The WIB Legal Line is our new regular feature. Employment laws are confusing. The WIB LEGAL LINE updates members on developments that could impact your business. Robert E. Gregg is a partner in the Boardman Law Firm of Madison and has long been associated with WIB. Want to read even more employment law legal updates? Visit the WIB website, WWW.WIBIZ.ORG and click on LEGAL LINE.

LEGISLATION AND ADMINISTRATIVE ACTION

Department of Labor is updating child labor rules—opening up more jobs. The current child labor rules prohibit minors, especially those under 16 years of age, from working in many businesses. The rules were implemented in the 1930s when workplaces were much more dangerous. Broad areas of employment were prohibited, and those under 16 may only work in retail, food service, gas stations and some “street trades” (which have become more dangerous). The proposed rules will decrease the broad ban on “industry” and look more to the specific job in question. So, the ban on work in banking, technology companies, graphics, etc., may soon be lifted. However, some traditional street trades may now be banned because of fear of unsafe neighborhoods and child abductions. For more information, see www.youthrules.dol.gov

Employers gain access to database of 2,000 job candidates with disabilities—Leadership for Employment of Americans With Disabilities (LEAD) and DOL website. The U.S. Department of Labor has made available to employers nationwide a free database of approximately 2,000 new job candidates with disabilities seeking work in a wide variety of fields. Federal employers now can tap into this ongoing recruitment resource online at WRP.gov, and private sector and other government employers can request unlimited searches by calling 866-327-6669. The EEOC’s LEAD program provides information and resources. [Wisconsin employers can also use Worksource Wisconsin for more information on compliance with the ADA and WFEA.]

Gas prices motivate Congress. House and Senate committees are considering action to alleviate the effect of gas prices on workers. The House is studying the Commuter Benefits Equity Act, which would double the amount an individual can deduct from taxes for mass transit commuting and would somewhat increase the deductibility for parking expenses. The Senate is considering the Telework Enhancement Act, which would promote more telecommunicating for federal government employees. Will it last? The last time gas topped $3.00 per gallon, there was also a flurry of national anxiety and legislative proposals. Then gas prices dropped and everyone forgot the whole thing. We forgot hybrid cars and started buying SUVs again and Congress shirked off on legislation. We seem to have a short-term mentality on this issue. The roof doesn’t leak anymore once the rain stops, so we stop thinking of roof repairs and go out to enjoy the sun!

LITIGATION

Cases of the Month

There are two cases of the month. The May 29, 2007 U.S. Supreme Court decision on sex discrimination in pay has received a lot of press and will be a topic of national discussion and even Congressional action. It may or may not have the major effect on pay discrimination law that everyone seems to be predicting. A much less publicized wage and hour decision by a lower court may have a huge effect on more people. If that decision is adopted by other courts and the Department of Labor, it will threaten the exempt status of millions of salaried employees. It could require changes in pay practices, employment policies and compensation plans everywhere. So, in the long run, the low profile case may be the most important and is featured first.

Fair Labor Standards Act (FLSA): Good deed gets punished—failure to use specific “guarantee” language in pay plan may destroy exempt status. Exempt employees must receive a guaranteed salary of at least $455 per week ($23,660 per year) for the employer to be exempt from paying time and a half for overtime work. The salary may not be subject to deductions for working fewer hours per week, except under very specific circumstances. It is “guaranteed.” An employer may give salaried-exempt employees extra pay or bonuses for working more than a 40-hour week; it just cannot give less pay for under 40. Many employers do gratuitously give extra “straight time” pay, bonuses, or “comp time” to salaried workers for their extra efforts. Be careful: these gifts can destroy the salaried exemption.

Many cases focus on the words of a law. The regulation, 29 CFR §541.604(a), states that “[a]n employer may provide an exempt employee with additional compensation without losing the exemption or violating the salary basis requirement, if the employment arrangement also includes a guarantee of at least the minimum weekly-required amount paid on a salary basis. (Emphasis added.)
 
In Rodgers v. Basin School District #72 (D.C. ID., 2007), the employer gave extra pay after 40 hours to salaried staff, but the pay plan did not have the magic words expressly guaranteeing payment of the basic salary. A salaried employee then exploited this technicality to claim that he should be classified as hourly and get time and a half for all “overtime.” The court, perhaps being picky, looked at the regulatory language and agreed. So this could invalidate the salaried status of all similar employees and require payment of the time and a half to everyone.

This was a summary judgment decision, allowing the case to proceed to trial, so it is not a final determination. However, it is a warning. Employers may wish to act now in the event this becomes the official interpretation.

Preventative Action. First, be careful if you grant extra pay or comp time to salaried employees. Assess your system to see if it creates this sort of dangerous effect. Second, school district annual contracts, private employers’ hiring letters for salaried employees, and individual pay plans or pay raise notices should all include the specific language that as an exempt employee, one is “guaranteed” or “promised” at least that minimum amount each pay period, unless any reductions are made in accord with FLSA regulations. Third, have a “Safe Harbor Policy” (how to complain about improper pay deductions) in your employee handbook. Under the FLSA regulations, this gives the employer a chance to spot and correct any problems before they become legal liabilities. [For more information on exempt employees and what can and cannot be deducted from salary, request the article Pay and Absence Concerns for Salaried Employees from Bob Gregg at rgregg@boardmanlawfirm.com 

Supreme Court rules against “continuing violation” in pay case. In Ledbetter v. Goodyear Tire & Rubber Co., Inc., the U.S. Supreme Court has used the Title VII 180-day statute of limitations to overturn a sex discrimination verdict in favor of a woman who was paid less than all men for the same work, for years. The problem was the “years.” Under Title VII a complaint over a discrete act must be brought within 180 days (300 days if the particular state has a “deferral agency”). Discrete acts are usually one-time tangible decisions such as hire, fire, promotion or transfer. Though the effects of no promotion, discharge, etc., continue for years, it is the original discriminatory act that starts the clock: if the case is not filed in the 180 days, it is too late.
 
A continuing violation is different. Each new instance keeps the statute of limitations fresh, and one can track all the way back to the start. Continuing violations include harassment, overtly discriminatory acts and ongoing conditions of employment, etc. Many courts have ruled that discriminatory pay is a continuing violation since each new pay check is yet again unequal and discriminatory.
 
The Supreme Court nixed this view on pay. It held that the company’s action in setting the unequal pay was the “discrete act” that could have been challenged. It should have been challenged years ago when the pay was set. Each further paycheck was not a new and continuing act of discrimination, but only the effect of a long-ago “discrete” decision. So it overruled the lower court’s verdict for Ms. Ledbetter.

The Equal Pay Act has a two-year time frame. Ms. Ledbetter may have had a better case under 29 U.S. Code §206(d), the Equal Pay Act. It has a two-year statute of limits. Further, the EPA has different language and standards than Title VII, requires less proof of intentional discrimination and does recognize unequal pay as a “continuing violation” with each new paycheck. The Supreme Court noted that the plaintiff had originally filed but then had “abandoned” an EPA claim. The decision then states, “If Ledbetter had pursued her EPA claim, she would not face the Title VII obstacles that she now confronts.”
 
What does this case mean? As with most Supreme Court decisions, we have to wait for the dust to settle. Some in Congress have already stated an intent to propose laws to remedy this decision, before we yet know its overall effect. Many high profile decisions turn out not to have much practiced consequence in the long run. Later decisions trim them back to the facts of that particular case, or attorneys become wiser in framing future complaints to fit in with the new decision’s requirements. It is clear that the Equal Pay Act, with its two-year statute of limitations and much more advantageous standards for a plaintiff, is available and does recognize a continuing violation in the issue of sex discrimination in pay. The Supreme Court also stated that in certain circumstances, with better proof of discriminatory motive in the pay system, it would recognize each new paycheck as a continuing violation of Title VII. So this case did not close the door. The next case may just need better proof. The long-term effects remain to be seen.

CONSTITUTION

Public Agency: Bulletin board policy forbidding religious postings violates Constitution. A government agency’s bulletin board policy informed employees that “items reflecting religious preference, ongoing business by employees and non-employees, i.e., real estate, Mary Kay, etc., are prohibited.” However, employees could post all sorts of other items of personal interest, union matters, school fundraising information, etc. An employee challenged the policy. The court ruled that employees’ business ventures are not Constitutionally protected, but religious expression is. A governmental entity cannot generally ban Constitutionally protected expression without a “compelling interest,” especially while allowing all sorts of other postings. The agency had no compelling interest. Lister v. Defense Logistics Agency (S.D. Ohio, 2007). [This is a public sector case. A private sector employer is not subject to the same Constitutional scrutiny.]

Discrimination

Sex

Overt propositions and attempt to destroy relationship warrants $1 million verdict. A jury decided that a male corrections officer was harassed by his female supervisor. She asked him out and made openly sexual advances. When he explained that he was already in a romance with someone, the supervisor said that she didn’t see why that should make any difference. She then tried to poison the relationship, calling the officer’s girlfriend and writing letters accusing him of infidelity with fabricated, but graphic, details. Singleton v. New York City (S. D. NY, 2007).

Disability

Supervisor’s loose tongue and under-the-microscope focus gets reversal of summary judgment. Judges don’t often reverse themselves, so this is an unusual case. The court granted summary judgment to an employer, dismissing the ADA case of an employee with diabetes. The plaintiff filed a Motion for Reconsideration. The judge then determined that significant evidence had not been given proper weight. In reconsideration, the judge found that the employer did not raise any performance concerns until shortly after learning of the person’s diabetes. There was a picky performance focus. The supervisor stated that the employee was going to “be under a microscope” and made repeated comments about the diabetes. This was sufficient to reverse the summary judgment and allow the case to proceed to trial. Davenport v. Iowa Dept. of Environmental Quality (D. Id., 2007). [For more examples of how supervisors’ “loose tongues” generate liability, request the article It Was Just a Joke from Bob Gregg at rgregg@boardmanlawfirm.com ]

Puppy is not a service animal. An employer or business establishment may not bar an animal that enables a disabled person to accomplish major life activities or essential work duties (i.e., seeing eye dogs, etc.). An employee was refused his request to have his 10-week old puppy at work to relieve his stress disability. He sued. The court dismissed the case, ruling that the ADA’s definition of a service animal is one which “has been trained or is being trained” to assist the person in specific ways. The puppy was not being trained for any specific function; the employee wanted the mere presence of the animal. Further, the employee’s doctors only verified that the puppy’s presence might help relieve stress. This did not meet the ADA’s service animal standard. Edwards v. EPA (D. DC, 2007).

No accommodation in firing meeting. Once the discharge decision is made, no further accommodation is required according to Novella v. Wal-Mart (11th Cir., 2007). A deaf employee was called into a termination meeting, and was fired with no interpreter present. He sued, claiming violation of the ADA’s accommodation provision. Interpreters were present up to the point the discharge decision was made. The purpose of the meeting was simply to end the job, and “termination is not an essential function of performing a position.” So as long as the employee could understand he was fired, that was all that was necessary.
 
Boardman Law Firm has a different view. Whatever the court might hold, Wal-Mart engaged in a poor HR practice. The termination meeting is also the employer’s last chance to learn of any mitigating factors or new information that might change the decision and that might just prevent legal liability. Supervisors don’t always give the full story, and an employee’s last-minute chance to fill in details has saved a number of employers from a wrong decision and resulting liability. Previous Legal Updates have cited cases by other courts in which failure to involve a job coach in terminating employees with cognitive disabilities was held to be a violation of the ADA. Boardman’s position is that an employee should be given the opportunity to understand every part of their employment process.

FAIR LABOR STANDARDS ACT

May not force use of vacation for jury duty. A federal court started a contempt process against a company because it forced an employee to use vacation time to cover jury service. Jury duty does not have to be paid, and an employee may elect to preserve any vacation or other leave for later use. The company avoided a contempt ruling by correcting its policy and restoring the vacation benefit. In re Heritage Propane (E.D. Tenn., 2007).

LABOR ARBITRATION

Paint gun attack warrants one-year suspension but not termination. On the way home from work, an off-duty toll collector, still in uniform, got upset with a slow driver on the New Jersey Turnpike. In passing the slow poke, he fired several paint balls, coating the side of the other vehicle. He was fired for the act. A labor arbitrator modified the discharge to a one-year suspension without pay and a requirement that the employee have a fitness for duty exam regarding stress response before returning to work. The employer appealed, but the state court upheld the arbitrator, finding that public policy did not require termination; the lengthy suspension was sufficient. N.J. Turnpike Authority v. Local 196 (N.J. S. Ct., 2007). [Labor arbitration decisions are given great weight by the courts and are difficult to overturn. Even if the court disagrees with the arbitrator’s outcome, there must be a clear legal violation before the court will substitute its judgment.]

PRIVACY

Copy of employee’s use of work computer for viewing pornography is public record. A school district found that a teacher was using its computer system to visit pornographic web sites. It made a CD of the materials the teacher had stored on the computer, then fired the employee. A newspaper requested all records of the incident. The ex-teacher objected. The court ruled that the CD of pornography was a public record, from a public agency’s computer system. Any privacy or reputational interests of the employee were outweighed by the public’s right to know in this circumstance. Zellner v. Cedarburg School District and Milwaukee State Journal (Wis. S. Ct., 2007).

[For a more detailed case description, see the May 2007 Boardman Municipal Law Newsletter in the Boardman Law Firm's Reading Room at   wwwboardmanlawfirm.com/readingroom . Click on Municipal Law Newsletter, Archived Issues.
 

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