Do your employees really know what they are signing? Enforcing waivers of judicial rights

In 2004, in Thurman v. DaimlerChrysler, the 6th Circuit upheld an employers right to contractually limit an employee’s timeframe to file a discrimination claim in court. On Monday, in Alonso v. Huron Valley Ambulance, the same court held that such waivers and limitations must be knowing and voluntary to be valid.

Huron Valley Ambulance used two tools to attempt to limit exposure to discrimination and other employment-related claims: a four-step internal grievance process and a six-month statute of limitations. Both are set forth in the employment application:

PLEASE READ THE FOLLOWING BEFORE SIGNING

Any dispute arising out of or in connection with any aspect of my employment by the Company, or termination thereof, including by way of example but not limitation, disputes concerning alleged civil rights violations, breach of contract or tort, shall be exclusively subject to review by the Grievance Review Board. Any decision of the Review Board shall be binding to both parties, and enforceable in circuit court….

I further recognize that if employed by the Company, I agree, in partial consideration for my employment, that I shall not commence any action or other legal proceeding relating to my employment or termination thereof more than six months after the termination of my employment and agree to waive any statute of limitations to the contrary.

Upon starting employment, HVA provided all employees a copy of its Operations Policies and Procedures Manual, which described the Grievance Review Board and its process in detail.

Alan Alonso and Kimberly Alonso both worked for HVA. They read and signed the employment application, and received copies of the Operations Policies and Procedures Manual, for which they signed a receipt. Nevertheless, the 6th Circuit held that HVA could not bind the Alonsos to either the grievance process or the shortened statute of limitations because the waivers of their rights were not “knowing and voluntary.”

The 6th Circuit took no issue with the language used in the waivers or the Alonso’s ability to understand what they signed. Instead, the 6th Circuit was troubled by the lack of information and detail about the Grievance Review Board given to the Alonsos at the time they signed the employment application:

At the time the Alonsos signed waivers of their rights to a judicial forum, they had no idea what the Grievance Review Board process entailed. They were never informed of their right to revoke their waiver. They were not given any documentation regarding the process until almost a month after they began their employment with HVA. Even then, the document they were given described the process in general terms, and pointed them to a website where they could find additional, more detailed information. They cannot be said to have knowingly and voluntarily waived their right to a judicial forum when they were not informed of the alternative procedures until a month after they began working for HVA.

The court glossed over the question of the enforceability of the shortened statute of limitations, simply finding:

Because we have already found that the Alonsos did not knowingly, intelligently, and voluntarily sign the waivers included in their employment applications due to the fact that they were not given any information regarding the Grievance Review Board procedures, we hold that their statute of limitations waivers were, likewise, invalid.

Given the scant analysis of the statute of limitations issue, Thurman v. DaimlerChrysler is likely still good law. Employers should still be able to limit the time in which employees can bring a lawsuit, provided that the waivers meet the requirements of being knowing and voluntary.

What other lessons can employers learn about waivers of judicial rights in employment agreements?

1. Waivers should be obvious and conspicuous. Both the Thurman court and the Alonso court pointed out that the waivers were set off by headings in all caps and bold type, letting the employees know what they were about to read was important and should be read with care before signing.

2. Employees should be given time to consider the waiver before signing it, should not be pressured or required to sign the waiver on the spot, and should not be denied the right to seek legal counsel before signing, if they choose.

3. Waivers should be understandable to those signing them. They should be written plainly and without legalese. Also, employees should be provided waivers in their primary language, or with the services of someone who can translate.

4. If you are requiring employees to submit disputes to an internal dispute resolution process, you must provide detail about the process at the time the waiver is signed for the waiver to be valid and enforceable.

Waivers remain an effective tool to limit your risk from lawsuits by employees. The Alonso case just creates more work for you and your lawyers in making sure that they will withstand judicial scrutiny.

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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.

Tweeting away your job

Before yesterday, former major league pitcher was likely most famous for giving up Barry Bonds 756th homer. This morning, he is perhaps more well known for the racially insensitive tweet that has cost him his sports radio hosting gig in Dallas.

According to the Dallas Morning News, Bacsik said he drunkenly tweeted, “Congrats to all the dirty mexicans in San Antonio” after watching the Spurs beat the Mavs on Sunday night. To his benefit, Bacsik at least realizes his mistake. He has removed the offensive tweet, and replaced it with the following apology on this Twitter account.

ESPN.com quotes Bacsik’s words of wisdom for all employees:

When you tweet like I did, you can’t see the sarcasm. It’s not a good joke. You can’t tell if it was pure hate or sarcasm. I never got to say anything. My tweets were talking for me. When you tweet like that, it’s not a playful, harmless thing. It’s not what it was meant to be.

A disciplined or terminated employee may not be as understanding or remorseful as Bacsik. So that employees understand your expectations about responsible social networking, it is best to have a policy. That policy should spell out to employees that what they post online is public, that anything in cyberspace can be used as grounds for discipline or termination, and that there are consequences for posting anything that negatively reflects on your business.

For more on drafting a social networking policy, see Drafting a social networking policy: 7 considerations.

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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.

Do you know? Paying overtime to salaried, non-exempt employees

In my never-ending quest to show you how many different ways you can screw up paying your employees under the federal wage and hour laws, today I am going to talk about how to properly calculate overtime payments for salaried, non-exempt employees.

An employer has two choices in how to pay overtime to a salaried non-exempt employee: by a fixed work week or based on a fluctuating work week. For reasons that will be illustrated below, the latter is a much more cost-effective option for most employers.

By a Fixed Work Week

1. If the employee is paid solely a weekly salary, his regular hourly rate of pay—on which time and a half must be paid—is computed by dividing the salary by the number of hours that the salary compensates. For example, If an employee is hired at a weekly salary of $525, which is intended to be compensation for a regular 35 hour work week, the employee’s regular rate of pay will be $15 per hour ($525 / 35). If that employee works overtime (more than 40 hours in a given work week), he or she will have to paid $22.50 for each overtime hour worked. Thus, in a 45-hour week, the employee would be paid $637.50.
   
2. Where the salary covers a period longer than a work week, such as a month, it must be reduced to its work week equivalent. Thus, for example, a monthly salary can be converted to a weekly salary by multiplying it by 12 and dividing by 52. Once the regular weekly salary is calculated, the analysis is the same as #1 above.
   

On a Fluctuating Work Week

1. Often times, the number of hours a salaried employee works will vary from week to week, depending on the given needs of the job. One might work 40 hours one week, 45 the next, and 38 the week after that. An employer and employee can agree that a salary will cover all straight time pay for all hours worked in a given week, no matter how few or how many. Payment for overtime hours at one-half such rate satisfies the overtime pay requirement because such hours have already been compensated at the straight time regular rate as part of the salary. And, that overtime premium will vary from week to week depending on the number of hours worked.
   
2. To use this method of overtime calculation, there has to be a clear mutual understanding of between the employer and employee that the fixed salary is compensation (apart from overtime premiums) for the hours worked each work week, whatever the number.
   
3. This “fluctuating workweek” method of overtime payment may not be used unless the salary is sufficiently large to ensure that there will be no work weeks in which the employee’s average hourly earnings from the salary fall below the minimum wage.
   
4. For example, taking our $525 salary from above, in a 45-hour work week, the hourly rate would be $11.66 ($525 / 45). But, for the extra 5 hours the employee would only be owed an additional $29.15 ($5.83 * 5), for a total weekly compensation of $554.15. The fluctuating work week saves this employer $83.35 in wages for the week. Thus, it is easy to see why the fluctuation work week is the preferred method for calculating overtime premiums for salaried non-exempt employees.

Wage and Hour audits are not without their risks (but are still necessary)

I’ve long preached the benefits of proactive wage and hour audits. In fact, in the nearly three years I’ve been writing this blog, I’ve written at least 10 different posts on this issue. (For a summary and list of links, jump here). A story posted last week at Wage & Hour—Developments & Highlights caught my eye. It illustrates that wage and hour audits have a downside of which employers must be aware, but should not deter employers from implementing this important proactive measure.

In Wlotkowski et al. v. Michigan Bell Telephone Co., a federal judge conditionally certified a class of workers who claim they are owed overtime as a result of being misclassified as “exempt”. The class is comprised of employees who are currently classified as “non-exempt.” They are suing to recover unpaid overtime for the time during which their employer had previously allegedly misclassified them as exempt. Because their job duties didn’t change when their pay classification changed, they questioned why they had been working for years without being paid overtime.

Employers may read this case and decide that they are better off burying their heads in the sand and ignoring wage and hour violations. This is a bad idea. Here’s what happens. A terminated employee goes to see a lawyer about a wrongful discharge lawsuit. The lawyer then asks this question: “Tell me about how you were paid.” The next thing you know, you are defending a class action and spending hundreds of thousands, if not millions, of dollars in legal fees, back wages, and potential liquidated damages and the plaintiffs’ attorneys’ fees. A wage and hour audit conducted by an experienced attorney can help stop this scenario from ever happening.

This Wlotkowski case teaches a very important lesson. When you audit your wage and hour practices, you should be prepared to pay for any mistakes that you find. It is much less costly to pay off a discovered mistake to than to defend a lawsuit in which you have, in essence, admitted liability.

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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.

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.