WIRTW #124

This week brought us two huge employment law stories, one of which I covered this week and one which I’ve covered in the past.

On Monday, the Supreme Court agreed to review the issue of the applicability of the “cat’s paw” to discrimination cases. For my thoughts on this issue, jump over to The Return of the Cat’s Paw. For others’ thoughts, I recommend: Fitzpatrick on Employment Law, Maryland Employment Law Developments, World of Work, SCOTUSblog, Washington D.C. Employment Law Update, Daily Developments in EEO Law, Workplace Prof Blog, Michael Fox’s Jottings By An Employer’s Lawyer, and LawMemo Employment Law Blog.

Also on Monday, the Supreme Court heard oral argument in Quon v. Arch Wireless, which may decide the issue of an employee’s right of privacy in non-work related emails and text messages on employer-owned and issued equipment. I covered this case last June, with the 9th Circuit’s original decision, and will cover it again when the Supreme Court issues its decision. In the meantime, the following blogs covered the oral argument: Rob Radcliff’s Smooth Transitions, Abovethelaw.com, How Appealing, SCOTUSblog, Philip Miles’s Lawffice Space, Dan Schwartz’s Connecticut Employment Law Blog, LawMemo Employment Law Blog, Workplace Prof Blog, and Workplace Privacy Counsel.

Here’s the rest of the best I read this week:

Discrimination

• Frivolous Litigation and the EEOC – from The ChamberPost

• Sexting at Work: What is an employer to do? – from Jennifer Hays at the Warren & Hays Employment Law Blog

• Colwell v. Rite Aid Corp.: Employer May Be Required To Modify Work Schedule to Accommodate Commuting Difficulties – from A Case of the Mondays

• The ADA: Headaches or a Litigation Perfect Storm? – from GT LE Blog

• Male Sexual Harassment Claims On The Rise – from Wyatt Employment Law Report

Wage & Hour

• Today is Equal Pay Day – from Stephanie R. Thomas, Ph.D.

• Obama Establishes National Equal Pay Day – from Washington D.C. Employment Law Update

• NPR on the Paycheck Fairness Act – from Workplace Prof Blog

• FMLA Right to Commence Leave is Not Absolute, 11th Circuit Holds – from The FMLA Blog

• Health Care Reform -- What Employers Need To Know Now – from Hunton Employment & Labor Law Perspectives™

• New Federal Workplace Lactation Law–Why It’s Good for Families, Good for Business – from Corporate Voices for Working Families

• Pick Your Poison: An IRS Audit or Visit to the Proctologist? – from Compensation Cafe

• House Committee Holds Hearing on Work-Life Balance Award Act – from Washington D.C. Employment Law Update

Social Networking

• The backstory on the lost iPhone 4 – from The Apple Core

• Social Media Revolution & What it Means for Employers – from Defending The Digital Workplace

Labor Relations

• Shock! Not all unions like card-check... – from LaborUnionReport.com

• SEIU’s Anna Burger: Push NLRB to Regulate, Congress to Use Reconciliation to Push EFCA – from Labor Relations Today

• The Future of Unions: A Key Question – from Michael Fox’s Jottings By An Employer’s Lawyer

• President Re-Submits NLRB Nominations of Becker, Pearce to Senate – from Labor Relations Today

Background Checks

• Boy Scouts Hit With $1.4 Million Plus Another $25 Million (Maybe) – from The Word on Employment Law with John Phillips

• Report: Disney Bus Driver Arrested on Child Pornography Charge – from StitchKingdom.com

• Negative Employment Verification Leads to Multimillion Dollar Judgment – from Nick Fishman at the employeescreenIQ Blog

• The Use of Credit Checks by Employers is Under Attack on Many Fronts—Oregon Statute is but One Example – from Fitzpatrick on Employment Law

Miscellaneous

• 75 Online Legal-Writing Resources, Just in Time for Summer Associates – from Molly DiBianca’s Going Paperless

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Today is “Take Our Daughters and Sons to Work” Day

I’ve brought my daughter to work before, but at not yet 4 years old, an entire day in the office might be a little much for her (and me). So, instead of taking her to work today, I’m posting the video of her all-time favorite song, Seven Days of the Week (I Never Go to Work), by They Might Be Giants. Bonus points for me because it actually has something to do with employment.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

The DOL confirms that it has its eye on unpaid internships

Two weeks ago I reported that the Department of Labor was going to start cracking down on for-profit employers that use the services of unpaid interns. The proof, as they say, is in the pudding, or in this case, on the DOL’s own website. Just moments ago the DOL released Fact Sheet #71, entitled, Internship Programs Under The Fair Labor Standards Act. In this fact sheet, the DOL affirms that internships in the “for-profit” private sector will most often be viewed as employment, which must be paid at least the minimum wage and overtime compensation for any hours in excess of 40 in a work week.

The six factors that comprise a lawful unpaid internship remain as they have been for years, and as I discussed a couple of weeks ago. Yet, the DOL went further, and explained how most internships are, in reality, paid employment in disguise as opposed to extensions of education or training:

[I]f the interns are engaged in the operations of the employer or are performing productive work (for example, filing, performing other clerical work, or assisting customers), then the fact that they may be receiving some benefits in the form of a new skill or improved work habits will not exclude them from the FLSA’s minimum wage and overtime requirements because the employer benefits from the interns’ work…. If an intern is placed with the employer for a trial period with the expectation that he or she will then be hired on a permanent basis, that individual generally would be considered an employee under the FLSA.

If I was an employer, I would be very careful in the use of unpaid interns. As the publication of Fact Sheet #71 points out, the DOL is watching.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

The Return of the Cat’s Paw

No, this is not a review of a 70’s B movie. The Supreme Court has agreed to review a case concerning the “cat’s paw” theory of discrimination liability. The case, Staub v. Proctor Hosp. (7th Cir. 3/25/09) [pdf], involves the termination of an army reservist who claims discrimination based on his association with the military under USERRA.

Here’s how the 7th Circuit eloquently described the origins of the “cat’s paw”:

One would guess that the chances are pretty slim that the work of a 17th century French poet would find its way into a Chicago courtroom in 2009. But that’s the situation in this case as we try to make sense out of what has been dubbed the “cat’s paw” theory. The term derives from the fable “The Monkey and the Cat” penned by Jean de La Fontaine (1621-1695). In the tale, a clever—and rather unscrupulous—monkey persuades an unsuspecting feline to snatch chestnuts from a fire. The cat burns her paw in the process while the monkey profits, gulping down the chestnuts one by one. As understood today, a cat’s paw is a “tool” or “one used by another to accomplish his purposes.” Webster’s Third New International Dictionary (1976).

In discrimination cases, the “cat’s paw” refers to a decision maker who lacks an unlawful bias, but who bases the adverse employment decision on the influence of another with such a bias. The Staub court described its interpretation of the “cat’s paw”:

[W]here an employee without formal authority to materially alter the terms and conditions of a plaintiff’s employment nonetheless uses her “singular influence” over an employee who does have such power to harm the plaintiff for racial reasons, the actions of the employee without formal authority are imputed to the employer….

[W]here a decision maker is not wholly dependent on a single source of information, but instead conducts its own investigation into the facts relevant to the decision, the employer is not liable for an employee’s submission of misinformation to the decision maker.

It is likely that the cat’s paw will survive the Supreme Court’s review in one form or another. It is unclear, though, whether the Court will sanction Staub’s employer-friendly “singular influence” standard as the standard-bearing definition of the cat’s paw.  

Nevertheless, as long as cat’s paw liability is a valid theory of discrimination, it is imperative that decision makers verify the information upon which they rely. Unless the decision maker 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.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Announcing KJK’s next Breakfast Briefing: The Top 5 Issues Confronting Your Business’s HR Practices Today

Top 10 lists are so 2009. KJK’s employment lawyers will bring you the top 5 issues currently facing your business and its HR practices as we move through 2010.

1. Classifications of Employees: The Department of Labor is ramping up its resources and enforcement measures. Learn why you need to get a handle on who is exempt versus who is not exempt, and the difference between an employee and an independent contractor.

2. Health Care Reform: Be honest, you haven’t read all 2000+ pages of the landmark health care legislation. We have. Learn about the most important issues that face your business.

3. Technology: Learn when you can and cannot read employees’ emails, text messages, and other electronic communications, and why even the best drafted policy likely will not grant you access to personal, sensitive information.

4. Disability Discrimination: The ADA amendments have been in place for a little over a year and the EEOC is about to issue sea-changing regulations. This is not your father’s ADA. Learn what has changed, and what you can do to protect your organization from this new breed of discrimination.

5. Hiring: If 2008 and 2009 were all about layoffs and downsizing, we are hopeful that 2010 and beyond will be about hiring. Learn how to plan for the economic upswing and proactively protect yourself by implementing key policies and procedures for hiring new employees and rehiring old ones.

Date:	Wednesday, May 12, 2010
Time:	8:00-8:30 Continental Breakfast
	8:30-9:30 Presentation
	9:30-10:00 Q&As
Place:	The Club at Key Center, 127 Public Square, Cleveland (on-site parking is free)
Cost:	Free

If you are interested in attending this free seminar, or for more information, please contact Andrea Hill, (216) 736-7234 or ach@kjk.com, by May 7, 2010.

Do you know? Overtime for non-exempt commissioned employees

Only a small subset of commissioned employees are exempt from the Fair Labor Standards Act’s overtime provisions. For the majority of employees who are paid wholly or in part by commissions, the FLSA presents a complicated calculus of rules and regulations that employers must follow to properly account and pay overtime premiums for hours worked in excess of 40 in any workweek.

The key question for for commissioned employees is how one computes the “regular rate of pay” for purposes of calculating the proper overtime premium to apply to commissions paid.

If a commission is paid on a weekly basis, the calculation is fairly basic. The commission is added to any other earnings for that workweek. The total is then divided by the number of hours worked during that week to obtain the employee’s regular rate for that particular workweek. The employee must then be paid overtime compensation of one-half of that rate for each hour worked in excess of 40 for that week.

It gets more complicated, however, If the calculation and payment of the commission cannot be completed until sometime after the regular pay day for the workweek. In the case, the employer may disregard until later the commission in computing the regular hourly rate and pay overtime exclusive of the commission. However, when the commission is ultimately paid, the employer has to go back and recalculate the overtime premium for each workweek covered by the deferred or delayed commission payment. The employer must apportion the commission back over the workweeks of the period during which it was earned. The employee must then receive additional overtime compensation for each week during the period in which he worked in excess of 40 hours.

It gets even more complicated if it is not possible or practicable to allocate the
commission among the workweeks per the amount of commission actually earned or reasonably presumed. In this case, the Department of Labor permits employers to choose from one of two different methods fairly and equitably account for overtime premiums.

1. Allocation of equal amounts each week. Under this method, the employer will assume that the employee earned an equal amount of commission for each week of the period covered, and compute any additional overtime compensation based on that pro rata amount. For example:

• For a commission paid monthly, multiple the commission by 12 and divide by 52 to obtain the amount attributable for each week of that month.
• For a commission paid semi-monthly, multiply by 24 and divide by 52.
• For a commission that covers a specific number of workweeks, divide the total commission paid by the number of weeks it covers.

Once the pro rata weekly commissions is determined, simply divide that amount by the total number of hours worked to obtain the increase in the hourly rate. The employee is then owed one-half of that increase for each hour worked in excess of 40 for a given week.

2. Allocation of equal amounts to each hour worked. Sometimes,
there are facts which make it inappropriate to assume equal commission
earnings for each workweek (such as when the number of hours worked each
week varies widely). In such cases, the employer can assume that the employee earned the same amount of commission for each hour worked during the computation period. The total commission payment should be divided by the total number of hours to determine the amount of the increase in the regular rate. To determine the amount of additional overtime compensation owed for the period, multiply one-half of the figure by the total number of overtime hours worked by the employee for all workweeks during the covered period.

Clear enough for you? Is it any wonder that companies get themselves in trouble with wage and hour issues?

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

When should you get an attorney involved with a problem employee? As soon as possible.

A few weeks ago I wrote about what employers need to know about EEOC investigations. I suggested that employers get attorneys involved “as early as the first receipt of the charge of discrimination.” West v. Tyson Foods (6th Cir. 4/15/10) (unpublished) [pdf] provides a great example of the importance of the early involvement of counsel.

Amanda West quit her job at a Tyson chicken processing plant after being subjected to more than a month of fairly pervasive sexual harassment. During her exit interview with Tyson’s HR manager, West talked about all of the harassment to which she had been subjected and that her supervisors failed to respond to her complaints. She also identified the perpetrators by name. The HR manager, however, did not conduct any investigation into the allegations until after Tyson received West’s EEOC charge. At trial, the court admitted into evidence the HR manager’s notes from the exit interview, along with its EEOC statement of position. That position statement falsely claimed that Tyson launched an investigation following the exit interview. From this evidence—along with the evidence of the harassment and the supervisors lack of response—the jury awarded West $1,281,636.58—$131,636.58 in lost wages, $750,000 for mental distress, and $400,000 in punitive damages—which the 6th Circuit affirmed.

What is the lesson here? Having an attorney draft the position may not have saved the day, but it would have certainly lessened the impact of Tyson’s involvement in the harassment. The misstatements in the position statement make it look like Tyson was trying to cover up what happened. That perception of a cover-up likely led to the high compensatory and punitive awards.