November 19, 2014

Courts Seem Poised to Weaken NCAA's Limits on Compensation of College Athletes

As a lawyer or judge might put it, the perennial legal issue of whether college athletes can be paid is now ripe. To understand the current state of affairs with regard to the legal status of the NCAA's policies on payment of student-athletes, we must begin by reviewing some recent history.

On June 18, 2012, the Seventh Circuit Court of Appeals upheld a district court's grant of summary judgment to the defendant in the case Agnew et al. v. National Collegiate Athletic Association (NCAA). But this was one of those cases wherein the judge's reasoning was actually more important than the decision. The plaintiffs were football players who earned scholarships to play at NCAA Division I football programs, suffered career-ending injuries while playing, then did not have their scholarships renewed and were forced to pay their tuition out of pocket to complete their education. Their argument in the case was that, but for the NCAA's bylaws, which limit the number of scholarships schools can offer to athletes and prohibit schools from offering multi-year scholarships, these players would have been offered four- or five-year scholarships.

The question for the court in Agnew was whether the NCAA's policies violated the Sherman Antitrust Act. To show this, the plaintiffs would have to prove three elements: (1) a contract, combination, or conspiracy; (2) a resultant unreasonable restraint of trade in [a] relevant market; and (3) an accompanying injury. The circuit court determined that the first element had been provided, since "there is no question that all NCAA members schools have agreed to abide by the bylaws." It also did not deny that these athletes suffered substantial economic damages in having to either pay for the remainder of their education, after their scholarship support ended, or else absorb the cost of transferring to a new school. The decision came down to one issue, then: whether the plaintiffs had shown that the NCAA's policies "restrained trade in a relevant market."

In its motion for summary judgment, the defendant argued that the plaintiffs had failed to define precisely the market within which the alleged anti-competitive actions were supposedly taken. "...we believe," the court states, "it is incumbent on the plaintiff to describe the rough contours of the relevant commercial market in which anticompetitive effects may be felt. It must therefore be determined whether the actual markets allegedly identified in plaintiffs' complaint--the market for bachelor's degrees and the market for student-athlete labor--were actually identified...The district court held that plaintiffs failed to identify in their complaint either of the markets they now present, and we agree." In short, the plaintiffs made a strategic error by failing to include any definition of the relevant market in their complaint.

Interestingly, though, the court went on (seemingly) to offer advice to future plaintiffs pursuing similar claims. It explained that the notion of a market for bachelor's degrees would be problematic on several grounds. For example, strictly speaking it is not bachelor's degrees, but only educational instruction, that students purchase; also, the class of consumers of bachelor's degrees includes far more people than college athletes. But on the other hand, the court volunteered, "the market for student-athletes...would meet plaintiffs' burden of describing a cognizable market under the Sherman Act. As an initial matter, labor markets are cognizable under the Sherman Act." "Unfortunately for plaintiffs, nothing resembling a discussion of a relevant market for student-athlete labor can be found in the amended complaint. Indeed, the word labor is wholly absent."

The natural conclusion from the circuit court's discussion of Agnew is that another plaintiff or plaintiffs making essentially the same claims as the plaintiffs in this case, could prevail if they alleged that the NCAA was violating the Sherman Act by interfering with the market for student-athlete labor. And there is a current case that does exactly this: in Rock v. the National Collegiate Athletic Association, plaintiff John Rock asserts, on behalf of himself and a broadly-defined class of similarly situated individuals, that in its efforts to avoid paying student-athletes while channeling hundreds of millions of dollars to itself, the NCAA and its member institutions have "unlawfully agreed to artificially fix or reduce the amount of athletics-based scholarships to be awarded to class members in exchange for the student-athletes' labor by agreeing amongst themselves not to offer multiyear athletics-based scholarships and by agreeing among themselves to artificially limit the overall supply of athletics-based scholarships."

The plaintiffs in Rock followed the Seventh Circuit's advice almost to the letter, in the process quoting their ruling from Agnew at length, and seem to have made the case that the appeals court wished it had heard.

A ruling in favor of the plaintiffs in Rock would be, so to speak, a real game-changer. Perhaps it would become precedent for eventually allowing colleges to compete for student-athletes by (finally) offering to pay them for their work.

If you believe your rights have been violated by a current or recent employer, please contact The Harman Firm, PC.

November 17, 2014

Court Denies Summary Judgment To Defendant in Georgia Sexual Harassment Case

On November 10, 2014, Federal District Court Judge W. Louis Sands of the Middle District of Georgia denied summary judgment to the defendant in Turner v. Parker Security and Investigative Services, Inc. ("Parker"), finding that the plaintiff had introduced genuine disputes of material fact.

Parker employed plaintiff Latrecia Turner as a security guard at a Sourthern Ag Carriers, Inc. ("Southern Ag") facility in Blakely, Georgia from May, 2011 through January, 2012. On January 6, 2012, after her supervisor told Turner that she had violated company policy by using her cell phone at work, Turner informed her that she had used the cell phone to discourage Southern Ag drivers from sexually harassing her. That same day, Turner met with Parker District Manager Ricky Reynolds to discuss her complaints about continuous sexual harassment by Southern Ag workers, and Reynolds in turn discussed those complaints with the Director of Operations from Southern ag.

Southern Ag then informed Parker that Turner would not be allowed to return to work at their Blakely facility because the drivers had denied her allegations. On January 10, 2012, her supervisor informed Turner that she was being trasferred to a different Parker facility in Cuthbert, Georgia, about thirty miles away from Blakely. Turner rejected the new position because she did not have reliable transportation, and Parker then terminated her.

Noting that the Plaintiff's only claims pertained to retaliation rather than harassment, the Court decided to "...apply only Title VII retaliation law in analyizing Parker's Motion for Summary Judgment." Under Title VII, it is unlawful "for an employer to discriminate against any of his employees...because [that employee] opposed any practice made an unlawful employment practice [by Title VII]."

The court concluded that there was no genuine issue of material fact as to whether Turner engaged in protected activity. There was no dispute as to whether she had complained about sexual harassment to her supervisors, that she had used her cell phone in an attempt to avoid interacting with the drivers she complained about, or that she had reason to believe the behavior about which she complained was in fact harassment.

The court also resolved the question the whether the company had taken ad adverse employment action. Parker might have argued that Turner had reported on her application that she had access to reliable transportation, making her transfer to a different work site not burdensome enough to qualify as an "adverse" action. However, the court noted that transfer can be an adverse employment action, depending on the employee's circumstances. In this case, since Turner earned $7.40 per hour and could not afford a new means of transportation to the Cuthbert site, the court concluded that "Parker's making the transfer mandatory after learning that Turner did not have reliable transportation constituted a materially adverse employment action."

Finally, Parker claimed to have a legitimate, non-retaliatory reason for transferring Turner: to protect her from harassment by the Southern Ag drivers. But the court seemed skeptical about this claim, finding no support for it in the deposition testimony, and concluded that this would be (at best) a factual question for a jury to consider.

If you believe your employer has retaliated against you for complaining about sexual harassment or discrimination, please contact The Harman Firm, PC.

November 12, 2014

Minnesota District Court Rejects EEOC's Motion for Preliminary Injunction Against Honeywell's Employee Wellness Program

On November 6, 2014, the United States District Court from Minnesota issued a Memorandum Opinion and Order in the case Equal Employment Opportunity Commission v. Honeywell International Inc denying the EEOC's motion for an injunction blocking Honeywell from implementing its new employee wellness program. Honeywell's program requires employees and their family members to undergo biometric screening to use company-subsidized health savings accounts or, if they do not undergo such screening, pay several surcharges. The company claims that its policy carries out the intent of the Affordable Care Act ("ACA,") offering expanded access to health care for employees at reduced cost. But the Commission argues that these requirements violate both the Americans with Disabilities Act ("ADA") and the Genetic Information Nondiscrimination Act ("GINA"), by punishing employees who do not submit to a blood draw and screening for e.g. blood pressure, cholesterol, glucose, and nicotine levels.

The goal of Honeywell's voluntary wellness program is to reduce the cost of employees' health care by screening for medical problems and encouraging healthy lifestyle choices. The sticking point for the EEOC concerns penalties employees and their families would suffer if they choose not to take the biometric tests and participate in the program. For example, non-participants would lose up to $1500 in company contributions to their Health Savings Accounts, incur $500 surcharge added to their annual medical plan cost, as well as a $1000 'tobacco surcharge' for choosing not to be tested (whether or not they smoke). Employees who choose not to participate stand to lose up to $4000 through surcharges and lost HAS contributions, the EEOC concludes.

On its website, the company defends the program's inclusion of surcharges for non-participants: "we don't think it's fair to the employees who do work to lead healthier lifestyles to subsidize the healthcare premiums for those who do not." They argue that employees, in addition to promoting their health, would save about $125 on their health coverage by participating in the program, and that they have safeguards to keep employees' health information from being disclosed to the company.

So far the Court has only denied the Commission's motion for an injunction against Honeywell. But it also acknowledged both the gravity and novelty of this case, noting that "...great uncertainty persists in regard to how the ACA, ADA and other federal statutes such as GINA are intended to interact...As a general matter, EEOC enforcement actions are designed to be in the public interest. At the same time, Honeywell's wellness program--which aims to raise awareness of important health indicators among its employees without requiring specific behavior changes--appears to comply with the ACA's surcharge limits while also supporting one of the primary goals of healthcare reform: reducing overall health care costs."

The Court expressed some reservations about the EEOC's claim that Honeywell's program violates the law, but also acknowledged that this is an early stage of a potentially important and interesting case. "Should this matter proceed on the merits," Judge Montgomery concludes, "the Court will have the opportunity to consider both parties' arguments after the benefit of discovery in order to determine whether Honeywell's wellness program violates the ADA and/or GINA."

If you believe your rights under the Americans with Disabilities Act and the Genetic Information Nondisclosure Act have been violated by an employer, please contact The Harman Firm, PC.

November 11, 2014

Restaurant in Michigan Refused to Hire Pregnant Woman in Violation of Federal Law

On November 4, 2014 the EEOC filed a lawsuit against Crooked Creek & Creekside Bar & Grille (Crooked Creek) restaurant in Saginaw, Michigan, at the U.S. District Court, Eastern District of Michigan for violating federal law by refusing to hire a qualified applicant as a food server because she was pregnant.

According to the EEOC's lawsuit, the job seeker had prior experience working in a restaurant. She applied for a vacant food server position in February 2013. Her first interview with Crooked Creek went well and she was asked to return for a second interview. When the applicant revealed her pregnancy during the second interview, however, Crooked Creek refused to consider her further for the job. To refuse to consider a woman for a job because she is pregnant violates Title VII of the Civil Rights Act of 1964, as amended by the Pregnancy Discrimination Act (PDA).

The PDA amended Title VII to state that discrimination "because of sex" includes discrimination "on the basis of pregnancy, childbirth, or related medical conditions." Further, women affected by pregnancy, childbirth, or related medical conditions must be treated the same for all employment-related purposes. In addition to making it unlawful for an employer to refuse to hire a woman because she is pregnant, the PDA also means that if a pregnant woman is temporarily unable to perform the functions of her job due to a pregnancy-related condition, the employer must treat her in the same manner as any other temporarily disabled employee, by providing modified tasks, alternative assignments, disability leave, or leave without pay. Further, an employer may not fire, demote, or deny promotion to a woman because she is or may become pregnant.

New York's state and city law also provide protection against workplace discrimination because of pregnancy. While neither New York State Human Rights Law (NYSHRL) nor New York City Human Rights Law (NYCHRL) explicitly names pregnancy as a type of discrimination, courts have recognized that both laws provide the same type of protection as the PDA. For instance, the United States Court of Appeals for the Second Circuit in Quaratino v. Tiffany & Co. held that the NYSHRL provides the same protection conferred by the PDA and the standards for establishing unlawful discrimination under the NYSHRL are the same as those under Title VII cases.

A plaintiff claiming that she was unlawfully discharged because of her pregnancy in violation of federal and state laws must first show that (1) she is a member of a protected class; (2) she satisfactorily performed the duties required by the position; (3) she was discharged; and (4) her position remained open and was ultimately filled by a non-pregnant employee. Assuming the plaintiff satisfies the aforementioned requirements, the burden of production shifts to the employer to articulate a legitimate, clear, specific and non-discriminatory reason for discharging the employee. Lastly, if the defendant satisfies this burden of production, the plaintiff has the ultimate burden to prove that the employer's reason was merely a pretext for pregnancy discrimination.

Pregnant women have the right to participate in the labor market and employers may not force them out. Therefore, there are federal and state laws that give women the necessary protection against this type of discriminatory conduct.

If you believe that your employer has violated your rights because of your pregnancy, please contact The Harman Firm, PC.

November 10, 2014

District Court Rejects Motions by AT&T and Its Contractor to Compel Arbitration and Dismiss Complaint in Misclassification Case

On October 30, 2014, the Federal District Court from Eastern District of California rejected the basis of Defendant Carter Brothers Security Services, LLC's motion to compel arbitration, and effectively to dismiss the plaintiffs' complaint, in the case Gutierrez, et al. v. Carter Brothers Security Services, LLC, et al. Plaintiffs make many claims in their complaint that the defendant, including claims that the defendant...

...willfully misclassified employees as independent contractors,

...willfully failed to pay Plaintiffs and Class Members overtime and double time as required by law,
...willfully failed to provide mandated meal and rest periods,

...willfully failed to pay compensation due and owing in a prompt and timely manner upon termination, and

...willfully required plaintiffs as a precondition of employment to sign illegal, voidable, unenforceable and unconscionable "Independent Contractor Agreements."

These "Independent Contractor Agreements" included an arbitration agreement which, if ruled valid, would have required the Court to dismiss the plaintiffs' complaint and send the matter to arbitration. The Court declined to compel arbitration, based on an interesting process of analysis. First, whereas the relevant laws from Georgia, where Carter Brothers is headquartered, would support the defendants' motion, the Court found that the case belongs in California. But since Georgia's law "would...contravene fundamental California public policy ' in favor of ensuring worker protections'" regarding determination of a litigant's employee/independent contractor status, and since California has a far greater interest in the case, the Court ruled that California's law should be used. Thus, the Court concluded, in order to determine whether the arbitration provision was enforceable, it would first have to determine whether the contract was generally valid.

Plaintiffs had argued that the Agreement in question, which they had been required to sign as a condition of their employment, was "permeated with illegal and unconscionable terms," and were therefore not enforceable.

In the end, the Court agreed that the contracts were unconscionable. First, it found that these were "adhesion contracts"--that is, "standard-form contract(s), drafted by the party with superior bargaining power, which relegate(d) the other party to the option of either adhering to its terms without modification or rejecting the contract entirely." Further, the Ninth Circuit has held that "[a] finding of a contract of adhesion is essentially a finding of procedural unconscionability." Thus, the contracts were procedurally unconscionable. Second, the Court found that the contracts imposed one-sided burdens on employees, which made it impractical for them to use arbitration to vindicate their statutory rights. Thus, by both of the applicable legal criteria, the contract is unconscionable and thus unenforceable.

Further, the Court continued, the contract's "central purpose" was "tainted with illegality," since, as plaintiffs allege, the main purpose of getting employees to sign the contract was to allow the employer to avoid paying employment taxes and receive other benefits. Thus, "because the Agreements' underlying purpose appears to be illegal, the Court declines to enforce it."

Now the interesting questions will be: A) how many plaintiffs will join, and will the class be certified? b) Will AT&T and Carter Brothers be treated as joint employers, so both are liable: And c) will the parties settle. The question of whether the plaintiffs are independent contractors or employees seems all but decided.

If you believe you have been misclassified as an independent contractor by your employer, please contact The Harman Firm, PC.

November 7, 2014

Four States Vote to Increase Minimum Wage

After years of inaction by the U.S. congress, raising the minimum wage turns out to be a popular policy at the state level--even in heavily Republican states.

Arkansas increased its statewide minimum wage from $6.00 to $7.50 per hour starting January 1, 2015, then $8.00 starting January 1, 2014, then $8.50 starting January 1, 2016.

The minimum wage in Nebraska was raised from $7.25 to $8.00 per hour on January1, 2015, then to $9.00 on January 1, 2016.

Alaska's minimum wage will increase from $7.75 to $8.75 per hour on January 1, 2015, then $9.75 on January 1, 2016. It will then be adjusted upward for inflation each September for the following year, based on the Consumer Price Index for urban consumers from the Anchorage metropolitan area. In addition, employers may no longer credit tips or gratuities given to employees toward the required minimum wage, so that tipped employees will have to be paid the full minimum wage in addition to any tips or gratuities.

South Dakota raised its minimum wage from $7.25 to $8.50 per hour. They also tied minimum wage to increases in the cost of living, as measured by the Consumer Price Index. The hourly wage for tipped employees was also increased from $2.13 per hour to
fifty percent of the minimum wage as specified by the new law.

The voters of Illinois also passed a ballot initiative advising their state legislators to raise the state's minimum wage to $10.00 per hour. But this ballot measure is non-binding, and the same Illinois voters also elected a governor who became notorious for advocating a decrease in the state's minimum wage. So the likelihood of Illinois taking its citizens' advice seems low.

While it has been widely argued and reported that a rising minimum wage tends to cause companies to shed jobs to deal with rising labor costs, the research seems to contradict this narrative. States that have raised their minimum wage have tended to experience faster job growth than others that did not.

November 6, 2014

District Court Denies Injunction to Microtech Contracting Corporation; Union Can Continue to Post Inflatable Rat at Job Sites

On October 24, 2014, the District Court for the Eastern District of New York denied plaintiff Microtech Contracting Corp.'s request for an injunction prohibiting members of Local 78 from "'[p]icketing, distributing handbills or flyers and/or posting an inflatable rat or similar sign or device at any job site' where Microtech is working." Microtech, an asbestos abatement company, argued that all of these activities violated the terms of the operative collective bargaining agreement (CBA).

The court decisively rejected most of the plaintiff's case, finding (first) that it lacked jurisdiction to issue the injunction under the Norris-LaGuardia Act (NLGA) because the issue being protested--the continued employment of a certain manager--was "unrelated to the terms of the CBA," and (second) that, with respect to the narrow question about the use of the inflatable rat, the only question remaining for the court to consider, the plaintiff could not show a likelihood of success on the merits.

Noting that Local 78 has a "constitutional right to use an inflatable rat to publicize a labor dispute," the court determined that the central question at issue was whether this constitutional right was outweighed by the clause of the CBA in which the union agreed not to engage in "disruptive activity." However, the court further noted, this same provision of the CBA, the "disruptive activity clause," refers to activities such as "strikes, walkouts, picketing, work stoppages, slowdowns, or boycotts," but the use of the inflatable rat does not involve any of these disruptive activities. The rat is disruptive, at most, in that Microtech's business clients react negatively to it, but even if true this would not be the kind of disruption specified in the CBA.

In fact, the court found that the union had used the inflatable rat to protest Mictrotech's continued employment of one manager, but not to protest any violation by the company of the terms of the contract. "Defendants' views about Moncayo do not concern the interpretation or application of any term of the CBA," so "...the NLGA prohibits the requested injunction." In addition, §104 of the NLGA "prohibits federal courts from issuing an injunctive order that prohibits any person from '[g]iving publicity to the existence of, or the facts involved in, any labor disupte, whether by advertising, speaking, patrolling, or by any other method not involving fraud or violence." In this case, the court concludes, "the inflatable rat is clearly intended to publicize the existence of defendants' dispute with plaintiff, which the parties agree is a labor dispute within the meaning of the statute."

The court found that it could only grant the requested injunction against the union if it had been shown that the use of the inflatable rat violated some part of the CBA, and even if the plaintiff had succeeded in making such an argument the NLGA almost certainly would still have required the court to find for the defendant in this case. The lesson: except under very specific circumstances, it is unlawful for an employer to stop employees from staging demonstrations--even extremely visible demonstrations, and even when those demonstrations are at their work site.

If you believe your employer has violated your right to engage in labor action, please contact The Harman Firm, PC.

November 3, 2014

Contractor for John Jay College Expansion Project Agrees to Settle With Female Sheet Metal Workers In Gender Discrimination Case

From 2009-2011, the City University of New York's John Jay College of Criminal Justice (John Jay) undertook a huge expansion, including the construction of a new building. Among the many contractors hired for the construction project was Vamco Sheet Metals, Inc. (Vamco), which would become the target of a gender discrimination lawsuit by the Equal Employment Opportunity Commission (EEOC) on August 29, 2013.

The John Jay construction site was within the contractually-defined territory of Local 28 of the Sheet Metal Workers' International Union (Local 28), and under the same contract Vamco was defined as an "out-of-town contractor." Thus, only two workers on the project could be from the company's home territory, and all others from Local 28. Vamco had to get sheet metal workers from Local 28, which used a ranking system of workers on its "out-of-work list" to choose which workers to send to Vamco.

According to the complaint, Vamco was required to employ a minimum of 6.9% female workers, and during the John Jay project they satisfied this requirement by employing seven female Local 28 members; however, "all but one of them worked for shorter tenures than male co-workers hired in or around the same time." The commission describes several examples of discriminatory treatment of female sheet metal workers:

One female employee with over a decade of experience was discharged after only five days of work, then denied reinstatement in favor of a male co-worker, and assigned menial tasks such as unloading trucks and fetching coffee which male co-workers were not assigned.

A second female employee, a new mother, was not provided an appropriate breaks or a location where she could express breast milk. She was also denied close, easily-accessible restroom facilities. In the end she was laid off without explanation, after which Vamco immediately hired about 10 male workers.

A third female employee was also forced to use a restroom twelve floors away from her work area, whereas her male co-workers were provide close restroom facilities, and monitored the time she took going to the restroom. She was allegedly told by managers that women workers were "too slow," "took too long to complete work," and "low-production," and the same managers called her and other charging parties "old ladies" and "old hags."

A fourth female employee was also made to perform menial tasks that men were never asked to perform. She was also required to move a heavy piece of equipment across the jobsite by herself, although no male employees had ever been required to do this and the same piece of equipment required two people to move safely. When local 28 selected this employee to send back to the job site, Vamco rescinded its request for a worker.

The settlement agreement includes a typical combination of injunctive relief, mandatory rule changes and monitoring, and $215,000 in monetary relief. We can hope that Vamco will change its policies based on its experience working on the John Jay project and being forced by local rules to hire and accommodate female workers.

If you believe you have been subject to gender discrimination in violation of the Civil Rights Act of 1964, please contact The Harman Firm, PC.

October 29, 2014

EEOC, Braun Electric Company Settle Sexual Harassment Lawsuit

If plaintiffs' accusations in Equal Employment Opportunity Commission v. Braun Electric Company et al. are true, the claimant Samara Schmidt and others similarly situated were subjected to sexual harassment so severe and pervasive that it created a hostile work environment and effectively forced Schmidt to resign. The complaint refers to an array of extremely offensive sexual comments and behaviors, all of which were clearly unwelcome and brought many unanswered complaints to the company's managers and human resources staff.

The EEOC alleges that the company knowingly failed to investigate, prevent, or correct this pattern of continuous harassment by the manager at the center of the complaint. "Despite multiple complaints of sexual harassment...beginning in 2004," the state, "Braun finally got around to conducting an investigation in August 2010. Sadly, Bruan's HR Manager Wood conducted only a cursory investigation...purposefully ignoring evidence that Robertson's conduct was not an isolated incident directed at one employee. Despite being aware that other employees were present for Robertson's comment, HR manager Wood decided to just interview Miller, never entertaining the idea of interviewing percipient witnesses." Wood allegedly made "no efforts to ascertain whether Robertson had previously engaged in such conduct, as Wood 'just didn't think that was true...'" In the end Robertson received only a written warning that had no material consequences for his working life or career. There was no meaningful discipline, and no monitoring to ensure that the behavior would not continue. According to the plaintiff's and claimants' allegations, this was only the first of several complaints about sexual harassment that led to no action.

The terms of the settlement, approved by the District Court for the Eastern District of California on October 15, 2014, are not unusual for EEOC cases of this kind: claimants will receive monetary relief in the amount of $82,500; the defendant agrees to refrain from discrimination and retaliation for complaints made under Title VII; the defendant will retain and an Equal Employment Opportunity Monitor to oversee the administration of the settlement and "bear all costs associated with the selection and retention of the Monitor and the performance of his/her duties"; the defendant will be required to "review, implement, distribute and post its companywide policies and procedures against employment discrimination prohibited by Title VII," following the Commission's recommendations; the defendant will implement a sustained program of regular training for managers, non-managers, and human resources personnel regarding unlawful harassment and the proper handling of harassment complaints by employees; and the defendant will submit reports about the administration of these policies to the EEOC.

Anna Park, regional attorney for the EEOC's Los Angeles District, stated that "the policies, procedures, training, and monitoring that Braun Electric has agreed to put in place will go a long way toward protecting employees from harassment." Director Melissa Barrios of the Commission's Fresno Local Office added: "As agents of the employer, supervisors and managers should act as role models and promote an environment free of harassment. Employers should make sure that supervisory staff is trained not only on the laws against workplace harassment, but also on how to effectively prevent and address such issues."

If you are an employee and you believe that you have been subjected to sexual harassment in violation of Title VII of the Human Rights Act of 1964, please contact The Harman Firm, PC.

October 28, 2014

Jury Will Decide Whether 'Outside Sales Exemption' to FLSA Was Properly Applied to Plaintiff in FLSA Case

On October 21, 2014, the U.S. District Court for the Eastern District of Pennsylvania denied summary judgment to the defendant in the case Drummond v. Herr Foods Inc., et al. While the court suggested that there were several reasons that the plaintiffs might fall under the Fair labor Standards Act's (FLSA's) "Outside Sales Exemption," it nevertheless concluded that these reasons were not strong enough to declare victory for the defendant based on the pleadings alone.

The relevant statute states that "Drivers who deliver products and also sell such products may qualify as exempt outside sales employees only if the employee has a primary duty of making sales..." That is the main question the court, or the jury, will have to decide. The court began by explaining that under the statute it is the employer's burden to establish the applicability of the exemption after considering several factors; the employer seeking to apply the exemption "must prove that the employee and/or employer comes plainly and unmistakably within the exemption's terms." It then noted that there are few cases applying to this legal question. The defendant argued that the court should adopt the Fifth Circuit's ruling in Meza v. Intelligent Mexican Marketing, Inc., but the court rejected this argument based on a key difference between Meza and Drummond: unlike the route salespeople at Herr, those at Intelligent Mexican Marketing, Inc. were the only people in the company salespeople at the company. By contrast, plaintiffs Drummond, while she was responsible for doing sales work, was supported by in-house salespeople from several other departments. Further, Herr's route salespeople, when they did make sales arrangements, were arguably constrained in making those decisions to such an extent that a jury would be able to question whether selling product was the route drivers' primary responsibility. In many cases, Drummond's main responsibility was arguably not to make sales but to execute the conditions of sales that were made by higher-level salespeople at the company.

It is not disputed that the plaintiffs were provided sales training, and attended meetings for that purpose. However, the court notes, both these meetings and the plaintiff's job description included many other job functions unrelated to sales-vehicle safety, loading trucks, merchandising, computer and equipment use, etc. On the central question of the case--whether Drummond's primary duty as a route driver for Herr was sales--there remained some open questions for a jury to consider and decide.

According to the plaintiff's complaint there are a total of about forty route salespeople at Herr who are potential class members in her lawsuit. If a jury were to determine that they have been misclassified as exempt, the five named plaintiffs, and any additional class members, would stand to gain many hours of unpaid overtime.

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

October 24, 2014

Plaintiffs File Unopposed Motion for Approval of $12 Million Settlement in Wage and Hour Case Against J.P. Morgan Chase Bank, N.A.

On October 8, 2014, attorneys for a class of plaintiffs from twelve states filed a notice of motion requesting court approval of a $12 settlement in the case Evan Hightower et al v. Washington Mutual Bank et al. (Defendant was later terminated and replaced by J.P. Morgan Chase, N.A.) The lawsuit is a fairly straightforward Fair Labor Standards Act (FLSA) action brought against the financial giant by non-exempt employees from the company's retail branch offices-- Chase tellers, bankers, assistant branch manager trainees and sales specialists--who allege that they "(1) performed work 'off-the-clock' and, accordingly, were not properly paid all the wages owed for hours worked (including overtime hours worked); (20 were not provided duty-free meal periods and rest breaks; (3) were not provided accurate itemized wages statements; (4) were not reimbursed for all expenses incurred in the performance of their duties; and (5) were not paid all wages due upon cessation of employment."

This class action, filed in 2011 in the Central District of California, consilidates thirteen separate lawsuits filed against J.P. Morgan Chase Bank ("Chase") in the last two years, each involving similar allegations under the applicable state laws as well as the FLSA. Noting that Plaintiffs and their expert had reviewed over three million payroll records, over 7 million time-clock records, and over 204 million transactions records, the court approved distribution of $3,600,000 million for attorney's fees and $200,000 for plaintiffs' costs, as well as $25,000 for regulatory penalties and $222,500 for incentive and service awards for named plaintiffs.

The remaining $7,952,500 is to be distributed to the approximately 145,000 members of the settlement class according to a formula: the number of hours worked, multiplied by the average pay for their position at their location. The resulting total is then multiplied by the applicable State Modifier, in order to cover additional state law claims.

The original lawsuit filed by the plaintiffs in this case was against Washington Mutual Bank, et al., which then collapsed in the largest bank failure in U.S. history before before being being seized by the government and sold to Chase. In the end Chase surpassed Bank of America as the largest bank in the United States, with $2,520,336,000 in assets.

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

October 22, 2014

Appeals Court Vacates Summary Judgment in Misclassification Suit by GEICO "Telephone Claims Reps"

On October 10, 2014, the Second Circuit Court of Appeals revived a 2011 lawsuit by a potential class of "telephone claims representatives" (TCRs) from insurance giant GEICO, vacating an order of summary judgment and remanding the case back to the lower court. The district court for the Eastern District of New York had accepted the Defendant's argument that the employees in question fell under the administrative exemption of the Fair Labor Standards Act (FLSA), but the appeals court found that there were genuine disputes of material fact to be decided by the court regarding whether the exempt status of these employees.

According to binding regulations issued by the the Secretary of Labor, in order to qualify as exempt under the FLSA's administrative exemption an employee must satisfy several criteria. The relevant criterion here is that the exempt employee's "primary duty incude(s) the exercise of discretion and independent judgment with respect to matters of significance." In addition to these general criteria, the regulation contains specific provisions for insurance claims adjusters: "Insurance claims adjusters generally meet the duties requirements for the administrative exemption...if their duties include activities such as interviewing insureds, witnesses and physicicans; inspecting property damage; reviewing factual information to prepare damage estimates; evaluating and making recommendations regarding coverage of claims; determining liability and total value of a claim; negotiating settlements; and making recommendations regarding litigation."

Despite the presumption in favor of adjusters being exempt, however, the appeals court notes that the Secretary's regulation goes on to state that the relevant section, § 541.203(a), "does not create a 'blanket excemption for claims adjusters,' but requires the courts to determine whether the claims adjusters "perform the listed tasks in a sufficiently discretionary way" to count as exempt.

The appeals court found "genuine disputes of material fact" concerning the applicability of these criteria to the class of plaintiffs. For one thing, several of the tasks enumerated in the relevant regulations do not apply--TCRs do not inspect property damage from their office cubicles, and do not appear to be involved in litigation. Also, the Court notes, there is conflicting testimony as to whether GEICO's supervisors monitor the TCRs' investigations, or whether GEICO's claim-adjusting software, ClaimIQ, eliminated discretion on the part of TCRs by limiting the questions they could ask and applying an "algorithm to calculate the range of GEICO's financial liability." There was also conflicting testimony regarding the extent of supervisors' control over the inputs that TCRs typed into ClaimIQ, or their involvement in negotiations about claims.

In the end, the court concluded that "the record could lead a reasonable jury to conclude that, to the extent that TCRs perform the tasks enumerated in § 541.203(a), they do so in too circumscribed and non-discretionary a manner to fall within that section's vision of a presumptively 'administrative' employee..." If a jury ultimately decides that these employees are not exempt from the FLSA's overtime requirement, GEICO might be liable for many hours of unpaid overtime by hundreds of its claims adjusters.


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

October 21, 2014

The Restraining Practice of Employers of Imposing Non-Compete Agreements on Low Wage Workers may be held Contrary to Public Policy and Unenforceable.

On July 18, 2014, employees at Jimmy John's restaurant filed a FLSA class action in the U.S. District Court of Northern District of Illinois against the sandwich chain alleging wage theft. The employees further alleged that the "Confidentiality and Non-Competition Agreement" Jimmy John's required employees to sign before they could start working was "oppressive, overly broad, unreasonable, against public policy, void as a matter of law and unenforceable."

Jimmy John's non-compete agreement restricts employees from working for any type of business for two years within a 3-mile radius of any of the 2,000 Jimmy John's Sandwich locations nationwide that generates more than 10% of its revenue from sandwiches. If enforced, the clause would dramatically limit a worker's ability to find employment after working for Jimmy John's.

Non-compete agreements are typically reserved for managers or high-level employees who could exploit a business's inside information by working for a competitor; however, Jimmy John's agreement applies to low-wage sandwich makers and delivery drivers.

Low-wage, interchangeable "sandwich artists" do not have the type of skills or insider information that justify such an agreement. The agreement's enforcement would merely thwart and frustrate employees' job searches. Such contracts are simply a novel attempt to control further and intimidate employees.

In order for the court to enforce the agreement, Jimmy John's will need to demonstrate that the agreement's purpose is to legitimately try to protect the company, and that the clause is reasonable and wouldn't put an undue burden on workers.

For instance, in Natural Organics Inc. v. Kirkendall, plaintiff brought action against former employee and former employee's new employer alleging a breach of the non-compete agreement. The employee worked for the company selling vitamins and dietary supplements. When he was hired for the position, the employee signed a nondisclosure and noncompetition agreement, which prohibited employment with a competitor of the company for a period of 18 months from the date of termination of employment, and where the employee is a sales person, for an additional 18 months within 300 miles of the boundaries of his or her territory.

The company alleged that the employee, due to his position as a salesman, had been exposed to reports containing detailed sales information concerning the company's customers. However, the court found that the employee, after leaving the company, did not physically appropriate, copy, or intentionally memorize any purported confidential business information. In addition, the court found that "an employee's recollection of information pertaining to specific needs and business habits of particular customers is not confidential." Further, the court stated that the company had failed to prove how the non-compete agreement was necessary to protect the goodwill of its clients or that the employee has used or threatened to use any protected trade lists or confidential customer lists. Therefore, the Supreme Court, Appellate Division, Second Department, New York held the non-compete agreement to be void and dismissed the complaint.

Courts not only look at the purpose and the time span of non-compete agreement, but also look at the geographical area to which the non-compete agreement applies. Courts usually give greater weight to the interests of the employer in restricting competition within a confined geographical area. For instance, in BDO Seidman v. Hirshberg, the Court of Appeals of New York declared part of a non-compete agreement to be overbroad because the company was a national firm seeking to enforce the agreement within a market consisting of the entirety of a major metropolitan area. A court may then get rid of the parts of the non-compete agreement that are unreasonable.

Non-compete agreements are only enforceable to the extent that they protect against misappropriation of the employer's trade secrets or of confidential customer lists, or protect from competition by a former employee whose services are unique or extraordinary. Indeed, under New York law, the general public policy favoring robust and uninhibited competition should not give way merely because a particular employer wishes to insulate himself from competition.

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

October 20, 2014

All of Plaintiffs' Claims Survive Summary Judgment in Fair Credit Reporting Act Case Against Lowe's and LexisNexis

The Federal Court for the Western District of North Carolina denied summary judgment to the defendants on all counts in the case Brown, et al. v. Lowe's Companies, Inc. et al, granted leave for plaintiffs to amend their complaint, and set the stage for the lawsuit to expand into a potentially large-scale class action. Each of the three named plaintiffs alleges that the defendants violated the Fair Credit Reporting Act (FCRA) by taking adverse employment actions--in each case, denying them employment--on the basis of consumer reports purchased from Lexisnexis Screening Solutions.

According to the plaintiffs, because Lowe's routinely bases employment decisions on consumer reports, including criminal-background reports, they are subject to several provisions of the FCRA. Specifically, Lowe's must provide a copy of a report to the applicant prior to taking adverse employment action, along with a summary of their rights under the FCRA, and must give each applicant the opportunity to correct inaccuracies in his or her report. Plaintiffs allege further that Lowe's routinely and knowingly fails to provide reports and correction opportunities to the many thousands who submit employment applications to them and for whom they solicit consumer reports.

Plaintiff Jason D. Brown was denied employment on the basis of a Lexisnexis report that contained several entries of criminal-history information for a different person named "Jason Brown." He was denied employment before a copy of his report was sent to him.

Plaintiff Laszlo Boszo applied online for a job at Lowe's, and as part of that application ordered a background report from Lexisnexis. The report indicated that Mr. Bozso had been convicted of a felony in 1999, but failed to include the information that this conviction had been overturned on appeal in 2000. Mr. Bozso was never even provided with a copy of his report

Plaintiff Meris Dudzic also alleges that she was denied employment on the basis a report from Lexisnexis. She does not allege that the report contained inaccuracies, but claims that that she was never furnished with a copy of the report on the basis of which Lowes decided not to hire her.

The class of plaintiffs are all individuals who applied for employment at Lowes, had their applications denied on the basis of Lexisnexis consumer reports, and received copies of these reports either after their applications were denied or not at all. Plaintiffs further allege, in counts two through four against Lexisnexis, that the reporting company failed to provide notice that reports were being issued, failed to conduct reinvestigation of disputed information, and failed to follow "reasonable procedures" to ensure accuracy of the reports. Every one of these allegations survived the motions to dismiss, and if it is true, as alleged, that Lowe's handles most of their job applications in similar ways, the class of plaintiffs will likely include many thousands.

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

October 17, 2014

EEOC Sues FedEx for Discriminating Against Dozens of Deaf and Hearing Impaired Package Handlers

Consolidating 19 individual cases that have been filed nationwide, the Equal Employment Opportunity Commission initiated the lawsuit EEOC v. FedEx Ground Package System, Inc. on September 30, 2014, on behalf of "a significant number" of deaf and hard-of-hearing employees and job applicants. The charging parties allege that the company has consistently and intentionally failed to provide reasonable accommodations to these employees, in violation of the Americans with Disabilities Act of 1990 and the Civil Rights Act of 1991.

In its complaint, the Commission argues that FedEx has failed to provide accommodations to hearing impaired Package Handlers "at all points in the employment life cycle," which includes (i) failing to provide communications-based accommodations such as American Sign Language (ASL) interpretation during new employee orientation, training, and mandatory meetings, (ii) ignoring multiple requests for such accommodation, (iii) failing to provide modified equipment such as vibrating scanners to enable hearing impaired employees to meet production quotas with the same level of effort as their co-workers, (iv) adding flashing lights to moving equipment for safety, and (vi) failing to initiate an interactive process regarding the need for these kinds of accommodations.

The ADA's implications for this situation seem clear: the company must "engage in good faith in an interactive process to identify effective reasonable accommodations" and then provide such accommodations unless it can show that doing so would not be an "undue hardship." After studying nineteen different facilities, the Commission concluded that FedEx has "engaged in widespread abandonment of its legal duties to engage in good faith in the interactive process with deaf and hard-of-hearing Package Handlers and deaf and hard-of-hearing applicants to the Package Handler Position and to provide effective reasonable accommodation to these individuals." Despite numerous complaints by hearing impaired Package Handlers, and despite they allege, the company has also failed to engage these employees in an interactive process. Thirty-two examples of such failures are cited in the complaint itself.

To cite just one typical example: Miriam Franson was terminated from her employment in Portland, Oregon for productivity issues. In a written complaint to FedEx, she challenged her termination for productivity and accuracy issues, explaining that her inability to rely on the scanner's audible "beeps" caused her to be slower and more error-prone.

EEOC Philadelphia District Director Spencer H. Lewis, Jr. said they filed this lawsuit "to remedy alleged pervasive violations of the ADA on a national level." Regional Attorney Debra M. Lawrence added: "Common sense, let alone federal legal requirements, would dictate that FedEx Ground should have provided effective accommodations to enable people with hearing difficulties to obtain workplace information that is disseminated in meetings and in training sessions. EEOC contends that by failing to do so, FedEx Ground has marginalized disabled workers and hindered job performance. This is a lose/lose scenario."

If you are an employee and you believe your rights under the Americans with Disabilities Act have been violated, please contact The Harman Firm, PC.