The Employee Free Choice Act publicity machine ramps up

Last week, I was jarred out of a comfortable evening of family television by the following commercial:

We’ve grown accustomed to endless political ads after a presidential campaign that seemed to go on forever. It’s one thing to see an ad for a ballot measure that we all get to vote on. It’s another to see an ad for a bill on which only 435 Representatives and 100 Senators will have any say-so. It’s a testament to how well-funded and savvy this union-backed campaign is.

There is a very compelling story to tell on why the ECFA is simply bad policy. It’s un-democratic in doing away with secret ballot union elections. It’s draconian in imposing first contracts through binding arbitration. It’s bad economic policy in adding significant costs to companies that are struggling to make it by as is. Does anyone doubt for a second that huge labor costs built into collective bargaining agreements are a big part of the Big 3’s big problems? I’ve yet to hear one person express why the EFCA is good policy for anyone other than the labor unions. I’ve also yet to hear one EFCA supporter in Congress explain why it’s okay to oppose NAFTA provisions that did not mandate secret ballot union election in Mexico, but it’s not okay to have the same protections for our own workers.

It is important to contact your Representative and Senators to tell them to vote against the ECFA. (How to contact your Senator; Write your Representative). The EFCA is not a done deal just because we have a Democratic President and Democratic majorities in both houses of Congress. Let our elected officials know that a yes vote for the EFCA as quid pro quo for union support will result in a vote for the other party in the next election.

The “Cat’s Paw” is alive and well in the 6th Circuit -- Pro se plaintiff’s trial win affirmed by Sixth Circuit

File this case under the category of never underestimate your opponent. The 6th Circuit has affirmed a trial court’s $120,000.50 verdict in a race discrimination case in which the plaintiff appeared pro se (without an attorney). In Madden v. Chattanooga City Wide Service Dept. (6th Cir. 11/25/08), the plaintiff was fired by management after a supervisor reported him for setting off firecrackers at a work site. The problem for the employer is that the plaintiff happened to be black, and he knew of two white employees who had done the exact same thing without being reported by the same supervisor.

The appellate court was unfazed by the fact that the person with the discriminatory animus, the reporting supervisor, was not the ultimate decisionmaker in Madden’s termination. Instead, the Court imputed the supervisor’s animus to the decision makers under what is known as “cat’s paw” liability. Cat’s paw liability is when an adverse employment decision is made by a person who lacks impermissible bias, but was influenced by another individual who was motivated by such bias.[1] The court found that the employer was liable because the supervisor discriminatorily decided which employee to report for identical misconduct.

There is the problem posed by the fact that Madden was fired not by his supervisor, Templin, but by senior managers—Templeton and Leach—who were unaware of incidents in which white workers set off fireworks without facing discipline. … We have held that when a plaintiff challenges his termination as motivated by a supervisor’s discriminatory animus, he must offer evidence of a “causal nexus” between the ultimate decisionmaker’s decision to terminate the plaintiff and the supervisor’s discriminatory animus. … In the instant case, there was an investigation of the events for which Madden was fired, which was conducted by Boyd and Templeton. This investigation led to Templeton’s recommendation that Madden be fired, which Leach accepted. … There was evidence that Templin discriminated in the information that he provided about employee misconduct to senior managers by reporting the misconduct of a black employee, but not the virtually identical misconduct of white employees. By relying on this discriminatory information flow, the ultimate decisionmakers “acted as the conduit of [the supervisor’s] prejudice—his cat’s paw.”

Because the decisionmaker acted on the supervisor’s word, without any additional investigation, the court imputed the supervisor’s animus to the decisionmaker.

There are two important lessons for employers to take from this case:

1. Never underestimate your opponent. It’s impossible to know whether Chattanooga acted out of hubris in taking this case all the way to trial. What we do know is that bad facts are bad facts, whether or not the plaintiff is represented or acting pro se.

2. As long as cat’s paw liability is a valid theory of discrimination, it is imperative that decisionmakers verify the information upon which they are relying. Unless the decisionmaker has first-hand knowledge of the reasons justifying the action, he or she should undertake some investigation and independently verify that the decision is the result of a legitimate non-discriminatory reason and not an unlawful animus.

The Blawg is taking the rest of the week off for the Thanksgiving Holiday. Everyone enjoy your turkey. I’ll be back on Monday with thoughts on the aggressive advertising campaign started by labor organizations in support of the Employee Free Choice Act. What I’m Reading This Week will return next Friday with a supersized edition.

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[1] “Cat’s paw” derives from a fable in which a monkey tricks a cat into scooping chestnuts out of a fire so that the monkey can eagerly gobble them up, leaving none left for the cat. It generally describes a situation where one is unwittingly manipulated to do another's bidding. See Read Book Online.

Do you know? Year-end bonus payments may affect overtime rates

Do you know? Year-end bonus payments could count as part of a non-exempt employee’s regular rate of pay, thereby increasing the overtime premium owed to that employee. Given the current economic state, fewer companies are likely to pay bonuses this year, but these rules are important to heed when bonuses are paid to hourly and salaried non-exempt employees.

Section 7(e) of the Fair Labor Standards Act requires the inclusion in the regular rate of pay all remuneration for employment except seven specified types of payments. Bonuses that do not qualify for exclusion from
the regular rate under one of the seven exceptions must be totaled with other earnings to determine the regular rate upon which the overtime premium rate must be based.

A bonus could fall under one of two exceptions: discretionary payments, or gifts made at Christmas time or on other special occasions. Each of these two categories, however, has specific criteria that must be met before a bonus payment can be excluded from the regular rate.

Discretionary Bonus Payments

For a bonus to qualify for exclusion as a discretionary bonus, the employer must retain discretion both as to the fact of payment and as to its amount. Consider the following examples:

• An employer promises at the beginning of the year to pay a bonus at year-end in some undetermined amount. It has given up discretion as to the fact of the bonus, but not as to its amount.

• An employer promises employees that they will receive a bonus based on some mathematical formula, but if the company determines that it can afford to make the payments at that time. It has given up discretion as to the bonus’s amount, but not as to the fact of payment.

In both examples, the bonus is not discretionary, albeit for opposite reasons. For a bonus to be truly discretionary, the employer would have to retain complete discretion as whether to make the payment, and if so, in what amount. The employer cannot rely on any prior promise or agreement in making the payment or determining its amount.

Gifts, Christmas and Special Occasion Bonuses.

To qualify for exclusion under this exception, the bonus must be a bona fide gift. If it is measured by hours worked, production, or efficiency, is so large that employees would reasonably consider it part of their wages for hours worked, or is paid pursuant to some agreement or policy, then the bonus cannot be considered to be a gift.

According to the Department of Labor, the following circumstances will not disqualify a year-end payment as a gift:

• If an employer pays it with such regularity that employees are led to expect it from year-to-year.

• The amounts paid vary among employees or groups, or are tied to salary, wage, or length of service. For example, a Christmas bonus paid in the amount of two weeks’ salary to all employees and an equal additional amount for each 5 years of service with the firm would be excludable from the regular rate.

The key factors are whether there is a contract, and whether the amount is specifically tied to hours worked, production, or efficiency.

Calculating the Regular Rate with a Bonus Payment

Where a bonus payment is considered a part of the regular rate at which an employee is employed, it must be included in computing the regular hourly rate of pay and overtime compensation. For purposes of calculating the regular rate of pay, the bonus does not have to be included in its entirety in the week it is paid. Instead, an employer can apportion the bonus amount back over the workweeks of the period during which it was earned. The employee must then receive an additional amount of compensation for each workweek that he worked overtime during the period equal to one-half of the hourly rate of pay allocable to the bonus for that week multiplied by the number of statutory overtime hours worked during the week. If it is impossible to allocate the bonus, an employer can select some other reasonable and equitable method of allocation.

If a bonus payment already accounts for the overtime premium, then no additional payment is required. For example, a bonus plan may pay, as a bonus, a 10% premium of an employee’s total compensation, including overtime premiums. In this instance, the payment already covers overtime, and no additional overtime is required.

Conclusion

Like most wage and hour issues, the handling of bonus payments to non-exempt employees is complex, and presents a real trap for the unwary employer. If you are considering paying a year-end or other bonus to hourly and salaried non-exempt employees, seriously consider running it past employment counsel before making the payments.

New FMLA Regulations: What do they mean to notice and designation obligations to employees?

Administration of FMLA leave probably causes more headaches for HR professionals than any other facet of their jobs. As if the FMLA is not complex enough, the new regulations radically revamp the notice and certifications processes for employers to follow when an employee seeks FMLA leave. The following summarizes these new responsibilities.

Required Postings and Policies

All covered employers who are required to post the prescribed FMLA notice in the workplace, even if they do not have any eligible employees. Employee handbooks will still have to contain FMLA policies. Companies that do not have a handbook, however, will be required to deliver a written FMLA notice at the time of hire. This written notice is separate from the FMLA posting discussed above.

The Eligibility Notice

Under the current iteration of the FMLA, employers only have one designation requirement to employees seeking FMLA leave – Form WH-381 – which is the employer’s response to an employee seeking FMLA leave. The new regulations break this process into two steps, requiring the use of several different documents. After January 16, 2009, old Form WH-381 will no longer be valid and should not be used.

Under the new regulations, when an employee requests FMLA leave, employers must notify employees of their eligibility to take FMLA leave. Employers must provide this notice of eligibility within five business days of the employee’s request for leave or the employer’s other notice of the need for leave, absent exigent circumstances. If an employer is going to seek medical certification for the leave, the employer can provide a copy of the medical certification form along with the eligibility notice. Additionally, the eligibility notice accomplishes the following:

1. It tells the employee the date the leave was requested and the employer’s understanding of the reason supporting the leave.
2. It tells if the employee is eligible to take FMLA leave, and if not, why.
3. For eligible employees, it gives a date certain for the employee to return any requests documentation for the leave, such as a medical certification.
4. It discusses arrangements for payment of health insurance premiums while on leave, the use of concurrent paid leave, whether the employee is considered a “key employee”, and any requirements for periodic status reports.
5. It gives the employer’s chosen method for calculating the FMLA leave year.

Eligibility is determined, and this notice must be provided, at the beginning of the first instance of leave for each FMLA-qualifying reason in the applicable 12-month period. All FMLA absences for the same qualifying reason in the same FMLA year are considered a single leave, and the employee maintains eligibility as to that reason during the entire 12-month period. 

If an employee is eligible for FMLA leave, at the same time an employer provides the eligibility notice the employer must also provide a written notice of “Rights and Responsibilities” under the FMLA. This notice details the specific expectations and obligations of employees under the FMLA.

The old form WH-381 (which was optional, but preferred), will be replaced by a new, mandatory WH-381. The new WH-381 encompasses both the eligibility notice and the “Rights and Responsibilities” notice. The new forms are already available as Appendices C & D to the new FMLA regulations (at pp. 191-193).

The Designation Notice

Once an employer has received sufficient information to determine whether an employee’s leave is covered by the FMLA, the employer must notify the employee within five business days that the leave is designated as FMLA leave, absent exigent circumstances. Note that the five business days is a ceiling, not a floor, and employers can provide the designation notice sooner, or even concurrently with the eligibility notice, if the employer has sufficient information available to do so. A copy of the designation form is available as Appendix E to the new FMLA regulations (at p. 194).

The designation notice tells employees one of five things:

• The leave is approved;
• More information is needed to determine if the leave can be approved;
• The leave is denied;
• The FMLA does not cover the leave request; or
• The employee has exhausted his or her FMLA leave entitlement for that 12-month period.

If the leave is approved, the employer must designate how much leave is expected to be taken, whether paid leave will be taken concurrently with the FMLA leave, and whether a fitness-for-duty certification will be required before the employee will be permitted to return to work.

If more information is necessary for an employer to make a determination, the employer must advise either what information is needed and give the employee at leave seven calendar days to provide it, or notify the employee that a second or third medical opinion, at the employer’s expense, is required. If an employee fails to meet these requests, the employer can then deny the FMLA leave.

In considering whether to approve an FMLA leave, employers can consider, in addition to the employee’s medical certification, any information received during an ADA interactive process or an employee benefit program.

The new regulations permit retroactive notice if the employer fails to provide timely notice and the delay does not cause employee harm or injury. If, however, an employer fails to provide a written designation notice, the new regulations make clear that such failure can be considered “interference” with an employee’s FMLA rights, for which the employee can seek damages included “any other relief tailored to the harm suffered.”

What this means for you

These new regulations provide a fundamental change in how employers will manage FMLA leave requests. The process is now bifurcated, splitting eligibility and designation. It eliminates the problems employers faced in having to conditionally certify leave as FMLA leave before having all of the information necessary to make a proper determination. Coupled with the new medical certification rules, employers will have much greater access to information in making FMLA decisions. While these regulations are largely a benefit to employers, they do pose significant new requirements with which employers must comply. It is incumbent on all HR professionals to learn these new rules and be prepared to implement them on January 16, 2009.

WIRTW #57

Two topics dominate the employment law headlines this week – the new FMLA regulations and the continued debate over the prospects for the Employee Free Choice Act. I’ve covered the former in depth earlier in the week (here and here). The following blogs all wrote this week on the latter, the EFCA: Today’s Workplace, Jottings By An Employer's Lawyer, World of Work, and Work Matters. In related news, Overlawyered happily reports that employment lawyers are busier than ever.

As always seem to be the case, we have a couple of interesting wage and hour posts: George’s Employment Blawg on wage and hour implications for telecommuters, and the Workplace Prof Blog on whether time spent booting up one’s computer is considered compensable work time.

The Trade Secrets Blog reports on a case before the Ohio Supreme Court on whether certain customer-related information qualifies as a trade secret.

The MMMG Law Blog discusses a 10th Circuit case, which may be the first of its kind to apply the Supreme Court’s Holowecki standard of what constitutes a “charge” of discrimination.

The Delaware Employment Law Blog gives some helpful guidance on how to properly make deductions from a salaried employee’s pay without jeopardizing an FLSA exemption.

BLR’s HR Daily Advisor properly advises that when management hears a rumor about inappropriate or discriminatory workplace conduct, it should investigate and not ignore it.

Finally, the Toronto Employment Lawyer points out a key difference between American and Canadian employment law – apparently north-of-the-border management-level employees have an affirmative duty to provide a reasonable notice of resignation.

Hidden cameras pose potential problems

The D.C. Circuit is considering an appeal by 16 former Anheuser-Busch employees who were disciplined or fired after the company installed hidden cameras without first bargaining with their union. Among the violations caught on video – sleeping on the job, peeing on the roof, and smoking marijuana. It is fairly settled law that in a unionized setting, the installation of security cameras is a mandatory subject of bargaining. Thus, Anheuser-Busch violated federal labor law by unilaterally installing the cameras. At issue in the appeal is whether an employer’s own violation of labor law should require it to ignore the employees’ misconduct.

The union argues that the employer should not receive any benefit from its misconduct. The employer argues that the remedy for its unfair labor practice is to remove the cameras, and that the employees should not receive a free pass for their misconduct. I’m curious to see how this case comes down, because both sides have compelling arguments, although I think the employer has the stronger position. It could have discovered the misconduct without the cameras and taken the same actions against the employees. The cameras were coincident to, but not the cause of, the discipline.

In a non-union setting, the use of hidden cameras pose their own unique problems. First, to avoid any potential illegal wiretap issues, cameras should be video-only. Surreptitious voice recordings could violate state and federal wiretap laws. Secondly, cameras should not be placed in any areas in which employees have an expectation of privacy. Bathrooms and locker rooms are per se off limits. Work areas, lunch rooms, smoke holes, and other areas in which employees cannot reasonably expect to have any privacy are all fair game for surveillance cameras.

[Hat tip: The Blog of LegalTimes]

Summary of new FMLA Regulations: Military Family Leave

Yesterday, I examined 10 key changes in the new FMLA regulations to the legacy FMLA provisions. Today, I’ll break down the new regulations’ effect on Section 585(a) of the National Defense Authorization Act for FY 2008. That provision amended the FMLA to provide eligible employees working for covered employers two important new leave rights related to military service: military caregiver (or covered servicemember) leave and qualifying exigency leave.

Military Caregiver Leave (also known as Covered Servicemember Leave):

1. Eligible employees who are family members of covered servicemembers will be able to take up to 26 workweeks of leave in a “single 12-month period” to care for a covered servicemember with a serious illness or injury incurred in the line of duty on active duty.

2. This provision also extends FMLA protection to additional family members (i.e., next of kin) beyond those who may take FMLA leave for other qualifying reasons.

3. When leave is taken to care for a covered servicemember with a serious injury or illness, an employer may require an employee to support his or her request for leave with a sufficient certification, which includes certain necessary military and medical information support the request for leave.

Qualifying Exigency Leave:

1. This provision makes the normal 12 workweeks of FMLA job-protected leave available to eligible employees with a covered military member serving in the National Guard or Reserves to use for “any qualifying exigency” arising out of the fact that a covered military member is on active duty or called to active duty status in support of a contingency operation.

2. The Department’s final rule defines qualifying exigency as any of the following categories for which employees can use FMLA leave: i)Short-notice deployment; ii) Military events and related activities; iii)Childcare and school activities; iv) Financial and legal arrangements; v) Counseling; vi) Rest and recuperation; vii) Post-deployment activities; and viii) Additional activities not encompassed in the other categories, but agreed to by the employer and employee.

3. Employers will be able to require an employee to provide a copy of the covered military member’s active duty orders or other documentation issued by the military which indicates that the covered military member is on active duty (or has been notified of an impending call or order to active duty), and the dates of the covered military member’s active duty service.

4. Each time leave is first taken for a qualifying exigency, an employer may require an employee to provide a certification that sets forth information pertaining to the exigency.