The DOL’s PAID program hopes that voluntary audits will result in better compliance with overtime and minimum wage requirements.
On March 6, 2018, the United States Department of Labor’s Wage and Hour Division (“WHD”) announced a new, voluntary audit program aimed at improving employers’ compliance with overtime and minimum wage requirements. The program is called the Payroll Audit Independent Determination (“PAID”) program. Here is a link to the DOL’s question-and-answer sheet on PAID: Coming Soon: PAID
At this point, details on the program are scarce. It will be a pilot program for six months, after which WHD will evaluate its effectiveness. All employers covered by the Fair Labor Standards Act (“FLSA”) will be eligible to participate. Employers will self-audit their compensation practices and identify potentially non-compliant wage practices. They will then identify the potential violations to WHD. Potentially, employers can benefit from this program because WHD will not require them to pay liquidated damages or civil monetary penalties for any voluntarily-disclosed violations.
WHD’s Acting Administrator, Bryan Jarrett, wrote an op-ed for The Hill discussing the new program, and it can be found here: PAID Program a Win-Win-Win. One interesting aspect of Mr. Jarrett’s op-ed is his observation that current laws prevent “employers from simply paying the wages due to conclusively settle overtime or minimum wage violations.” That statement correctly recognizes that the only way to conclusively settle an FLSA claim is through litigation and a settlement in which a Judge finds the settlement fair and reasonable for the employee. Rather than facing the issues arising from such suits, some employers simply refuse to pay money legally owed to an employee.
As with any new area of the law, the devil is in the details. I will keep an eye out for details on the PAID program as they emerge, and attempt to keep you up-to-date.
The Defense Contractor Whistleblower Protection Act could impact many employers in Alabama.
Alabama employers need to know about the Defense Contractor Whistleblower Protection Act, 10 U.S.C. § 2409. Off the top of my head, I can identify major military bases at Redstone Arsenal, Maxwell Air Force Base and Fort Rucker. Private defense contractors will be an integral part of each such base. Moreover, many of my defense contractor clients based in Huntsville have employees outside Alabama. Thus, they need to be aware of this Act.
In short, the Whistleblower Protection Act protects employees from retaliation if they make complaints about violations related to Department of Defense or NASA contracts, or dangers to public safety. More particularly, the Act provides:
(1)An employee of a contractor, subcontractor, grantee, or subgrantee or personal services contractor may not be discharged, demoted, or otherwise discriminated against as a reprisal for disclosing to a person or body described in paragraph (2) information that the employee reasonably believes is evidence of the following:
(A) Gross mismanagement of a Department of Defense contract or grant, a gross waste of Department funds, an abuse of authority relating to a Department contract or grant, or a violation of law, rule, or regulation related to a Department contract (including the competition for or negotiation of a contract) or grant.
(B) Gross mismanagement of a National Aeronautics and Space Administration contract or grant, a gross waste of Administration funds, an abuse of authority relating to an Administration contract or grant, or a violation of law, rule, or regulation related to an Administration contract (including the competition for or negotiation of a contract) or grant.
(C) A substantial and specific danger to public health or safety.
10 U.S.C. § 2409(a)(1). The list of persons/entities to whom an employee can complain is extensive. See 10 U.S.c. § 2409(a)(2). Most importantly, employees are protected if they make an internal company complaint to a “management official or other employee of the contractor or subcontractor who has the responsibility to investigate, discover, or address misconduct.”
There have only been a handful of trial court cased dealing with the Whistleblower Protection Act. Even so, one of those case was issued by Judge Abdul Kallon in the Northern District of Alabama late last year. See Devillo v. Vision Centric, Inc., No. 5:15-cv-02211-AKK, 2017 WL 3425465 (N.D. Ala. Aug. 9, 2017).
For any lawyers reading this, there is a slight divergence of authority on the proper method for analyzing Whistleblower Protection Act claims. Judge Kallon followed the lead of other District Court judges and applied the traditional burden-shifting scheme for retaliation claims arising under Title VII of the Civil Rights Act. But, recently, Magistrate Judge Michael Hegarty in Colorado found that the Whistleblower Protection Act contained a statutorily-mandated analysis, which he summarized as follows:
[An employee] will succeed on his claim for retaliation in violation of 10 U.S.C. § 2409 if he demonstrates (1) he engaged in protected activity as described in the statute, (2) the [employer’s] decision maker knew he engaged in protected activity, and (3) his protected activity was a contributing factor in the adverse employment action taken against him, unless (4) [the employer] shows by clear and convincing evidence that it would have taken the employment action despite [the employee’s] protected activity.
Cejka v. Vectrus Sys. Corp., No. 15–cv–02418–MEH, 2018 WL 879522 at *14 (D. Col. Feb. 14, 2018).
The Supreme Court limited whistleblower retaliation claims under Dodd-Frank.
The United States Supreme Court recently released an opinion in which it narrowly defined the term “whistleblower” in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”). Digital Realty Tr., Inc. v. Somers, No. 16-1276, 2018 WL 987345 (U.S. Feb. 21, 2018). As a result, the Court limited the class of employees who can sue for retaliatory discharge under Dodd-Frank. Under the Court’s interpretation, an employee is only entitled to protection if he or she directly reported violations of Dodd-Frank to the United States Securities and Exchange Commission (“SEC”). Thus, employees receive no protection under Dodd-Frank for reporting violations internally at their company, or to some other source.
Under Section 922 of Dodd-Frank, a “whistleblower” is an individual who provides “information relating to a violation of the securities laws to the [SEC].” Whistleblowers are entitled to protection under Dodd-Frank from retaliation. In attempt to broaden Dodd-Frank’s whistleblower protections, the SEC adopted rules expanding the definition of “whistleblower” to employees who made internal complaints with their employers.
The employee in Digital Realty claimed that he was terminated after he reported alleged violations of the securities laws internally to company management. The employee did not make a report to the SEC, and his employer argued that the claim was barred by the express language of Dodd-Frank. The Ninth Circuit Court of Appeals nevertheless relied upon the SEC’s interpretation and found that the employee was entitled to whistleblower protection.
The Supreme Court’s opinion unanimously reversed the Ninth Circuit. The Court particularly relied upon the clear statutory language of Dodd-Frank, which defined a “whistleblower” as a person who made a report to the SEC. The Court also found that Congress’s “core objective” in Dodd-Frank was “to prompt reporting to the SEC. ”
The Digital Realty decision is a mixed blessing for employers. On the one hand, it limits the circumstances in which an employee can sue under Dodd-Frank. On the other hand, Digital Realty could cause employees to skip internal complaint procedures and proceed straight to the SEC.
Depending on context, calling an African-American employee “boy” might be discriminatory.
When dealing with workplace conduct, context is everything. Recently, the Eleventh Circuit affirmed dismissal of a race-based retaliation claim, even though a supervisor called an African-American employee “boy.”
At the outset, let me stress that employees should be strongly discouraged from using the term “boy” in the workplace. This term has created a very difficult area of the law. “[T]he use of the word ‘boy,’ when directed by a non–African American to an African–American, is potentially racially hostile.” Craig v. Alabama Power Co., 2010 WL 11561855 (N.D. Ala. Sep. 21, 2010). Even so, the Supreme Court has explained that a supervisor referring to an African–American plaintiff as “boy” “will not always be evidence of racial animus” and that such factors as “context, inflection, tone of voice, local custom, and historical usage” are consulted to assess whether it is evidence of discriminatory animus in a particular case. Ash v. Tyson Foods, Inc., 546 U.S. 454, 456, 126 S.Ct. 1195, 163 L.Ed.2d 1053 (2006).
The importance of context is evident in the Eleventh Circuit’s recent decision in Bell v. City of Auburn, No. 17-11597, 2018 WL 388484 (11th Cir. Jan. 12, 2018). In Bell, Shawn Bell claimed that the was terminated in retaliation for complaining to human resources that his supervisor called him “boy.” But, Mr. Bell was required to give deposition testimony as part of his law suit. During that deposition, Mr. Bell said that “the comment discredited his manhood, that he was a man, and that he did not think a man should talk to another man like that.” When asked if the supervisor was “being racial” when he called him boy, Bell answered: “No.”
To succeed on a retaliation claim, Mr. Bell was required to show that he subjectively believed that he was reporting racial discrimination when he complained to human resources. But, the Eleventh Circuit found that Mr. Bell’s own testimony demonstrated that he did not possess such a subjective belief. Instead of believing that the term insulted his race, Mr. Bell believed it insulted his manhood.
The City of Auburn may have dodged a bullet in the Bell case. To avoid these types of issues, I strongly recommend that employers discourage the use of the term “boy” in the workplace.
Snow days present several problems for Alabama employers
Snow Day! It’s a glorious phrase to school kids everywhere, and a massive pain for employers. Here in North Alabama, commerce was dragged to a halt yesterday by a dusting of snow. While my friends in the North scoff, we play it safe in the Deep South even when there’s a possibility of ice. As a result, employers need to think about the legal ramifications of inclement weather.
Let’s first focus on the “coldhearted” (pun intended) employers out there. Some businesses cannot or do not close in the face of snow. While surfing Twitter yesterday, I came across this interesting news story from Memphis: Employers Can Legally Fire You for Not Coming To Work In Bad Weather. It provides a correct analysis of the employee-at-will doctrine and its application to snow days — both in Tennessee and Alabama. In most cases, if an employee does not possess an employment contract, and refuses to come to work because of weather, he or she can be terminated from employment.
Most employers will probably be more concerned about whether they are required to pay employees for snow days. This question implicates the Fair Labor Standards Act (“FLSA”). If the employer closes the business because of weather, it is not required to pay hourly, non-exempt employees for the time off. The employer can allow such employees to use Paid Time Off to cover the absence, or consider the time-off unpaid. As a practical matter, many employers pay employees, even though it’s not required, in the interest of employee relations.
Weather days for overtime-exempt employees are more difficult. If an employer is open-for-business, but the employee chooses to stay home, the employee is not entitled to pay for the day. The employer can dock the employee’s salary in full-day increments without violating the salary-basis test of the FLSA. In contrast, if the employer closes the business, the employee’s full salary must be paid for the week — even though he or she may not have worked a full work week.
For Alabama employers, I hope that this post helps you to enjoy the snow while understanding your obligations to employees.
Employees who are fired for complaining about abuse of their retirement benefits under ERISA have fewer rights than workers who complain about violations of other laws. See Atkins v. Greene County Hospital Board, No. 7:16-cv-00567-LSC, 2017 WL 6383183 (N.D. Ala. Dec. 14, 2017). Marilyn Atkins was employed by Greene County Hospital, which allowed her to participate in a defined benefit pension retirement plan through the Retirement Systems of Alabama. The hospital deducted retirement contributions from the paychecks of all full-time employees like Atkins, and put those funds into the Hospital’s general fund — from which general expenses were paid.
The Hospital was supposed to send the employee contributions to RSA “around” the tenth of each month, but almost never sent the payments within that time. Moreover, some payments were delayed by as many as three months. Atkins complained about the late payments to the Hospital’s CFO, and also made public complaints to the Hospital’s Board of Directors on October 20, 2015. She was terminated from employment on October 29, 2015 for allegedly violating the Hospital’s “no call/no show” absence policy.
Ms. Atkins sued the Hospital claiming a breach of fiduciary duties under the Employee Retirement Income Security Act (“ERISA”) and for violating ERISA’s whistleblower protections. On December 14, 2017, United States District Court Judge L. Scott Coogler dismissed Ms. Atkins’s claims. Judge Coogler found that Ms. Atkins did not possess standing to sue for breach of fiduciary duty, and even if she did, she failed to prove her claims.
From an employment law perspective, Judge Coogler’s analysis of the ERISA whistleblower claims was more interesting. He found that the anti-retaliation provisions of ERISA are not as extensive as those found in other federal statutes such as Title VII of the Civil Rights Act of 1964. Those statutes protect employees who oppose, report or complain about unlawful practices. In contrast, ERISA only protects persons who provide information in response to an “inquiry.” Thus, Judge Coogler joined several other courts from around the country and found that employees are only protected by ERISA if they “participate, testify or give information in inquiries, investigations, proceedings or hearings.” Ms. Atkins only complained internally at the Hospital, and she did not “participate, testify or given information in inquiries, investigations, proceedings or hearings.” Therefore, Judge Coogler found that she did not possess an ERISA retaliation claim.
ERISA retaliation is a relatively rare claim. Nevertheless, Judge Coogler has provided Alabama employers an additional weapon if they are sued for ERISA retaliation in the future.
Dancers at adult clubs claim that they are “employees” under the FLSA.
I’m sure you will surprised to hear this: allegedly employers in the adult entertainment industry aren’t vigilant about complying with the law. I previously wrote about the dangers of age discrimination at a “gentlemen’s club” in South Alabama here: Age Discrimination and Dancers. Now, one entertainer at a North Alabama landmark, Jimmy’s Lounge, has apparently decided to claim a violation of her rights to fair pay under the Fair Labor Standards Act (“FLSA”). See Miller v. JAH, LLC, No. 5:16-cv-01543-AKK, 2018 WL 305819 (N.D. Ala. Jan. 5, 2018).
In an attempt to adequately describe Jimmy’s Lounge for non-Huntsvillians, I went to their Facebook page. Their cover photo is a woman who is scantily “clothed” — in pizza. Their “about” description is short: “#1 Gentlemen’s Club.” Hopefully, you get the picture.
Breeana Miller has decided to sue this renowned establishment, claiming that she is an employee who hasn’t been paid correctly under the FLSA. Additionally, Ms. Miller has asked United States District Court Judge Abdul Kallon to certify a class action of all people who danced at Jimmy’s from September 16, 2013 to September 16, 2016. The opinion released by Judge Kallon last week discussed that request for class certification and sheds some light on Ms. Miller’s claims.
Ms. Miller claims that Jimmy’s dancers are employees, covered by the FLSA, but they are not paid minimum wage as required by the FLSA. Instead, their sole pay comes from the tips of patrons. Ms. Miller claims that she is an employee because Jimmy’s maintains control over the terms and conditions of her work, including: paying “tip out” fees to management and other non-tipped employees; requiring them to report to work at specific times with specific shifts; setting the prices of private dances; and, imposing monetary penalties for absences, lateness, leaving early, and their weight.
Jimmy’s denies that the dancers are employees, and instead claims the dancers are independent contractors. Only employees can sue for violations of the FLSA. Judge Kallon’s opinion does not provide much information discussing the details of Jimmy’s independent contractor defense.
Federal judges frequently grant conditional certification of a class in FLSA actions, and allow plaintiffs like Ms. Miller to contact potential class members. Judge Kallon’s opinion discussed an interesting request by Ms. Miller to contact former dancers by e-mail and text message — claiming that dancers tend to move frequently. Judge Kallon denied that request for now, and he seemed particularly reluctant to allow contact by text message. Nevertheless, he seemed open to reconsidering the request if traditional contact by mail was unsuccessful.
I will try to keep tabs on this case and keep my faithful readers updated. In the interim, if you assume that Ms. Miller’s accusations are true, the best lesson to be learned is one that I’ve talked about before. Merely labeling somebody an “independent contractor” does not automatically prevent them from being considered your “employee”: How “Independent” Are Your Independent Contractors. The test for determining whether a worker is an “employee” for purposes of the FLSA can be a complex one, and it will be interesting to see what the evidence reveals as this case goes on.
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.
Employees suing for discrimination can’t focus solely on comparator employees who were treated better. Instead, if comparator employees were also treated worse, there may be no viable claim for discrimination
United States District Court Judge Madeline Haikala recently dismissed a discrimination claim because the employee failed to show that the majority of comparators (i.e., similarly situated co-employees outside the protected class) were treated better than him. See Burton v. Miles College, No. 2:14-CV-02471-MHH, 2017 WL 6336327 (N.D. Ala. Dec. 12, 2017). Abraham Burton was employed by Miles College as an assistant dormitory director. He sued the college for gender discrimination and age discrimination, and claimed that Miles paid women and younger employees more than him.
In most employment discrimination cases, employees like Mr. Burton try to use circumstantial evidence to prove discrimination. Employees can sometimes succeed in a circumstantial case by offering evidence of “comparators” — similarly situated individuals of the opposite sex or similarly situated, substantially younger employees. Comparators must be “similarly situated in all relevant respects.” That is, they must work in the same position with the same experience and same supervisors. Usually, if an employee like Mr. Burton identified a comparator who was paid more favorably, a judge would find an inference that the difference in treatment was the result of discrimination.
Mr. Burton pointed to two comparators — a younger assistant dormitory director and a female assistant dormitory director — who were paid more than him. But, Judge Haikala refused to rely solely upon those comparators when determining whether discrimination occurred. Instead, she relied upon a case from the Third Circuit Court of Appeals to hold that “[a] plaintiff may not pick from a valid set of comparators only those who allegedly were treated more favorably, ‘and completely ignore a significant group of comparators who were treated equally or less favorably than [he].'” Burton, 2017 WL 6336327 at *3 (quoting Simpson v. Kay Jewelers, 142 F.3d 639, 646-47 (3d Cir. 1998).
In this case, Miles College paid one female assistant dormitory director better than Mr. Burton, but paid five other female assistant dormitory directors worse than Mr. Burton. Similarly, the college paid one younger assistant dormitory director better than Mr. Buton, but also paid three substantially younger assistant dormitory directors better. Thus, Judge Haikala concluded: “These circumstances do not give rise to an inference of discrimination ….”
It will be interesting to see if other judges in Alabama adopt Judge Haikala’s rationale. For the time being, however, she has provided employers with an additional way to fight employment discrimination claims.
In FLSA claims, employers which litigate “as a matter of principle” may wind up paying big money in attorneys’ fees if they lose.
Last week, Judge David Proctor issued a decision in a Fair Labor Standards Act (“FLSA”) case, which provides a warning to employers who want to litigate claims “as a matter of principle.” See Lopez-Easterling v. Charter Communications, Inc., No. 2:14-cv-01493-RDP, 2017 WL 6406520 (N.D. Ala. Dec. 15, 2017). Karen Lopez-Easterling sued her employer, Charter Communications, for overtime violations. On May 18, 2017, a jury awarded her $5,355.72 as payment for those violations.
The FLSA permits a “prevailing party” to recover their attorneys’ fees. Ms. Lopez-Easterling’s three attorneys spent 507.8 hours working on the case at rates between $325.00 and $450.00 per hour. Thus, they asked Judge Proctor to award them $215,685.00 in attorneys’ fees.
Judge Proctor’s opinion largely granted the request for fees. After some additions and a few reductions, Judge Proctor awarded $211,710.00 in fees. The opinion strongly suggests that Charter Communications’ attitude towards the litigation influenced the fee award. Judge Proctor discussed the fact that Charter “made crystal clear that it had no interest in resolving the case and exercised its right to ignore all of Plaintiff’s proposals.” He also noted that Charter brought a “contest everything” approach to the litigation. Finally, Charter’s own communications with the Judge during pre-trial conference may have been the deciding factor:
[Charter] had multiple opportunities to resolve this case prior to trial and chose not to do so. [Charter] stated that it was not interested in settlement and was trying the case on principle. In light of that position, the court gave [Charter] a warning that went something like this: “you have the absolute right to take that position, but if you lose at trial — in for a dime, in for a dollar.”
Clients frequently want to go to court “as a matter of principle.” But, principles can frequently be costly. In this case, Charter could have settled for a relatively small payment early in the litigation, and avoided the substantial fee that Judge Proctor required after trial. Instead, Charter will face a triple-threat of losses: (1) $5,355.72 in overtime payments; (2) $211,710.00 in payments to the employee’s attorneys; and, (3) payments to their own attorneys of at least that amount.
