August 27, 2014

Appeals Court Reverses Summary Judgment for Defense in Case of Company That Denied FMLA Leave for Depression

On August 18, 2014, the Seventh Circuit Court of Appeals reversed a decision by the U.S. District Court for the Eastern District of Wisonsin to grant summary judgment to the defendant in Hansen v. Fincantieri Marine Group LLC. The plaintiff in this case alleged that his employer, Fincantieri Marine Group ("FMG") interfered with his rights under the Family and Medical Leave Act and then terminated him in retaliation for exercising the same rights.

The key question for the Appeals Court in this case was whether the employer had the right to make Mr. Hansen's FMLA leave conditional on his providing an expert opinion supporting his claim that his condition--depression--was serious and rendered him unable to perform his job. The Wisconsin District Court had accepted the Defendant's argument that they were legally permitted to deny Mr. Hansen's request for leave because i) the notification they received from Mr. Hansen's doctor estimated that he would need intermittent leave when his depression flared up, about four times every six months for 2-5 days each time, but he took leave exceeding that predicted amount of time; and iii) the evidence Mr. Hansen provided to the company substantiating his FMLA claims did not include an expert medical opinion. The Appeals Court rejected this conclusion and remanded the case back to District Court.

FMG has an attendance policy, under which employees accumulate points for missed work time. An employee gets one point for each time they miss more than four hours of a scheduled work day, and is subject to termination if they have ten points. Plaintiff Hansen had nine points, then requested FMLA leave for two additional episodes of depression. If he had been granted FMLA leave, these two absences would not have counted toward his attendance points. However, FMG denied his requests, because he had "exceeded his frequency" as outlined in his doctor's notice to the company and his certification for additional FMLA leave was incomplete or insufficient. He received additional points and was terminated.

The Family and Medical Leave Act guarantees an employee the opportunity to cure any claimed deficiency in the cerficiation of a request for leave before the employer may deny the request. Hansen was not given this opportunity. FMG rejected the medical certification he provided because it was not the testimony of a medical expert commenting on Mr. Hansen's incapacity to do his job. But FMG never informed Mr. Hansen that they had found his certification incomplete, thus denying him his right to attempt to "cure the deficiency."

The Court also explained no grounds had been provided for the company's claim that Hansen had "exceeded his leave," since his doctor's statement about his condition was only an estimate of how much leave he was likely to need: "...none of the other authorities cited by FMG establish that the estimated frequency and duration of intermittent leave act as absolute limits on the employee's entitlement to leave." The company was legally obligated to find out whether certification could be provided for Hansen's additional absences, and to give him an opportunity to correct any problems with this certification, before they could terminated him.

If you are an employee and you believe your rights under the FMLA have been violated, please call The Harman Firm, PC.

August 25, 2014

Applebee's Restaurants Sued for Paying Sub-Minimum Wage to Servers for Un-Tipped Work; Court Grants Motion for Class Certification

On August 24, 2014, the Western District of New York Federal District Court granted class certification to Plaintiffs in the case Hicks et al v. T.L. Cannon Management Corp. et al. The Defendants own almost sixty Applebee's franchises in New York and employ hundreds of servers who earn most of their money from customers' tips. As is typical in the restaurant industry, these servers are paid a base wage that is well below the minimum wage. Normally a server will expect their earnings with wage plus tips to be much more than the minimum wage, and it is Applebee's policy that servers who make less than the minumum wage are paid enough to make up the difference between what they actually earned and what they would have earned if paid the minimum wage.

So far, so good. But the plaintiffs claim that they were also regularly paid the subminimum-wage base rate for hours they spent on tasks unrelated to their tip-earning customer service work. Plaintiffs enumerage several examples of such unrelated work in the Complaint:
*cleaning the dining room and all wood work with Murphy's Oil Soap
*dusting the artificats and memorabilia hanging on the walls
*windexing all the photos on the walls
*scrubbing the legs of all the chairs
*dusting all TVs
*wiping down the wrought iron
*cleaning out the cracks of the booths
*cleaning and cutting vegetables, spices, fruits
*preparing sanitation buckets
*preparing dessert shooters
*setting up the salad bar
*setting up the expo line
*breaking apart and cleaning the soda machine
*breaking down the salad bar
*breaking down the expo line
*removing and cleaning light fixtures
*scraping the gum from under every table
*removing all the items on the shelves
*cleaning and wiping down all the shelves in the kitchen
*vacuuming, sweeping, dusting, sanitizing
*replacing all paper products in the bathrooms
*cleaning bathroom floors
*washing the store's windows
*bleaching coffee cups, mugs, pots, tea kettles
*cleaning dishes and skillets
*rolling silverware
*filling creamers
*filling salt and pepper shakers
*doing expediter duties
*stocking beverage stations
*preparing entrees and appetizers

Plaintiffs allege that it was Defendants' policy not to adjust their pay to at least minimum wage when they performed these jobs, even when they spent more than 20% of their work day on these non-tip-earning tasks.

In its August 24th Order, the Court made three key decisions that favored the Plaintiffs. First, it granted the motion for class certification, with some adjustments to the Plaintiffs' proposed definition of the class.

Second, the Court found the Defendants' most straightforward argument--that businesses do not have to pay the minimum wage to tipped employees, but only a separate and lower base wage--"without merit" and "flatly contradicted by the statute, the regulations, and the relevant case law." Defendants argued that "food service workers do not receive a tip allowance or credit" that offsets part of what the employer would normally pay them; rather, they argue, food service workers simply earn a lower wage. The Court pulls up this argument by its roots, concluding that "Defendants have not cited a single case in which a court held that food service workers were subject to a completely different hourly minimum wage, as opposed to receiving a tip credit against the standard minimum wage. Cao, the sole case Defendants cite in support of their argument, actually states the opposite..." In short, the Court accepts the Plaintiffs' premise that they were entitled to at least minimum wage for all hours they worked.

Finally, third, the Court concluded that Defendants had failed to meet their legal obligation to properly notify Plaintiffs that they would be claiming a "tip credit" for money earned by servers which brought them up to the level of the minimum wage. They also failed to notify servers that they were entitled to makeup pay if they did not earn at least the minimum wage from wages plus tips. Plaintiffs won a consequential victory when the Court granted summary judgment on this point, since it implies that Defendants "were not entitled to take a tip credit and they are therefore liable to (Plaintiff) for paying her less than the standard minimum wage."

If you are an employee and you believe your rights under the Fair Labor Standards Act have been violated, please contact The Harman Firm, PC.

August 22, 2014

Massachusetts is Latest State to Require Employers to Provide Domestic Violence Leave

On August 8, 2014, Massachusetts Governor Deval Patrick signed a new law that offers leave from work to domestic violence victims and their family members; so that they can take necessary steps such as getting medical attention; seeking victim services; submitting police reports; talking to attorneys, police or courts; making arrangements for child custody; etc. The Family and Medical Leave Act offers only limited leave for the specifically medical needs of the victim, but the new law recognizes many other ways in which domestic violence can disrupt the victim's working life.

About a dozen other states have enacted similar laws. The provisions of those laws vary widely. Washington D.C.'s law is the only one that mandates paid leave. The laws vary in the activities for which leave is allowed. They also vary in the amount of time granted: some offer a set number of days, others require only a "reasonable" amount of leave, while others are silent about the length of time and only prohibit disciplining or firing employees who take time off for reasons relating to domestic violence. The Massachusetts law mandates "up to 15 days of leave from work in any 12 month period."

The new law also specifies that, while employees can be required to provide "appropriate advance notice of the leave to the employer...if there is a threat of imminent danger...the employee shall not be required to provide advanced notice of leave; provided, however, that the employee shall notify the employer within 3 workdays that the leave was taken or is being taken under this section." An obvious problem for domestic violence victims is that they can suddenly miss work, violate their employer's policy regarding notice for absences, and lose their jobs. The employee will now be guaranteed 30 days to provide any required documentation to the employer regarding the reason for their absence from work.

Under the new law, an employer can require the employee to provide documentation substantiating the domestic violence. Importantly, though, the employer cannot require the employee to provide an arrest, conviction, or other law enforcement documentation; notes from doctors, admissions from the abuser, sworn statements from counselors or shelter workers, or the employee herself are sufficient. Whatever information the employee provides must be kept confidential by the employer.

Massachusetts new "Act Relative to Domestic Violence" has two important limitations. First, before taking leave, the employee is required to exhaust "all annual or vacation leave, personal leave and sick leave" that is available. (Presumably this provision is there as a disincentive to anyone who would inappropriately claim leave under the law.) A second, more worrisome limitation is that the law "shall apply to employers who employ 50 or more employees." Lawmakers' hesitance to impose costs on small businesses is obviously understandable, there must be hundreds of victims of domestic violence who work for businesses with less than 50 employees. Surely they should be protected as well.

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

August 20, 2014

New York is 23rd State to Legalize Medical Marihuana

On July 7, 2014, New York Governor Andrew Cuomo signed into law the Compassionate Care Act, creating a regulatory framework for the controlled growth of a new marijuana industry in the state that could benefit both patients and public coffers. New York becomes the twenty-third state to legalize medical marijuana.

Critics raise many different kinds of objections to the law. Pro-legalization advocates complain that the law is disappointingly limited. It includes a complex array of regulatory requirements including licenses for users and producers; the law sunsets in seven years unless the legislature acts to renew it; it limits possession by individual users to a 30-day supply or 2.5 ounces; it specifies that there can be only five manufacturers producing medical marijuana legally in the state; and the list of diseases for which marijuana can be prescribed arguably leaves out many patients who could benefit. The new law also arguably inflates the drug's cost by forbidding whole-plant sales, prohibiting production or sale of medical marijuana in its most-common smokable form, and imposing a seven percent tax on the drug.

On the other hand, New York's law is relatively sweeping in one way: it classifies all individuals who are prescribed medical marijuana as "disabled," which implies that employers will have to make allowances--and even provide reasonable accommodation for medical marijuana users. We can expect a lot more arguments by legislators, and probably a good amount of legal activity, aimed at deciding exactly which accommodations legal marijuana users must be provided by their employers.

Other criticisms have to do with the new law's requirement that these five new large entities that will be collectively responsible for production of all legal pot in New York are required by statute to have all their employees represented by "bona fide labor organizations" and to enter into "labor peace agreements" with their employees' unions. Indeed, the first section states:

The legislature finds that the financial viability of such organizations (producers) would be greatly diminished and threatened by labor-management conflict, such as a strike at a facility that cultivates marijuana, especially because of the need for enhanced security concerning the products. Replacements during a strike would be difficult to arrange and cause delay far more significant than a strike elsewhere. Accordingly, the legislature finds that the state has a substantial and compelling proprietary interest in this matter, and finds that labor peace is essential for any organization to conduct business relating to the sale of medical marihuana."

Critics argue that this requirement will greatly increase the cost of labor and, ultimately, the product. Others simply oppose union activity generally and see the law's provisions about "labor peace" as a victory for their pro-union adversaries. Interestingly, the authors of the law seem to be most interested in making the state's new marijuana industry economically stable, by putting employees under agreements that offer them benefits in return for agreeing not to engage in disruptive activities like strikes.

If you believe your rights under New York's new Compassionate Care Act have been violated at work, please contact The Harman Firm, PC.

August 18, 2014

Home Depot Settles FLSA Misclassification Case with Fourteen Plaintiffs for $376, 941.91; Over 100 Opt-Ins Dismissed Without Prejudice and Able To Bring Further Actions

On August 11, 2014, the U.S. District Court for the Southern District of California approved a settlement in the case Ambrosino, et al. v. Home Depot, U.S.A., Inc, which would award about $224,000 to the plaintiffs and about $113,600 to their counsel.

There was extensive legal wrangling about the constitution of the class of plaintiffs, and about confidentiality provisions in the settlement agreement, but the basic complaint in this case was relatively straightforward. Plaintiffs allege that Home Depot intentionally misclassified certain employees as managers in order to avoid paying them time-and-a-half for hours worked in excess of forty per week. Specifically, while the company paid its Department Heads, Supervisors, Store Managers, and Store Managers hourly wages and premium time-and-a-half pay when they worked overtime, another category of employees--Merchandising Assistant Store Managers (MASMs)--were classified as exempt from overtime pay under the Fair Labor Standards Act (FLSA) and never paid overtime.

In their complaint, plaintiffs allege that Home Depot classified them as "executives," and thus as exempt under the FLSA, despite the fact that their job duties consisted primarily of non-managerial duties such as "packing and unpacking freight; setting product; cleaning the bathrooms and the store; picking up and taking out the garbage; returning shopping carts from the parking lot to inside the store; running registers; receiving trucks; building displays; cutting wood; painting displays; fixing tools; labeling product in overhead; and loading customers' cars ('tasking'). When Plaintiffs were not tasking and were on the floor, Plaintiffs spent the majority of their time providing customer service."

Nationwide, the losses suffered by Home Depot's "Assistant Managers" because of this policy are substantial: they are were required to work a minimum of 55 hours per week, and regularly have to work more than this, without ever receiving overtime pay. Plaintiffs characterize Home Depot as doing all of these things in willful violation of the FLSA, simply in order to save money on labor costs.

In the present case and several other, similar cases, judges have recently ordered that putative classes of plaintiffs be broken up and their cases transferred to different courts where those plaintiffs have resided and worked. For example, just as Judge Lorenz denied the Plaintiffs' motion for class certification in Ambrosino, a judge in the District Court for Connecticut granted defendant Home Depot's motion in James D. Costello, et al. v. Home Depot U.S.A., Inc. to sever the claims of thirty-five plaintiffs and transfer their cases back to their home states.

Hopefully other attorneys will be as determined as those representing the plaintiffs in the Ambrosino case, since the basic question of whether Home Depot misclassified its Merchandising Assistant Managers in order to avoid paying them overtime wages seems to be getting answered in the plaintiffs' favor in court.

If you believe your rights under the Fair Labor Standards Act to minimum wage or overtime pay have been violated, please contact The Harman Firm.

August 13, 2014

Appeals Court Reverses Summary Judgment in FMLA and Title VII Retaliation Case, Criticizes Defendant for Tactics

On August 7, 2014, the Seventh Circuit Court of Appeals reversed the decision by the United States District Court for the Northern District of Illinois to grant summary judgment to the Defendant in Malin v. Hospira, Inc. Judge Hamilton, writing the Court's Opinion, criticized the District Court's reasoning and actually rebuked the Defendant for the arguments it gave in seeking and defending summary judgment.

Plaintiff Deborah Malin alleged Title VII and FMLA retaliation by her employer, Hospira, Inc. (Abbott Laboratories, at the time she was hired), arguing that she was repeatedly denied promotion from about 2003 through 2007 in retaliation for either (i) pursuing a sexual harassment complaint, (ii) telling management she would need FMLA leave, or (iii) some combination of (i) and (ii).

In July 2003, Plaintiff Malin told her direct supervisor Bob Balogh that she intended to complain to Human Resources about sexual harassment by her indirect supervisor Satish Shah. Balogh then called Shah's boss, Mike Carlin, and told him about Malin's intention to complain. Balogh made this call in Ms. Malin's presence, and she heard Carlin shouting through the phone and, when Balogh hung up, he told Malin that Carlin had told him to do everything in his power to stop Malin from going to Human Resources. Malin then made a formal sexual harassment complaint. Abbot investigated Malin's complaint, and eventually issued him a counseling memorandum and written warning, but no further action was taken.

Malin would continue to work under Carlin's decision-making authority for at least five more years. The Court found that she had provided enough evidence that Carlin might have remained hostile toward her over this entire time, and that the Plaintiff could plausibly argue that he made a series of decisions which denied her advancement opportunities because of his continued hostility about the sexual harassment complaint. While she received glowing reviews from just about everyone else, as long as Carlin remained the final decision-maker for all promotions in the IT department, Malin's career stagnated. In fact, as part of a company reorganization she was actually demoted from level-2 to level-3 manager, after a new position was created above hers. That position remained open for over a year, until Carlin Malin's new manager to hire an external candidate for the position. Malin's application for the position was never considered.
The Defendant had argued in District Court, and the Judge had agreed, that the three-year gap between Malin's complaint and the reorganization undermined any inference about retaliation by Carlin. But the Circuit Court cites several decisions in which it was made clear that the mere passage of time between protected activity and adverse action does not undermine a retaliation complaint.

Regarding the FMLA retaliation claim, the Defendant had argued that Carlin's decision not to promote Malin could not have been retaliation for her FMLA claim, since that claim was made days after a meeting in which the decision not to promote her had already been made. Again poring over the evidence, the Appeals Court found that this claim was disputable, especially considering that no evidence was offered porporting to show that such decisions had been made then.

The Circuit Court Judges closed their Opinion paper by scolding the Defense for "misrepreset(ing) the record and Malin's legal arguments" by "cherry-pick(ing) isolated phrases from Malin's deposition..." They warn Defense counsel that "this approach to summary judgment...quickly destroys their credibility with the court." At one point the Judges referred to the Defendant's legal strategies as "shenanigans," and highlighted the dangers they involve.

If you believe you have been retaliated against for claiming FMLA leave from work, or for complaining to management about unlawful behavior at work, please contact The Harman Firm, PC.

August 11, 2014

Alabama District Court Judge Denies Summary Judgment for Defendant In Race Discrimination Case

On July 17, 2014, a federal judge issued an order denying summary judgment to the defendant in the case Clayton v. Golden Bird Acquisition LLC. In the lawsuit, plaintiff Sylvia L. Clayton alleges that her employer, a Krystal restaurant in Trussville, AL, denied her many requests for promotion to the position of "Master Cashier" because of her race. Judge William M. Acker, Jr. found that the appropriate framework for deciding the case is the "tired and sometimes tiresome burden-shifting framework of McDonnell Douglas Corp. v. Green." This framework calls for three stages of argument: i) plaintiff establishes a prima facie case of racial discrimination; ii) the employer offers some nondiscriminatory reason for the acts in question; and iii) the complainant tries to show that the proffered nondiscriminatory reasons are pretextual.

In most ways this case is fairly ordinary, but much of Judge Acker's analysis is interesting and even entertaining. At the outset he notes that neither side begins with a strong argument--"Frankly," he states, "both parties' cases are fragile..." The plaintiff shows that the defendant's process of evaluating and promoting her was "callous, blundering, and even dishonest," but also provides "little evidence that race had anything to do with it." Over the course of almost four years Ms. Clayton made her desire to be promoted clear to three different managers, each of whom told her that that they were "working on it." She eventually received a Master Cashier shirt with her name on it, but was never officially given the promotion, the title, or the accompanying pay raise. In the meantime, several other people, both white, were offered the position of Master Cashier.

It is unclear whether Ms. Clayton was ever actually given the promotion. So one interesting feature of the case is that the plaintiff's argument takes the form of a dilemma: either the defendant discriminated against her by failing to promote her, or else they discriminated against her by unlawfully denying her pay equal to that of other Master Cashiers.

Whichever horn of the dilemma is chosen, the plaintiff would have the difficult task showing that the denial of promotion or pay was the result of racial discrimination. But this is where the Judge's analysis gets most interesting. "Plaintiff's lack of affirmative evidence...is not fatal to her case," Judge Acker states, because "it is permissible...for the trier of fact to infer the ultimate fact of discrimination from the falsity of the employer's explanation." He continues "plaintiff can rest her case entirely on the inadequacy of defendant's explanation, rather than the adequacy of her own. Defendant certainly has provided her the opportunity to do so." The defendant's testimony and arguments contain several inconsistent or implausible claims. For example, they argue that the plaintiff never expressed an interest in the position of Master Cashier to one manager, although many others testified that she had done so. The defendant also argues that they did not consider plaintiff to be a deserving employee, but this argument is based on the testimony of a manager who was later fired for embezzlement, and thus had questionable credibility, and in any case there is "abundant evidence that plaintiff's performance was conspicuously good and evidence that Moore expressed optimism about her promotion throughout his tenure." Finally, the defendant claims that Ms. Clayton was not promoted prior to 2012 because she had not completed the requisite training, but this claim is belied by the fact that they promoted several other cashiers whose training was also incomplete at the time.

The Court clearly found the defendant in this case to have a severe credibility problem. In fact, making light of the defendant's use of italics and bold print for emphasis in their briefs, the Judge quipped "The court ought to coin a new legal Latinism to capture the phenomenon that the more emphasis is placed on text, the less likely the text is to be true. The maxim would apply here..."

If you are an employee and you believe you have been denied employment or promotion because of your race, please call The Harman Firm, PC.

August 9, 2014

Company Responsible For Illegally Interfering with Plaintiff's FMLA Leave, Although She Never Actually Requested It

On July 25, 2014, the United States District Court for the Middle District of North Carolina denied the Defendant's motion to dismiss/strike the Plaintiff's FMLA claims in the case Alexander v. Carolina Fire Control, Inc. Plaintiff Alexander worked for Defendant as a Project Manager for about six years before her young son was diagnosed with cancer in 2012. At that time she informed her employer that she would need to take leave from work on an intermittent basis in order to care for her son. She requested and received from the company's Human Resources Department the paperwork she and her physician needed to apply for FMLA leave. however, before she could turn in her application materials, she alleges, the company's owners called her into a meeting wherein they discouraged her from applying for leave. Instead, they told her, she would be allowed "to work a reduce number of hours" and to "work from a remote location by laptop so that she could provide care for her son without using FMLA." In response to the owners' requests, she decided not to submit the application for intermittent leave.

Plaintiff continued to work at Carolina Fire Control, Inc. from August 2012 to January 2013, working approximately 30 to 40 hours per week, while caring for her son. However, because she was working fewer hours, and outside the office, she was far less available than before to respond to supervisors' communications. On January 9, 2013, with no prior warning, Defendant informed Alexander that she was terminated for insubordination.

In her complaint, Plaintiff argues that she had not been insubordinate, and that Defendant had failed to explain this charge or to give her any indication that there was a problem with her work.

The basis of Defendant's argument in their motion is that the Plaintiff never applied for FMLA leave, and thus they did not interfere by denying her request. Plaintiff therefore could not possibly succeed in showing that she had been denied leave to which she was legally entitled. Also, since they voluntarily offered the Plaintiff various accommodations, including a number of hours away from work exceeding what she would have had with FMLA leave, any damages resulting from Plaintiff's not taking leave could not be Defendant's responsibility.

The Court disagreed with the Defendant's reasoning; assuming Plaintiff was basically correct about the relevant facts, Judge Beaty concludes, the Defendant's act of discouraging the Plaintiff from taking FMLA leave might well constitute an unlawful attempt "to interfere with, restrain, or deny the exercise of or the attempt to exercise, any right' under the FMLA." And the losses she suffered--emotional and financial losses due to her termination--arguably would not have happened had taken FMLA leave rather than accepting the alternative offered by her supervisors.

If you are an employee and you believe your rights under the Family and Medical Leave Act have been violated, please contact The Harman Firm, PC.

August 6, 2014

Royal Tire, Inc. Will Pay $182,500 to Female Manager Who Was Paid Far Less Than Male Predecessor

On August 4, 2014, the U.S. District Court for Minnesota issued a consent decree approving a $182,500 settlement for the Plaintiff in Equal Employment Opportunity Commission v. Royal Tire, Inc., and ordering changes to the company's policies and practices regarding sex discrimination in pay.

Plaintiff-Intervenor Christine Fellman-Wolf was promoted to the position of Human Resources Director at Royal Tire, Inc. in January 2008. The male employee who held that position before her was paid $82,800 per year. According to company policy she should have been paid between $66,268 and $82,825, but they actually paid her only $47,164. In addition, Ms. Fellman-Wolf's predecessor had also been treated as part of its Executive Team and awarded a bonus of $58,000 in 2010, which was a typical year. However, the position ceased to be part of the Executive Team as soon as Fellman-Wolf took over, so she received only the $7,000 bonus paid to members of the management team. In short, the EEOC argued, Ms. Fellman-Wolf suffered substantial monetary losses due to Royal Tire's discriminatory treatment of her, in spite of her repeated requests for equal pay.

The EEOC alleged in its complaint that Royal Tire violated the Equal Pay Act of 1963 ("EPA") and Title VII of the Civil Rights Act of 1964, both of which prohibit sex discrimination in pay. John C. Hendrickson, Regional Attorney for the EEOC's Chicago Discrict, said "Too many employers appear to think that it's enough just to let women in the door, and that no one is going to notice if the money in their pay envelope is less than men's who are doing the same work. Bad guess. Employers should know that such pay discrimination is a violation of federal law under two statutes and that it's a top law enforcement priority for the EEOC. That should be the takeaway for employers-and women-who have been watching this case."

There is another takeaway from this case: from a legal standpoint it is fortuitous that Royal Tire maintains a relatively transparent compensation policy, at least internally, making it a relatively straightforward matter to compare Fellman-Wolf's compensation relative to her male counterparts. In a vast majority of sex discrimination cases like this one, the companies are more secretive about their policies and openly threaten retaliation against employees who try to find out how their salaries compare to those of their coworkers. The Paycheck Fairness Act, if passed, would begin to address this problem, but it has been rejected by the U.S. Senate three times.

Under the terms of the settlement, Royal Tire will now be required i) to investigate, report, and correct current sex-based inequality in employees' pay; ii) to require annual training for managers and employees regarding Title VII compliance; iii) to post notices for employees; iv) and to record all reports of sex discrimination by employees and report all such complaints to the EEOC.

If you believe an employer has discriminated against you based on your sex, please contact The Harman Firm, PC.

August 4, 2014

In FLSA Misclassification Case, Fifth Third Bank Settles With Mortgage Loan Officers for Four Million Dollars

On July 11, 2014, the United States District Court for the Southern District of Ohio approved a $4,000,000 settlement in the case Swigart et al v. Fifth Third Bank. Besides the two named plaintiffs, 366 individuals opted into the lawsuit, and none of the plaintiffs has rejected the settlement.

Fifth Third Bank is accused of misclassifying its Mortgage Loan Officers (MLO's) as exempt under Section 13(a) of the Fair Labor Standards Act, and on that basis failing to pay premium overtime pay (time-and-a-half) to hundreds of Mortgage Loan Officers ("MLOs"). The Court found that the "complexity, expense, and likely duration of litigation" weighed strongly in favor of the settlement. In addition to questions about the facts of the case and the legal status of the class of plaintiffs, based on issues raised so far there would surely be extensive motion practice relating to the exempt status of the employees.

As suggested by their decision to settle, based on previous decisions by the Court the defendants probably believe the process of litigating these issues would be not only long and costly, but likely to end in failure. On the key question in the case--whether the employers were properly classified as exempt under the FLSA from overtime pay--the Court had already rejected the defense that Fifth Third Bank had made good faith attempt to comply with the law as it had been interpreted by the Department of Justice. This defense has several problems. First, nearly all of the DOL's pronouncements on this issue-a 1999 Opinion Letter, a 2001 Opinion Letter, 2004 Revisions to the relevant regulations all made clear that MLO's were primarily salespeople and lacked the requisite authority and control to be exempt from the FLSA's wage requirements.

The Defendant cited one Department of Labor statement that seemed to support the argument that MLO's are exempt: an Opinion Letter released in 2006, which concluded that a certain group of MLO's being considered were exempt. But, crucially, that same letter states: "if a MLO's primary duty was selling mortgage loans," as opposed to managerial or other duties, then "the MLO would not qualify under the exemption." This 2006 Letter was then officially withdrawn in a 2010 Administrator's Interpretation, owing to its "misleading assumption," and "selective and narrow analysis." Despite being misleading, the 2006 letter as consistent with all other DOL pronouncements in stating that MLOs are not exempt insofar as their primary job responsibility is sales.

Thus, the Court ultimately rejected the Defendant's Motion for Summary Judgment based on the good faith defense, concluding that there was "considerable evidence" that the Defendant did in fact regard MLO's primarily as salespeople, and that there was "no evidence that Defendant made an attempt to communicate with its MLOs or their supervisors to determine the MLOs' primary job duties or whether they were actually performing the same job duties as the mortgage loan officers described in the 2006 Opinion Letter."

If you are an employee and you believe your rights under the Fair Labor Standards Act have been violated, please contact The Harman Firm, PC.

July 30, 2014

NLRB Decides McDonald's Franchises and Parent Company are Joint Employers, Company Now Potentially Liable in Dozens of Lawsuits Against Franchisees

On July 29, 2014, the General Counsel Richard Griffin of the National Labor Relations Board ruled that franchisor McDonald's, USA, LLC, is a joint employer with each of its 31,000+ franchises. The NLRB will therefore name the corporation as a respondent in each of the sixty-four lawsuits currently pending against McDonald's franchises, whenever these lawsuits are not settled by the parties. Thus, the corporation will now be accountable for working conditions at all of its franchises; it will no longer be able to avoid liability by shifting it to franchisees.

Critics claim that the NLRB decision strikes a blow--perhaps a fatal one--against the franchise model used by many of the country's largest companies. The fast food industry is particularly invested in the franchising business model; for example, 90% of McDonald's 14,000 restaurants in the U.S. are owned by franchisees. Advocates of the franchise model such as McDonald's' human resources president Heather Smedstad complain, predictably, that "activist" NLRB judges have "change(d) the rules for thousands of small businesses, and (gone) against decades of established law regarding the franchise model in the United States." They claim that the franchise model is needed in order to "run successful businesses as part of a system that every day creates significant employment, entrepreneurial and economic opportunities across the country."

A series of recent studies, publications, and government proceedings have focused on questions about economic and legal aspects of the franchise system. In recent hearings by the United States House of Representatives, the National Restaurant Association complained that the NLRB was actively trying to change the joint employer standard in ways that "would be bad for workers, employers, franchisors, and the economy." They argued, for example, that McDonald's exercises too little oversight and control over its franchises to be treated as a joint employer.

The Department of labor's Wage and Hour Division is considering similar measures; Division administrator David Weil was the principal investigator for a DOL report entitled "Improving Workplace Conditions through Strategic Enforcement: Report to the Wage and Hour Division Strategic Enforcement." In the report, Weil argues that the "fissuring" of the employment relationship under franchising arrangements tends to promote wage-and-hour noncompliance. His concern, he told the U.S. Senate, is not with the franchise model itself, but with the use of franchising by employers to subvert the law.

As we have recently written here, there have been several recent strikes, and threats of strikes, by fast food workers nationwide. Some pro-business advocates have expressed concern that the NLRB decision about franchisor accountability will open the floodgates to unionization in sectors of business that have been generally successful at thwarting union activity.

If you are an employee and you believe your rights under the Fair Labor Standards Act or the National Labor Relations Act have been violated, please contact The Harman Firm, PC.

July 28, 2014

President Obama Signs Executive Orders Forbidding Discrimination on the Basis of Sexual Orientation and Gender Identity in Federal Government and Most Contractors

On July 21, 2014, President Obama signed an Executive Order amending Executive Order 11478 adding "gender identity" to the list of categories on the basis of which the government may not discriminate in its hiring and employment practices. The amendment now states that: "It is the policy of the Government of the United States to provide equal opportunity in Federal employment for all persons, to prohibit discrimination in employment because of race, color, religion, sex, national origin, handicap, age, sexual orientation, gender identity, or status as a parent and to promote the full realization of equal employment opportunity through a continuing affirmative program in each executive department and agency."

In a second Executive Order, the President took an unprecedented further step in the same direction: he amended Executive Order 11246, which establishes rules for private companies that do contract work for the government exceeding $10,000.00 in a twelve-month period, as well as subcontractors of those complanies, to follow the same anti-discrimination policy. Each contractor will now be governed by the regulation stating: "During the performance of this contract, the contractor agrees as follows: (1) The contractor will not discriminate against any employee or applicant for employment because of race, color, religion, sex, sexual orientation, gender identity, or national origin." Similar language is added in other sections of the Order, and contractors and subcontractors covered by it will now be required to include corresponding nondiscrimination clauses in subcontracts with their vendors and supplies of goods and/or services necessary to carry out their covered contracts, and to take affirmative action to ensure that individuals are employed and treated without regard to sexual orientation and gender identity. Notably, this Executive Order does not include exemptions for religious organizations.

As he signed the Order, the President said "It doesn't make any sense, but today in America, millions of our federal citizens wake up and go to work with the awareness that they could lose their job, not because of what they do and fail to do, but simply because of who they are--lesiban, gay, bisexual, transgender--and that's wrong. We're here to do what we can to make it right, to bend that arc of justice just a little bit in the other direction." Then, speaking to LGBT advocates in attendance, he continued: "Many of you have worked for a long time to see this day come. You organized, you spoke up, you signed petitions, you sent letters--I know because I got a lot of them...Thanks to your passion and advocacy and the irrefutable rightness of your cause, our government--the government of the people by the people and for the people--will become just a little bit fairer."

Also in attendance were Senators who have fought to pass legislation to make these policies the law of the land: the Employment Non-Discrimination Act, if it is ever implemented, will prohibit all employers from discriminating on the basis of sexual orientation or gender identity.

If you believe your employer has illegally discriminated against you, please contact The Harman Firm, PC.

July 25, 2014

EEOC Sues AutoZone for Discriminating Due To "Perceived Customer Preference" for Latinos over Blacks at Chicago Store

On July 22, 2014, the Equal Employment Opportunity Commission filed a lawsuit in the Northern District of Illinois against AutoZone, Inc. for discrimination. AutoZone is a large nationwide company headquartered in Memphis, TN. The Commission alleges that the company forced district manager Kevin Stuckey to transfer from one Chicago-area store to another as part of its "effort to eliminate or limit the number of black employees at (its) Kedzie store...because it believed that customers of the Kedzie Store preferred to be served by non-black, Hispanic employees." If true, they allege, this would be a clear violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2(a), which prohibits any effort "to limit, segregate, or classify store employees on the basis of race."
When AutoZone informed Mr. Stuckey of their decision to relocate him, he was offended and refused, and they then terminated his employment. Through these actions, the EEOC alleges, the company acted so as to "deprive Stuckey and other black individuals of employment opportunities because of their race."

The company's belief that Hispanic customers at its Kedzie location would prefer to interact with Hispanic over Black employees was confirmed by the EEOC's investigation, supervised by District Director John Rowe.

John Hendrickson, the EEOC's regional attorney in Chicago, said "Fifty years after the adoption of the Civil Rights Act, a major employer transferring an employee simply because of his race and then firing him for not going along is unacceptable. When the employer is a major national brand and a leader in its industry, it's even worse. Everyone must understand that supposed customer preference is no excuse for discrimination - it's still illegal, and the EEOC will step in to challenge it."

The EEOC is requesting an order requiring the defendant to revise its policies to eliminate discrimination, to reinstate Stuckey to his position, to give him back-pay, and compensate him for economic losses, emotional pain, suffering, humiliation, inconvenience, and mental anguage as determined by a jury at trial.

If you are an employee and you believe you have been subject to gender discrimination, please contact The Harman Firm, PC.

July 23, 2014

Plaintiffs in Wage-and-Hour Case Against Chipotle Mexican Grill Get Court's Approval to Amend Complaint, Expand Case

On July 2, 2014, Magistrate Judge Sarah Netburn from New York's Southern District granted the plaintiff's motion in Scott v. Chipotle Mexican Grill, Inc. to file an amended complaint, which will convert four opt-ins to named plaintiffs and add four new state labor law class action claims. As of January 20, 2014, the close of the opt-in period, 582 plaintiffs had opted into the case, in addition to the two remaining original named plaintiffs.

The central claims in the original complaint are not unusual or complicated: plaintiffs allege that Chipotle violated both the Fair Labor Standards Act and New York Labor Law by misclassifying hundreds of its employees as "apprentices" who were supposedly FLSA exempt, although in fact they did the same work as non-exempt crew members--preparing guacamole, chopping vegetables, making burritos, etc. Because they were thus misclassified, these "apprentices" allege that they were never paid overtime or spread-of-hours pay as required under both state and federal law.

On March 4, 2013, the plaintiffs filed an amended complaint adding Jay Ensor as a named plaintiff, alleging overtime claims under the FLSA as well as parallel claims under Missouri state law. A class of Missouri Chipotle employees was thereby added to the existing class of New York employees. The newly-approved amended complaint will add new named plaintiffs from Colorado, Illinois, North Carolina, and Washington, along with new state-law claims for the corresponding four classes of Chipotle workers from those four states. The FLSA action already encompasses a nationwide class: on June 27, 2013 the plaintiffs' counsel won the Court's approval to send notification of the pending legal action to a nation-wide class of prospective opt-in plaintiffs.

As the judge explains in her discussion, the Court's main task in deciding whether to grant leave to file an amended complaint, once the plaintiffs have used their one opportunity to file an amended complaint as of right, is to determine whether the parties moving for leave to amend their complaint again have shown good cause. This means they must have demonstrated diligence prior to filing their motion, which implies that the deadline to amend the pleadings could not reasonably have been met. In this case the Court concluded that the answer to this question was clear: while they might have been able to anticipate that new state law claims would be available when the lawsuit was filed, "Plaintiffs could not actually know the entire scope of potential plaintiffs until notice issued to the nationwide collective, until those potential plaintiffs opted in, and until the opt-in period finally closed." The Court had denied the plaintiffs' request, as part of their motion for conditional certification, for Chipotle to reveal all class members' dates of employment and work locations along with their contact information; thus, the plaintiffs had no option but to wait for people from other states to opt into the lawsuit before they could bring actions under those states' labor laws. Thus, the Court concluded, since plaintiffs' counsel did all they could reasonably have been expected to do to find all class members as soon as possible, and "given the choice between litigating each claim separately or in the aggregate," the law "favors the latter," the proper decision in this case was to allow the plaintiffs to expand their complaint.

If you are an employee and you believe your rights under the Fair Labor Standards Act have been violated, please contact The Harman Firm, PC.

July 21, 2014

Northern California District Court Rejects Collective Action Settlement in Daniels v. Aéropostale

On May 29, 2014 a federal judge denied the parties' joint motion for preliminary approval of a Fair Labor Standards Act settlement in the third of a trio of wage-and-hour cases against Aeropostale: "state-law overtime and wage-and-hour claims were filed in Sankey, the state-law vacation, rest-period, and waiting-time claims were filed in Pakaz, and the FLSA overtime claims were filed here (Daniels)." In each of these cases the plaintiffs are represented by Joseph R. Becerra from the Law Office of Joseph R. Becerra and Torey Joseph Favarote from Gleason & Favarote, LLP, and all involve similar complaints.

The judge was harshly critical in his order, concluding that the settlement "is so unfair, it cannot be fixed." One problem he found with the proposed settlement is that, by prosecuting three similar cases against the same defendant, with three overlapping lists of opt-in plaintiffs, plaintiffs' counsel have created conflicts of interest. The court notes that "the Supreme Court has warned of the problems with an attorney who currently represents another class against the same defendant...because defendants have an incentive to settle all claims at once, if it settles at all, thereby creating opportunities for counsel to manipulate the allocation of settlement dollars to the detriment of absent class members. Here the same plaintiff's counsel settled all three actions within months."

Second, the settlement would have distributed only $8,645.61 among 594 collective-action members, Worse, according to the distribution formula, a large majority of collective action opt-in members would sign away their rights to sue in exchange for nothing. "The collective-action opt ins," the Court explained, "would be better off simply walking away from this lawsuit with their rights to sue still intact." Further, he continued, the plaintiffs making almost no attempt to argue that this settlement would be fair.

The judge next criticized the fact that the proposed agreement contains an extremely broad release clause that would insulate "'defendants...the Released Parties, Representative Plaintiff, other Settlement Collective Action Members, Collective Action Counsel, Defendants' Counsel, [and] the Claims Administrator' from 'any claim ...based on distributions or payments made in accordance with this Settlement Agreement." This, the Court concluded, "takes the cake. Not only would most opt ins receive nothing at all, or in some cases, virtually nothing at all, but absent opt ins could not go after their counsel for malpractice in foisting this deal upon them."

The Court finally criticizes plaintiffs' counsel for submitting a fourteen-page notice of settlement, to be sent to all potential opt in plaintiffs, along with a one-page objection form, "all chock-full of legalese," devoid of any clear explanation of the salient points, and in a form that was sure to be "oppressive to the average person." In the notice, plaintiffs' counsel also carefully avoid mentioning the fact that nearly all plaintiffs would receive "nothing or virtually nothing" in the settlement.

If you are an employee and believe your rights under the Fair Labor Standards Act have been violated, please contact The Harman Firm, PC.