46.6 million reasons to think about settlement

In the largest verdict Ohio history, and what might be the largest single-plaintiff employment verdict ever, a Cuyahoga County jury has awarded $46.6 million to Ronald Luri against garbage hauler Republic Services. Cleveland.com reports that Luri was fired after he refused to fire three employees in their 60s. The jurors reported that they were outraged by Republic's conduct after it fired Luri: "The jurors said the key piece of evidence was an email penned by Luri's boss, Jim Bowen, the Ohio area president. Attorneys Shannon Polk and Richard Haber presented a computer expert who found that Bowen had post-dated the memo and added two paragraphs critical of Luri's job performance two weeks after Luri filed the lawsuit."

There are many lessons to be learned from this story, but none more important than this - companies need to be aware of the risks that are inherent any time they step into the courtroom in an employment case. In Ohio, only 6 out of the 8 jurors must agree on the verdict. Of the 8 total jurors, it is a sure bet that at least 6 will more naturally identify with the employee than the employer, which means that the company is usually playing from behind.

Secondly, as far as employers are concerned, an employee's performance history must be frozen in time as of that employee's termination date. Nothing will anger a jury more than a company that looks like it is trying to cover its actions, either by destroying damaging documents or creating helpful ones. The shenanigans the jury found to have taken place after Mr. Luri was fired was a significant factor in the verdict, and if his personnel file was frozen on his termination date, I predict that the verdict would have looked much different.

Unsurprisingly, it is reported that Republic will likely appeal the verdict. Regardless of how much of the $46 million holds up, employers should use this information as a wake up call. Litigation is dangerous. Juries are unpredictable. Some cases cannot be resolved and need to be tried, but sometimes it's better to live to fight another day.

What I'm reading this week #38

I'm here a day early with this week's best from the blogosphere, starting with 2 posts from the New York Times' Shifting Careers series: Blogging About Layoffs, the Legal Implications, and Can Ex-Bosses Object When Ex-Employees Start Businesses?

The FLSA Blog has an interesting post on crisis planning for class action lawsuits.

The Delaware Employment Law Blog writes on a topic of the utmost importance to everyone this time of year - the office thermostat.

The Connecticut Employment Law Blog, meanwhile, reminds everyone of the important distinctions between hostile work environment and quid pro quo sex harassment claims.

The Pennsylvania Labor & Employment Blog opines that the Supreme Court's D.C. gun ban decision should have little impact on employers.

Finally, the Laconic Law Blog points everyone to the new I-9 form that employers must use beginning July 1. The only difference is its effective date; otherwise the form is unchanged.

Everyone have a fun and safe July 4th weekend, and I'll see everyone back on Monday.

More on compensation for meal periods

Yesterday, a Minnesota judge ruled that Wal-Mart violated state wage and hour laws by failing to provide meal and rest periods to more than 56,000 of its employees. The judge found evidence of more than 2 million separate violations, and awarded the class of employees $6.5 million in back wages. The judge will hold a second hearing on possible penalties, which could exceed $2 billion.

In light of this news, now is as good a time as any to revisit my post from a couple of weeks ago on whether employees' meal periods counted as "hours worked" under the FLSA:

A bona fide meal period, however, is not considered hours worked. To be a bona fide meal period the employee must be totally relieved of his or her work duties. According to the Department of Labor: "The employee is not relieved if he is required to perform any duties, whether active or inactive, while eating."

So, what does it mean to be "totally relieved of one's work duties?" The 6th Circuit falls in line with most of the federal courts in applying the "predominant benefit" test to determine whether an employee's meal period is compensable. Under this test, first applied by the 6th Circuit in Myracle v. Gen. Elec. Co., the employee bears the burden to prove that the normally non-compensable meal period should be compensable because it is spent predominantly for the employer's benefit. The key inquiry is whether the employee engaged in the performance of any substantial duties during the lunch break. As long as the employee can pursue his or her mealtime adequately and comfortably, is not engaged in the performance of any substantial duties, and does not spend time predominantly for the employer's benefit, the employee is not entitled to compensation under the FLSA for a lunch break. Thus, for example, it may not matter if an employee is "on call" during a meal break, unless the employee's meal is actually disturbed.

As most employment law issues, it is best to set out expectations about meal breaks in a clear policy. For example: "Each employee is entitled to a 30-minute lunch break each day. That lunch break is unpaid. Because it is unpaid, it is the employee's time to spend as he or she sees fit. Employees should expect to enjoy their lunch breaks without interruption by a co-worker, supervisor, or manager, except in the event of a emergency that requires an employee to cut his or her lunch break short. No employee is permitted to work through a lunch break without the prior approval of his or her immediate supervisor." Of course, such a policy is only as good as how it is enforced.

Did you know that FMLA policies are mandatory?

Did you know that if you are covered by the FMLA and have an employee handbook, the FMLA's regulations require that handbook to contain an FLMA policy?

If an FMLA-covered employer has any eligible employees and has any written guidance to employees concerning employee benefits or leave rights, such as in an employee handbook, information concerning FMLA entitlements and employee obligations under the FMLA must be included in the handbook or other document. For example, if an employer provides an employee handbook to all employees that describes the employer's policies regarding leave, wages, attendance, and similar matters, the handbook must incorporate information on FMLA rights and responsibilities and the employer's policies regarding the FMLA.

An annual review of an employee handbook or other policy manual is always a good idea. Laws are constantly in flux. New laws are passed (for example, Ohio's workplace smoking ban in 2006) that may require new guidance for employees. Courts issue decisions that may make old policies either obsolete or downright illegal. The only way to make sure that a handbook is up to date is to actually take a close look at it as often as every year.

The bottom line - if you have 50 or more employees for each working day during each of 20 or more calendar workweeks in the current or preceding calendar year, and your handbook at all deals with employee benefits or leave rights (as most do), take a look at the handbook and make sure it has an FMLA policy.

Do wage and hour laws apply to independent contractors?

Every once in a while I'll answer a question that comes from my readers. Sometimes a question comes by email. Other times (to break down the 4th wall) they come from a search someone ran to find the blog.

Last week, someone asked, "Do minimum wage laws apply to 1099 independent contractors?" The answer is no. The FLSA (and Ohio's parallel wage and hour laws) only apply to employees.

But, companies should tread very carefully before classifying a worker as an independent contractor. Among the factors that the Department of Labor will examine in determining whether one is an employee or a contractor are:

1. The extent to which the services rendered are an integral part of the principal's business.
2. The permanency of the relationship.
3. The amount of the alleged contractor's investment in facilities and equipment.
4. The nature and degree of control by the principal.
5. The alleged contractor's opportunities for profit and loss.
6. The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor.
7. The degree of independent business organization and operation.

If a company errs by misclassifying an employee as a contractor, it would be liable for back wages (up to the minimum wage if the hourly rate is less) and unpaid overtime for two years, or even three years if employer was trying to willfully avoid the FLSA.

In other words, I would think long and hard before paying a worker like a contractor, and would not do so without some input from an employment lawyer and a written agreement setting forth the terms of the relationship.

To whoever typed that search into Google, thanks for the question. If anyone has any topics they'd like to see covered, email me and I'll do my best to accommodate.

House overwhelmingly votes in favor of ADA Amendments Act of 2008

By a margin of 402-17, the House yesterday voted in favor of the ADA Amendments Act of 2008. The New York Times is reporting that the Senate is expected to take similar action soon, but that President Bush is concerned that "it 'could unduly expand' coverage and significantly increase litigation."

The highlights of the bill (the full text of which is available here) are several. It defines "substantially limits" to mean "materially restricts," it specifies examples of major life activities, and expands upon them to include major bodily functions, and helps employers by exempting from "regarded as" claims transitory or minor impairments that last or are expected to last for 6 months or less.

The biggest changes, however, come to the definition of "disability" itself. In Sutton v. United Airlines, the Supreme Court held that whether an impairment substantially limits a major life activity is to be determined with reference to the effects of mitigating measures on the impairment. For example, a diabetic who has the condition under control with insulin might not meet the definition of "disability." These amendments expressly reverse that ruling:

• An impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active.
• The determination of whether an impairment substantially limits a major life activity is to be made without regard to the ameliorative effects of mitigating measures, such as medications, equipment, assistive technology, auxiliary devices, learned behavioral, or adaptive neurological modifications.
• Eyeglasses or contact lenses, however, can still be considered in determining whether an impairment substantially limits a major life activity.

All in all, the goal of this legislation is to be lauded: "To carry out the ADA's objectives of providing 'a clear and comprehensive national mandate for the elimination of discrimination' and 'clear, strong, consistent, enforceable standards addressing discrimination' by reinstating a broad scope of protection to be available under the ADA." These amendments may not necessarily increase litigation, but they will certainly make it more difficult for employers to get ADA cases dismissed on summary judgment.

Delay in reporting harassment dooms employee's claim

Federal Express terminated the employment of Deborah Thornton after she failed to return to work from a 16-month leave of absence taken because of alleged stress stemming from sexual harassment by her immediate supervisor, David Bragorgos. She did not report the retaliation to FedEx until two months after her leave of absence began, claiming that she feared retaliation from Bragorgos and others if she reported it. In Thornton v. Federal Express, decided early this week, the 6th Circuit rejected that argument and upheld summary judgment entered in the employer's favor.

An employee’s subjective fears of confrontation, unpleasantness or retaliation do not alleviate the employee’s duty under Ellerth to alert the employer to the allegedly hostile environment.

In other words, employees have an affirmative obligation to report harassment. In return, the employer has an affirmative to ensure that the employee can do so free from retaliation. The employee is not excused from her responsibilities out of a fear that the employer will not live up to its end of the bargain.