Second Circuit Ruling on FMLA Eligibility Reminds Employers to Keep Accurate Time Records

By Stearns Weaver Miller on September 4, 2012 Posted in Disability & Leave, Employment Litigation

In Donnelly v. Greenburgh Central School District No. 7, the Court of Appeals for the Second Circuit recently highlighted the importance of keeping accurate time records for employees to determine Family Medical Leave Act (“FMLA”) eligibility. To be eligible for leave under the FMLA, an employee must work “at least 1,250 hours of service…during the previous 12-month period.” 29 U.S.C. § 2611(2)(A)(ii). According to the U.S. Department of Labor (“DOL”) regulations interpreting the FMLA, the employer has the burden of proving that this eligibility requirement has not been met. 29 C.F.R. § 825.110(c)(3).

Edward Donnelly, a school teacher, filed a retaliation lawsuit against the school district after he was denied tenure following his FMLA leave. On summary judgment, the school district argued that Donnelly was not eligible for FMLA because, according to his collective bargaining agreement, he had worked only 1,247 hours, 3 hours shy of the statutory minimum. Donnelly submitted an affidavit stating that he and “most teachers regularly work in excess of a total of one hour before and after class” and that he “typically worked a total of 1.5 hours before and after class every day.” Donnelly also submitted a performance evaluation which stated that he “arrive[d] to work in a professional manner, early, on time and often. He often stay[ed] late into the afternoon working with his kids to ensure their success.” Notwithstanding Donnelly’s evidence, the trial court granted summary judgment in favor of the school district. Donnelly appealed.

The Second Circuit reversed the summary judgment decision relying on the DOL regulations. The school board had not kept records of the hours Donnelly worked and, instead, had to turn to the collective bargaining agreement to estimate the hours he worked. In light of Donnelly’s affidavit detailing his excess hours and the performance evaluation, and because the discrepancy between the collective bargaining agreement calculation and the eligibility threshold was only 3 hours, the Second Circuit determined that the school board had not met its burden of proof.

The decision highlights the importance of employers keeping accurate time records for all hours worked by employees, even employees exempt from overtime, for whom employers may not track hours worked. The applicable DOL regulation, 29 C.F.R. § 825.110(c)(3), places this burden of proof on the employer for all employees, “including for employees who are exempt from FLSA’s requirement that a record be kept of their hours worked…”

Employers Beware: NLRB Says Your Confidentiality Rules and At-Will Employment Disclaimers May Violate the Law

By Stearns Weaver Miller on August 28, 2012 Posted in Employee Handbooks & Policies, Labor Law

This summer, the National Labor Relations Board (“NLRB”) highlighted its position that confidentiality rules and at-will employment disclaimers routinely promulgated by employers may violate the federal labor law. The NLRB held that a generalized directive to employees not to discuss matters under investigation with co-workers interfered with the National Labor Relations Act (“NLRA”). The NLRB also said that at-will employment disclaimers that acknowledge that no written or oral statements can alter that employment relationship violate the NLRA. The NLRA gives employees the right to engage in “protected concerted activity” for their mutual aid and protection, which includes co-workers discussing amongst themselves the terms and conditions of their employment.

In Banner Health, the NLRB held that the employer violated the federal labor law by instructing a witness not to discuss the subject matter of an ongoing internal investigation. The NLRB ruled that the employer’s “generalized concern with protecting the integrity of its investigation” as the basis for the requested confidentiality did not outweigh the employees’ protected right to discuss workplace matters with co-workers. The NLRB did say that employers may lawfully prohibit employees from discussing an ongoing investigation if they can demonstrate a legitimate business need for confidentiality. To meet this legitimiate business need, the employer must show that specific witnesses need protection, that evidence is in danger of being destroyed, and/or that the confidentiality instruction is needed to prevent a cover-up. If one of these needs is not met, the NLRB will likely find that the employer infringed upon employees’ rights under the NLRA.

On June 11, 2012, NLRB Acting General Counsel, Lafe Solomon, addressed the Connecticut Bar Association discussing the NLRB’s position on at-will employment provisions contained in employer’s handbooks. Earlier this year, the Phoenix branch of the NLRB brought a complaint against the American Red Cross in Arizona alleging, among other things, that the at-will provision in its employee handbook violated the federal labor law. The language was as follows:

I understand my employment is “at will.” This means I am free to separate my employment at any time, for any reason, and [the company] has these same rights. Nothing in this handbook is intended to change my at-will employment status. I acknowledge that no oral or written statements or representations regarding my employment can alter my at-will employment status except for a written statement signed by me and either [the company’s] Executive Vice-President/Chief Operating Officer or [the company’s] President.

In the case, American Red Cross Arizona, 28-CA-23443 (Feb. 1, 2012), an administrative law judge for the NLRB found the provision to be unlawful because it “premise[d] employment on an employee’s agreement not to enter into any contract, to make any efforts, or to engage in conduct that could result in union representation and in a collective-bargaining agreement, which would amend, modify, or alter the at-will relationship,” and therefore restricted employees’ NLRA rights.

When asked if he agreed with the position taken by the Phoenix branch of NLRB, Solomon said that the NRLA would not be violated if an employer merely tells its employees that they are employed at will. However, he said the remaining portion of the statement was wrong because it did not acknowledge that if employees are unionized and a collective bargaining agreement is agreed to, it may have a “just cause” for limiting the at-will status of employees. Solomon also faulted the language for implying “the futility of unionization.” It is unclear whether the NLRB’s position would be upheld in a federal court.

The Fifth Circuit Says Employer Can Privately Settle FLSA Claims Without DOL or Court Approval

By Stearns Weaver Miller on August 24, 2012 Posted in Employment Litigation, Labor Law, Wage & Hour/Employee Classification

For over 30 years, the federal courts in Florida (and in other states) have required that settlements of minimum wage and overtime claims under the Fair Labor Standards Act (“FLSA”) be reviewed and approved either by a court or the US Department of Labor. Now, one court, the Fifth Circuit Court Of Appeals, the federal appeals court for Texas, Mississippi and Louisiana, has carved out an exception to this rule. The appeals court held that where there is a bona fide dispute as to the amount of hours worked by the employee, such review and approval is not necessary.

In Martin v. Spring Break ’83 Productions, the plaintiffs, a group of lighting and rigging technicians working on a movie in Louisiana, filed a grievance through their union claiming that they had not been paid wages for the work they performed. The union representative conducted an investigation and concluded that it would be impossible to determine whether the plaintiffs had indeed performed the work on the days they alleged they had. Consequently, the movie production company and the union reached a settlement over the disputed hours. Prior to the union signing off on the settlement, the plaintiffs filed a lawsuit in California seeking the unpaid wages. The case was transferred to Louisiana where the trial court granted summary judgment for the movie production company. The trial court based its ruling on a Texas ruling from 2005, Martinez v. Bohis Bearing Equipment Co., holding that parties may reach private compromises on FLSA claims where there is a bona fide dispute as to the amount of hours worked or compensation due. The plaintiffs appealed.

On appeal, the plaintiffs argued that the releases in the settlement were not valid because individuals may not privately settle FLSA claims without DOL or court approval. The Fifth Circuit rejected the argument and, instead, agreed with the reasoning in Martinez:

The Settlement Agreement was a way to resolve a bona fide dispute as to the number of hours worked…and though, Appellants contend they are yet not satisfied, they received agreed-upon compensation for the disputed number of hours worked.

It is important to understand that under the Fifth Circuit’s holding, not all private settlements are enforceable, only those where there is a bona fide dispute as to the amount of hours worked. For example, an agreement releasing or waiving FLSA coverage issues or other substantive FLSA rights would not be enforceable without court or US Department of Labor review and approval.

As of now, the ruling applies only to federal courts in Texas, Mississippi and Louisiana. However, the decision presents the possibility that other circuits, including the Eleventh, may move towards permitting private FLSA settlements under similar circumstances

Employers Should Continue to Use Expiring Form I-9 After August 31, 2012

By Glenn Rissman on August 13, 2012 Posted in Immigration

The current version of Form I-9, used to verify the identity and work authorization of new employers, will expire on August 31, 2012. The U.S. Citizenship and Immigration Services (USCIS) has advised that employers should continue to use the current Form I-9 even after the OMB control number expiration date of August 31, 2102 has passed. Employers should use the Form I-9 until further notice from USCIS. We will continue to keep you updated on any new versions of the Form I-9.

Federal Appeals Court Says DHL is Not Liable for Overtime to Its Contractor Drivers

By Stearns Weaver Miller on July 16, 2012 Posted in Employment Contracts & Corporate Issues, Wage & Hour/Employee Classification

The Eleventh Circuit Court of Appeals, which has jurisdiction over Florida, recently ruled that DHL was not liable for overtime under the Fair Labor Standards Act (“FLSA”) for hours worked by independent drivers it had hired through a third-party contractor. In the case, Layton v. DHL Express (USA), Inc., DHL Express (USA) Inc. contracted with a separate company, Sky Land Express, Inc., to provide DHL drivers to deliver packages in Alabama. The issue was whether DHL was liable for overtime compensation to the contracted drivers as a “joint employer” under the FLSA. The Court ruled that DHL was not the joint employer of drivers.

Under the FLSA, courts determine whether an entity is a joint employer based on the contracted workers’ economic dependence on the entity. This is called the “economic realities test.” The Eleventh Circuit for the first time applied the following 8 factors in determining that the drivers were not economically dependent on DHL:

APPLICATION TO DHL

DHL did not involve itself in how to accomplish the goals of delivering packages on time and serving customers DHL had a limited amount of monitoring at the warehouse but did not supervise the drivers while making deliveries, which took up the vast majority of workday Sky Land, and not DHL, had the power to establish drivers’ pay rates Sky Land, and not DHL, had the power to hire or fire drivers Sky Land, and not DHL, retained the obligation to compensate the drivers Although DHL owned the warehouses where packages were picked up, the drivers spent most of their time in vans owned by Sky Land delivering the packages While the drivers “performed a crucial task” for DHL, they performed most of their work away from DHL’s facilities and did not work side-by-side with other DHL employees Both DHL and Sky Land made significant investments.

FACTORS

The nature and degree of control of the workers

The degree of supervision, direct or indirect, of work

The power to determine the pay rates or the methods of payment of the workers

The right, directly or indirectly, to hire, fire, or modify employment conditions of the workers

Preparation of payroll and the payment of wages

Ownership of the facilities where worked occurred

Performance of a speciality job integral to the business

Investment in equipment and facilities.

Employers who hire through third-party contractors must review these 8 factors to determine if they may have a joint employment relationship with the contractor–supplied workers.

United States Supreme Court Says Pharmaceutical Reps are FLSA Exempt Outside Salespeople

By Glenn Rissman on June 29, 2012 Posted in Employee Benefits & Compensation, Employment Litigation, Wage & Hour/Employee Classification

The U.S. Supreme Court handed the pharmaceutical industry a huge victory in the battle over whether pharmaceutical sales representatives are entitled to overtime under the Fair Labor Standards Act (“FLSA”). The pharmaceutical industry took the position that its sales representatives were exempt from the FLSA’s overtime requirements as exempt outside salespeople. The sales representatives argued that they were merely promotional employees and not salespeople. In Christopher v. Smithkline Beecham, the Court held that the primary duty of pharmaceutical sales representatives, a/k/a detailers, is to obtain nonbinding commitments from physicians to prescribe their employer’s drugs and that they therefore qualify as exempt outside salespeople.

The issue the Court had to determine was whether the activities the pharmaceutical sales reps engage in falls within the meaning of “sales.” Although the Court determined that the detailers do engage in sales, the interesting part of the decision was how the Court reached its decision and how it may impact other cases when exempt status is an issue. Quoting the Department of Labor’s own words, the Court stated that exempt status should not depend on technicalities. The Court refused to give deference to the DOL’s interpretation of its regulations because (1) the DOL’s interpretation of whether pharmaceutical reps are exempt came after many lawsuits seeking overtime had been filed and exposed the industry to potentially massive liability, (2) for decades, the pharmaceutical industry treated pharmaceutical reps as exempt and the DOL never initiated enforcement or suggested that the practice was unlawful, and (3) the DOL’s after-the-fact interpretation was inconsistent with the language of the FLSA. The Court also said that the language of the FLSA favors a functional, rather than a formal, inquiry regarding exempt status. Further, the analysis of an employee’s exempt status should consider the employee’s responsibilities in the context of the particular industry in which the employee works. The Court found that the detailers had the external indicia of salespeople – they were hired for their sales experience, they were trained to close sales, they worked away from the office with minimal supervision, and they received incentive compensation. The Court said that the pharmaceutical sales reps were hardly the type of employees the FLSA was intended to protect – they earned salaries well above the minimum wage, averaging more than $70,000 a year.

The Court’s analysis and language should offer employers with ammunition to argue against an overly technical and formulistic application of the DOL’s regulations in favor of a realistic approach that takes into account the particular industry in which the employee works.

National Labor Relations Board Highlights Examples of Protected Concerted Activity on New Web Page

By Stearns Weaver Miller on June 22, 2012 Posted in Labor Law

If you are a non union employer be afraid – be very afraid. Take a look at the NLRB’s new web page that highlights cases where the Board thought that the activity engaged in by the employee was protected under federal labor law, http://www.nlrb.gov/concerted-activity. The cases involve both union and non-union employers because the concept of protected concerted activity applies across the board. Under the federal labor law (the National Labor Relations Act), an employee has “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” Employees also have the right to refrain from any or all such activities. An employer, whether unionized or not, cannot interfere with the employee’s right to engage in protected concerted activity.

The NLRB’s web page provides examples of what the Board considers to be an interference of employees’ rights in violation of the federal labor law. Many of the examples involve situations where employees were terminated after complaining about work conditions or wages. Before taking adverse action against an employee, employers should consider the implications of the federal labor law, as well as the other employment law statutes regulating the workplace.

NLRB’s Acting General Counsel Provides Do’s and Don’ts for Social Media Policies

By Stearns Weaver Miller on June 6, 2012 Posted in Employee Handbooks & Policies, Labor Law

The National Labor Relations Board Acting General Counsel Lafe E. Solomon issued his third report on employees’ social media use on May 30. We previously blogged about the first report (see NLRB Issues Guidance on Social Media Policies) and several other NLRB cases involving social media.

This recent report focuses on the lawfulness of several companies’ social media policies under Section 7 of the National Labor Relations Act, which prohibits employers from restricting an employee’s right to form, join or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection. A workplace rule that explicitly restricts Section 7 rights is unlawful. If a rule does not explicitly restrict Section 7 rights, it will still be unlawful if: (1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of Section 7 rights.

Acting General Counsel’s Dont’s:

1) Provisions that prohibit postings about terms and conditions employment;

2) Provisions that prohibit discussions of the employer’s non-public information, confidential information and legal matters (without further clarification of the meaning of these terms);

3) Provisions that instruct employees to make sure their postings are “completely accurate and not misleading”;

4) Provisions that prohibit postings detrimental, disparaging or defamatory to the employer without specific examples that would not reach protected communications about working conditions;

5) Provisions that prohibit discussions of potential claims against the employer;

6) Provisions that prohibit postings containing objectionable or inflammatory topics such as about politics and religion;

7) Provisions that require employees to secure permission prior to posting photos, music, videos, quotes and personal information of others;

8) Provisions discouraging employees from “friending” co-workers;

9) Provisions requiring employees to resolve concerns about work internally (“by speaking with co-workers, supervisors, or managers”) rather than “airing grievances online”;

10) Provisions requiring employees to receive prior authorization from the employer to correspond with members of the media or press regarding the employer or its business activities;

11) Provisions requiring employees to seek permission from the employer before conversing with government agencies;

12) Provisions that prohibit employees from using the employer’s logo or trademarks for non-commercial use; and

13) “Savings clauses” that broadly state, “[n]othing in this policy is intended to interfere with employee’s rights under the NLRA, and any conflicts between this policy and applicable law will be decided in favor of the law.”

Acting General Counsel’s Do’s:

1) Provisions prohibiting “inappropriate postings that may include discriminatory remarks, harassment and threats of violence or similar inappropriate or unlawful conduct”;

2) Provisions prohibiting postings that “could be viewed as malicious, obscene, threatening or intimidating” or “contribute to a hostile work environment on the basis of…any…status protected by law or company policy”;

3) Provisions that suggest and not encourage employees to resolve work-related complaints internally rather than posting complaints online;

4) Provisions preventing the dissemination of trade secrets and confidential information with examples of prohibited disclosures (i.e., products, know-how, technology, internal reports, procedures, or other internal business-related communications) for employees to understand that they do not reach protected communications about working conditions; and

5) A complete social media policy (found on pages 22-24 of the third report) that passed muster.

It is important to note that the Acting General Counsel’s reports do not constitute binding NLRB precedent but, rather, reflect his position for purposes of determining whether an unfair labor practice charge should be prosecuted by the NLRB. Courts may take a different view on these issues and permit restrictions the NLRB finds objectionable.

Tampa Federal Court Rejects NLRB D.R. Horton Decision – Arbitration of FLSA Collective Action Claims Permitted

By Glenn Rissman on May 30, 2012 Posted in Employment Litigation, Labor Law

In January we blogged about the NLRB’s decision in D.R. Horton, Inc., which said that requiring employees, as a condition of employment, to sign an arbitration agreement barring collective or class actions for employment-related claims violated the law (see NLRB Says Not To Requiring Employees To Sign Arbitration Agreements Prohibiting Group of Class Action). A federal district court in Tampa recently declined to follow the NLRB’s D.R. Horton decision and compelled arbitration of a Fair Labor Standards Act collective action.

In Oliveira v. Citigroup North America, Inc., the plaintiff and five opt in plaintiffs sued Citigroup under the Fair Labor Standards Act (FLSA) for the alleged failure to pay overtime. All of the plaintiffs had signed acknowledgements of employee handbooks containing mandatory arbitration clauses. The arbitration clauses in the handbooks required arbitration and said that arbitration was the exclusive forum for resolution of all disputes arising out of or in any way related to the employment. The clause also said that claims had to be brought on an individualized basis and that employees could not participate as a class or collective action representative or as a member of any class, collective, or representative action. Relying on these clauses, Citigroup filed a motion with the court to compel individual arbitration of each of the plaintiffs’ claims. The district court in Tampa had to decide whether a collective action waiver in an arbitration agreement is enforceable. Applying law from the Eleventh Circuit Court of Appeals, which is binding on federal courts in Florida, the district court found that the arbitration agreements were enforceable and waived the plaintiffs’ right to pursue collective claims under the FLSA. The district court in Tampa declined to follow the NLRB’s decision in D.R. Horton, saying that it was bound to follow the Eleventh Circuit case law that enforced a collective action waiver to compel arbitration of an individual’s FLSA overtime claim.

Other courts in Florida are not required to follow the Tampa court’s decision in Oliveira. Nevertheless, the decision lends further strength to the enforceability of arbitration clauses, including those that waive an employee’s right to bring or participate in a collective or class action against their employee.

EEOC Updates Enforcement Guidance on Use of Arrest and Conviction Records in Employment Decisions

By Stearns Weaver Miller on May 8, 2012 Posted in Discrimination & Harassment, Legislation & Regulations

The Equal Employment Opportunity Commission (“EEOC”) issued updated enforcement guidance in light of recent court decisions on the use of arrest and conviction records in making employment decisions. The EEOC Enforcement Guidance can be found here. The guidance is not binding on employers but the EEOC will be enforcing Title VII with the guidance in mind.

The EEOC’s “best practices” when using criminal records when making employment decisions are as follows:

General:

- Eliminate policies or practices that exclude people from employment based on any criminal record.

- Train managers, hiring officials, and decisionmakers about Title VII and its prohibition on employment discrimination.

Developing a Policy:

- Develop a narrowly tailored written policy and procedure for screening applicants and employees for criminal conduct.

- Identify essential job requirements and the actual circumstances under which the jobs are performed.

- Determine the specific offenses that may demonstrate unfitness for performing such jobs.

- Identify the criminal offenses based on all available evidence.

- Determine the duration of exclusions for criminal conduct based on all available evidence.

- Include an individualized assessment.

- Record the justification for the policy and procedures.

- Note and keep a record of consultations and research considered in crafting the policy and procedures.

- Train managers, hiring officials, and decisionmakers on how to implement the policy and procedures consistent with Title VII.

Questions about Criminal Records:

- When asking questions about criminal records, limit inquiries to records for which exclusion would be job related for the position in question and consistent with business necessity.

Confidentiality:

- Keep information about applicants’ and employees’ criminal records confidential. Only use it for the purpose for which it was intended.