Newsflash! The Alabama Supreme Court Really Likes Arbitration

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The Alabama Supreme Court recently compelled arbitration of an employment-related dispute, even though the employer was not a named party to the arbitration agreement.

When I was a young lawyer, the Alabama Supreme Court really disfavored arbitration.  They would find almost any excuse to give somebody their “day in court,” instead of enforcing contractual dispute resolution.  Times have certainly changed.   Binding decisions from the United States Supreme Court, and election of pro-business candidates to the Alabama Supreme Court have lead to a sea-change.  Now, the Alabama Supreme Court almost always enforces arbitration agreements.

This point recently hit home in Bridgestone Americas Tire Operations, LLC v. Adams, No. 1160877, 2018 WL 1355966 (Ala. Mar. 16, 2018).  Ottis Adams was hired by BFS Retail and Commercial Operations (“BFS”) in 2006.  When he was hired, Adams signed BFS’s Employee Dispute Resolution Plan which required arbitration of almost all employment disputes.  At some point, Adams changed employers from BFS to a sister company — Bridgestone Americas Tire Operations, LLC (“Bridgestone”).  Adams left Bridgestone in 2016 and began work for a competitor — McGriff Tire Company.  Bridgestone then sent a letter to McGriff stating that Adams’s employment violated a noncompetition and nonsolicitation agreement signed by Adams.  Bridgestone also suggested that Adams violated a duty of loyalty by selling tires for McGriff while still employed by Bridgestone.

McGriff terminated Adams’s employment, and Adams sued Bridgestone for interference with his business relationship with McGriff and for defamation.  Bridgestone moved to dismiss the lawsuit and compel arbitration.  Adams convinced the trial court that Bridgestone was not a named party to the the BFS agreement, and that court denied the motion.  So, Bridgestone appealed.

The Supreme Court compelled arbitration for two reasons.  First, the BFS agreement required arbitration of “all disputes covered by that plan, not just disputes with BFS.”  Second, the agreement applied to all “sister companies,” “related companies,” and “affiliate companies” of BFS.  Even if Bridgestone was not a named party to the agreement, it fell within the definition of a “sister company,” “related company” or “affiliate company.”

Adams provides guidance to employers who want to avoid trial courts and jury trials.  By broadly wording an  agreement to cover all disputes related to employment, and by making the agreement applicable to any sister companies or affiliates, employers can avoid litigation and compel arbitration.

 

 

Interns: Department of Labor Scraps 6-Factor Test

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Many unpaid “interns” are actually “employees” who can sue under the FLSA.

Sometimes, a client will call me and ask whether there are any legal issues if they utilize unpaid “interns.”  Usually, my answer is:  “yes.”  Some employers see job-hungry college students as a source of “free” labor.  But, free labor is exactly the problem that the Fair Labor Standards Act (“FLSA”) was designed to prevent.

Nevertheless, the United State Department of Labor (“DOL”) recognizes that there are circumstances in which a student truly obtains an academic benefit from working-for-free in industry.  So, the DOL has developed a test for distinguishing “employees” (who should be paid) from “interns” (who may work for free).  Under the Obama Administration, the DOL adopted a restrictive six-factor test in 2010.  Under that test, an unpaid intern would be considered an “employee” under the FLSA unless each of the six factors  was met.  As a matter of practicality, if the company received any economic benefit from the “intern’s” services, the DOL considered the intern to actually be an “employee” entitled to minimum wage and overtime.

The DOL’s six-factor test was generally criticized by federal courts around the country, including the Eleventh Circuit Court of Appeals, which reviews cases from Alabama.  See Schumann v. Collier Anesthesia, P.A., 803 F.3d 1199, 1209 (11th Cir. 2015).   Rather than following the DOL’s strict, six-factor test, the Eleventh Circuit follows a more-flexible seven-factor test, borrowed from the Second Circuit Court of Appeals.  That test considers the following elements, none of which is conclusive:

1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.
On January 5, 2018, the DOL formally scrapped its six-factor test in favor of the more-flexible seven-factor test.  The DOL’s fact sheet with the new test can be found here:  DOL Intern Fact Sheet.    In short, if analysis of the seven factors “reveals that an intern or student is actually an employee, then he or she is entitled to both minimum wage and overtime pay under the FLSA. On the other hand, if the analysis confirms that the intern or student is not an employee, then he or she is not entitled to either minimum wage or overtime pay under the FLSA.”

Assault by the Department Store Santa: A Cautionary Tale

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A department store was found responsible for injuries caused by Santa Claus

Merry Christmas!  At about this time last year, I tried to provide some insight on the dangers of Christmas hams in the workplace:  The Dangers of Christmas Hams.  This year, in my never-ending quest to provide hard-hitting legal updates, I bring you a cautionary tale of assault by a department store Santa Claus:  Honeycutt v. Louis Pizitz Dry Goods, Co., 235 Ala. 507 (Ala. 1938).

This case is from 1938, so it’s what a lawyer might call “well-established law.”  As part of its holiday advertising, the Pizitz Department Store in Birmingham sent out into the community a truck with a full band playing music and an employee dressed as Santa Claus.  The band attracted a crowd and the Santa Claus threw presents and candy.  Unfortunately, an “all day sucker” struck Mrs. Linnie Honeycutt in eye.  Here is the Supreme Court’s recitation of the facts:

The evidence is without dispute that the defendant’s advertising scheme attracted several hundred women and children, who surrounded the truck carrying the band; defendant’s servant dressed as Santa Claus. That some of those in the crowd stood from seventy to seventy-five feet away from the truck; and that defendant’s servant standing in the truck threw with great force the articles being distributed into the crowd, and one of said “lollypops” struck plaintiff in the eye, producing an abrasion of the sclera of the eyeball across the pupil, resulting in an infection causing much pain and suffering and, there is evidence tending to show, causing partial dimness of the sight necessitating the use of spectacles which plaintiff had not before had to use.

Honeycutt, 235 Ala. at 509 (emphasis added).

A jury found in favor of Mrs. Honeycutt and Pizitz appealed, arguing that this was just an “accident.”  Unfortunately, the Supreme Court disagreed:  “If the missiles thrown — the lollipops — were of such nature and character as that they were liable to produce injury, and were thrown into the crowd of women and children with such force as to cause injury, the jury was warranted in finding the defendant liable under the [claim of assault and battery].”

The Honeycutt case doesn’t provide any earth-shaking principles of law.  But, it does reinforce one lesson which employers should already know:  employers can be held responsible by a jury for the actions of their employees — even if the employee is Santa Claus.

I hope you have a wonderful Holiday Season.!

Taxpayer Can Sue to Void “Illegal” Government Employment Contract

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If a governmental entity enters into a “illegal” employment contract, Alabama taxpayers can sue to void it.

Last week, the Alabama Supreme Court ruled that Alabama taxpayers can sue to void “illegal” government employment contracts.  Ingle v. Adkins, No. 1160671, 2017 WL 5185288 (Ala. Nov. 9, 2017).  At issue was an employment contract between the Walker County Board of Education and the Superintendent of the Walker County Schools.  After he was re-elected as Superintendent in 2014, Jason Frank Adkins signed an employment contract with the Walker County school board.  The contract provided:  a $159,500 salary with annual pay raises; a $1,000 per month travel stipend; reimbursement for a cell phone; and, a promise to allow him to return to his previous job as a tenured employee.

Apparently, Sheila Mote Ingle thought that contract was excessive.  So, she sued, claiming that, as a taxpayer, she was entitled to have the “unconstitutional, illegal and void” contract vacated.   Ms. Ingle also sought to recover monetary amounts that she claimed were improperly paid to Mr. Adkins.  Mr. Adkins and the school board immediately moved to dismiss Ingle’s law suit.  They claimed that the Alabama Constitution of 1901 confers immunity from law suits to them, and that Ms. Ingle had no “standing” to challenge the contract, because she was not a party to it.  Without giving a specific reason, a trial court in Walker County granted that motion to dismiss and Ms. Ingle appealed.

The Alabama Supreme Court found that Ms. Ingle was entitled to pursue her claims to vacate the contract, but not her claims for money.  The Court reiterated a string of cases holding that Alabama School Boards and Superintendents are absolutely immune from claims for money damages under the Alabama Constitution.  But, the Court refused to extend that immunity to claims for declaratory and injunctive relief.  In short, the Court found that immunity could not bar Ms. Ingle’s claim to have the employment contract declared invalid.

The Supreme Court also rejected the Board’s standing defense.  The Court found that its cases have “continually held that taxpayers have standing to seek an injunction against public officials to prevent illegal payments from public funds.”

Accordingly, the Supreme Court reversed dismissal of Ms. Ingle’s case to allow her to pursue her theory that the contract between Mr. Adkins and the School Board is illegal.  At the same time, the Court refused to comment on whether her actual theories had any merit.  That decision will come at a later date after the parties fully litigate the issue.

President Trump Not Responsible for Discrimination by Employers

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President Trump’s transgender ban does not injure individuals who suffer discrimination from private employers.

A federal judge in Alabama ruled last week that President Donald Trump is not legally responsible for potential discrimination by private employers.  See Williamson v. Trump, No. 7:17-01490-LSC, 2017 WL 4536419 (N.D. Ala. Oct. 11, 2017).  On August 15, 2017, President Trump issued a Presidential Memorandum for the Secretary of Defense and Homeland Security.  That memorandum prohibits accession of transgender employees in the United States military and authorizes the discharge of such individuals.  Cassandra Williamson is a transgender veteran living in Tuscaloosa, Alabama.  Ms. Williamson sued, claiming that the memorandum violated her rights to equal protection under  the United States Constitution.

Ms. Williamson did not argue that she is a part of the class of military personnel directly affected by the memorandum.  Instead, she claimed that President Trump’s memorandum had an immediate and chilling impact on her “ability to get work,” because it was “seen by the community and prospective potential employers … as justification to not consider her for employment and to mistreat her when she goes out to get food, go to church, and deal with other issues in the community, or even to walk her dog.”

United States District Court Judge Scott Coogler dismissed Ms. Williamson’s complaint.  Judge Cooger relied upon a legal doctrine called “standing.”  In summary, the standing doctrine required Ms. Williamson to demonstrate that she was injured by President Trump’s memorandum, and that the court could prevent future injuries.  Ms. Williamson’s complaint failed to surmount that obstacle:  “Plaintiff’s allegations are that employers, not the President, have caused an injury to Plaintiff through employment discrimination.  Although the memorandum does order that the accession of transgender persons in the military eventually be ceased, it in no way directs the hiring practices of private individuals or companies.”

Ms. Williamson lost her case because she is not directly affected by the memorandum.  Several other law suits have been filed in other parts of the country directly challenging the ban on behalf of service members.  The United States Department of Justice filed a motion two weeks ago seeking to have one of those cases dismissed.  Here’s a link discussing that motion.  DOJ Moves To Dismiss Transgender Ban Lawsuit.

Workers’ Comp: A Replacement Machine Is Not a “Safety Device”

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The Alabama Supreme Court held that failure to install a replacement machine is not equivalent to removal of a “safety device.”

Alabama’s Workers’ Compensation Act provides employers with an interesting trade-off.  Employees who are injured on the job are entitled to have their medical bills paid by the employer and receive compensation for any resulting disability.  But, the amount of disability benefits are specifically set-out and limited by the Act.  Workers’ Compensation is a no-fault system.  If an employee is injured, he or she is entitled to benefits.  Here’s the trade-0ff.  In the vast majority of cases, the Workers’ Compensation Act prohibits employees from suing their employer for negligence, wantonness or punitive damages.  In short, the Workers’ Compensation Act makes it easier for employees to recover for their injuries, but limits the ability of employees to sue their employers and the amount they can recover.

Of course, there are always exceptions to any law.  The Workers’ Compensation Act also recognizes a limited set of cases in which the employee can sue his or her co-employees for punitive damages.  If a co-employee engages in “willful conduct” that causes injury to another employee, the co-employee can be sued.  Generally, the Act recognizes four types of “willful conduct”:  (1) acting with a purpose, intent or design to injure another; (2) willful and intentional removal from a machine of a safety guard or safety device provided by the manufacturer of the machine with knowledge that injury or death would likely or probably result from the removal; (3) intoxication that causes injury or death of a co-employee; and, (4) willful and intentional violation of a specific written safety rule of the employer after written notice.

Over the years, employees have attempted to expand the reach of those four examples of “willful conduct.”  Last week, the Alabama Supreme Court rejected such an attempt in Saarinen v. Hall, No. 1160066, 2017 WL 3821732 (Ala. Sep. 1, 2017).  In that case, Louis Hall was injured by a power saw, which was manufactured with a guard that was insufficient to protect Hall.  At least a month before he was injured, his employer purchased a replacement saw with a better guard from  a different manufacturer.  But, the replacement saw was not installed because his employer was too busy to change out the saws.

Hall injured his hand on the saw with the insufficient guard, and then sued his supervisors for “willful conduct.”  Hall claimed that their failure to install the new saw was equivalent to the willful and intentional removal of a safety guard.  The Alabama Supreme Court rejected that argument:  “Under the facts in this case, the failure to install another, presumably safer, saw that was present on the premises but that had not been put into operation and that was manufactured by a different manufacturer than the saw that injured the plaintiff is not the equivalent of the removal of a safety guard so as to constitute willful conduct ….”  Saarinen, 2017 WL 3821732 at *3.  Interestingly, the Supreme Court expressly refused to decide whether the failure to install a replacement machine manufactured by the same manufacturer might be equivalent to removal of a safety device.

 

Overtime Regulation Struck Down

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The Department of Labor’s Overtime Regulation Was Struck Down By a Federal Judge.

Yesterday, United States District Court Judge Amos Mazzant struck down a Department of Labor overtime regulation which increased the threshold for salary exemption under the Fair Labor Standards Act from $23,000 per year to $47,476 per year.  Here’s an article from The Hill discussing Judge Mazzant’s ruling:  Texas Judge Strikes Down Obama Overtime Rule

I wrote about the overtime regulation when it was released, here:  Overtime Rule Released.  After the regulation was released, numerous interested parties filed suit in Judge Mazzant’s court challenging the regulations, and he issued a preliminary injunction, which prevented the regulation from going into effect:  Judge Halts Overtime Regulation

The DOL under the Obama administration was not satisfied with Judge Mazzant’s ruling and filed an appeal with the Fifth Circuit Court of Appeals:  DOL Appeals Overtime Ruling  That appeal remains pending, but many attorneys believe that the DOL under the Trump administration may abandon the appeal.  I will keep you updated as the appeal progresses.

Best Lawyers in America – Employment Law – Management

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Best Lawyers recently recognized my work in the area of employment law – management.

I’m proud to announce that I have been recognized by The Best Lawyers in America® for my work in Employment Law – Management.  Here’s a link to my law firm’s announcement:  Wilmer & Lee Best Lawyers

I am also rated as an AV-Preeminent Attorney™ by Martindale-Hubbell and I have been recognized as a Mid-South Super Lawyer® in the area of employment law.

No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers. Alabama Rules of Professional Conduct Rule 7.2(e).

Is Working From Home a Reasonable Accommodation?

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Sometimes, working from home is not a reasonable accommodation under the ADA.

The Eleventh Circuit Court of Appeals recently found that an employer was not required to allow an employee to work from home as a reasonable accommodation for her pregnancy/disability.  Everett v. Grady Memorial Hosp. Corp., No. 16-13495, 2017 WL 3485226 (11th Cir. Aug. 15, 2017).

At the outset, let me stress that the reasonable accommodation analysis under the Americans with Disabilities Act is a case-by-case determination.  The Eleventh Circuit’s ruling in Everett depends on the specific facts of that case.  In other cases, involving other jobs, work-from-home might be a reasonable accommodation.  If one of your employees suffers from an impairment and asks to work from home, proceed very carefully.

In Everett, Ana Everett was employed as the Program Manager for Grady Memorial Hospital’s car seat program.  She was diagnosed with a high-risk pregnancy in February 2015 and granted FMLA intermittent leave at that time.  On April 28, 2015, Ms. Everett presented a doctor’s note placing her on “light duty.”  In May 2015, her doctor diagnosed her with an “incompetent cervix” and said she should work exclusively from home.  Grady refused to allow Ms. Everett to work from home.  Instead, Grady placed her on unpaid leave until her doctor allowed her to return to work on October 8, 2015.

Ms. Everett asserted several claims against Grady — including a claim for failure to accommodate her pregnancy/disability because she was not allowed to work from home.  This is where the fact-intensive nature of the accommodation analysis comes into play.  The issue was whether Ms. Everett could perform the essential functions of her job if she worked from home.  In short, the Eleventh Circuit reviewed the relevant facts and found that teaching courses, supervising employees and meeting with patients were essential functions of the job.  Ms. Everett could not perform those essential functions if she worked from home.

Ms. Everett argued that Grady could assign those job duties to another employee as a reasonable accommodation, but the Eleventh Circuit rejected that argument.  “‘[T]he ADA does not require the employee to eliminate an essential function of the plaintiff’s job’ or place it upon someone else.”  Everett, 2017 WL 3485226 at *5.

Again, the Eleventh Circuit’s decision in Everett relied upon the fact that Ms. Everett’s presence at the work site was crucial to teach courses, supervise employees and meet with patients.  In other cases, particularly in those involving computer-intensive jobs, it might be reasonable to allow an employee with an impairment to work from home.

Charlottesville: Terminating Neo-Nazi Employees

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In most circumstances, it is permissible for an employer to terminate an employee based upon disruptive political views.

John Heyman at Workforce Magazine just wrote a great article on legal issues arising from termination of employees with repugnant political views:  When You Discover That You Employ a Nazi  In short, Mr. Heyman endorses an employer’s right to terminate employees with Neo-Nazi beliefs.

Mr. Heyman’s analysis applies equally-well in Alabama.  As I’ve written on numerous occasions, employees in Alabama possess very few legal rights, because Alabama is an “employment-at-will” state.  This means that an employee, who does not possess a written employment contract, can be fired for a good reason, a bad reason, or no reason at all.  Of course, federal law can overrule Alabama’s general employment-at-will rule.  As a result, employers in Alabama cannot terminate employees who are protected by a federal law.  Thus, many forms of discrimination are prohibited in Alabama, because they are barred by federal laws like Title VII of the Civil Rights Act, the Americans with Disabilities Act and the Age Discrimination in Employment Act.

Mr. Heyman’s article notes that employees expressing political views on their own time may receive protection from the National Labor Relations Board.  So, there may be some circumstances when employers in Alabama would be ill-advised to terminate employees based upon their political beliefs.  Also, governmental-employers face additional obstacles.  The First Amendment to the United States Constitution protects freedom of speech.  But, the First Amendment only protects citizens from invasion of their rights by government.  In most cases, private employers are not required to give employees free speech rights.  But, the First Amendment generally prohibits governmental employers for terminating employees based upon their political viewpoints.