The Department of Labor has appealed an order which halted new overtime regulations
Yesterday, the United States Department of Labor filed an appeal challenging an order which halted DOL’s new overtime regulations. Those new regulations were scheduled to go into effect on December 1, 2016 and would have raised the minimum salary for exempt employees to $47,476.00. I previously wrote about the injunction which stopped the new regulations here: Federal Judge Halts New Overtime Regulations!
In a “normal” case, an appellate court can take a year or longer to issue a decision on an appeal. Most likely, this appeal will be fast-tracked by the Fifth Circuit Court of Appeals. Even so, employers should not expect a decision any earlier than some time in the first quarter of 2017. Here is the DOL’s press release concerning the appeal: https://www.dol.gov/whd/overtime/final2016/litigation.htm
The fluctuating workweek provides an alternative method for calculating overtime.
Many of my clients are calling with questions about the new overtime regulations, which become effective on December 1, 2016. Those calls and a recent decision from the Eleventh Circuit Court of Appeals merit a discussion of the “fluctuating workweek” method of calculating overtime. See Garcia v. Yachting Promotions, Inc., No. 16-10095, 2016 WL 6276046 (11th Cir. Oct. 27, 2016). In summary, an employee with a fluctuating work schedule can be paid: (1) a fixed weekly salary; and (2) half-time (instead of time-and-a-half) as overtime compensation for all hours over 40.
This methodology should only be applied to employees who work irregular work hours. Most importantly, their hours must fluctuate both above and below 40 hours per week.
If an employee truly works a fluctuating workweek, then it is possible to pay them overtime at half-time rather than time-and-a-half. But, there are numerous requirements that must be satisfied. Critically, the employee must be paid a fixed weekly salary as straight time pay. The employee receives this amount if they work less than 40 hours in a week, or more than 40 hours. Additionally, the Department of Labor’s regulations provide:
The employee clearly understands that the straight-salary covers whatever hours he or she is required to work;
The straight-salary is paid irrespective of whether the workweek is one in which a full schedule of hours are worked;
The straight-salary is sufficient to provide a pay-rate not less than the applicable minimum wage rate for every hour worked in those workweeks in which the number of hours worked is greatest; and
In addition to straight-salary, the employee is paid for all hours in excess of the statutory maximum at a rate not less than one-half the regular rate of pay.
In Lopez-Garcia, the issue was whether there was a clear mutual understanding between the employer and the employee to apply the fluctuating workweek methodology. “The employee does not have to understand every contour of how the fluctuating workweek method is used to calculate salary, so long as the employee understands that his base salary is fixed regardless of the hours worked.” Lopez-Garcia, 2016 WL 6276046 at *2. In Lopez-Garcia, the plaintiff possessed limited proficiency in English. Nevertheless, he signed a memorandum acknowledging his understanding of the fluctuating workweek, and he knew that he was a “salary employee who did receive overtime.” Id. Those facts were sufficient for the Court to find that the employee was properly paid under the fluctuating workweek method.
The Department of Labor is concerned that employers might attempt to use the fluctuating workweek methodology to limit overtime paid to employees — particularly employees who do not truly work a fluctuating schedule. Thus, application of this methodology should be approached very carefully. But, if you have employees whose schedule truly fluctuates over and under 40 hours per week, this is a potential alternative method for calculating overtime.
Dale Earnhardt, Jr.’s car dealership won a recent discrimination case.
In a sweeping victory for NASCAR fans, the Eleventh Circuit Court of Appeals recently affirmed dismissal of a discrimination law suit against Dale Earnhardt, Jr. Chevrolet. Wilson v. Dale Ernhardt, Jr. Chevrolet, No. 15-15352, 2016 WL 6211818 (11th Cir. Oct. 25, 2016). (It appears that the parties or the Court incorrectly spelled Dale, Jr’s name “Ernhardt”).
Glenda Wilson claimed that Earnhardt Chevrolet refused to promote her to a guest service manager position because she was black and older than the three women hired for the position. Yet, Ms. Wilson’s discrimination claims were undermined by her own actions. After Ms. Wilson filed a charge of discrimination with the EEOC, the general manager of the car dealership twice asked if she would like the position. On the second occasion, Ms. Wilson said that she was not interested in the position.
Additionally, Ms. Wilson never applied for the guest service manager position. She argued that it would be futile to apply because an operations manager told her that she would suffer a reduction in wages if she accepted the position. But, she never asked other service managers what they made, so that she could compare salaries. Moreover, the general manager testified that he actually told Ms. Wilson she would not suffer a reduction in pay.
Based upon all of the those facts, the Eleventh Circuit affirmed a decision by the trial court to dismiss Ms. Wilson’s claims. Wilson provides a useful lesson for employers faced with discrimination claims. Many times, the best way to combat a discrimination claim is to offer the employee what they want when you learn about the claim. If the employee rejects that offer, then their claim for damages is severely reduced. By offering Ms. Wilson the position she desired, the dealership also created valuable evidence that helped negate the discrimination claim.
An Alabama United States Magistrate Judge recently declined to dismiss a discrimination claim filed by a homosexual police officer. Smith v. City of Pleasant Grove, No. 2:16-cv-00373-JEO, 2016 WL 5868510 (N.D. Ala. Oct. 7, 2016).
According to the complaint, Lance Smith was hired by the Pleasant Grove Police Department in 2014. After he was offered the position, he informed his supervisor that he is homosexual. The supervisor suggested that he should reconsider working at the department, but later sent an email saying that his homosexuality would not be an issue. After starting work, he was paid a salary $5,000 less than promised by the supervisor. Mr. Smith was supposed to attend a three-week filed training course, where he was assigned to ride with a Field Training Officer. But, he was assigned to work on his own after less than two weeks. Two months after starting work, Mr. Smith was told that he was “not going to work out,” and told that he would be grounded, suspended and fired if he did not resign.
Mr. Smith resigned from employment and filed suit under Title VII of the Civil Rights Act of 1964. He alleged that he was constructively discharged because of his sexual orientation and because of sexual stereotypes associated with his gender.
The City of Pleasant Grove moved to dismiss the complaint and argued that discrimination based upon sexual orientation is not actionable under Title VII. Magistrate Judge John Ott declined to dismiss the complaint. Judge Ott recognized that the Eleventh Circuit Court of Appeals has consistently rejected Title VII claims based upon sexual orientation. Nevertheless, he also recognized that trend might be changing. The United States Equal Employment Opportunity Commission and at at least one federal court in Alabama have recently recognized that sexual orientation claims are actionable under Title VII. See Isaacs v. Felder Servs., LLC, 143 F.Supp. 3d 1190, 1193 (M.D. Ala. 2015).
Judge Ott was able to side-step the issue of conclusively deciding whether sexual orientation claims are actionable under Title VII. Instead, he relied upon an established line of Eleventh Circuit cases holding that Title VII protects employees who allege discrimination based upon failure to conform to sex and gender stereotypes. See Glenn v. Brumby, 663 F.3d 1312, 1316 (11th Cir. 2011). Judge Ott found that Mr. Smith’s complaint contained sufficient allegations to allow him to proceed with discovery to support his gender stereotyping claim.
Judge Ott’s ruling appears to be a proper application of the existing federal law in Alabama regarding gender stereotyping. I previously wrote about the issue of gender stereotyping here: Emerging LGBT Issues Unquestionably, the City of Pleasant Grove will move for summary judgment at the conclusion of discovery. It will be interesting to see if Judge Ott directly tackles the issue of sexual orientation discrimination at that stage.
The Eleventh Circuit Court of Appeals recently ruled that attorneys are not entitled to overtime under the Fair Labor Standards Act (“FLSA”). Okonkwo v. The Callins Law Firm, No. 16-10192, 2016 WL 4916850(11th Cir. Sep. 15, 2016).
This ruling really should come as no surprise to any attorney who practices wage and hour law. The FLSA expressly exempts those employees who are “employed in a bona fide … professional capacity.” 29 U.S.C. 213(a)(1). Moreover, the United States Department of Labor (“DOL”) has defined a “bona fide professional” as “[a]ny employee who is the holder of a valid license or certificate permitting the practice of law … and is actually engaged in the practice thereof.” 29 C.F.R. 541.304(a)(1).
Nevertheless, the plaintiff in Okonkwo argued that, as a matter of policy, she should receive overtime because she was paid an hourly wage instead of on a salary basis. The Eleventh Circuit rejected that argument because DOL regulations expressly provide that the salary basis test does not apply to licensed attorneys. 29 C.F.R. 541.304(d). The Court deferred to those regulations.
Okonkwo simply reinforces that professionals like doctors and lawyers are not entitled to overtime.
The Equal Pay Act Does Not Prohibit Wage Discrimination Resulting from Job Assignments
Recent decisions from the United States District Court for the Northern District of Alabama demonstrate that the Equal Pay Act cannot be used to sue employers for wage disparities caused by discriminatory work assignments. See Crosby v. Massey Hauling, Co., No. 2:16-cv-00383-RDP, 2016 WL 6082047 (N.D. Ala. Oct. 18, 2016).
Generally, the Equal Pay Act prohibits wage discrimination on the basis of gender. An employer cannot discriminate “between employees on the basis of sex by paying wages to employees … at a rate less than the rate at which he pays wages to employees of the opposite sex …for equal work ….” 29 U.S.C. 206(d)(1). In Crosby, the plaintiff was a female truck driver. Her employer paid truck drivers based upon the materials hauled in the trucks. Most of the employer’s trucks were coal trucks, but the employer also used about seven dump trucks. The coal truck assignment were more lucrative for drivers than dump truck assignments. The Plaintiff alleged that she suffered wage discrimination because her employer always assigned her to dump truck jobs, while allowing men to drive the coal trucks.
United States District Court Judge R. David Proctor dismissed the plaintiff’s Equal Pay Act claim. He relied heavily upon an earlier opinion by Senior United States District Court Judge C. Lynwood Smith, Jr. in Caetio v. Spirit Coach, LLC, 992 F.Supp.2d 1199 (N.D. Ala. 2014). Judge Smith found that “the Equal Pay Act does not provide relief for allegations of discriminatory work assignments.” Caetio, 992 F.Supp.2d at 1213. Because the Plaintiff in Crosby was seeking to recover for disparities in pay caused by discriminatory work assignments between coal trucks and dump trucks, Judge Proctor dismissed the Equal Pay Act claim.
Judge Proctor’s decision was only a minor win for the employer. The plaintiff also filed a claim under Title VII of the Civil Rights Act of 1964 which generally prohibits gender discrimination. Potentially, discriminatory work assignments could violate Title VII. The employer in Crosby did not seek dismissal of the Title VII claim, and that claim will proceed through the discovery process.
A supervisor told an employee: “Get your shit and leave.”
A Huntsville employer is going to trial because a supervisor told an employee: “Get your shit and leave.” Griffith v. Nicholas Financial, Inc., No. 5:14-cv-02330-MHH, 2016 WL 5724725 (N.D. Ala. Sept. 30, 2016). Based upon that statement, and other facts, Judge Madeline Haikala found that the employee could reasonably believe that her employment was terminated.
Krysti Griffith suffers from lupus and claims that her employer, Nicholas Financial, discriminated against her and terminated her employment in violation of the Americans with Disabilities Act. Prior to November 2013, Ms. Griffith generally had a good working relationship with her supervisors. In November 2013, however, Ms. Griffith was denied a promotion and the evidence in the case indicated that her relationship with her supervisors deteriorated thereafter. In December 2013, her desk was moved to the front of her office facility and she objected, because she feared that sunlight in her new location might cause a flare-up of her lupus. Then, she missed work on January 20 and 21, 2014 because of a lupus flare-up. On January 29, 2014, Nicholas Financial, began interviewing candidates to replace Ms. Griffith, and she found out about those interviews. Later on January 29, 2014, Ms. Griffith received a negative performance evaluation from her immediate supervisor.
On January 30, 2014, Ms. Griffith spoke with Nicholas Financial’s district manager, who scolded Griffith for a “bad attitude” and commanded her to “get her shit and leave.” Ms. Griffith then packed her belongings and left the facility. She did not return to work.
Nicholas Financial argued that the district manager did not actually terminate Ms. Griffith’s employment. Instead, it argued that Ms. Griffith was merely being sent home for the day, and that Ms. Griffith voluntarily resigned when she packed her belongs and left the facility.
Judge Haikala found that she was required to determine whether plaintiffs in the position of Ms. Griffith would have “reasonably concluded that their employers had terminated their employment taking into account all of the circumstances surrounding the employees’ separation from the employers.” Griffith, 2016 WL 5724725 at *7. Judge Haikala found that Nicholas used language or engaged in conduct that would logically lead a prudent person to believe that she had been terminated — particularly in light of the poor job review, the interviews of other candidates and the command to leave.
Nicholas argued that the district manager never explicitly told Ms. Griffith that she was fired. But, “an employer need not use the term’fired’ in order for a discharge to occur.” Id. at *8. Judge Haikala was required to view the facts favorably for Ms. Griffith, and in doing so Judge Haikala determined that a jury should decide whether Ms. Griffith was fired or quit.
Griffith presents a simple warning to Alabama employers: “Anything you say can, and will, be used against you in a court of law.” The district manager might not have intended to terminate Ms. Griffith. But, when emotions ran high a statement was made that ultimately forced the employer to trial. When communicating with employees about performance issues, try to keep emotions in check and communicate as clearly as possible.
The Eleventh Circuit Court of Appeals has ruled that job applicants cannot assert claims for disparate impact discrimination under the Age Discrimination in Employment Act (“ADEA”). Villareal v. R.J. Reynolds Tobacco Co., No. 15-10602, 2016 WL 5800001 (11th Cir. Oct. 5, 2016).
Most employment discrimination claims are “disparate treatment” claims. Under a “disparate treatment” theory, an employee or job applicant claims that an employer intentionally discriminated on the basis of a protected characteristic — like race, gender or age. In contrast, a “disparate impact” theory does not require proof of intentional discrimination. Instead, the employee or applicant must demonstrate that a neutral policy disproportionately impacts people with a protect characteristic.
In Villareal, a job applicant claimed that hiring guidelines of R.J. Reynolds disproportionately impacted older applicants for positions. Those guidelines suggested that a “targeted candidate” should be someone “2-3 years out of college,” who “adjusts easily to changes.” The guidelines also told a contractor reviewing applicants to “stay away from” applicants “in sales for 8-10 years.”
Villareal was a 49-year-old whose job application was rejected by R.J. Reynolds. He sued under the ADEA and claimed that the hiring guidelines had a disparate impact on older applicants. Nevertheless, the Eleventh Circuit found that the ADEA categorically does not permit disparate impact claims for job applicants.
In particular, the Court found that the ADEA only permits disparate impact claims under Section 4(a)(2) of the Act. But, Section 4(a)(2) only applies to “employees” by making it “unlawful for an employer … to limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s age.” 29 U.S.C. 623(a)(2). Because job applicants, by definition, are not yet “employees,” they cannot sue for disparate impact.
Villareal provides a victory to employers, because it eliminates an entire class of potential discrimination claims. Nevertheless, Villareal does not provide complete protection for policies like the guidelines used by R.J. Reynolds. Potentially, the job applicant in Villareal could have sued for age discrimination under a disparate treatment theory. But, those claims were barred because Villareal failed to file a charge of discrimination with the EEOC within 180-days of denial of his application.
A preliminary injunction saves federal contractors from the “blacklisting rules.”
Yesterday, federal contractors received a reprieve from one of President Obama’s executive orders. Late on October 24, 2016, a federal judge in the Eastern District of Texas granted a preliminary injunction halting implementation of certain provisions of the Fair Pay and Safe Workplaces Executive Order (E.O. 13637) and the Final Rule implementing that order. The injunction applies nationwide and blocks two key provisions of the Final Rule which affected government contractors: (1) disclosure and disqualification requirements; and, (2) a prohibition on pre-dispute arbitration agreements.
The preliminary injunction blocks the portions of E.O. 13637 and its Final Rule, which are also known as “blacklisting rules.” Those rules require federal contractors to disclose adverse findings and decisions related to their compliance with federal and state labor and employment laws. The blacklisting rules also allow federal agencies to deny contracts to employers who are deemed to lack a satisfactory record of integrity and business ethics based on such disclosures. The blacklisting rules were supposed to take effect on October 25, 2016.
E.O. 13637 and its Final Rule also prohibit certain federal contractors from requiring pre-dispute arbitration agreements from its employees for disputes under Title VII of the Civil Rights Act of 1964, or claims arising out of or related to sexual harassment. The injunction also blocked those arbitration restrictions.
Importantly, the federal judge did not issue an injunction related to “paycheck transparency” provisions of E.O. 13637 and its Final Rule. Those provisions will go into effect for solicitations or contract amendments made on or after January 1, 2017. Under the “paycheck transparency” provisions, covered contractors and subcontractors must provide wage statements to covered workers. Those statements must give workers information concerning hours worked, overtime hours, pay, and any additions to or deductions made from pay.
The minimum wage for employees of federal contractors will increase on January 1, 2017
The minimum wage for employees of many federal contractors will increase to $10.20 per hour effective January 1, 2017. President Obama’s Executive Order 13658 established a minimum wage for contractors working under four major categories of federal contracts:
Procurement contracts for construction covered by the Davis-Bacon Act (DBA);
Service contracts covered by the Service Contract Act (SCA);
Concessions contracts, including any concessions contract excluded from the SCA by the Department of Labor’s regulations at 29 CFR 4.133(b); and
Contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.
Effective January 1, 2015, the minimum wage was set at $10.10 per hour, and that wage has seen five cent increases over the last two years. On September 20, 2016, the United States Department of Labor announced the increase for 2017. The notice of wage increase and an updated workers’ rights poster can be found here: Minimum Wage Increase
