Chat Room "Volunteers" Sue America Online, October 31, 2001
Happy Halloween AOL. Three chat room volunteers have sued the internet service provider for minimum wage under the Fair Labor Standards Act. Apparently, America Online uses over 5000 volunteers to monitor, police, and maintain those famous chat rooms. In return, the volunteers get free service or some kind of discount. The lawsuit alleges that the volunteers are performing work for AOL and should be paid for it.
It should be interesting to see how this lawsuit plays out. Under the Fair Labor Standards Act, "volunteers" performing the necessary work of the business or doing the work of other paid employees are generally entitled to minimum wage and overtime. Further, employees cannot agree under the FLSA not to receive their rightful wages, even if they were the ones who proposed the relationship to the employer. It's hardly an easy case for AOL, or any other employer who tries to save money by offering its product, instead of cold cash, in return for services normally performed by employees.
Victim of Racial Harassment Receives Over One Million Dollars, October 30, 2001
In a scary decision published in time for Halloween, a federal appeals court has affirmed a jury verdict for a black employee who alleged that he was the victim of racial harassment. Swinton v. Potomac Corporation, No. 99-36147 (9th Cir., 10/24/01). The employee worked for his Fiancee's uncle, a white supervisor who apparently allowed bad jokes of a racial nature to be told in the workplace. Further, another supervisor, as well as other employees, told racial jokes in his presence.
Although there was a handbook provision for complaints of harassment, the employee never complained. In fact, he continued to socialize with his Fiancee's uncle both in the workplace and outside the workplace. He quit after a short period of time and sued the company for racial harassment, alleging that the employer was negligent in not stopping the jokes and racial remarks.
The employee was awarded over $1,000,000.00 in punitive damages. The court would not allow the company to introduce evidence of remedial efforts after the Human Resources department learned of the harassment, noting that the joke telling was so pervasive that the employer should be held responsible for the conduct – even though upper-level supervisors were not "actually" aware of the misconduct.
This case illustrates the absolute necessity of training supervisors. A poorly- trained supervisor is very dangerous to an employer. Training needs to include sensitivity training, both on matters of race and sex. In this case, a trained supervisor might have understood that jokes with racial content are inappropriate, even if members of the minority group involved participate in the joke telling.
Juvenile Prank Leads to $350,000 Verdict Against Employer, October 30, 2001
Chris Fotiades worked in an auto body repair shop where the managers and co-workers often engaged in juvenile pranks with one another. In particular, they liked to take embarrassing pictures of one another in compromising positions. One day, they surprised Fotiades while he was in the bathroom. They picked the lock, kicked the door in, and snapped a picture of him with his pants down. The picture was passed around to all the employees at the shop, and co-workers began calling Fotiades various nicknames - all based on the size of his genitals. When he transferred to a different shop, the picture was mailed to his new manager, who also passed the picture around to coworkers, encouraging more nicknames to develop.
When he sued for invasion of privacy and intentional infliction of emotional distress, the jury awarded him over $1 million in compensatory damages, and $150,000 in punitive damages. Although the trial court significantly reduced the award, the California Court of Appeals upheld a $350,000 verdict for Fotiades, stating that "[w]hen an agent of the employer breaks into the bathroom where an employee is urinating, photographs him, circulates the photograph to his coworkers, ridicules his penis, and encourages others to do so, the employer has stepped outside its proper role." The conduct alleged was outrageous enough on its own to support a finding of severe emotional distress, the court said.
Employer Entitled to Television Set, October 26, 2001
A used car salesman won a television set in a raffle. He received the raffle tickets at a used car auction based on cars he brought on behalf of his employer. He kept the television.
The employer, rightfully believing the television set belonged to the business, demanded it back. The employee refused and was fired. The employee, incredibly, sued.
Fortunately, a state appeals court in Washington reversed a jury verdict in favor of the employee. Under state law, an employee cannot be required to "kickback" any salary to his employer. The jury found that demand of the return of the television was a kickback. The appeals court, finding the raffle was not part of the employee's compensation, said that any jury verdict in favor of the employee was ridiculous. Byrne v. Courtesy Ford, Wash. Ct. App., No. 25583-9-II, 10/12/01.
OSHA Issues New Form 300, October 25, 2001
You can throw away old Form 200 for reporting workplace injuries on New Year's Eve. OSHA has issued new forms to comply with new record keeping rules adopted during the Clinton Administration. For copies, consult the OSHA website at http://www.osha-slc.gov/recordkeeping/index.html. The rules affect employers with 10 or more employees and have the greatest effect on the construction industry.
Court Finds Salaried Employees Entitled to Overtime Based on What they Do, October 23, 2001
Executive employees are exempt from overtime under the Fair Labor Standards Act. To be exempt, such employees must be salaried, and their job duties must involve supervising employees, being in charge of a distinct department, or some other evidence of "executive" duties. The requirements are set forth in Department of Labor regulations.
A federal appeals court has said that 20 employees working for a nuclear facility are entitled to overtime because, despite their job descriptions, their actual job duties do not qualify them as executives. Ale v. TVA, 6th Cir., No. 99-6642, 10/17/01. Significantly, the court said that despite evidence that many of the workers "supervised" other employees, their supervision really did not involve the exercise of independent judgment or discretion. In other words, they were merely group leaders who carried out the judgment of their superiors.
Employers should regularly review their exempt employees to insure that they are, in fact, exempt. Failure to do so can result in liability for overtime, and in some cases, liquidated damages and attorneys' fees.
NLRB Uses Confidentiality Rule to Set Aside an Election, October 23, 2001
Many employers do not want employees discussing wages with each other because it can cause resentment among the lower paid workers. Some even adopt rules against disclosure of wages and benefits. Such rules, however, violate the National Labor Relations Act, which protects the rights of employees to act "in concert" with each other over working conditions. While concerted activity includes organizing a union, it also means any activity among two or more employees to further some job-related goal. Discussion of wages and benefits among employees is considered protected because how can employees act in concert over employment conditions if they don't know what they are?
The NLRB recently found that a confidentiality rule in an employee handbook was grounds to set aside an election that the employer had won against a union trying to organize its workers. Freund Baking Co., 336 N.L.R.B. No. 75, 10/1/01. That case is a reminder that such rules should not be adopted in the workplace. Moreover, as we frequently remind our clients, there are no secrets in the workplace anyway. Such rules are ineffective, so why run the risk of an unfair labor practice charge by trying to prevent the inevitable.
Search of Computer Contents Not a Privacy Violation, October 22, 2001
The Second Circuit held that a state employee's Fourth Amendment privacy rights were not violated when the government searched the contents of his office computer for evidence of unauthorized use.
The employee was an accountant at the New York Department of Transportation. His supervisor received an anonymous letter, describing but not specifically naming the employee, and accusing him of coming to work late, taking excessive time off, and conducting work unrelated to his job. As a result of the letter and without the employee's knowledge, his supervisor printed out a list of the file names and other information contained on his office computer. The search revealed tax preparation programs that the employee was using for his private tax business.
The Department had a written policy prohibiting employees from using state equipment for personal business, and the employee was disciplined. Later, the employee brought a claim under the Civil Rights Act claiming that the computer searches violated his Fourth Amendment Rights. The Second Circuit held that although the employee had a reasonable expectation of privacy, the employee's privacy rights were not violated because the search was not excessively intrusive and was reasonably related to its objectives. Such investigatory searches for evidence of suspected work-related employee misconduct is constitutionally reasonable if it is justified at its inception and appropriate in scope, the court explained.
Workplace “Privacy” Bill Vetoed, October 11, 2001
While California is famous for favoring employees over employers in most issues relating to the workplace, a bill designed to limit employer monitoring of employee email and computer files has been vetoed – for a third time – by the governor. For a sample email and voice mail policy, click here.
Union Slammed for Defaming Employer, October 11, 2001
Under the National Labor Relations Act, a unionized employer cannot claim financial inability to meet contract demands without running the risk that it will be required to disclose financial statements during bargaining. The NLRB forces “the books” to be opened to unions whenever an employer says it cannot afford an increase, or other words to that effect. In most cases, the proper thing to say is “we just don’t want to pay that much.”
A drycleaner in Hawaii disclosed his financial records to the union in the hope that the union would recognize his legitimate claim of economic hardship. The union, without reviewing the documents, made false accusations about the company’s financial position to its members. A strike followed.
The drycleaner sued for defamation, and despite great odds, won the lawsuit and a judgment of nearly 1 million dollars. (Steam Press Holdings Inc. V. Hawaii Teamsters Local 996, D. Haw., No 99-00187 HG, 9/28/01). The judge, quite correctly, said that while the NLRB tolerates abusive and inaccurate statements during negotiations, the law does not tolerate false statements made strictly to hurt someone. Because the union knew the statements were false, the court found that they were made with actual malice towards the employer.
Union Sued for Bargaining Lower Wages for Women, October 11, 2001
A federal court has ruled that state anti-discrimination laws apply to unions that negotiate lower rates for female workers. In this case, a union representing musicians allowed employers to pay men twice what women musicians made. Despite arguments by the union that state civil rights laws take a back seat to federal labor law, the employee’s discrimination case was allowed to proceed. (Bredesen v. Detroit Federation of Musicians Local 5, E.D. Mich., No. 00-CV-71630-DT, 9/28/01).
Appeals Court Recognizes Reality of Failed, Consensual Sexual Relationships, October 11, 2001
After the breakup of their affair, a supervisor began to give less than favorable evaluations to his former lover. The Court said that disappointment over a failed relationship, which motivated the poor evaluations, does not necessarily constitute discrimination based on sex. What the Court seems to be saying is that sexual harassment and sex discrimination cases cannot be based on the usual fallout that accompanies the breakup of the relationship. (Pipkins v. Temple Terrace, Fla., 11th Cir., No. 01-11736, 9/28/01). Therefore, while we do not encourage employment decisions to based on anger, sexual disappointment, and so forth, some courts will recognize that these very human reactions can be a legal basis for those decisions.
Be Direct, October 11, 2001
A federal court in Indiana is allowing an older employee to proceed with an Age Act claim where her hours were reduced to part time after 30 years of service. The reduction was part of an “office restructuring” that really only affected the older employee. Whatever the employer was trying to accomplish was seriously hampered by poor execution of the decision, or worse, an attempt to “restructure” the employee out of a job rather than confront the real reasons for terminating or reducing the hours of the employee. (Genung v. Northwest Radiology Network, S.D. Ind., No IP99-0863-C-H/G, 9/21/01).
If you have a tough employment decision to make, confront it. Never call a disciplinary or performance-related decision anything else. It only makes it more difficult to justify the decision later.
Nurse With Disability Lawfully Terminated Under The ADA, October 8, 2001
The Eighth Circuit held that a nurse with rheumatoid arthritis was lawfully terminated because she could not perform the essential functions of her job. Stafne v. Unicare Homes d/b/a Trevilla of New Brighton Inc., No. 99-3562 (8th Cir. Oct. 1, 2001).
In a 2-1 decision, the Court of Appeals found that, among other things, Marion Stafne was unable to push wheelchairs, lift patients and perform the Heimlich maneuver because she needed to use a motorized cart. It stated that there was no accommodation that her employer could have offered that would have assisted her in completing the essential functions of her job.
Successor Company Not Bound By Collective Bargaining Agreement, October 1, 2001
In Ameristeel Corp. v. International Bhd. of Teamsters, No. 00-3366 (3d Cir. Sept. 26, 2001), a split Third Circuit held that a steel company that purchased a manufacturing facility and expressly refused to be bound by its predecessor's collective bargaining agreement with the International Brotherhood of Teamsters could not be forced to arbitrate disputes.
In April 1999, Ameristeel purchased the facility in York, Pennsylvania from Brocker Rebar and began operations one month later. The purchase agreement between the two companies expressly stated that Ameristeel was not bound by the terms of the collective bargaining agreement between Brocker Rebar and Teamsters Local 430, which represented the truck drivers, warehouse workers, material handlers and other helpers. Ameristeel also repeatedly told the union that it would not be bound by the agreement and that it was not obligated to arbitrate claims brought under the agreement.
Ameristeel's statement was tested by the union in April 1999, when it filed a grievance against both Brocker Rebar and Ameristeel challenging unilateral changes that would occur in the workplace. The Third Circuit held that arbitration was inappropriate because Ameristeel was not bound by the substantive terms of the collective bargaining agreement between Brocker Rebar and the union.
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