Top 10 Labor & Employment Law Stories of 2008: Nos. 2 and 1

Today brings us to the end of our countdown, and the top two labor and employment law stories of the year. Each of these stories will have far reaching implications into 2009:

2. The economic downturn and the proliferation of layoffs and shutdowns: It’s no secret that our economy is in the toilet, and will continue to be at least in the short term. Companies have been and will continue to shed employees and operations as they try to stay afloat or fail. Unemployment insurance systems will continue to be stressed to the max. As employers continue to feel economic pressure, acronyms like OWBPA and WARN will continue to be on the tips of their tongues and at the core of employees’ fears. This story very well could climb to number in 2009 as the economy is predicted to continue to suffer, and employment lawsuits are expected to continue to rise.

1. The election of President Obama: In the last two years, the Democratic majorities in the House and Senate have proposed a cornucopia of new labor and employment laws – Employee Free Choice Act, Employment Non-Discrimination Act, Ledbetter Fair Pay Act, Arbitration Fairness Act, Working Families Flexibility Act, Independent Contractor Proper Classification Act, RESPECT Act, Equal Remedies Act, Civil Rights Act of 2008, and the Health Families Act. While jump starting the economy should preoccupy the new administration, we cannot overlook that Senator Obama sponsored most if not all of these bills. With the Democrats in charge of the White House and Capitol Hill for the first time in 14 years, there is a real chance that we will see the most sweeping changes to our nation’s labor and employment laws in decades. This story is number one in 2008, and very well could repeat as the top story of 2009, 2010, 2011, 2012, and beyond.

Top 10 Labor & Employment Law Stories of 2008: Nos. 4 and 3

Today brings us numbers 4 and 3 of our countdown of the year’s top labor and employment law stories:

4. President Bush signs the ADA Amendments Act: The ADA Amendments, which go into effect Jan. 1, will undo several employer-friendly Supreme Court decisions that limited who could qualify as “disabled” under the statute. These amendments will make it easier for an employee to qualify for protection under the ADA, and make it harder for employer to get cases dismissed on summary judgment on the issue of whether an employee is disabled.

3. President Bush enacts new FMLA provisions for military leave, and the Department of Labor publishes new FMLA regulations: Thanks to the National Defense Authorization Act for FY 2008, the FMLA now provides for additional unpaid leave for family members to care for a servicemember with a serious illness or injury suffered in the line of duty, and for employees to take FMLA leave for certain emergencies stemming from a family members’ active duty. In a few weeks, the DOL’s regulations interpreting these new provisions and reinterpreting the original FMLA will go into effect. Covered employers will have to re-learn the FMLA in light of these new regulations, which, while being employer-friendly, significantly change how the FMLA operates. An already confusing statute is going to become that much more confusing, at least in the short-term.

Top 10 Labor & Employment Law Stories of 2008: Nos. 6 and 5

Our year-end countdown the year’s top 10 labor and employment law stories continues with numbers 6 and 5:

6. The Ohio Supreme Court holds that retained memories can qualify as trade secrets: In Al Minor & Assocs. v. Martin, the Ohio Supreme Court held that a customer list compiled by a former employee strictly from retained memory can form the basis for a statutory trade secret violation. According to the Court, information that constitutes a trade secret does not lose its character by being recreated from memory. In doing so, it not only greatly expanded the scope of statutory trade secret claims, but also expanded the class of employees against whom a non-competition agreement can be held to be enforceable.

5. The Ohio Healthy Families Act crashes and burns as its supporters pull it off the November ballot: The Ohio Healthy Families Act, if passed, would have provided 7 annual days of paid sick leave to employees of all Ohio employers with 25 or more employees. Thanks to an 11th hour compromise struck by Gov. Strickland and Sen. Brown, the SIEU agreed to remove this measure from November’s ballot. Had this measure been on the ballot, it would have likely passed, making Ohio the first state to mandate such a paid benefit. The last thing Ohio’s economy needs is a disincentive for businesses to call our state home. Thankfully, common sense prevailed.

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.