Top 10 Labor & Employment Law Stories of 2008: Nos. 8 and 7

We continue our year-end countdown of 2008’s top 10 labor and employment law stories with numbers 8 and 7:

8. Wage and hour lawsuits continue to dominate federal court filings: Few if any companies do wage and hour perfectly. Save yourself the headache of defending a class action for misclassified employees or off-the-clock work and make 2009 the year your business audits its wage and hour practices.

7. The Genetic Information Nondiscrimination Act becomes law: In May, President Bush signed GINA into law, one of several significant statutory employment law changes during the year. GINA adds “genetic information” to the list of classes of employees protected by the federal employment discrimination laws. It makes it unlawful for an employer to fail or refuse to hire, or to discharge, any employee, or otherwise to discriminate against any employee with respect to the compensation, terms, conditions, or privileges of employment of the employee, because of genetic information with respect to the employee. Expect the EEOC to issue regulations interpreting this statute at some point in 2009.

Top 10 Labor & Employment Law Stories of 2008: Nos. 10 and 9

A couple of Sundays ago, the New York Times suggested that more and more companies will be flat out shutting down for the last week of the year as a cost-savings move:

Normally, the unfortunate people who are stuck at work during the molasses-slow week between Christmas and New Year get to know its spooky charms. Corridors and conference rooms lie empty, the telephone on the desk sits as quiet as a headstone.

But this year, a week that is usually just carefree and unproductive is likely to be positively dead. Companies in industries like high technology and manufacturing, pressed to the wall by the recession, are forcing workers to take the week off for accounting reasons as well as to reduce lighting and heating bills. Other people will also be taking the week off for the first time — not to dash off to ski at Killington, Vt., but because they lost their jobs.

I normally don’t like to be labeled a bandwagon jumper, but I happily will be joining this trend by taking off for the remainder of the year. Let me take this opportunity to wish everyone Happy Holidays (whatever your holiday of choice happens to be) and Happy New Year. I’ll see everyone back with fresh content in 2009.

Fear not, however, I will not leave everyone without something to read between now and Jan. 1. For the rest of the year, I will be counting down the top 10 labor and employment law stories of the year. We start today with numbers 10 and 9:

10. The 6th Circuit recognizes a claim for associational retaliation: In Thompson v. North Am.Stainless, the 6th Circuit expanded Title VII retaliation liability to cover adverse actions taken against those "who are so closely related to or associated" with employees who engage in protected activity. The question of how close is close enough is still open, and subject to lots of debate.

9. The 6th Circuit sets a very low bar to survive summary judgment in a mixed motive discrimination case: In White v. Baxter Healthcare Corp., the 6th Circuit held that the traditional McDonnell Douglas burden-shifting framework does not apply to the summary judgment analysis of a Title VII mixed-motive claim. Instead, to survive a motion for summary judgment, a Title VII plaintiff need only show: (1) that an adverse action occurred, and (2) some evidence that the protected class was a motivating factor for that adverse action. This is a very low threshold to meet, and will lead to fewer summary judgments being granted in this circuit.

Do you know? The FLSA’s Executive Exemption

Do you know? What does it take for an employee to qualify as exempt under the Executive Exemption of the Fair Labor Standards Act? Yesterday, we examined a $35.5M verdict in a wage and hour collective action over certain management-level employees misclassified under the FLSA’s executive exemption. As that case illustrates, job titles do not determine exempt status. For an exemption to apply, an employee’s specific job duties and salary must meet all the requirements of the DOL’s regulations.

Today, we’ll examine exactly what it takes for an employee to qualify under the executive exemption. Over the next several weeks, we’ll also look at exemptions for administrative, professional, computer, and outside sales employees.

To qualify for the executive employee exemption, all of the following tests must be met:

• The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $455 per week;

• The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;

• The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent (such as one full-time and two part-time employees, or four part-time employees); and

• The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

“Primary duty” means the principal, main, major or most important duty that the employee performs, with the major emphasis on the character of the employee’s job as a whole.

“Management” includes, but is not limited to, activities such as interviewing, selecting, and training of employees; setting and adjusting their rates of pay and hours of work; directing the work of employees; maintaining production or sales records for use in supervision or control; appraising employees’ productivity and efficiency for the purpose of recommending promotions or other changes in status; handling employee complaints and grievances; disciplining employees; planning the work; determining the techniques to be used; apportioning the work among the employees; determining the type of materials, supplies, machinery, equipment or tools to be used or merchandise to be bought, stocked and sold; controlling the flow and distribution of materials or merchandise and supplies; providing for the safety and security of the employees or the property; planning and controlling the budget; and monitoring or implementing legal compliance measures.

“Customarily and regularly” means greater than occasional but not necessarily all the time. For example, work normally done every workweek is customarily and regularly, but isolated or one-time tasks are not.

Factors to be considered in determining whether an employee’s recommendations as to employment decisions are given “particular weight” include whether it is part of the employee’s job duties to make such recommendations, and the frequency with which such recommendations are made, requested, and relied upon. An employee’s recommendations may still be deemed to have “particular weight” even if the employee is not the ultimate decisionmaker.

Make a list and check it twice – FLSA exemptions

At the end of last year, I made a list of New Year’s resolutions for everyone. Number 4 on that list was, “Audit your wage and hour practices.” Morgan v. Family Dollar Stores (11th Cir. 12/16/08) provides a not-so-subtle reminder that it’s never too late to make good on this resolution.

In Morgan, the 11th Circuit affirmed the trial court’s $35,576,059.48 judgment against Family Dollar in a wage and hour collective action. The class consisted of 1,424 store managers, who claimed that Family Dollar improperly classified them as exempt and paid them a salary, while requiring 60 and 90 hours of work each week and refusing to pay overtime. According to the plaintiffs, store managers were managers in name only, and actually spend the almost all of their time performing manual labor, such as stocking shelves, running the cash registers, unloading trucks, and cleaning the parking lots, floors, and bathrooms. 

If you need any better reason why a company should not ignore these wage and hour issues, consider that the court found Family Dollar’s violation to be willful, which extended the statute of limitations (and therefore the damages) from two to three years. Family Dollar’s ignorance of it’s employees’ exemption loomed large in the willfulness finding:

Family Dollar raises several challenges to the jury’s willfulness finding. All fail. First, the evidence, detailed above, was legally sufficient to support the jury’s finding that Family Dollar’s FLSA violations were willful. For example, the Plaintiffs presented testimony from Family Dollar executives that it never studied whether the store managers were exempt executives. Executives also testified that Family Dollar’s company-wide policy was that store managers were exempt from FLSA overtime requirements, but they had no idea who made that policy.

FLSA exemptions are usually fact specific and almost always a judgment call. Because it is a subjective decision, classifications may not always be correct. However, if you have a rational basis for making the decision (such as hiring an outside professional to analyze and classify employees) and implementing a policy, you may not always win the exemption battle, but you will put your business in a much better position to avoid a finding of willfulness.

Come back tomorrow for a closer look at the executive exemption, and what factors businesses should be considering in classifying managerial employees as exempt or non-exempt.

WIRTW #60

What I’m Reading This Week will be taking the rest of the year off to recharge it’s batteries. After today’s column, this feature will return January 2 with a special round-up of the best from the blawgosphere's holiday season. As for this week’s most interesting posts…

An Op-Ed in today’s Wall Street Journal by University of Chicago law professor Richard Epstein poses that the Employee Free Choice Act is unconstitutional.

The Connecticut Employment Law Blog provides some pointers on handling your workforce in bad weather.

The Pennsylvania Labor & Employment Blog has some more information on wage and hour issues with year-end bonuses.

The Delaware Employment Law Blog gives some tips on avoiding problems at office holiday parties when alcohol is involved.

The Labor and Employment Blog suggests who should be conducting workplace investigations.

World of Work reports on a big win for Starbucks in a class action lawsuit that challenged its employment application as unlawful.

Law.com draws some employment law lessons from the presidential campaign.

HR World points out that the number of employment lawsuits filed is inversely proportional to the health of the economy.

George’s Employment Blawg has the top 10 things someone doesn’t want to do during a job interview.

Finally, two bits of positive news on the Employee Free Choice Act:

• EFCA Updates reports that Rev. Al Sharpton has come out against the EFCA.

• Also from EFCA Updates comes news that at least a few Democratic Senators are starting to have doubts about the EFCA.

I’ll be back next week with the latest from the world of labor and employment law, in addition to starting my countdown of the top 10 labor and employment law stories of 2008.

Presented by Kohrman Jackson & Krantz

An early holiday gift from the Department of Labor – Revised FMLA forms for the new FMLA regulations

Hot off the presses from the Department of Labor are the following documents to use when the new FMLA regulations go into effect on January 16, 2009, linked for your holiday enjoyment:

• A revised Family and Medical Leave Act (FMLA) poster.

• Certification of Health Care Provider form for an Employee’s Serious Health Condition (WH-380E).

• Certification of Health Care Provider form for a Family Member’s Serious Health Condition (WH-380F).

• The DOL’s Notice of Eligibility and Rights and Responsibilities form (WH-381).

• Designation Notice to Employee of FMLA Leave (WH-382).

• Certification of Qualifying Exigency for Military Family Leave (WH-384

• Certification for Serious Injury or Illness of Covered Servicemember for Military Family Leave (WH-385).

For information on what all these forms mean and how they should be put into practice beginning on Jan. 16, click on over to New FMLA Regulations: What do they mean to notice and designation obligations to employees?

“Ugly” as a protected class? Let’s get real.

Let’s review the currently protected classes. Under the current state of the law, it is illegal to discharge, to refuse to hire, or otherwise to discriminate with respect to hire, tenure, terms, conditions, or privileges of employment, or any matter directly or indirectly related to employment because of: race, color, sex, religion, national origin, ancestry, age, disability, genetic information, military status, and veteran status. I am fairly confident that 2009 will add sexual orientation, and possibly gender identity, to this list.

According to Workplace Prof Blog, some researchers are beginning to suggest that we also add “ugly” to this list:

Researchers, including lawyers and economists, have begun examining ugliness, suggesting that the subject has been marginalized in history and that discrimination against the unattractive is a silent, widespread injustice…. "Beauty and the Labor Market," a study published in the American Economic Review in 1994, estimated that unattractive men and women earn five to ten percent less than those considered attractive or beautiful, and that less attractive women marry men with less money. Another study conducted by Tanya Rosenblat, an associate professor of economics, said "people who are physically attractive might develop better communication skills because the tendency is that from an early age they get more attention from all their caregivers, including their own mothers onward. The conclusion: discrimination based on looks occurs across occupations….

Steadily playing off of insecurities and implications, Dr. Synnott states: "Beautiful people are considered to be more intelligent, sexier, and more trustworthy.  And this implies that ugly people are assumed to be less trustworthy and less intelligent."

He notes that while few current laws prohibit employment discrimination based on lack of attractiveness, at least two California cities (San Francisco and Santa Cruz) have such a law on their books.

Let’s get real for a second – nothing is more subjective than beauty. Voltaire said, “Ask a toad what is beauty....; he will answer that it is a female with two great round eyes coming out of her little head, a large flat head, a yellow belly and a brown back.’” If we engaged this folly and legislated ugliness as a protected class, whose eyes would be the judge and jury?

Folly aside, this notion nevertheless serves a good reminder that we, as employers, should be making employment decisions based on ability and merit, not innate characteristics over which a person has no control, whether it’s a protected class such as race or an unprotected class such as attractiveness. Consistent merit based decisions not only serve as the best defense against lawsuits, but also save us from the notion that we need more protected classes.