Tag: Wage and Hour
Don’t Mess With Employee Tips… or Investigation Finds Restaurant Used Tip Pool to Cover Business Costs
Big Texan Steak Ranch restaurant agreed to pay back $650,000 in minimum wage back wages and $150,000 in liquidated damages to 279 current and former wait staff following an investigation by the Wage and Hour Division. The investigation found violations of the Fair Labor Standards Act’s minimum wage and record-keeping provisions. Violations stemmed from an illegal tip pooling arrangement at the restaurant in Amarillo, Texas. The investigation found that Big Texan illegally retained a portion of the restaurant workers’ tips to pay for business costs, such as menus, glassware, trays and contest prizes.
Here’s the FLSA Fact Sheet on Tips.
When it comes to paying employees who can’t come to work because the business is shut down due to bad weather the rule is simple with hourly employees–you don’t have to pay them. It gets a bit more complicated with salaried employees. According to the DOL guidelines:
- You can substitute or reduce an employee’s accrued leave (vacation, PTO, sick pay, etc.) in partial or full-day increments without destroying the salary basis, as long as the employee still receives pay equal to the guaranteed salary. So, if you use a day of their vacation pay, it has to be the equivalent of what they would have earned that day.
- If the office stays open, the employee’s absence is attributable to personal reasons and the employer may make full-day deductions or require them to use vacation, paid time off, or sick leave.
- An employer may not make partial-day deductions from the pay of exempt employees who stay home for less than a full day because of inclement weather.
Click here to read the DOL opinion letter.
“Education is the most powerful weapon which you can use to change the world.” –Nelson Mandela (1918-2013)
This issue discusses:
- Editor’s Column: Think For Yourself
- Poor Timing for a Termination
- The Top Three Traits of Outstanding Leaders
- American CEOs’ View of Human Capital: Room for Improvement
- California Court Allows a Class Action Wage Claim to Include Independent Contractors Provided by a Leasing Company
- Your Company’s Exposure When It Provides an Employee with a Vehicle to Use
- Question of the Month
We have also provided you with the Form of the Month.
Please click here to view the newsletter in PDF.
Editor’s Column: Think For Yourself
You either choose your story for yourself or let others choose it for you. As Don Miguel Ruiz reminded us: we can become domesticated into our stories. This means that they’re often not of our own making. As I say, they are gifted to us. Often these stories are so familiar to us that we are unaware they even exist. They can affect us both good and bad for a lifetime.
It took a revealing experience in my mid-thirties which caused me to become an independent thinker. In a workshop, I had the highest winning score ever in a betting game designed to teach win/win thinking. The only instruction they gave, or would give, was to win as much as you can. There was a guy in the corner with a megaphone continually barking out this instruction to the participants.
I dutifully manipulated the game (as instructed) and won more than anyone else by a large measure. Heck, being a lawyer, the game of manipulation came natural. Of course, this meant I helped generate a number of really bad…and upset… losers. During a group debriefing afterwards, I was asked if I could see that I could have played a win/win game where all participants could prosper. I said sure I could see that, right away in fact, yet I justified my high score by saying “I was only following instruction! Those were the game rules and we lawyers are trained to follow rules. In addition I was raised by a 6’3” Marine Corps Sergeant. (I felt like his last soldier at times.) You better believe I learned about following rules early on in life!”
The facilitator then asked me an insanely powerful question: He said “Do you always listen to the noise?” My brain stopped dead in its tracks. Wow. The noise. Why did I blindly follow instruction? What other rules am I following that are not of my own making? Do they really make sense? As Gurdjieff might ask, “Am I truly an automaton?”
From that day on, I determined to think for myself; to become 100% responsible for my lot in life. I decided that I could no longer do the safe thing, the thing I had trained myself to do, the thing I did so well; but rather to evolve and do what I should do. For 17 years as a plaintiff’s attorney, I had been feeding off the story that litigation was how I could make a difference. When I stopped listening to the noise and reality hit, I had a midlife crisis. I couldn’t live my passion using litigation to actualize it. Nobody wins a lawsuit. There had to be a better way!
Sometimes we question our sanity when reinventing ourselves. Change is fearful even if it is exciting. Will they let me champion this idea I have? Is this new career or business going to survive? Am I going to go bankrupt – again? Will a competitor come along to put me out of business? Do I really want to do this anymore? Am I too inexperienced to do it? Am I nuts?
If you try to do the exact same thing, the exact same way for the next three… or thirty… years, you’ll be guaranteed to turn into that automaton and regret missed opportunities.
Don’t listen to the noise. Don’t let others decide what your story will be. Think for yourself.
Poor Timing for a Termination
The California case Rope v. Auto-Chlor System reinforces the futility of an employer trying to terminate an employee so as to avoid liability. Plaintiff Scott Rope informed his employer at the time of his hire that he planned to donate a kidney to his physically disabled sister. He had requested to be given leave to do so. He later requested that leave be extended and paid under newly enacted Donations Protection Act, which was to take effect January 1, 2011. Rope was fired two days before the DPA came effective; Auto-Chlor clearly hoping to avoid the 30-day payment obligation. The court agreed that the employer could not be held liable under a law that had not yet taken effect. However, it added that, under the circumstance, Rope had a potential claim, because the disability of his relative was a substantial factor motivating the employer’s decision, otherwise known as “associative discrimination.”
The court cautioned:
“Our holding should not be interpreted as a siren song for plaintiffs who, fearing termination, endeavor to prepare spurious cases by talking up their relationship at work to a person with a disability; such relationships do not, by themselves, give rise to a claim of discrimination. An employer who discriminates against an employee because of the latter’s association with a disabled person is liable even if the motivation is purely monetary. But if the disability plays no role in the employer’s decision, there is no disability discrimination.”
The case was sent back to the lower court to determine whether the plaintiff’s disability or that of his sister played any role in the employer’s decision. If it was purely an economic choice, there was no disability discrimination. (The court indicated that Rope himself did not have a disability as the result of donating a kidney, nor did the company act as if he had one).
The Top Three Traits of Outstanding Leaders
According to the 2013 Inc. 500 CEO survey, the top three attributes of outstanding leaders are trustworthiness, sincerity, and a capacity to inspire. This survey can be viewed as a self-prophecy. Perhaps this is how most of the CEOs view themselves. Of course, they see themselves as trustworthy, sincere, and inspiring. But is that how their employees view them?
According to Inc. magazine, likability was the last of 21 characteristics for making great leaders. In my experience, you don’t have to like a boss to work for him or her, but the chances are you won’t work there very long. However, if you like the boss, you’re likely to stay remain much longer, even if you could make more money elsewhere. To see the survey results, go to http://www.inc.com/magazine/201309/how-the-inc.500-approach-leadership.html
American CEOs’ View of Human Capital: Room for Improvement
In its research report, The Conference Board CEO Challenge 2013, American respondents ranked concerns about operational excellence, government regulation, customer relationships, and innovation above challenges related to human capital (human resources). This fifth-place ranking is the lowest among CEOs surveyed across the world. Let’s think about the role of human resources in all of this:
- HR should be directly involved with improving operational excellence by understanding total quality management and similar tools. Bring that same level of excellence to the HR function.
- HR should manage government regulation as it relates to human capital. This job is considerably more difficult in states like California and if you have offices abroad. There’s no substitute for audits, surveys, training, and running data to make sure you are meeting these obligations.
- The quality of customer relationships depends primarily on how well HR supports the hiring of these employees. HR can also work with the marketing department to brand the importance of great customer service to the workforce.
- Finally, HR has to improve its willingness to innovate. Most people view HR as boring, unimaginative, non-innovative, etc. – largely because it’s true. How many HR experiments have you implemented in such areas as of hiring, retention, performance management, generating employee suggestions, and so forth?
This survey tells me that American CEOs continue to undervalue the opportunity in human resources. The challenge for HR professionals is to step up and give these executives a reason to change their minds.
California Court Allows a Class Action Wage Claim to Include Independent Contractors Provided by a Leasing Company
In the California case of Benton v. Telecom Specialist (TMS), the proposed class consisted of approximately 750 cell-phone tower technicians, most of whom were hired and paid by staffing companies that contracted with TMS. The plaintiffs alleged that TMS was the employer of these contracted employees. While the direct employees received an employee handbook which discussed the rest and meal period breaks, the contracted employees may or may not have received an employee handbook from their companies. Of course, all the staffing companies stated that they had “no way of knowing” whether their technicians were taking breaks or working overtime while working on TMS jobs. The court spent a great deal of time discussing recent changes to California meal and break law. That law pretty much states that employees are responsible for taking their meal and rest periods unless they work under severe time constraints or other management direction that precluded them from taking “proper meal and rest periods.”
Even though the employees were contracted for, the Court stated that TMS was a joint employer with the staffing companies and therefore allowed the class action case to move forward. The plaintiffs argued that TMS was required to personally authorize and permit meal and rest periods because it exerted self-control over the technicians’ worksite and the manner which they reported their hours. As a result, TMS may not delegate its meal and rest break obligations or overtime requirements to a co-employer staffing company.
Tips for employers: The bottom line is that if you use contract employees consider yourself responsible for safety obligations, wage and hour obligations, and others. Make sure you’re covered in any agreement and you also have clear personnel practices.
Your Company’s Exposure When It Provides an Employee with a Vehicle to Use
Most employers understand that when an employee is on the job using a company vehicle that they are liable for any of the employee’s tortious actions. The question arises about what is within a scope and course of employment. For example, if they use a company vehicle going to and from work then that is considered in the cost of employment. However, what happens if they take a side trip in the process? That was the case in a lawsuit brought against in the consolidated cases of Halliburton v. Carly Baker. Halliburton supplied Troy Martinez with a pickup truck to drive, allowing him to run personal errands during breaks as well as to and from work. Halliburton had a written policy that company vehicles were not to be used for personal business but could be used to commute between home and work “and make a stop directly enroute for personal reason traveling to and from work.”
On the day in question Martinez left his shift, traveled home where he met his wife and daughter at a car dealership to purchase a vehicle for his wife. The deal fell through and Martinez and his family went to a restaurant and had lunch. Martinez then began a return trip to work. On his way back to work he was involved in an accident causing injuries to six people. Martinez’s pickup went off the pavement, traveled up a mound of dirt in the center divider and was launched into the air, landing in the opposite lanes of the freeway where it collided with the plaintiff’s vehicle. The plaintiff sued Martinez, and Halliburton as his employer, and also Caltrans as being responsible for a dangerous condition of public property that contributed to the accident. Of course all the defendants sued each other for amenity and contribution.
In summarizing the law, the court stated that “the most common, obvious cases in which respondeate superior liability arises are those in which the employee commits a tortious act while performing his or her ordinary duties for the employer at the employer’s place of business. In certain circumstances, the employers are ordinarily reliable for the employee’s tortious act, even if holy unauthorized and without benefit to the employer. An exception is made when an employee has substantially deviated from his duty for personal purposes at the time of the tortious act. While a minor deviation is foreseeable it will not excuse the employer from liability, a deviation from the employee’s duties that are so material or substantial as to amount to a departure from those duties will take the employee’s conduct out of the scope of employment.” For example, when the employee leaves the employer’s premises on a lunch break, to get lunch or run a personal errand and the employee is not engaged in any errand or task for the employer, the employee is not acting within the scope of his or her employment.
Further, if the main purpose of the employee’s activity is still the employer’s business, it does not cease to be within the scope of employment for reasons of personal incidental personal acts, slight delays, or deflections from the most direct route. In this case, the plaintiffs and Caltrans, who sought indemnification from Halliburton, was not able to plead a case as the court ruled that his going to the auto dealership with his family was a substantial deviation from the commute to pursue his own personal business.
What should employer should do:
- First of all, make sure you have full auto coverage for any employees who use any of their or your vehicles as part of their work activities.
- Secondly, have a policy that makes it very clear that the employees are not entitled to engage in substantial deviations from their commute to work with the company owned vehicles.
- Make sure anybody driving their vehicle on work time or your vehicles during work time has a clean driving record as well as sufficient insurance on any personal vehicle used for work purposes.
Question of the Month
Do you have a comprehensive list of which laws wireless device laws apply in which states?
We don’t, at least not structured like that. If the state has such a law it can found on the BNA State Law Summary for example here is a screen shot from the California summary.
However, I did some digging and found two good resources: http://www.lawireless.com/cephlawbyst.html and http://drivinglaws.aaa.com/laws/distracted-driving/. There may be helpful info here too http://www.distraction.gov/
Form of the Month
Annual HR Game Plan Worksheet (PDF) – This is the year to commit to a constant HR improvement process! Take on one strategic objective per month.
Click here to to listen to this month’s newsletter podcast.
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©2014 Reprinted with permission from HRThatWorks.com, a powerful program designed to inspire great HR practices.
California law provides that, absent an exemption, an employee must be paid time-and-a-half for work in excess of 40 hours per week. To be exempt from that requirement the employee must perform specified duties in a particular manner and be paid “a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.” (Lab. Code, § 515, subd. (a).)
The question presented in this case is whether a compensation scheme based solely upon the number of hours worked, with no guaranteed minimum, can be considered a “salary” within the meaning of the pertinent wage and hour laws. We conclude that such a payment schedule is not a salary and, therefore, does not qualify the employee as exempt. Since the trial court found the employee was exempt, we shall reverse.
In the May 2013 case of Heyen v. Safeway decided out of Los Angeles, the appellate court affirmed a ruling that poses a large risk exposure for retailers of all kinds. Bottom line is that if a manager spends more than 50% of their time doing non-exempt work, they are non-exempt….even if they have significant managerial responsibilities. Safeway pointed out the reality of multi-tasking at these jobs but the court wasn’t buying it. “In order to count as exempt work, the employee must ‘clearly’ disengage from the non-exempt activity and engage in the exempt activity.” At issue were the jury instructions which the court upheld. The instructions told the jurors the following:
“Exempt” tasks include:
- Forecasting of store sales.
- Scheduling the work of store employees.
- Monitoring store sales and adjusting schedules to ensure compliance with payroll budgeting
- Directing the work of store employees.
- Inspecting store conditions.
- Inspecting and reviewing the work of store employees.
- Activities, such as audits and pulls, authorizing overrides, and providing for the safety of the employees and property.
- Training employees.
- Coaching store employees.
- Counseling, disciplining and firing store employees.
- Interviewing and hiring employees, including time spent instructing and supervising others in the process of selecting job candidates.
- Preparation and review of management paperwork such as: 259 reports, and profit and loss reports.
- Review and sort email and conventional mail and determine follow up action needed.
- Review of store employees‟ time and attendance records, including identification and completion of paperwork for edits needed to ensure accuracy of such records.
- Monitoring store conditions and delegating tasks to employees to meet federal, state and local laws and regulations regarding licensing, food safety, worker and customer safety, and consumer protection law (for example, food recall, weights and measures requirements).
- Handling employee complaints and grievances.
“Non-Exempt” Tasks include:
- Ringing up sales for customers.
- Bagging groceries and/or assistance to customers with carry out.
- Assisting customers with routine matters (for example, finding an item in the store).
- Stocking or facing merchandise, including items in the general merchandise, health and beauty aids aisle(s).
- Mopping and sweeping floors.
- Retrieving shopping carts from parking lot.
- Constructing merchandise displays.
- Selling money orders and lottery tickets.
- Stocking and replenishing stock on shelves, including out-of-stocks.
- Fetching items for customers.
- Unloading trucks and unpacking merchandise.
- Stocking beverage and other coolers.
- Labeling shelves, completing signage including shelf and price tags.
- Driving motorized pallet movers.
- Gathering shopping carts.
- Maintaining the back room.
- Putting up and taking down product displays and decorations.
- Preparing payroll.
They then had the jury determine the apportionment of time. In its opinion the court reminded employers in a footnote as follows:
California’s distinct approach to defining overtime exemptions “can also be illustrated in its treatment of the exemption for administrative, executive, and professional employees. … With regard to such employees, “[t]he federal exemption for this category of employees adopts a core test which focuses on the employee’s “primary duty”; if the “primary duty” test is met, then he or she is deemed exempt regardless of how much time the individual actually spends performing the primary duty. ….By contrast, the state law exemption, as in the case of “outside salespersons,” adopts the requirement that the employee must be “engaged primarily” in exempt work … the term “primarily‟ is defined as “more than one – half the employee’s work time.”
Conclusion: Employers won’t be able to get around the broad, pro-employee ruling in this case. I expect it will generate a flood of new claims along these same lines. It’s getting to the point where I advise California employers to simply treat these employees as non-exempt and figure out what you would need to pay them straight time to keep their total compensation, including overtime, the same as their salary.
“The health of your employees has little to do with your health insurance costs – and the cost of health care has little to do with the health of your employees.” –Dr. Wendy Lynch
This issue discusses:
- Editor’s Column: How Many Bad Jokes Does It Take to Get You Fired?
- Summer Interns: To Pay or Not To Pay?
- Safety Bonus Programs: Pros and Cons
- ADA and FMLA: Symbiotic Interaction
- Employment Practices Risks: Reality Check
- Toys ‘R’ Us Sued For Alleged Discrimination Against Deaf Job Applicant
We have also provided you with the Form of the Month.
Please click here to view the newsletter in PDF.
Editor’s Column: How Many Bad Jokes Does It Take to Get You Fired?
I recently reported on a California case in which a manager was fired partly because he and his buddies would tell off-color jokes after work in one guy’s office, out of the earshot of others. A female attorney who was investigating a claim brought by a poorly performing employee felt that such conduct violated the company’s sexual harassment policies, even though it had nothing to do with the claim being filed.
I say, only in America!
I realize that many people today are hypersensitive to finding their rights violated. The complaining employee in this case seemed to be such a person. If, for some reason, someone feels ostracized by society or the demographics of the company where they work, they will constantly be filtering events to show that others are discriminatory and insensitive. Of course, at the family picnic next week, this “offended” employee will be laughing when their uncle tells the same jokes they found so offensive in the workplace.
Today’s workplace has changed. Mad Men is a period piece. Whether you like the great cleansing of the American workplace or not, it’s reality. So, if you want to give an employer an excuse to fire you, tell some off-color jokes on the job – or you might realize that’s probably not worth it and tell them outside the workplace. Things have gotten to the point that Prairie Home Companion jokes can be deemed offensive when uttered in the workplace. Are we so stressed that we’ve lost all sense of humor?
I’ll leave you with a safe joke my 11-year old told me that you can share in all sorts of company: “What did the green grape say to the purple grape?” Answer: “You gotta breathe, man!” As I see it, there are too many hyper-sensitive folks in the workplace that could do some breathing as well.
Summer Interns: To Pay or Not To Pay?
Now that summer season is here, it’s time to review your payment obligations to interns.
The DOL’s Test for Interns and Trainees
Although the Fair Labor Standards Act (FLSA) doesn’t define intern or provide an exemption from minimum wages or overtime for interns, it recognizes that not everyone who performs duties for an employer is an “employee,” and thus entitled to compensation under the wage and hour laws. Generally, the FLSA provides that if a company benefits from using interns, it must pay them at least minimum wage. However if the intern isn’t doing anything that directly benefits your company but is just observing or learning, you might be justified in not paying him or her.
Whether student interns are considered employees under the FLSA depends on the circumstances surrounding their duties and activities. The U.S. Department of Labor (DOL) uses a six-part test to distinguish interns or “trainees,” from employees:
- The training, even though it includes actual operation of the employer’s facilities, is similar to what would be offered in a vocational school.
- The primary benefit of the training is for the intern.
- The trainees don’t displace regular employees, but work under close observation.
- The employer derives no immediate advantage from the activities of the interns, which on occasion might actually be counterproductive.
- The intern is not guaranteed a permanent job at the end of the program.
- Both parties understand that the intern is not entitled to wages for the time spent in the internship.
Who Benefits: Intern Or Company?
Although courts will use these factors to analyze a worker’s status, they don’t necessarily weigh all of them equally. In fact, judges will often find that the most important criterion for determining whether someone is subject to the FLSA involves which party enjoys the primary benefit from the internship.
Essentially, if the intern benefits primarily from the arrangement, she will be considered a volunteer, rather than a paid employee. However, if the company is the primary beneficiary of the intern’s work experience, this person will be considered an employee who must be paid at least the minimum wage.
In one case involving a company’s use of trainees, McLaughlin v. Ensley, the Fourth U.S. Circuit Court of Appeals held that the owner of a snack foods distribution business had to pay trainees for route jobs. Before being formally hired for such a job, trainees were required to participate in what was usually five days of exposure to the tasks they would be expected to perform. They traveled an ordinary route with an experienced route man, loaded and unloaded the delivery truck, received instruction on how to drive the truck, restocked stores with the employer’s product, were introduced to retailers, learned basic maintenance on snack food vending machines and occasionally helped prepare orders of goods with financial exchanges. However, the employer did not pay the trainees during their training week.
In determining whether this practice was legal, the Fourth Circuit explained that the key question involved whether the employer or the trainees received the principal benefit from the orientation. The court held that the employer enjoyed a greater advantage than the trainees because they were, in fact helping the company distribute snack foods. The skills they learned in training were either so specific to the job or so general that they had practically no transferable usefulness. As a result, the appeals court ruled that the trainees who participated in the orientation program were entitled to receive minimum wages.
Ensuring FLSA Compliance
If you offer unpaid internships, structure the position so that the intern is the one who will receive the primary benefit of the work experience. Unpaid internships should concentrate on exposing the intern to a particular career field and offer a mentoring experience. The focus should not be on production – do not use interns as a free source of labor!
Also, if you use unpaid interns, document the nature of the relationship, explain that both parties intend the arrangement to be an unpaid internship that will provide the intern with practical learning experience. The intern’s actual duties should comply with the terms set forth in this s written documentation.
The Bottom Line
Having interns can be a great experience, not only for the intern but also for your company. Interns can bring a fresh perspective to your business and allow you to assess potential employees. Employees often get their proverbial foot in the door by starting as summer interns while in school and then becoming full-time workers after graduation.
Safety Bonus Programs: Pros and Cons
I recently received this hotline inquiry:
Q: We have a safety bonus program that gives a $25 gift card each quarter for all groups that have no lost-time accidents and at the end of the calendar year provides them with a share in an $8,000 bonus check. In researching this, I found that OSHA has stated that safety bonus programs which give monetary rewards to employees for no-lost time accidents can be seen as creating incentives to not report accidents or to pressure fellow employees not to do so. However, I read in a SHRM article that the Secretary of Labor stated that there would not be a fine for keeping such programs. Should we stop our incentive program it or leave it as is and wait for the DOL to prohibit it?
A: We’ve seen this memo from OSHA on HR That Works. Incentives always have their shadow side. If management makes it clear they want injuries reported, the next step is to approach your employees and ask how the company can use these incentives in a way that does not encourage non-reporting? They might well have some better ideas than what you’re using. There’s no law prohibiting safety incentives – just concerns about possible negative results from using them.
ADA and FMLA: Symbiotic Interaction
These case summaries, courtesy of Worklaw® Network firm Shawe Rosenthal, spotlight the symbiotic interaction between these two leave laws.
A federal court in Alabama held that an employer had no duty under the Family and Medical Leave Act (FMLA) to restore the employee to her job with an accommodation under the Americans with Disabilities Act (ADA). In Brown v. Montgomery Surgical Center, the employee who sought to return to work after FMLA leave provided a doctor’s note with lifting and standing restrictions. The employer refused to reinstate her without a full release. She then sued under the FMLA and ADA. The employee’s ADA claims were dismissed as untimely filed. With regard to her FMLA claims, the Court observed that the right to reinstatement under the act is not absolute, and held that an employee who is unable to perform an essential job function is not entitled to reinstatement. The FMLA does not require an employer to provide a reasonable accommodation that will enable the employee to return to work at the end of FMLA leave. The reasonable accommodation obligation arises from the ADA, not the FMLA.
More on the ADA and FMLA
In another case exploring the interaction between the ADA and the FMLA, a federal court in Pennsylvania held that an employee was not entitled to reinstatement under the FMLA to a pre-leave position that the company had given her as an accommodation for a temporary disability under the ADA and to provide better accommodation of her need for intermittent leave under the FMLA. In Karaffa v. Montgomery Township, a pregnant employee who was usually assigned rotating morning, evening, and overnight shifts was reassigned to morning shifts only as an accommodation for her gestational diabetes. Following her FMLA leave, the employee sought to return to the morning shift assignment. The court noted that she had been assigned the shift in connection with her need for intermittent FMLA, and thus it was not a position that she held “when leave commenced.” Moreover, under the ADA, this morning shift assignment was an accommodation for her temporary disability of gestational diabetes, which no longer existed after the birth of her child. Thus, both laws required the employer only to reinstate her to the original rotating shift assignment.
Employment Practices Risks: Reality Check
I just finished listening to an interesting podcast by the Freakonomics authors about the risks that gun use presents. For example, they indicated that the odds of a gun causing a person’s death are about 1 in 10,000, while the chances of a backyard swimming pool causing a death are some 100 times greater. Does this mean that we should focus on swimming pool control and forget about gun violence? Although I doubt that anyone would suggest this, it does give food for thought.
For the past dozen years, I’ve been in a catbird seat observing the incident of employment practices liability exposures and lawsuits. My conclusion: Employment Practices Liability Insurance cannot cover the major personnel practice exposures facing businesses. For example, there’s no risk mitigation for making poor hires, fostering low productivity, triggering high turnover, or failing to have workers play like a team. The frequency of such exposures, and their expense, far exceed those associated with employee lawsuits.
Let me share another statistic. In 2012 the U.S. had one of the worst years ever for mass shootings, with approximately 700 fatalities (four times the annual average toll). As you might expect, these sensational and painful cases grabbed plenty of headlines. However, in the same year, roughly 20,000 Americans committed suicide using guns, killing some 11,000 other people in the process – and garnering little, if any, media attention.
The same thing holds true for workplace risk exposures. How many articles are you going to read about the impact of bad hires or productivity left on the table every day? Where’s the drama in that? However, a juicy lawsuit in which a sexual harassment claimant gets a multi-million dollar verdict will get plenty of press.
Likewise, more than half of the discussions at any HR conference will involve compliance exposures. Meanwhile, the greatest risk to your company’s survival has little or nothing to do with compliance litigation. In my 30 years as an attorney, I’ve seen only a handful of small businesses go under because of employee lawsuits – and hundreds of companies of all sizes go out of business because of poor management practices.
As with the gun/swimming pool example, we need to understand the relative probabilities of the various risks employers face.
None of us need the horror of mass shootings or nasty employee lawsuits. These events make for good press (as they say, “if it bleeds, it leads.”) When we run 75 mph as a society, it’s hard for us to connect without doing so through a mass pity party. The media taps into this social reality on a daily basis with sensational headlines and lead stories, making it all too easy to divert business owners and managers from focusing on significant employment risk management issues.
Food for thought…
Toys ‘R’ Us Sued For Alleged Discrimination Against Deaf Job Applicant
The U.S. Equal Employment Opportunity Commission has sued Toys “R” Us, Inc. for alleged disability discrimination under the Americans with Disabilities Act. A deaf woman applied for a job at the toy retailer’s store in Columbia, MD. She was denied a sign language interpreter for her interview and the store refused to hire her despite her qualifications and ability to do the job, with or without a reasonable accommodation. I asked JAN expert Linda Batiste some questions about this case:
- Is the implication that it’s reasonable for a company to hire an interpreter any time a job applicant needs it?The implication is that under the ADA providing an interpreter is a reasonable accommodation which a company must consider on a case-by-case basis. The ultimate goal is effective communication during the job interview, and in some cases this means an interpreter, if no undue hardship is involved.
The problem that Toys “R” Us ran into was flat out refusing to provide an interpreter for the job interview without offering an alternative method of communication. Instead, the applicant was instructed to provide her own accommodation. I saw no indication that Toy “R” Us claimed undue hardship.
- What if a company interviews 10 people for a low wage job and hires only one. What if two of the applicants are deaf? Do they need to provide one for each candidate?
In some cases, an employer might have to consider hiring an interpreter for each applicant who is deaf. The Toys “R” Us case involved a group interview, and perhaps in such a situation only one interpreter would be needed. However, whether it’s one or multiple interpreters, most job interviews don’t last more than an hour, so the actual expense might not be that much, especially for a large company.
- If hired, what would be the company’s obligation to provide an interpreter then? That interpreter could cost more per hour than the employee.
If hired, the employer would have to assess the need for an interpreter on a case-by-case basis. For some jobs it might be minimal; others it might be more extensive. Again, the key would be effective communication; and, for some jobs, that can be done in other ways besides an interpreter. Under the ADA, employers should probably not try to make the argument that an interpreter would get paid more an hour than the deaf applicant. This isn’t generally accepted as meeting the undue hardship defense.
My take: Nothing drives employers nuts more than the ADA’s “case-by -case” analysis. Although larger companies might absorb such expenses readily, it could be an undue burden on smaller firms. The best answer is to get professional advice in such circumstances.
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By now you may have heard that the California Supreme Court finally decided the Brinker case, ruling in favor of employers. It concluded that an employer’s obligation is to relieve its employees of all duty, with the employee thereafter at liberty to use their rest or meal period for whatever purpose he or she desires. The employer need not ensure that no work is done. Thankfully for California employers the court ruled that you can treat employees like the adults they are supposed to be! Here’s the bottom line to a decision that took much too long to come to such a commonsense conclusion:
- You have to offer rest and meal breaks.
- It’s up to employees to take them.
- Your managers can’t dissuade employees from taking their breaks.
- If they can’t take the break, you pay a one-hour penalty.
Much of the case had to do with the class action certification process, which is only of interest to the lawyers. Of course, if it’s to be a class action, the issue is whether common or individual questions predominate and that question often depends on a resolution of issues closely tied to the merits. Here are some quotes from the Brinker decision that apply to rest and meal period:
- “To earn the first ten-minute break, one must be scheduled for a work shift of at least three and one-half hours, while to earn the next ten minutes, one must be scheduled to work four hours plus a major fraction to earn the next ten, eight hours plus a major fraction, and so on.” So, employees are entitled to ten-minute rests for shifts from 3.5-6 hours in length, 20 minutes for shifts of 6 hours up to 10 hours, and 30 minutes for shifts of 10 hours up to 14 hours, and so on.
- “As a general matter, one rest break should fall on either side of the meal break.”
- “The meal period requirement is satisfied if the employee: 1) has at least 30 minutes uninterrupted, 2) is free to leave the premises, and 3) is relieved of all duty for the entire period. Again, the employee must be relieved of any duty or employer control and are free to come and go as they please. It is not the employer’s obligation to ensure that no work is being done.
- “When someone is employed for 5 hours, an employer is put to a choice: 1) it must afford an off-duty meal period; 2) consent to a mutually-agreed upon waiver if one-hour or less will end the shift; or 3) obtain written agreement to an on-duty meal period if circumstances permit. Failure to do one of these will render the employer liable for premium pay. If work does continue, the employer will not be liable for premium paid. At most, it will be liable for straight pay, and then only when it ‘knew or reasonably should have known’ that the worker was working through the authorized meal period.”
- “Proof of an employee’s working through a meal period will not alone subject the employer to liability of premium pay. Employees cannot manipulate the flexibility granted them by employers to use their breaks as they see fit to generate such liability. On the other hand, an employer may not undermine a formal policy providing meal breaks by pressuring employees to perform their duties in ways that omit breaks. For example, common scheduling policies that make taking breaks extremely difficult or creating incentives to forgo or otherwise skipping breaks. “
- “The first meal period must start after no more than five hours. A second meal period is only required after ten hours of work.”
In the case, the plaintiff also contended that Brinker required employees to perform work while clocked out and that meal break records were altered to conceal time working during those periods.
Additional notes: Remember that all meal periods are required to be recorded. Rest periods are not so required. Think about this twist: It can be argued that those employees who worked through their meal breaks and thereby out-produced their peers, are doing so voluntarily with a desire to be promoted. If in fact they are promoted ahead of their peers, their peers can then argue that you basically discouraged them from taking meal breaks and violated the law.
In this California case “consulting service managers” who were primarily engaged in selling recruitment services for Surrex, filed claims for overtime and missed meal periods. The court dismissed their case claiming the fit under the Sales exemption The most important language in the case is as follows:
“We conclude Labor Code section 204.1 sets up two requirements, both of which must be met before a compensation scheme is deemed to constitute ‘commission wages.’ First, the employees must be involved principally in selling a product or service, not making the product or rendering the service. Second, the amount of their compensation must be a percent of the price of the product or service.” http://www.courtinfo.ca.gov/opinions/documents/D057955.PDF
Note in the CarMax case the court ruled a flat fee commission satisfies the requirement.
The Federal standard for sales exemptions can be found here. There are exemptions for auto sales, retail sales and outside sales. Here’s an advisor on the Outside Sales
Outside Sales Employee section
This section helps you in determining whether a particular employee who is an outside sales person meets the tests for exemption from the minimum wage and overtime pay requirements of the FLSA.
- Review the Fact Sheet
- Start Outside Sales Employee section
A California Appellate Court shut down a class action effort which, in a sense, would have provided employees for a minimum of two hours show up pay for attending weekly team meetings which were not concurrently conducted with their work schedules. For example, when employees show up for an all team meeting on a Saturday morning at 10:00. The court ruled that as long the meeting was a) scheduled, and b) the meeting lasted for at least half the time scheduled, and c) the employees were paid for the time they did attend, the law has been satisfied. However, if it’s not a scheduled meeting and say somebody is pulled into the office for only 15 minutes, then you may be required to pay between two and four hours of show up pay depending on their “normal work schedule.” Reporting time pay is defined in the following manner:
“Each workday an employee is required to report to work and does report, but is not put to work or is furnished less than said employee’s usual or scheduled day’s work, the employee shall be paid for half the scheduled or usual day’s work, but in no event for less than two hours no more than four hours, the employee’s regular rate of pay which shall not be than less than minimum wage.”
So, for example, if they normally work an 8-hour day, and they’re sent home, they have to be paid for four hours. If they normally work a 3-hour day and are sent home, they must be paid for at least 2 hours. In this case, the battle was over employees showing up for weekly meetings when they did not go to work immediately thereafter.
Bottom line: Identify how long the meeting will be, spend at least 50% of the scheduled time, and make sure they record their time.