Dealing with dismissal and compensated no fault dismissal for micro businesses

rbonino@reedsmith.com (Ruth Bonino) — Thu, 22 Mar 2012 14:34:04 GMT

The Government has recently issued a new “Call for Evidence”, Dealing with dismissal and “Compensated no fault dismissal” for micro businesses.

The main aim of the paper is to gather evidence from businesses to establish what can be done to encourage small employers to recruit more employees, whilst at the same time ensuring some protection for employee rights. The paper also aims to gather evidence regarding the dismissal process, and in particular how well the 2009 Acas Code works in the case of dismissals for underperformance.

Small businesses

The Government’s paper looks at the Australian Small Business Fair Dismissal Code – a one page document which provides a very basic set of guidelines to follow when a business with fewer than 15 employees dismisses an employee for conduct or capability. Views are sought as to whether, as regards small businesses, a code such as this could replace the Acas Code which currently applies to all employers, irrespective of size, in relation to discipline and performance matters. The paper also seeks evidence on whether small businesses should be able to dismiss employees on a “no fault” basis, and instead that employees receive an automatic “compensation” payment, whatever the reason for dismissal. The Government is examining how other countries deal with dismissals in the case of small businesses. In Germany, for example, businesses employing 10 or fewer employees are exempted from unfair dismissal laws.

Whilst the immediate reaction of small employers will likely be to welcome such a change, the wider implications of no-fault dismissals must also be considered. It would appear that the proposal would effectively amount to giving such employers an exemption from unfair dismissal laws except if the dismissal is for a discriminatory reason, or in connection with whistleblowing or assertion of a statutory right. Could this inhibit small employers from taking on more staff if that means exceeding the maximum number of employees for “small businesses”? Since job security will be diminished, it may be harder for small employers to compete for the best talent. Further, without recourse to an unfair dismissal claim, there is a risk that an aggrieved employee will bring a discrimination claim or allege that the real reason for dismissal related to whistleblowing (whether or not this would have any substance at all). However, this risk could be addressed by strengthening the ability of the Employment Tribunal system to weed out unmeritorious claims.

Having acted for a number of small businesses and charities, our view is that a less complex code would be desirable, particularly for businesses with fewer than 10 employees. However, whether or not they should effectively be exempted from unfair dismissal laws is a more contentious issue. An area of controversy which is inherent in the Government’s proposals is the suggestion to compensate employees for no-fault dismissals. If the compensation is set too high, employers will remain discouraged from taking on staff. If too low, the employees will have virtually no dismissal rights. The Government asks for views on the appropriate compensation. Perhaps a compromise would be to increase the statutory minimum notice period by 2-4 weeks after the employee has 2 years’ continuous employment (ie the new minimum period of employment for unfair dismissal clauses for employees taken on after 5 April 2012), making sure that the legislation provides for employers to be free to pay in lieu of notice so that they not burdened with an employee they do not want.

A point which is unclear from the Government’s paper is whether small employers will be able to opt not to make a no-fault dismissal compensation payment on termination of employment in circumstances such as gross misconduct. It is unclear as yet, whether, if no compensation payment is made, the employee would be entitled to make an unfair dismissal claim, or would their remedy simply be for payment of the statutory no-fault dismissal compensation amount? It would seem sensible that small employers should not have to pay an employee compensation where it has followed a fair dismissal route in such circumstances but if this option is chosen, it also seems fair that the employee should have full recourse to usual unfair dismissal rights. It will be necessary for any legislation to define the concepts clearly and provide for this type of situation to be addressed.

Acas Code

The Government is also seeking views on the Acas Code, which was already substantially revised and reduced in length in 2009. As well as having a concern that it is not suitable for small businesses, the Government also considers that it may not deal adequately with cases of poor performance. The criticism is that the Code concentrates more on backward-looking actions (such as conducting investigations) which are more relevant to disciplinary issues, than what is to be done for the future.

Whilst there is no doubt that the abolition of the former statutory disciplinary and dismissal procedures was a beneficial step for employers and has simplified Employment Tribunal claims, we do not believe that the revision of the Acas Code has made much difference in the actual dismissal process. It would have been useful if it had been made absolutely clear that ill health dismissals were not covered by the Code. However, it is our experience that the Code does not hinder the performance management process and it would certainly not be helpful to make the Code any more complex or prescriptive.

Reed Smith will be responding to the Government Call for Evidence paper and for that purpose, we would be interested in hearing your views on the paper or, indeed, on any of the comments we have made above. Please feel free to send in your comments via our blog or to email direct by contacting Ruth Bonino (rbonino@reedsmith.com). Alternatively, you may wish to respond in person. The consultation closes on 8 June 2012.

140 Law - Legal Headlines for Thursday, March 22, 2012

Thu, 22 Mar 2012 13:47:22 GMT

Here are the leading legal headlines from Wise Law on Twitter for Thursday, March 22, 2012:

- Rachel Spence, Law Clerk

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Employment Law Blog Carnival

mark.toth@na.manpower.com (Mark Toth) — Thu, 22 Mar 2012 13:40:17 GMT

Each month, the world’s finest employment lawyers gather together in an online event affectionately known as the Employment Law Blog Carnival. Here’s this month’s edition, which features everything from employee engagement to hiring for diversity to gender pay gaps to social media policies and much much more. Enjoy!

Each month, the world’s finest employment lawyers gather together in an online event affectionately known as the Employment Law Blog Carnival.

Here’s this month’s edition, which features everything from employee engagement to hiring for diversity to gender pay gaps to social media policies and much much more.

Enjoy!

Bankruptcy Highlights Necessity of Preventing Data Breaches

dschwartz@pullcom.com (Daniel Schwartz) — Thu, 22 Mar 2012 13:18:32 GMT

With all the focus lately on social media, it’s easy for forget that there are other laws and issues that remain vitally important to employers. One of them is the need for employees to understand the importance of compliance with data privacy laws. I talked in 2008 about a new law in Connecticut that may... Continue Reading

In today’s guest post, my fellow law partner, Steven Bonafonte shares a recent case that emphasizes what can happen with an employer doesn’t take its obligations seriously. My thanks to Steve for the post.

We routinely hear stories about “Data Breaches” “Identity Theft” “Credit Monitoring” and other data loss-related events in the media.

These reports are becoming more frequent – almost routine – and may run the risk of being overlooked by many companies, even those who are in the business of collecting, processing or otherwise using confidential information of individuals.

One recent case, however, illustrates why employers should not be complacent when it comes to data breaches. They are anything BUT “routine”.

The Wall Street Journal recently reported on the bankruptcy of a national medical records firm after over 14,000 medical records were compromised during a burglary of their California offices in December 2011.

The burglary occurred on December 31, 2011, was discovered just three days later. It was promptly reported to law enforcement. Nonetheless, the company was required to report the incident to various state and federal regulators as well as notify each of the potentially affected individuals.

The company stated that “The cost of dealing with the breach was prohibitive” in its explanation of why it was seeking protection under Chapter 7 bankruptcy. Chapter 7 bankruptcy (unlike Chapter 11) is used when the company is to be liquidated and its proceeds distributed to its creditors, so it appears as if this firm is headed out of business permanently.

Fortunately, events such as this are usually avoidable with the right combination of preventive legal and technical counseling.

It also is critical from a risk management and a business continuity perspective that companies have a legally defensible system of controls in place to meet their regulatory and contractual responsibilities.

Having the minimum of: policies and procedures for managing sensitive personal data, technology controls such as encryption and other data loss prevention software, physical security and a critical incident response plan will go a long way toward avoiding this unfortunate result.

Importantly, the responsibility should be emphasized to employees and to human resources as well. Breaches of an employee’s privacy may be just as costly as a customer.

Jackson Lewis White Paper Addresses Legal Risks Stemming From Occupational Health Nurses and On-site Health Clinics

lazzarottij@jacksonlewis.com (Joseph Lazzarotti) — Thu, 22 Mar 2012 12:11:03 GMT

Employers increasingly have health professionals on-site providing medical services to employees. Whether it is a single nurse at a facility providing basic first aid and assisting in fitness-for-duty exams, or a full-scale health clinic staffed with physicians, nurses and others, there are a range of issues the company should be thinking about – e.g., workplace safety, disability/leave management, labor, employee benefits, and privacy. Some of our practice group leaders put together a white paper to aid employers in spotting these issues. We hope you find this helpful and easy to read.

Click here to access the White Paper: An Overview of Legal Considerations When Bringing Health Care "In-House"

If the employee doesn’t certify, you need not comply (with FMLA)

jth@kjk.com (Jon Hyman) — Thu, 22 Mar 2012 11:29:00 GMT

In Poling v. Core Molding Technologies (S.D. Ohio 2/9/12), the plaintiff, who suffered from Reflex Sympathetic Dystrophy Syndrome, claimed that his employer interfered with his FMLA rights when it terminated him for excessive absences. Poling’s problem, however, was that he never adequately completed the FMLA medical certification forms his employer had requested. That omission was fatal to his claim. (It probably didn’t help Poling’s cause that he called off from his Lake Erie vacation home.)

If an employee seeks FMLA leave to care for his or her own serious health condition, or that of a covered family member, the statute permits an employer to require a certification by a health care provider to support the leave. At the time the employer requests certification, it must advise the employee of the anticipated consequences of a failure to provide adequate certification. An employee has 15 calendar days to return the requested certification. If the employee fails to provide any certification, the employer may deny the taking of FMLA leave. If an employee returns an incomplete or insufficient certification, the employer must provide the employee seven calendar days to cure the deficiency. The employee’s failure to timely cure also entitles the employer to deny the FMLA leave.

The employer in Poling:

Requested certification in writing the day after Poling’s absence.
Told Poling in writing that “[a]ny absences not qualifying as FMLA will be subject to and recorded according to the attendance policy."
Gave Poling 15 days to return the certification.
Provided Poling a second chance when he missed the first 15-day deadline.
Offered an additional seven days for Poling to cure his late-submitted, deficient certification.

It was only after Poling missed the deadline to cure his certification that the employer finally had enough and terminated him (he had already exhausted his paid and unpaid days off).

There is no doubt that the FMLA is a pain for employers to administer. It is not, however, a toothless statute for employers. The FMLA offers employer plenty of opportunities to catch a malingering employee, provided that you know, understand, and follow its maze of rules.

@LRToday Morning Round-Up: March 22, 2012

Thu, 22 Mar 2012 11:06:47 GMT

"Retail group tells Senate to ax NLRB’s union-election rule" -- The Hill

The Retail Industry Leaders Association (RILA) is asking the Senate to weigh in on a contentious union-election rule proposed by the National Labor Relations Board (NLRB).

In a letter sent Wednesday to Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.), the trade group said the upper chamber should pass a joint resolution of disapproval against the rule before it takes effect on April 30.

"AMR Said to Ready Bankruptcy Court Bid to Dump Contracts" -- Bloomberg

AMR Corp.’s American Airlines (AMR) plans to start a bankruptcy-court process for rejecting union contracts by next week after failing to reach a deal to cut labor costs, two people familiar with the matter said.

AMR will probably ask for U.S. Bankruptcy Court approval within a week to void the contracts, barring last-minute agreements on union concessions, said the people, who declined to be identified because details are confidential. The motion, to be filed in Manhattan, will seek to cancel nine collective bargaining agreements, one person said.

"Walker Recall Vote Key Test Of Union Reforms' Future" -- Investor's Business Daily

It's the unheralded political nail-biter of the year: a fight that could determine the direction the country takes for years, even decades. And as of right now it is a complete tossup.

On June 5, Wisconsin's Republican governor, Scott Walker, faces a recall election. At stake is whether any leader can battle state public employee unions as Walker has and survive.

"Airports board won't give in on Dulles Rail union labor" -- Washington Examiner

The airports authority in charge of the Dulles Rail project held its ground in a labor dispute with Virginia on Wednesday, insisting it would not give up its preference for union labor on the project despite the state's threat to withhold $150 million unless it did so.

"If the labor agreement [on Phase I] worked, why would we say, 'We don't want to do that again, we want to change course'?" asked authority member Dennis Martire, who is also vice president of the Laborers' International Union of North America. "You do what's right for the project, what's right for the toll road riders, what's right for the taxpayers, not what's right for politics."

"Union OKs Tesoro Hawaii refinery labor contract" -- Reuters

United Steelworkers union members at Tesoro Corp's 93,500 barrel-per-day Kapolei, Hawaii, refinery approved a new contract as workers at five other of the company's refineries threaten a strike, a union spokeswoman said on Wednesday.

Workers in Hawaii approved the agreement because of Tesoro's plan to sell the Kapolei plant, said USW spokeswoman Lynne Hancock.

"AFL-CIO tweaking itself with an affiliate" -- MySanAntonio.com

Most of us think of labor unions as organizations that people join at work. The AFL-CIO is trying to change that.

The giant labor federation is opening its doors to everyone, including those who are between jobs or don't have unions at work. It set up an affiliate union —Working America — to focus on many of the same hot-button issues that unions do, including health care access, retirement security and unemployment insurance benefits.

ADA does not allow employees to hold their employers hostage for indefinite periods

cyeager@gardere.com (Celeste R. Yeager) — Wed, 21 Mar 2012 22:55:03 GMT

Celeste R. Yeager - Partner

We recently achieved an outstanding result for employers who struggle with the application of leave of absence policies in conjunction with the ADA. In a favorable opinion for employers, a Federal District Judge for the Western District of Virginia recently held that an employee's request for indefinite leave was not a reasonable accommodation under the ADA. This well-reasoned opinion works through some very challenging factual and evidentiary issues, and is worth reading. A short analysis and details follow ...

The employee worked in a distribution center where his job required him to read labels and handle heavy equipment. Blind in his right eye at the time of hire, he later developed a condition that resulted in the loss of virtually all the vision in his left eye. After being released to return to work, the employee claimed that his vision remained blurred and asked for an additional day off. The next day, the employee presented a doctor’s note from the ER saying that he might be able to return to work in 2 days, but if symptoms of blurred vision continued he should return for treatment. The supervisor issued an ultimatum: return to work or be fired.

First, is refusing to engage in the interactive process a per se violation of the ADA? When failing to do so results in the inability to find an appropriate accommodation for the disabled employee, it can. But the process has to be a fruitful exercise. In this case, the employee could not see and therefore could not return to work. The employee could not do his job part time, or be reassigned to a different position or to a lighter work load. The only feasible accommodation was additional leave—and the employer had already given the employee 2 additional weeks and a day beyond its medical leave policy. So, refusing to engage in the interactive process, again, was not a per se violation.

Second, did the employer fail to reasonably accommodate by denying additional leave? This is the interesting and practical part of the opinion. What evidence can be considered in determining a reasonable accommodation? A “snapshot” of the facts as they were at the time he was fired? Or the progress and duration of the disabling condition post-termination? Both.

“Snapshot.” Because the employee’s request was not for a clearly finite period—the additional 2 day request was, at best, a guess from an ER doc, not his treating physician—it was not reasonable. The Court further noted that the short length of the request was not dispositive; if it were, employees could evade returning to work by requesting successive short periods of additional leave. “The ADA does not empower employees to hold their employers hostage for indefinite periods.”

“Prospective.” Even if an additional 2 days of leave had been granted, this employee would not have been able to return to work and perform his job during that time. In fact, he subsequently had surgery that rendered him completely blind for 7 ½ weeks and was not able to return to work until almost one year after his termination.

Take away from this opinion: the requested leave must be reasonable and finite, and the employee must demonstrate that he would be able to return to performing the essential functions of his job if the accommodation were granted. Congratulations to Sarah Bradbury, who briefed and argued this MSJ, for obtaining a fantastic outcome for our client and an important opinion for employers!

March Madness & Risk

Wed, 21 Mar 2012 21:12:31 GMT

Healthcare Economist Jason Shafrin is this week's riskmeister - he hosts Cavalcade of Risk #153, the March Madness Edition. He has filtered this to a nice trim edition of what he calls the "elite 8." We're pleased that he thought our post made the grade!...

States Immune from Suit for FMLA Violations Related to Self-Care

Wed, 21 Mar 2012 20:55:37 GMT

The Supreme Court issued it's opinion in Coleman v. Md. Ct. App. today, holding that Congress lacked the power to abrogate state immunity from suits for damages for violations of the FMLA's self-care provisions. Here's the syllabus: JUSTICE KENNEDY, joined...

Cunningham-Parmeter on Federalism and Immigration

Wed, 21 Mar 2012 20:44:30 GMT

Apropos of yesterday's federalism decision in the FMLA/11th Amendment context, Keith Cunningham-Parmeter (Willamette) has a nice piece on federalism in immigration laws: Forced Federalism: States as Laboratories of Immigration Reform. Here's the abstract: This Article questions the experimental value of...

Wasserman on Hosanna-Tabor and Jurisdiction

Wed, 21 Mar 2012 20:37:20 GMT

And in keeping with the federal courts/Supreme Court theme, Howard Wasserman (Florida International) has a really interesting essay on the Supreme Court's holding in Hosanna-Tabor Lutheran School v. EEOC that the ministerial exception is not jurisdictional in PENNumbra: Prescriptive Jurisdiction,...

Quebec Budget 2012

Wed, 21 Mar 2012 20:21:47 GMT

On March 20, 2012, the Quebec government introduced its 2012-13 Budget. As expected, the government is moving forward with the joint federal-provincial initiative to provide small business owners and their employees with access to large-scale, low-cost, professionally administered pension plans. Accordingly, the Budget introduces Voluntary Retirement Savings Plans (“VRSPs”), mandatory group pension plans that all employers in Quebec employing at least five employees will be required to implement, if they do not already provide a retirement savings plan for employees.

The VRSPs are the Quebec version of the federal Pooled Registered Pension Plans ("PRPPs"). VRSP rules are therefore similar to those outlined in Bill C-25, An Act relating to pooled registered pension plans and making related amendments to other Acts with respect to PRPPs and the proposed income tax rules released on December 14, 2011, except for the mandatory nature of the Quebec model. The following highlights are particularly noteworthy:

Employees with more than one year of uninterrupted service will be automatically enrolled in a VRSP unless they elect to opt out of the plan within 60 days of enrolment.
Employer contributions to the VRSP will not be mandatory, but any employer contributions will be exempt from Quebec payroll taxes, and tax-deductible. Participant contributions to a VRSP will be tax-deductible and will share the same annual maximum contribution amounts as RRSPs.
The government is proposing to establish the following default employee contributions rates: 2% from January 1, 2013 to December 31, 2015; 3% from January 1, 2016 to December 31, 2016; and, 4% as of January 1, 2017.
A participant may change contribution rates or take contribution holidays, and may continue contributing to the same VRSP after changing employers.
A participant may withdraw his or her contributions, less deductions, prior to retirement; any employer contributions to a VRSP may only be withdrawn as of age 55.
Persons not automatically enrolled (e.g. self-employed workers and individuals) may enroll in a VRSP by contacting a plan administrator directly.

Enabling legislation is expected to be introduced in the next few months, with a view to meeting a targeted implementation date of January 1, 2013. Businesses that are required to implement VRSPs would be required to achieve compliance by January 1, 2015. Subsequently, employers required to offer a VRSP would have one year to comply.

Other Budget highlights include:

An employer incentive to retain workers over the age of 65 by reducing private-sector employer contributions to the Health Services Fund. This new measure, which will take the form of a reimbursement starting in 2013, will provide $400 in 2013 per employee and increase to $1,000 per employee after 2015.
Amendments to Quebec tax legislation relating to the treatment of inter-municipal public transportation services organized by employers for groups of employees, and creating a favourable tax deduction for those employers.
Employees who continue working past age 65 will receive a $1500 tax credit per year starting in 2016. This is an increase from the current $450 credit.

More information about the PRPP legislation is available in our FTR Now of November 23, 2011, “Pooled Registered Pension Plan Framework Introduced.”

New York Appellate Court Upholds Contractual Provision Tolling Employee's Non-Compete Period Due To Employee's Violation of Non-Compete

dclark@ebglaw.com (David Clark) — Wed, 21 Mar 2012 19:54:43 GMT

An increasingly common type of provision found in employment agreements, allowing for extension of an employee’s post-employment non-compete restrictions by a period of time that the employee violates the restrictions, was upheld in a recent decision by New York’s Appellate Division, First Department.

According to the complaint in Delta Enterprise Corp. v. Cohen, the plaintiff Delta Enterprise Corp. is in the business of manufacturing and selling juvenile furniture and other products for infants, toddlers and children. Many of Delta’s products are sold under licenses and use well-known cartoon and other names and images such as Barbie, Spongebob Squarepants, and Hot Wheels. Defendant Ralph Cohen worked in various positions over seven plus years at Delta, and was the co-head of the Toddler Furniture Division in 2009 and early 2010. The complaint alleges that Mr. Cohen misappropriated confidential information from Delta, and began operating a business, called Resolute Trade, in competition with Delta while he was still employed with Delta and afterwards, all in violation of a Confidentiality Agreement (which also contained several two-year non-competition and non-solicitation clauses). Mr. Cohen’s employment with Delta ended on March 1, 2010.

Delta sued Mr. Cohen nearly a year later and on March 1, 2011, secured a temporary restraining order directing Mr. Cohen, among other things, to refrain from engaging in business with any factories with which Delta conducted business, and from interfering with or disrupting any relations between Delta and any of its customers, licensors, employees, or vendors with regard to Delta’s products. After a preliminary injunction hearing, the Supreme Court, New York County, issued a preliminary injunction enjoining Mr. Cohen from taking such actions at any time up through and including February 28, 2012 (i.e., for two years after the end of his employment with Delta).

Although the Court awarded Delta the preliminary injunction, Delta appealed, arguing that it was error for the Court to enforce the two year restrictive covenants only through February 28, 2012, and to fail to enforce the Confidentiality Agreement’s provision tolling the expiration of the restrictive covenants during any period in which Mr. Cohen was in violation of the agreement. In a March 1, 2012 decision, the Appellate Division agreed, holding that the tolling provision should have been given effect and modifying the preliminary injunction to extend until March 1, 2013 (i.e., two years from the date of issuance of the temporary restraining order) or resolution at trial, whichever is earlier.

As more and more employers add such tolling provisions when drafting non-competition and non-solicitation agreements, this appellate court decision, which rejected Mr. Cohen’s arguments that the provision is unenforceable as a matter of law or violates public policy, could prove valuable in employers’ efforts to enforce such tolling provisions. It should be noted, however, that restrictive covenant agreements containing tolling provisions remain subject to judicial analysis as to whether they are necessary to protect the employer’s legitimate business interests, and are reasonable temporally and geographically. Also, the appellate decision specifically noted that Delta proffered an “abundance of unrefuted documentary evidence showing that it was likely that defendant had repeatedly breached multiple provisions of the agreement,” and that there was evidence that Mr. Cohen had consulted with counsel before executing the agreement and received $50,000 in consideration thereof.

Job Applicants Asked for Facebook Passwords

mjzackin@mintz.com (Martha Zackin) — Wed, 21 Mar 2012 19:19:55 GMT

News outlets are all a-twitter about the practice of some employers to ask applicants for their Facebook login and password information, so they can have a “look around” as part of the interview process. Click here and here for here, for sample stories. The ACLU has weighed in, with the following statement:

It’s an invasion of privacy for private employers to insist on looking at people’s private Facebook pages as a condition of employment or consideration in an application process. People are entitled to their private lives. You’d be appalled if your employer insisted on opening up your postal mail to see if there was anything of interest inside. It’s equally out of bounds for an employer to go on a fishing expedition through a person’s private social media account.

Legislators in Illinois and Maryland agree, and have introduced bills restricting the practice. We will keep you posted as this story plays out, in the press, legislatures, and courts.

New York Federal Court Finds Questions of Fact Exist as to Whether "Assistant" or "Co" Managers at Drug Chain Are Properly Classified as Exempt Employees

Wed, 21 Mar 2012 19:04:52 GMT

The most recent installment in the continuing saga concerning the exempt status of various managerial titles in the retail industry involves a group of plaintiffs referred to by their employer (the drug chain Rite Aid) as “Co-Managers” and by plaintiffs as “Assistant Managers.” Judge Paul Gardephe of the United States District Court for the Southern District of New York, finding questions of fact as to the applicability of the exemption to this position, recently denied the Defendant’s motion for summary judgment. Gordon, et al. v. Rite AID Corp. et al., S.D.N.Y., No. 09-cv-07665, 03/12/12.

In a lengthy opinion, Judge Gardephe collected and reviewed recent Second Circuit authority regarding applicability of the executive exemption within the retail and food service industries, As to the first named Plaintiff Gordon, the Court concluded that the Defendant had not established the criteria for exempt status as a matter of law, namely “that Gordon’s primary duty was management, that she customarily and regularly directed the work of two or more employees, that she was authorized to hire and fire employees, or that her suggestions and recommendations as to the hiring or firing of employees were given particular weight.” Id. at 27. The Court conducted as separate analysis before arriving at the same conclusion with respect to a second named plaintiff. Id. at 30-31. The Court however rejected Plaintiffs’ request for an injunction preventing Defendant “from engaging in . . . the unlawful practices [alleged in the Complaint],” noting that Defendant had correctly observed that “an action for injunctive relief under the FLSA rests exclusively with the United States Secretary of Labor.”

Appellate guidance regarding the application of the executive exemption test to managers in the retail setting remains limited, and litigation remains a constant concern for retailers, especially in regard to assistant managers classified as exempt. An exemption review, including a periodic review of exempt employees’ actual job duties under federal and applicable state law, should be part of every retailer’s risk management program.

Pennsylvania: Crime Wave in a Bureaucracy

Wed, 21 Mar 2012 18:48:52 GMT

The Insider does not normally think of state workers comp insurance funds as hubs of criminal activity, but then again, we haven't been to Scranton lately. James McDonnell, 53, is a supervisor in the State Workers' Insurance Fund (SWIF). He makes about $51,000 a year - at least, that's his declared income. He has apparently been pulling in a whole...

Unions CAN Indemnify Employers If It's In the Contract

kmcmurdy@foxrothschild.com (Keith R. McMurdy) — Wed, 21 Mar 2012 18:00:40 GMT

Back in 2009, we looked at a Third Circuit case called Pittsburgh Mack Sales v. IUOE, Local No. 66 that found that it was not against public policy to require a union to reimburse an employer for withdrawal liability. Well, the Sixth Circuit agrees. In Shelter Distribution v. General Drivers, Warehousemen & Helpers Local Union No. 86, the Sixth Circuit Court of Appeals considered a situation where an employer was assessed withdrawal liability because of a termination of a collective bargaining agreement.

The collective bargaining agreement that expired contained the following provision: "The Union and the members of the Bargaining Unit have agreed that only the liability of the Company to the Pension Benefit Plan are, have been and shall be limited to the actual contributions it makes during the course of the past, present and future Contracts and the Company shall not be liable for any other obligation or contingent obligation of any kind or nature whatsoever. The Union shall indemnify the Company for any contingent liability which may be imposed under MEPPAA." Sure enough, it happened and the company went looking for indemnification from the union.

The union argued that it was against public policy because it shifts the liability Congress imposed on employers and would defeat the statute. But the Court disagreed, noting that since ERISA allows fiduciaries to insure against risk, there must be a way to shift potential liability, including indemnification contracts. So it was not a frustration of the statute and not against public policy.

So when undertaking future bargaining with your unions, consider adding this indemnification language that has now been twice confirmed. Of course, it will be part of collective bargaining and it may cost you something, but it might be worth it in the long run. If you need assistance in dealing with multiemployer plans, or in collective bargaining, please contact your attorney at Fox Rothschild.

Unions CAN Indemnify Employers If It's In the Contract

kmcmurdy@foxrothschild.com (Keith R. McMurdy) — Wed, 21 Mar 2012 18:00:40 GMT

Preventing and Addressing Workplace Bullying

feica@foster.com (Alicia Feichtmeir) — Wed, 21 Mar 2012 17:23:08 GMT

What was once considered a playground problem has now become a concern for employers. As awareness of workplace bullying has grown, academics, advocacy organizations and business consultants have focused their efforts on recognizing and addressing harmful and intimidating behavior.

Anti-bullying messages have even made their way into legislation. Earlier this year, a “Healthy Workplace Bill” was introduced in Washington State. The bill sought to amend the Washington Law Against Discrimination so that “subjecting an employee to an abusive work environment” would constitute an unfair practice. Although the proposed law was not enacted, it highlights the seriousness of issues facing employers as they seek to maintain a safe and productive workplace.

More employers are implementing policies and practices that recognize and remedy workplace bullying. The Washington State Department of Labor and Industries has issued a report intended to assist employers seeking to address these issues.

Some of the information in the Report is useful, while other portions are too vague and general to provide real guidance. The questions and answers below are taken from the L&I report, with our modifications and suggestions.

What is workplace bullying?

Workplace bullying is repeated and ongoing unreasonable actions toward one or more employees that is intended to intimidate, undermine, degrade, threaten, humiliate or harm the employees.
Workplace bullying generally involves an abuse or misuse of power, verbally or in conduct. Bullying can also be corporate or institutional, for example where a company uses policies or practices to intimidate and demoralize its employees.

What are some examples of workplace bullying?

Deliberately giving employees unrealistic and unmanageable deadlines, or placing unrealistic expectations on employees, where failure to meet expectations means making life unpleasant for the employees or dismissing those employees who might object.
- Even high-pressure, high-production work environments ordinarily have an institutional standard for productivity and efficiency. When a manager or company goes well beyond this standard to “set employees up for failure,” giving physically impossible assignments and deadlines, then criticizing employees for their inability to meet the unrealistic expectations, it might be a sign of workplace bullying
Excessive monitoring or micro-managing of employees.
- All effective mangers monitor their subordinates, but when monitoring is constant, invasive and oppressive and done without a legitimate purpose, it might be bullying behavior.
Interference or sabotaging actions that intentionally prevent an employee from completing required work.
- Examples of interference might include deliberately preventing access to information (such as a key memo or data) that an employee needs to complete a task, or constantly interrupting the employee with a barrage of unrelated menial tasks so that he or she cannot complete the required work. Such behaviors could be considered bullying.
Providing unwarranted, invalid and excessive criticism of employees or blaming employees without factual justification.
- Criticism and discipline should be based on concrete actions or behaviors that need correcting. Falsely accusing an employee of errors, or consistently commenting on past errors without a constructive reason, could be considered bullying.
Berating or humiliating employees.
- Feedback and criticism should be communicated in a respectful manner, as the goal is to elicit improved performance, not to personally attack an employee for his or her failures. Yelling, shouting and insults could be viewed as workplace bullying.
Deliberate exclusion or social isolation of employees
- Some examples of isolating actions might include: refusing to invite an employee to a meeting in which he/she would normally participate, refusing to include an employee in social, team-building events where the rest of a group has been invited, or moving an employee’s workspace far from the rest of his or her team. Such behaviors could be considered workplace bullying.

What is the difference between workplace bullying and harassment?

Harassment is a type of illegal discrimination defined as offensive and unwelcome conduct serious enough to adversely affect the terms and conditions of a person’s employment. A harassment claim arises out of the employee’s status as member of a protected class, such as race, sex or disability.
Bullying, on the other hand, might not be overt or serious enough to adversely affect the terms and conditions of employment, and the target of a workplace bully might not be a member of a protected class. Bullying might be covert, through indirect, constant criticism, unrealistic expectations or deadlines, or actions that force a person to feel demeaned or isolated from a group. Unlike harassment, bullying is ordinarily not illegal.

How can employers demand top performance or impose discipline without bullying?

Employers should not be dissuaded from direct and sometimes critical feedback, evaluations and discipline. Respectful communications are key. Prudent employers train managers on effectively and sensitively managing their subordinates and correct overly-aggressive or hostile behavior promptly. Similarly, managers should treat reports of bullying with sensitivity.

How can employers address and prevent workplace bullying?

Understand the behaviors that constitute bullying.
Consider an anti-bullying (or respectful workplace) policy as part of the wider commitment to a safe and productive workplace.
Consider workplace training and awareness so employees and managers can recognize and understand bullying.
Address and investigate bullying behavior promptly, including situations where there are allegations of institutional/corporate bullying.
Consider reassignment of the bullying individual(s) to another group as necessary.
Structure the work environment to allow employees some level of autonomy, create clear expectations of how tasks should be performed, provide constructive criticism and feedback to employees on how to improve performance, and include employees in decision making processes as appropriate.
Adopt and encourage open door policies.
Regularly evaluate the effectiveness of the foregoing policies.

For more information on workplace bullying or assistance implementing anti-bullying measures, contact Foster Pepper’s Employment and Labor Relations group.

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