Non-renewal of Contract is not Termination of Whistleblower, August 30, 2004
Dr. Larry Howard signed a one-year employment contract with Life Care Centers of America, Inc. titled "Medical Director Independent Contractor Agreement." During his tenure with the company, Howard became aware of certain practices that he believed would constitute violations of Medicare guidelines and regulations. Howard complained to the company and then anonymously contacted the Office of the Inspector General to report the alleged violations. After the Office of the Inspector General made an inquiry into Life Care's billing practices, Life Care notified Howard that his contract would not be renewed upon expiration.
Howard sued alleging a violation of the Tennessee "whistleblower" statute. He did not allege retaliation nor breach of contract. The court granted the company's summary judgment motion. Howard appealed.
In order to be establish a prima facie case for a violation of the Tennessee whistleblower statute, a plaintiff must show (1) his status as an employee; (2) his refusal to participate in, or to remain silent about, illegal activities; (3) employer's discharge of employee; (4) an exclusive causal relationship between the refusal and the discharge. Howard asserted that despite the specific title of his agreement with Life Care designating him an "independent contractor," he was never fully in control of his activities at the company.
The Court of Appeals of Tennessee held that while there was arguably a genuine issue of fact as to whether Howard was an employee, he could not establish the third element of the prima facie case. Howard was not "discharged" from his employment; rather, his contract was not renewed. Because the Tennessee whistleblower statute requires that the employee be "terminated" there was no violation of the statute. Howard's contract "simply expired" and Life Care's decision not to enter into a new contract at the end of the bargained-for period was not actionable: "There is no authority in Tennessee which gives an individual the right to sue for failure to renew a contract and we do not deem it appropriate to create such a cause of action in this case." Howard v. Life Care Centers of America, Inc., No. E2004-00212-COA-R3-CV, Tenn. Ct. App., August 20, 2004.
Maryland Court Strikes Down State Employee Union Contracts, August 24, 2004
Eric PaltellOn August 23, 2004, the Maryland Court of Appeals invalidated two collective bargaining agreements with Maryland state employees that were finalized in the waning hours of Governor Glendening's administration. The Court found that, because Governor Glendening had failed to sign the contracts, as required by law, the State is not required to adhere to the terms of the agreements.
The case arose in late 2002, after Governor Glendening agreed to a 2% increase in wages for all State employees and certain other terms with just two months to go on his final term in office. Although Maryland law provides that any collective bargaining agreement with state employees "is not effective until it is ratified by the Governor," Governor Glendening never signed the agreements, opting instead to have his Chief of Staff sign on the very last day of the his term in office. When Governor Ehrlich took office the next day, he took the position that the State could not afford the salary increases and other benefits agreed to by Governor Glendening, and declined to fund them in the budget he submitted in January 2003.
AFSCME, which is the Union representing the state employees, filed suit in the Circuit Court for Anne Arundel County, where the Court held that Governor Ehrlich was not required to abide by the economic terms of the Agreements. However, the Court ruled that the State was required to abide by the non-economic terms, even though the Agreements were not signed by Governor Glendening.
The parties appealed, and the Maryland Court of Appeals ruled that Maryland law required the Governor himself to sign an Agreement in order for it to be effective, "By requiring gubernatorial ratification . . . the General Assembly no doubt wanted to make certain that the Governor not only fully understood the terms and conditions of the Agreement but expressed his/her approval in an unmistakable and public manner - a manner that could be documented in a way as to be beyond dispute."
At this point, it is unclear whether the State of Maryland will continue to follow the terms of the old agreements or will begin negotiations on new terms. Nevertheless, the Court's decision made it clear that a departing Governor cannot try to surreptitiously agree to a collective bargaining agreement that will bind his successors.
New Overtime Regulations Take Effect, August 23, 2004
Eric PaltellOn August 23, 2004, the long anticipated revisions to the Fair Labor Standards Act overtime regulations took effect. These hotly contested changes to the law are the most dramatic change in the FLSA in more than half a century.
The most significant change in the law was to raise the minimum salary required to be exempt from federal overtime requirements to $455.00 per week ($23,660.00 annually). The law also provides that workers who make in excess of $100,000.00 per year are now likely exempt from overtime. According to Department of Labor estimates, increasing the minimum salary required to be exempt should make more than a million employees newly eligible for overtime.
Despite a large amount of "propaganda" generated by organized labor and other political interest groups, the new regulations do not strip overtime from workers. Rather, for the most part, the regulations simply formalize existing enforcement practice, case law interpretation, and operative guidance from sources such as the Department of Labor's Field Operations Handbook. The Regulations also clarify when it is permissible for an employer to make deductions from an exempt employee's salary, and provide that an employer who has an established policy prohibiting improper deductions from salary can usually avoid liability for inadvertent deductions. The Regulations also make it clear that an employer may now pay additional pay to an exempt employee for hours worked beyond a normal work week without jeopardizing their exempt status.
Employers should take the time to review their current job classifications to see whether employees are properly being treated as "exempt" or "non-exempt" from overtime requirements. The Department of Labor expects employers to be in compliance with the new regulations beginning August 23, 2004. If you have any questions about an employer's obligations under the new regulations, please contact any one of us at Kollman & Saucier.
Court Strikes Down Overtime Exemption, August 9, 2004
Thomas A. BowdenEvery time Congress passes a new law regulating labor, bureaucrats at the Department of Labor start churning out regulations. Usually, those regulations have the force of law. Sometimes, however, those regulations depart from the intent of Congress. When that happens, a court can refuse to enforce the regulation. It happened in a recent case involving a company that provides home care to elderly persons.
Evelyn Coke worked as a "home healthcare attendant" for her employer, Long Island Care At Home. When her employer failed to pay her overtime or minimum wage, she sued under the Fair Labor Standards Act. The federal appeals court ruled in her favor, despite a regulation (29 CFR Sec. 552.109(a)) that exempts companies from having to pay overtime to persons providing companionship services.
The court held that Congress intended to exempt from overtime only caregivers employed by the household where the care is being given. So, the regulation was not enforceable against Coke, who was not employed by the household but by a separate company.
Lesson: It often pays to question whether an agency's regulation really squares with the statute.
Coke v. Long Island Care At Home, 9 WH Cases2d 1377 (2d Cir.; July 22, 2004).
Hand Injury Not Serious Enough for FMLA Relief, August 9, 2004
Thomas A. BowdenCarol Bradley was a hospital cook. One day she accidentally hit her right hand against a salad bar, resulting in a bruise and muscle strain. She worked the rest of the day in pain, then saw a doctor the next day. The doctor restricted her to left-handed work.
Bradley's employer, however, did not understand what a left-handed job was, and so Bradley was required to work as best she could for the next three days. But when she told the doctor that her employer was not accommodating her restriction, the doctor took her off work completely.
These and other events led to Bradley's termination about a month later, whereupon she sued under the Family and Medical Leave Act. The court held that the hand injury was not a "serious health condition" and was not entitled to FMLA protection. Congress intended to protect those with truly serious afflictions, like severe arthritis or back conditions requiring surgery, the court said. Congress did not intend for an employee to have FMLA rights "whenever a need for aspirin or cold tablets arose."
Bradley v. Mary Rutan Hosp. Ass'n, 9 WH Cases2d 1424 (S.D. Ohio; June 28, 2004).
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