might eventually have led us far beyond the specifically racial forms of injustice to wrestle with essential questions about the essence of injustice itself, in all its forms--all the different ways we fail to give people all and only what they deserve. But at just that moment, after he had decimated the intellectual foundations of American racism, he was murdered before he could enter the deeper battles that he knew would have to come next: the fight for economic equality and labor rights.

This is the detail that the self-congratulators tend to miss when Martin Luther King, Jr. day comes around each year: he was killed, after all his great speeches and marches and legislative successes regarding race policy, when he went to Memphis to fight for the right of public workers there to form a union. We would do well to think about his reason for supporting those sanitation workers in Memphis.

If you believe your legal rights have been violated by your employer, please contact The Harman Firm, PC.

January 14, 2015

NLRB Announces Consolidated Hearings For Joint Employers McDonald's, USA, LLC and Its Franchisees, Addressing Violations of National Labor Relations Act

Recently there has been a well-publicized wave of union organizing activity at fast food restaurants across the country. Owners of service industry franchises like fast-food restaurants have expressed their predictable opposition to these organization efforts by their employees, and the National Labor Relations Board (NLRB) has been increasingly involved in trying to protect workers' rights under the National Labor Relations Act ("the Act") to engage in union organizing activity.

As part of its intervention to protect these workers' rights, the Board announced on July 29, 2014 that it intended to treat the franchisor McDonald's, USA, LLC and its franchisees as joint employers--that is, as jointly liable for violations of the Act at the many McDonald's franchises nationwide. This was an important decision, since the corporation now stands to lose large sums of money from lawsuits that have been filed across the country by employees at hundreds of its local franchises.

The Board wasted no time in putting this new policy into action, announcing on December 19, 2014 that it would file 13 Consolidated Complaints comprising 78 separate charges alleging many different alleged violations of the Act. Litigation is scheduled to commence on March 30, 2015, when the Board will hold its first wave of hearings on these cases in three regional locations.

The allegations being consolidated in these hearings involve a long list of unlawful actions allegedly taken by owners and managers of Mcdonalds' restauraunts to discourage or punish union activity by workers, including:

-Soliciting employee complaints, promising to address those complaints and improve conditions if employees refrained from union activity

-Ceasing to post employee work schedules

-Threatening employees with reprisals, including reduction of work hours or discharge, if they engaged in union activity

-Causing employees to believe that their union activities were under surveillance

-Interrogating employees about their union activities or sympathies

-Instructing employees not to engage in union activity, or to speak with Fast Food Workers' Committee (FFWC) representatives

-Interfered with, restrained, and coerced employees in the exercise of their rights under Section 7 of the Act

-Discrminating against employees in regard to the hiring or tenure or terms of their employment in an effort to discourage union membership

-Offering an employee promotion if she ceased participating in union activities

-Restricting the use of company property, including during break time, for discussion of union actions

-Promulgating threatening empoloyees with civil or criminal prosecution for copying or reproducing company documents, including posted work schedules

The Board is taking large-scale action to change the franchise model that has been used by companies like McDonalds for decades. Under that model, high turnover and low wages are obstacles to unionization, but recent decisions about union election rules, the use of company email accounts for union organizing, and this recent decision to treat franchisors as joint employers seem to shift the balance of power from employers to employees.

If you believe your rights under the National Labor Relations Act have been violated by your employer, please contact The Harman Firm, PC.

January 12, 2015

Muslim Woman Not Allowed to Wear Khimar (Headscarf) at Work; Sues NYC Transit Authority for Religious Discrimination

On September 30, 2014, the District Court for Eastern New York denied summary judgment to defendant New York City Transit Authority ("NYCTA") in the case Muhammad v. New York City Transit Authority. NYCTA allegedly demanded that Muhammad either remove or her khimar or else wear a different hat over it, then took a series of adverse employment actions against her--including an involuntary transfer to a bus depot--when she refused.

Plaintiff Gladys Muhammed wore her khimar to work without incident for over seven months after she was hired in November, 2001. Then in July 2002, her manager met with her and told her that she must either remove her khimar or wear a Transit Authority issued baseball cap over it. After that meeting she continued to operate a bus, wearing her khimar each day, until November 2003, when she received a violation for failing to comply with the NYCTA's newly-enacted policy forbidding operators from wearing non-NYCTA-issued headwear.

Muhammad explained to her Superintendent that her religious beliefs did not permit her to remove or cover her khimar, at which time he demanded that she prove the sincerity of her religious beliefs. She responded by giving him a letter from the Minister of her Mosque explaining that as an active member of the mosque she was required to wear a "modest head covering." Following these meetings with the Superintendent, Ms. Muhammad was taken out of "passenger service" and assigned to clean buses at a depot while training to become a "shifter," a worker who moves empty buses back and forth within the bus depot.

This transfer of jobs was an adverse action in several ways: the work was far more strenuous than driving a bus, the work environment was a building full of exhaust fumes, and as a shifter she worked a highly coveted shift that would normally be given to someone with higher seniority, causing her to be stigmatized by her colleagues.

The first element of a prima facie claim of religious discrimination is that the claimant has a bona fide religious belief that conflicts with an employment requirement. The NYCTA claimed that Muhammad's could not have had such bona fide belief, since they were able to find evidence that Muslim women sometimes chose not to wear a Khimar. The Court made light of this argument, noting that the NYCTA "apparently disagrees with Muhammad and her Minister's interpretation of the Quran, arguing that Muhammad should have simply removed her headscarf because, 'generally speaking...some Muslim women do, and some do not [wear headscarves]'." By arguing that, since some Muslim women do not wear headscarves, as a Muslim woman Muhammad must not believe she is required to wear her khimar, the Defendant "...is, in effect, arguing that all Muslim women subscribe to the same interpretations of Islam." In any case, the Court concluded, the important question of whether Muhammad's regious belief was sincere would be a question for a fact-finder and not for a court considering a summary judgment motion.

Once a prima facie claim is made, the Court must consider whether the employer had a legitimate, non-discriminatory reason for the adverse actions it took against the employee; in the absence of such a reason, the Court has reason to conclude that the employer's action was intentionally discriminatory. In this case, the Court found that the NYCTA's "facially neutral" policy--that no one could wear religious headwear--was arguably discriminatory due to its disparate negative impact on Muslim women. Plaintiffs pointed out that, of the 64 documented violations of the headwear policy, five Muslim employees were transferred out of passenger service for violating the policy, while zero employees who violated the policy for secular reasons were transferred. "100% of those with religious objections were transferred, while 0% of those with non-religious objections were transferred."

Ms. Muhammad was ultimately terminated as a result of this issue in the Fall of 2005, so if successful she seems poised to recover a good amount of backpay in addition to whatever other damages she is awarded.

If you believe your employer has taken adverse action against you because of your religious belief, please contact The Harman Firm, PC.

January 10, 2015

Eighth Circuit Reverses Iowa District Court's Decision to Impose $4.7 Million in Attorneys' Fees and Costs on the EEOC

On December 22, 2014, the Eighth Circuit Court of Appeals Reversed a decision by the U.S. District Court from Northern Iowa to require the Equal Employment Opportunity Commission to pay Defendants' $4.7 million in legal fees and costs in Equal Employment Opportunity Commission v. CRST Van Expedited Inc.

The EEOC originally filed this lawsuit on behalf of Defendant's female employee Monika Starke, along with about 270 others similarly situated. In its Complaint the commission alleges that these employees had been subjected to "severe and pervasive sexual harassment" in the company's New Driver Training Program in violation of Title VII and corresponding Iowa state statues. In response to a court order to provide a list of plaintiffs and make all of them available for deposition, the Commission reduced the number of plaintiffs to 155. The District Court then ruled on several motions for summary judgment by the defendant, ultimately trimming the number of potential plaintiffs to two. The EEOC then withdrew one of those claims, so that only the original plaintiff Monica Starke remained.

The company then agreed to a $50,000 settlement with Ms. Starke, stipulating (1) that the Agreement does not preclude CRST from pursuing attorney[s'] fees and costs..., and (2) that the Agreement also does not preclude either of the parties from making arguments relating to CRST's pursuit of attorney[s'] fees and costs, including arguments relating to whether [the] EEOC or CRST is the prevailing party.

CRST then filed a motion for an award of attorneys' fees, arguing that, because they had prevailed on the EEOC's "pattern-or-practice" claim and succeeded in getting all but two of the original claims dismissed, they had successfully defended against many claims that were "frivolous, unreasonable or groundless." CRST then filed a bill of costs for $4,560,285.11 and moved the Court for an award of fees and costs, which the Court granted.

The EEOC appealed to the Eighth Circuit Court of Appeals, arguing (1) that the District Court erred in granting summary judgment on the pattern-or-practice claim, since it had made no so such claim. In fact, they argued, the EEOC's "...case was comprised of a single claim (Starke's claim), and it won that claim;" (2) that CRST was not a prevailing defendant, and thus not eligible for a fee award, because the decision to dismiss clients was not determined on the merits but only a determination that procedural preconditions had not been met. The Appeals court disagreed with the premise of the first argument, finding that the EEOC had actually brought multiple separate actions. They concluded, however, that "the district court's conclusion that the EEOC's original action was frivolous, unreasonable, or groundless is insufficient to support an appellate award," and that "on remand, the district court must individually assess each of the claims for which it granted summary judgment to CRST on the merits."

In short, since most of the claims were not decided on the merits, most of the fee awards are overturned, and the rest will have to be re-litigated and are likely to fail. So the Eighth Circuit just saved the EEOC millions of dollars.

If you believe you have been sexual harassed on the job and/or suffered retaliation for complaining about harassment in the workplace, please contact The Harman Firm, PC.

January 9, 2015

ISS v. Busk - What Is "Work" Under the FLSA?

The Supreme Court recently handed down a consequential decision restricting the ability of workers to pursue actions against employers for unpaid overtime under the Fair Labor Standards Act ("FLSA"). The case, Integrity Staffing Solutions, Inc. v. Busk, involved employees employed by Integrity Staffing Solutions ("ISS") working at Amazon.com warehouses. Employees alleged that ISS forced all employees to go through a theft-prevention screening at the end of their shifts to ensure that the employees were not stealing goods, and that employees had to wait, on average, twenty-five minutes each day to go through this process. The employees brought suit seeking payment for the time they were required to spend waiting in line to go through ISS's mandatory post-shift screening.

The question before the Court was whether the time spent waiting in line for mandatory screening after the end of their shifts was "work" for which the employees were entitled pay. The relevant law concerning many questions of pre-shift and post-shift work is the "Portal to Portal Act," an amendment to the FLSA. The Portal to Portal Act severely limited the definition of what activities are considered "work" - and therefore warrant compensation - under the FLSA. Specifically, the Portal to Portal Act changed the definition of "work" under the FLSA to include only those tasks which are "principal activities" of the job. The Court had previously defined a "principal activity" to mean an "integral and indispensible" element of employment.

The Court held that time spent in line for post-shift screenings was not a principal activity, and therefore, the defendant was not required to pay plaintiffs for that time. Its decision overruled the holding by the Ninth Circuit Court, which stated that because the screening was mandatory and for the exclusive benefit of the employer, it was compensable under the FLSA. The Supreme Court, in a unanimous decision, disagreed. The Court focused on the "integral and indispensible," and found that, as a screening check was not necessary to perform warehouse work, it was not integral to the employee's job, and therefore not compensable. The Court found the facts that the screening was mandatory and for the exclusive benefit of the employer to be insignificant.

An instructive comparison the Court used was the difference between changing clothing in a battery manufacturing plant and changing clothing in a poultry processing plant. In a battery manufacturing plant, employees are required to wear protective garments to prevent injury from the dangerous substances involved in the manufacturing process, and must take time to change in and out of them. It is not possible to safely manufacture batteries without the protective garments, therefore the time spent putting on the protective garments is compensable. In a chicken slaughterhouse, however, protective garments are used to keep clothes clean rather than for safety; it is possible to work safely and efficiently without them. Thus, the time spent putting on protective garments in a poultry plant is not compensable.

The effects of this decision remain to be seen; however, it does confirm the courts' increasingly narrow view of what employers are required to compensate employees for doing.

If you believe that your employer is not properly paying you for all hours worked, contact The Harman Firm, PC.

January 8, 2015

Court Rules that Defendants Made No Good Faith Attempt to Comply With FLSA, Now Owe $512,290.26 to 33 Employees For Unpaid Overtime

On December 17, 2014, Oregon District Court Judge Marco A. Hernandez issued the Court's Findings of Fact and Conclusions of Law in Perez v. Oak Grove Cinemas, Inc. et al., after conducting a four-day bench trial in October 2014, ordering the defendants to pay $256,145.13 for unpaid overtime wages owed plus another $256,145.13 in liquidated damages.

The Plaintiff in the case was U.S. Secretary of Labor Thomas E. Perez, and Defendants were several companies owned by David Emami including a movie theater and a property management company. Employees were general-purpose construction and maintenance workers who performed various tasks at the companies' several locations.

Noting that Mr. Emami "has been associated with at least thirty-three different business entities in Oregon" and "...is familiar with wage and hour laws including minimum wage law and overtime exemptions for movie theater employees," the Court concluded that he had intentionally avoided the requirements of the Fair Labor Standards Act by setting up an elaborate system for paying his employees. Under this system, administered by Emami's wife Diana Emami, employees kept track of their work hours on two separate time cards each day, and were issued two separate corresponding checks for each pay period. One of these checks would be from Oak Grove Cinemas (OGC), and this check, calculated by Diana Emami using Quick Books software, would include withholdings and deductions as typical for a regular W-2 employee. The other check would be issued by a different entity, one of the Barrington companies, and the same employees were classified as independent contractors for those additional hours.

These two distinct systems for calculating employees' pay were not based on any difference in the nature or location of their work. The Emamis' explanation for this convoluted system was that the employees had requested to be treated as independent contractors, so they accommodated this request by classifying them as such for some hours. The Court rejected this explanation, finding that the classification of these workers as independent contractors failed to meet any of the relevant Boucher criteria--they had minimal control over their work, they had no opportunity for profit or loss based on their skill, they did not invest in equipment, their services required no special skills, they had a permanent dependent relationship to their employer, and their work was an integral part of their employer's business. Supporting the more obvious and likely reason was one employee's testimony that Mr. Emami himself had told him that the reason he received two separate checks each pay period was that he "...did not want more than 40 hours per week on the OGC payroll." It was an elaborate scheme to avoid paying overtime to workers who often worked more than sixty hours per week.

This case is a testament to the value of legwork by law office support staff. The Defendants claimed to have lost nearly all of their records of employee work hours in a flood, and were able to produce only a few limited records. Although the law allows the Court to estimate the number of hours each employee worked, this estimate must be "derived as a matter of just and reasonable inference" from some set of data, and the records produced in this case almost certainly would not have been enough to support such an estimate. Judge Hernandez explicitly stated that testimonial evidence about the number of hours worked would not have been sufficient, so the case might have fizzled out, but for the efforts of Claire Barba, paralegal for the plaintiff, who reviewed more than 1,800 pages of Bank records and used them to generate estimates of the hours each employee had worked. The Court found this methodology sufficiently accurate and complete, especially as it produced results similar to those of the Defendant's method of calculating time for the periods for which complete time cards were produced.

The Court also found that the plaintiff was entitled to a permanent injunction against the defendants, since "the evidence established Defendants' intentional disregard for the law, threats of retaliatory action by David Emami, willfulness and a lack of good faith, and a questionable commitment to future compliance."

If you believe your employer has failed to pay you minimum wage or overtime pay in violation of the Fair Labor Standards Act, please contact The Harman Firm, PC.

January 6, 2015

$5.8 Million Settlement of FLSA Misclassification Lawsuit Against Bank of America

On November 18, 2014, the U.S. District Court for the Central District of California approved a settlement for one of the two classes in the case Terry P Boyd v. Bank of America Corp et al., awarding $5.8 million to be distributed among the approximately 368 class members, after payment of $1,933,333.33 in attorneys' fees plus $30,000 in litigation costs. The amounts to be distributed will be based on the number of adjusted eligible workweeks worked, resulting in an average recovery of $10,840, with an additional $30,000 divided between the two named plaintiffs. The Settlement Agreement also specifies that the defendants will reclassify these employees--Residential Appraisers and Review Appraisers--and that this reclassification will yield "significant, ongoing benefits" for class members.

Bank of America allegedly misclassified its Appraisers as exempt from the overtime requirements of the Fair Labor Standards Act and corresponding sections of the California Labor Code. According to Plaintiffs' allegations, the job duties of Appraisers involved generating appraisals, under the direct supervision of company managers, by following pre-established guidelines. Thus, they argue, these employees should not have fallen under the administrative exemption from the FLSA's overtime requirements, since they "lack significant discretion over appraisal values they assign."

The Appraisers' compensation was determined by the number of appraisals they completed, and they were required to meet a minimum number of appraisals. As a result, appraisers were required to work "far in excess of forty hours per week," including regularly working holidays and weekends; in fact, it was common for appraisers to work seven days, and often for up to eighty hours, each week.

If you believe your employer has violated your rights under the Fair Labor Standards Act, please contact The Harman Firm, PC.

January 2, 2015

D.C. District Court Vacates DOL's New Rules on FLSA Exemption for Domestic Workers, Was Set to Go Into Effect January 1, 2015

On December 22, 2014, the U.S. Court for the District of Columbia decided to prevent the implementation of a new Department of Labor (DOL) policy, which would have become effective at the beginning of this year. The Court found that the DOL lacks the authority to change its regulation of home care providers employed by third-party agencies, making those workers no longer exempt from the minimum wage and overtime rules of the Fair Labor Standards Act.

Plaintiffs in Home Care Association of America et al. v. Weil et al. are agencies representing the interests of companies providing in-home health care services, who would have had to begin paying minimum wage and overtime pay to almost 1.9 million home care providers who had been classified as exempt from those requirements for the last forty years. Defendants are executives of the U.S. Department of Labor Wage and Hour Division (WHD). Privately-contracted domestic workers would have remained exempt, but all of those employed by third-party entities--now the vast majority--would have become protected under the FLSA. Needless to say, this change would have represented a new financial burden for the companies in question, so a broad challenge from the industry was predictable.

The home care industry had scored a major victory on these issues in 2007, when the Supreme Court ruled in Long Island Care at Home v. Coke that providers of "companionship services" employed by third-party agencies fell under the exemption; that is, they need not be paid minimum wage for all hours worked, and need not be paid one-and-one-half times their regular pay for hours worked above forty in a given week. These rules apply unless (i) the employee in question performs medical services that would typically be performed by trained personnel such as nurses, or (ii) they spend more than 20% of their work time doing general household work. The exemption was clearly intended to apply to employees whose principal responsibilities included basic monitoring and care of the patient.

After the Supreme Court's decision in Coke, there were several unsuccessful attempts in Congress to remove these exemptions and require companies providing home care services to follow the same wage and hour rules as other companies. The pay received by most home care workers is relatively very low, and this situation is made worse by the fact that most of these workers are minority women.

Whatever social concerns might have motivated the DOL's change of policy, however, the District Court found that the legal validity of the proposed policy change depended on narrow questions about the Department's authority to change its regulations on its own. In short, the Court found that Congress's intent in the FLSA was to make the exemption applicable to "any employee...who is employed to provide companionship services, or who resides in the household in which he or she is employed to perform domestic services." As long as third-party-employed domestic service workers belong to this category, the Court reasoned, they are clearly exempt. The language of the statute clearly designates a category of workers defined by their job duties, not by the specific arrangement under which they are employed. The DOL has extensive authority to "close definitional gaps" in order to determine the scope of its regulations, and tried to stretch this authority to cover its action here, but the Court found that all such "definitional gaps" had already been closed. So there was no remaining "open question" that the DOL's policy change could have been intended to answer; it was a spontaneous change of policy, and outside the Department's authority.

The ruling does seem to be the kind of judicial review normally exercised by higher courts. We will have to wait to see whether those higher courts agree with the District Court's seemingly gratuitous limitation of the DOL's rule-making power.

If you believe your employer has violated your rights under the Fair Labor Standards Act, please contact The Harman Firm, PC.

December 31, 2014

Sixth Circuit: Not Legal for Employer to Withhold Wages to Pay for Immigration-Related Expenses

On August 20, 2014, the Sixth Circuit Court of Appeals affirmed decisions by the Department of Labor (DOL) Administrative Review Board (ARB) and the U.S. District Court from East Tennessee in Kutty v. United States Dep't of Labor, finding employer Mohan Kutty liable for back wages and expenses related to violations of the Immigration and Nationality Act (INA). Kutty was ordered to pay $1,044,294 in damages to seventeen plaintiffs, all physicians who worked at his medical clinics in Tennessee and Florida, plus $108.800 in civil penalties.

The plaintiffs in the case are physicians who were employed by Kutty after entering the United States on J-2 nonimmigrant foreign-medical-graduate visas. These visas allow physicians to remain in the United States for their graduate and medical training, but then require them to return to their home country for two years before applying for H-1B or L-1 visas or Lawful Permanent Resident status. Alternatively, the physicians can be granted a waiver of the two-year home-return requirement if an interested state or federal agency requests a J-1 waiver on his or her behalf. To get this waiver, the physician must submit a waiver application to the U.S. Department of State and demonstrate that s/he has a contract to practice medicine for at least three years in an area designated by the Secretary of Health and Human Services as having a shortage of health-care professionals. Once they have the J-1 waiver, the physician becomes eligible to apply for an H-1B visa. In order to get the H-1B visa, the physician's employer must sign a Labor Condition application (LCA) with the DOL, certifying that the physician will be paid the greater of (i) the actual wage level the employer paid to other individuals with similar experience for the type of employment at issue, or (ii) the prevailing wage leve for the occupational classification in the area of employment. In this case, Kutty filed LCAs certifying that he would pay each of the physicians $80,000 per year.

Kutty, acting as an executive of the corporate entities that employed the physicians, signed and filed similar LCA's for all of the plaintiffs. When business encountered financial difficulties, based on statements by the administrator of his Tennessee operations and his own cursory investigation, Kutty accused the physicians of lying about how many hours they were working and began withholding their salaries until they saw more patients. They sent Kutty a letter demanding to be paid according to their contract and threatening to contact the DOL if he did not comply. They further warned Kutty that he was probited from retaliating against employees for reporting violations of the INA. He responded by withholding their pay of the eight physicians who had joined in the letter.

The physicians then filed a complaint with the DOL. The administrator of the Wage and Hour Division of the DOL determined that Kutty had violated numerous provisions of the INA, including 1) willfully failing to pay required wages to the physicians, 2) failing to make LCAs available for public examination, 3) failing to maintain payroll records, and 4) retaliating against the physicians for engaging in protected activity under the INA.

The most interesting finding of the Court, agreeing with the DOL and the District Court, was that it was illegal for Kutty to withhold pay from his physicians in order to pay costs associated with filing immigration paperwork on their behalf. These withholdings reduced the physicians' pay below the contractually-specified amounts, and all agency and court decisions indicated that this is clearly illegal: "Under the INA, employer-sponsors of H-1B nonimmigrants must pay a fee to file an H-1B petition on behalf of a nonimmigrant, and may not be reimbursed by their employees for 'part or all of the cost' of that fee. See 8 U.S.C. § 1182(n)(2)(C)(vi)(II); 8 U.S.C. § 1184(c)(9).

The Appeals Court rejected each of the defendant's arguments and deferred to the DOL's authority to administer its regulations, and found Kutty individually liable for all damages and fines assessed.

If you believe your employer has violated your rights under the Immigration and Nationality Act, please contact The Harman Firm, PC.

December 30, 2014

11th Circuit Shoots Down Georgia School District's Eleventh Amendment Defense in FMLA Case, Rules that District is Not an Arm of the State

On November 10, 2014, the United States Court of Appeals for the 11th Circuit reversed a decision by the U.S. District Court from Northern Georgia, which had granted summary judgment to Defendant Henry County School District in Lightfoot v. Henry County School District("the District"). Plaintiff Zaneta Lightfoot suffers from Sickle Cell Anemia, which causes her to experience sporadic "pain crises" and difficulty standing or walking. In March 2010 she applied for intermittent FMLA leave, which she took during the 2010-2011 school year. She then applied for an additional period of intermittent FMLA leave.

During the time of her eligibility for leave, the Principal and two Vice Principals of the school met with Ms. Lightfoot to give her a "letter of redirection," a disciplinary document in which she was accused of "fail[ing] to work cooperatively with co-workers" and "fail[ing] to provide five days of substitute lesson plans." Lightfoot claims that during this meeting her three managers revealed that their true reason for issuing the letter was her use of FMLA leave, stating that her medical absences had caused many of the problems described in the letter. Then Lightfoot received an overall evaluation of "unsatisfactory" in her next performance evaluation, was placed on a Performance Development Plan ("PDP"), and removed from her (paid) position as the school's cheerleading coach. One of her classes was moved to a distant classroom, which required her to take several painful walks across the school each day and, when she requested accommodation, which Principal Cook denied because she "did not appear to be in pain."

She next received a second letter of redirection, on which she was accused of falsifying a student's grades--a charge for which no evidence was ever provided to the Court--and then informed in March 2013 that her employment was terminated. She then initiated her lawsuit, until on September 17, 2013 the district court found that the School District was an "arm of the state" and thus entitled to Eleventh Amendment immunity from actions within federal courts.

Ultimately, the 11th Circuit rejected the district court's application of the four-part Manders test for determining whether an entity is immune from legal action under the Eleventh Amendment. The four factors for the court to weigh are 1) how state law defines the entity; 2) what degree of control the State maintains over the entity; 3) where the entity derives its funds; and 4) who is responsible for judgments against the entity. The appeals court found that the defendant in the present case failed all four tests, most importantly the first two. Regarding the first factor, the Appeals Court found that Georgia's Constitution and laws generally define school districts as entities of their respective counties, and are either silent or equivocal on the question of whether they are parts of the state's government. Regarding the second factor, the Court found that, while the State does retain certain powers, "Georgia's school districts are largely under local control." Regarding the third factor, unlike the cases relied on by the Defendant / Appellee, the Henry County School District had, in addition to state funding, substantial freedom to raise revenues through property taxes, bonds, and borrowing. Finally, regarding the fourth factor, it is not clear that the State of Georgia would be responsible for paying any fines, judgments, etc., and in any case the State's financial responsibility is not a primary determinant of Eleventh Amendment immunity.

In the end, the Appeals Court reversed Georgia court's grant of summary judgment on the ground of the state's immunity under the Eleventh Amendment and remanded the case back to the district court.

If you believe your rights under the Americans with Disabilities Act or the Family and Medical Leave Act have been violated by your employer, please contact The Harman Firm, PC.

December 22, 2014

Third Circuit Compels Arbitration in Whistleblower Action Against Bank

On December 8, 2014, in Khazin v. TD Ameritrade Holding Corp., the United States Court of Appeals for the Third Circuit decided that the anti-arbitration provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") only applieds to the whistleblower-protection causes of action arising under the Security and Exchange Act (the "Exchange Act") and not to those arising under the Sarbanes-Oxley Act ("SOX").

A "whistleblower" is someone, usually an employee, who reports an employer who has broken the law to an outside agency. In Khazin, TD Ameritrade, Inc. ("TD") terminated Boris Khazin, a financial services professional, after Khazin reported to his supervisor that the price of one of TD's products did not comply with the relevant securities regulations. Khazin's supervisor instructed Khazin not to correct the problem because remedying the violation would cost TD two million dollars ($2,000,000) in revenue. About one month later, TD terminated Mr. Khazin when it allegedly discovered a billing irregularity. According to Mr. Khazin, the alleged irregularity was outside of his duties and responsibilities at TD. Regardless, the result of TD's investigation was that the irregularity did not exist at all. Nevertheless, TD bank told Mr. Khazin his termination was final because he could not be trusted.

Mr. Khazin filed a complaint in the District Court of New Jersey for TD's unlawful termination of his employment in violation of the Dodd-Frank's whistleblower provision amending the Exchange Act. TD moved to dismiss the complaint and to compel arbitration pursuant to an employment agreement Khazin signed.

Dodd-Frank spans thousands of pages and amends a number of statutes designed to regulate the financial industry. Before Dodd-Frank was enacted, whistleblowers who suffered retaliation for reporting violations of the securities laws could only bring claims under SOX. Dodd-Frank allows whistleblowers to pursue claims under the Exchange Act as well. The Exchange Act is a more attractive statute for whistleblowers than SOX because a SOX litigant must file an administrative complaint with the Secretary of Labor and may only obtain backpay with interest. On the other hand, an Exchange Act litigant is not required exhaust administrative remedies and is entitled to two times the amount of backpay with interest.

At issue in Khazin was whether Dodd-Frank's anti-arbitration provision, which provides "[n]o predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under th[at] section," voids predispute arbitration agreements for claims arising under the Exchange Act. The Third Circuit decided it did not. The Third Circuit held that the anti-arbitration provision of Dodd-Frank is expressly limited to a single category of disputes arising under Section 1514A of SOX and did not extend to the causes of action under the Exchange Act. Further, the court noted that in light of the liberal federal policy favoring arbitration agreements, courts are required to enforce agreements to arbitrate according to their terms unless this mandate has been overridden by a congressional command. The court found no such command in the Exchange Act. As Khazin's only claims were under the Securities and Exchange Act, the anti-arbitration provision was inapplicable. Accordingly, the court held that predispute arbitration agreement between Khazin and TD was enforceable and dismissed Khazin's claim.

In addition to offering guidance concerning the interpretation of Dodd-Frank, Khazin reminds litigants that the courts will defer to an arbitration agreement and dismiss claims unless there is a contrary congressional command.

If you are an employee and you believe you have been discriminated against and/or retaliated against for exposing your employer's wrongdoings, please contact the Harman Firm, PC.