Al Franken and EFCA
After months of litigation, Al Franken has been declared the winner of the Senate race in Minnesota. He will be the 60th Democrat in the Senate, which could enable the Democrats to override a filibuster in the Senate.
So the question becomes where does Senator Franken stand on the Employee Free Choice Act (EFCA)? Just as a reminder, this is the bill, which gives unions the right to organize by showing that a majority of employees signed cards and it basically does away with secret ballot elections.
Here is Senator Franken's answer:
Ouch. He doesn't sugarcoat it, does he? Senator Franken is a big supporter of EFCA. So, what does this mean? It makes it more likely that Democrats will push the original bill forward in the Senate or will not compromise (too much) on the original terms. Stay tuned. The EFCA drama is likely to play out in 2009.
Washington Supreme Court Decides Morgan v. Kingen - Bankruptcy is No Defense
The Washington Supreme Court issued a decision today in Morgan v. Kingen, holding that bankruptcy is not a valid defense to a willful withholding of wages under RCW 49.52.070. The plaintiffs in this case worked at Funsters Grand Casino in SeaTac, Washington. The casino was not a success and the owners voluntarily filed for Chapter 11 bankruptcy after only one year in business. After it became clear that the owners were not going to inject badly needed capital, the bankruptcy court converted the proceedings to a complete liquidation under Chapter 7. After the conversion, the owners couldn't have paid their employees even if they had wanted to (at least from the seized Funster assets).
The plaintiffs brought a class action lawsuit on behalf of over 180 employees to recover unpaid wages. The owners of the bankrupt casino argued that while the wages were admittedly owed, the withholding was not willful because the assets were seized in bankruptcy. This distinction is crucially important because willful withholding of wages allows a plaintiff to recover double damages, attorneys' fees and exposes the withholder to personal liability. The owners of the bankrupt casino were thus personally liable for twice the amount of all the unpaid wages plus attorneys' fees unless they could assert a bankruptcy defense. They tried. They failed at the trial level, the appellate level, and as of today, at the Washington Supreme Court as well. Justice Sanders dissented, noting that the owners could not have paid as their assets were seized and unavailable. He was joined by Justice Johnson and Justice Sweeney, pro tem.
The bottom line for businesses in Washington remains unchanged by this decision. A financial inability to pay wages does not constitute a defense to a willful withholding of wages. Today's decision establishes that even a complete liquidation in bankruptcy is no defense. The lesson? If your business is failing and it looks like there may not be enough assets to satisfy all the looming creditors, you might want to seriously consider paying wages before anything else.
Seventh Circuit Rules FLSA Doesn't Protect Verbal Complaints
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Most employment lawyers and HR professionals know that firing an employee for making a complaint about being paid properly is a recipe for disaster. This week in Kasten v. Saint-Gobain Performance Plastics Corp., the Seventh Circuit Court of Appeals thought differently, at least for verbal complaints about violations of the Fair Labor Standards Act.
The plaintiff, Kevin Kasten, was reprimanded three times for failing to clock in and out. In response, he complained that the location of the time clock was illegal because, among other things, it prevented employees from being paid for time donning and doffing protective gear. After Kasten failed to clock in a fourth time, he was terminated. Kasten sued under the FLSA, claiming that he had been terminated in retaliation for his complaint.
The FLSA protects employees who have "filed any complaint" under FLSA and whose employers retaliate against them for complaining. The Seventh Circuit ruled that because a complaint must be "filed," verbal complaints are not protected by FLSA.
The takeaway? Despite this ruling, we at the World of Work think that employers should be wary of terminating employees for verbal complaints. As others have noted, the case law in other circuits may contradict the Seventh Circuit on this issue. Even more crucially, plaintiffs making verbal complaints may have other causes of action under state statutory law or common law.
DOL Secures $3.4 Million Settlement for NY Car Wash Employees
A portend of things to come in federal wage enforcment? Yesterday, a group of New York car washes have agreed to pay over one thousand current and former employees a total of $3.4 million to settle a lawsuit filed by the Department of Labor (DOL) alleging violations of the Fair Labor Standards Act (FLSA). Click here to read the consent decree in Solis v. LMC et al.
As we reported back in May, the Department of Labor received a budget increase of 10 percent and is devoting most of that increase to enforcement. Employers can expect to see more activity from the DOL to enforce wage and hour laws, especially large cases against groups of employers.
In the meantime, sit back, relax and enjoy Rose Royce:
Federal Minimum Wage Increases to $7.25 Effective July 24
Employers take note: the federal minimum wage increases to $7.25 per hour effective July 24, 2009. For more information, check out the Department of Labor's Fair Labor Standards Act site.
Of course, many states also have minimum wage laws, an where an employee is subject to both state and federal minimum wage laws, the employee is entitled to the higher minimum wage. Click here for the Department of Labor's handy list of minimum wages by state, effective January 1, 2009. (Note: the chart does not accurately reflect that Nevada's minimum wage will increase effective July 1, 2009 increase from $5.85 per hour to $6.55 per hour, while the minimum wage for employees not receiving health benefits will increase from $6.85 per hour to $7.55 per hour).
Need the Department of Labor's minimum wage posters? Here they are:
Supreme Court Agrees to Hear Case About Meddling International Union
The US Supreme Court just agreed to hear a case asking just how much international unions will be allowed to meddle in the affairs of their local affiliates. In Granite Rock v. Teamsters, the employer sued the International Brotherhood of Teamsters in federal court claiming that the International interfered with the relationship between the employer and the Local Teamsters union.
In Granite, the employer and the Local had reached a tentative new agreement which contained a no-strike clause. The employer alleged that the Local ratified the agreement and then engaged in a strike. Apparently a high ranking official of the International was the motivating force behind the strike. The 9th Circuit held that the employer could not sue the International because the agreement was between the employer and the Local, and did not involve the International. The Supreme Court granted cert and will hear the case, perhaps recognizing that international unions are often working behind the scenes with their local unions.
The Court will probably not hear the case until the 2010 session, and it could be some time before an opinion is issued. It is not uncommon for employers to have good relationships with local unions. Sometimes those relationships are strained through pressure from out-of-town international union officials. Currently, international unions are somewhat insulated from liability for meddling in negotiations and other ongoing business relationships between local unions and employers. Ultimately, this decision could open a new legal avenue for employers to hold international unions accountable for their actions.
Oregon Musicians No Longer Presumed Employees for Unemployment Purposes
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Sine die! The Oregon Legislature's biennial session has come to a close, providing a perfect opportunity for the World of Work to take a look at what passed, what failed, and what flew under the radar.
One helpful new statute fixes a problem for employers who operate music venues. In late 2007, Mississippi Studios, a hip North Portland nightspot and recording studio, got nailed in an Oregon Employment Department audit for not paying unemployment taxes on musicians who played at the venue. Mississippi assumed that the musicians were not employees, but were independent contractors according to the Department's test. Not so fast. Mississippi was unaware of ORS 657.506, an obscure provision in Oregon statute that presumed musicians are employees unless otherwise stated in an employment agreement.
The new statute, which went into effect immediately on passage, repeals the old rule and treats Oregon musicians just like everybody else. The bill is simply drafted and repairs some bad lawmaking. Way to go, legislature! This time you were up there with the best.
9th Circuit Orders Damages, but Not Reinstatement for Unauthorized Alien Workers
What's an employer to do when it is ordered to reinstate former employees, but those employees are not legally authorized to work in the United States? Pay liquidated damages instead, according to the Ninth Circuit's recent decision in NLRB v. C&C Roofing Supply Inc.
In C&C, the National Labor Relations Board (NLRB) alleged that the employer unlawfully fired 20 workers for engaging in union activity. The parties reached a formal settlement that called for reinstatement of the illegally fired workers and payment of specific amounts of liquidated damages to each. However, the employer then refused to reinstate the employees because many of them were unauthorized aliens and rehiring them would violate the Immigration Reform and Control Act (IRCA) and the Legal Arizona Workers Act, which both prohibit hiring unauthorized aliens.
The Ninth Circuit solved the dilemma by ordering the employer to pay the agreed-upon liquidated damages, but did not require the employer to reinstate the unauthorized employees. But how does this case square with Hoffman Plastic Compounds Inc. v. NLRB? There, the U.S. Supreme Court held 5-4 that the board may not order back pay for unauthorized aliens, despite their firing in violation of federal labor law, because doing so would violate immigration policy expressed in IRCA. In C&C, the Ninth Circuit dodged that issue by ruling that agreed-upon liquidated damages as part of a settlement do not raise the same issues as back pay ordered by the court, as the employees need not be "available to work" in order to receive liquidated damages. Don't be surprised if this one gets appealed up to the Supreme Court for a determination if it really does square with Hoffman.
Ricci v. DeStefano -- Supreme Court Holds City Violated Title VII By Rejecting Racially Disparate Test Results
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To end its term, the Supreme Court today issued its long awaited opinion in Ricci v. DeStefano--a case that has received extra media attention because Supreme Court nominee Sonia Sotomayor was on the Second Circuit Court of Appeals panel that decided the case below. The conservative justices on the Court reversed the Second Circuit (and by extension, Judge Sotomayor) in a 5-4 decision, ruling that the city of New Haven violated Title VII by discarding the results of a firefighter promotion test where white applicants fared disproportionately better than other applicants. As one might expect, Justice Kennedy provided the swing vote and authored the majority opinion.
New Haven used the test in question to identify firefighters best qualified for promotion. Despite being objectively administered, the test's racially disproportionate results led the city to question whether it should validate the results. The city, of course, found itself in a "damned if you do, damned if you don't" position: certify the test results, and face Title VII disparate impact litigation from minority applicants; fail to certify them, and face Title VII reverse discrimination litigation from the white officers who passed but were denied a promotion. The city opted for the latter course, and, as expected, the white firefighters filed a reverse discrimination lawsuit. The city prevailed on summary judgment at the district court level, and the Second Circuit affirmed.
The Supreme Court found that discarding the tests violated Title VII , while certifying the test would not have been a violation of law because there was no "strong basis in evidence" for believing that the black firefighters would prevail on a disparate impact claim. The court noted that despite what otherwise would have constituted a "prima facie" showing of disparate impact race discrimination, several defenses were available to the city--namely that the exam at issue was job related, consistent with business necessity, and there existed no equally valid, less discriminatory alternative that suited the city's needs but was not adopted. The four dissenting justices disagreed, arguing that the majority's analysis was flawed because "New Haven had ample cause to believe its selection process was flawed and not justified by business necessity."
Ultimately, the Ricci decision will have little to no impact on most employers, but represents a small victory for employers (despite the positioning here that held against the city/employer). Employers can now take a somewhat more confident stand in backing test results that may demonstrate some disparate impact, so long as the test was objective and no other less discriminatory alternative exists. The Ricci decision may not last for long, however. Political condemnation by Democrats has been swift, with Senator Patrick Leahy (D-VT) saying that "it is less likely now that employers will conscientiously try to fulfill their obligations under this time-honored civil rights law. This is a cramped decision that threatens to erode these protections and to harm the efforts of state and local governments that want to build the most qualified workforces." Don't be surprised if Congress passes legislation down the road aimed at upending the Ricci decision.
FOREWARN Act Introduced - Changes to WARN Act in 2009?
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Last week, the Federal Oversight, Reform, and Enforcement of the WARN (FOREWARN) Act was introduced in the House by Rep. George Miller (D-CA) and in the Senate by Sen. Sherrod Brown (D-OH). FOREWARN aims to amend the Worker Adjustment and Retraining Notification (WARN) Act by requiring more and smaller employers to notify workers of plant closings or mass layoffs. FOREWARN also would increase penalties for employers who violate the act. For more information, click here to read Senator Brown's press release on FOREWARN.
This isn't the first time in Congress for FOREWARN; it was introduced in 2007, but failed to gain traction, perhaps because of a likely veto from the then Bush White House had it passed. The reintroduction of FOREWARN does not come as a big surprise: the World of Work warned (ouch! bad pun!) that changes were coming to the WARN Act back in March. Better yet, we predicted FOREWARN would be on then President-Elect Obama's agenda back in November 2008.
While FOREWARN is still making its way through Congress, employers must comply with the existing WARN Act, and we have some WARN Act resources to help:
- For a basic overview of the law, here's a basic WARN Act Fact Sheet.
- For more detailed information, download the Employer's Guide to the WARN Act (a great resource and our personal favorite).
- Next, if your layoff is caused by an "act of God," you might want to download the WARN Act Natural Disaster Fact Sheet.
- And finally, you can read what the DOL is telling your employees: the Workers' Guide to the WARN Act, and for Spanish-speaking employees, the Guía para el Trabajadores.
