Risk Management Survival Guide Seminar Hosted by Pietragallo’s Employment Group at PNC Park

July 25, 2012

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The Third Circuit Establishes Factors For Joint Employer Status Under The FLSA

July 24, 2012

The Fair Labor Standards Act (“FLSA”) requires employers to provide overtime compensation to non-exempt employees who work more than 40 hours a week.  Under the FLSA, a single individual can be considered to be the employee of more than one employer.  When such a joint employment situation exists, both employers are required to comply with the FLSA’s overtime requirements.  In In re Enterprise Rent-A-Car Wage & Hour Employment Practices Litigation, 2012 WL 2434747 (3d Cir. June 28, 2012), the Third Circuit set forth the factors to determine whether one is a joint employer for purposes of the FLSA. Nicholas Hickton was a former assistant branch manager for Enterprise Rent-a-Car Company of Pittsburgh.  Mr. Hickton claimed that he was a joint employee of both Enterprise Rent-a-Car Company of Pittsburgh and Enterprise Rent-a-Car Company of Pittsburgh’s parent company, Enterprise Holdings, Inc., and that both companies had violated the FLSA by failing to provide him with overtime compensation.  Suit was brought on behalf of Mr. Hickton and all current and former assistant branch managers at all Enterprise Rent-a-Car locations. According to the underlying facts, Enterprise Holdings, Inc. is the sole shareholder of 38 domestic subsidiaries, including Enterprise Rent-a-Car Company of Pittsburgh.  Enterprise Holdings, Inc. did not directly rent or sell any vehicles.  Rather, this activity was performed solely by the subsidiaries.  However, Enterprise Holdings, Inc. directly and indirectly supplied the subsidiaries with administrative services and support such as business guidelines, employee benefit plans, rental reservation tools, a central customer contact service, insurance, technology and legal services.  The subsidiaries had the ability to choose whether they would participate in these services or not.  Those who did participate were required to pay corporate dividends and management fees to Enterprise Holdings, Inc. Additionally, the board of directors of each of the subsidiaries consisted solely of the same three people who also served on the Board of Directors of Enterprise Holdings, Inc. Read More

Pharmaceutical Sales Representatives Are Not Entitled To Overtime Wages

July 10, 2012

On June 18, 2012, the United States Supreme Court issued its long-awaited decision in Christopher v. Smithkline Beecham Corp., –S.Ct.–, 2012 WL 2196779 (June 18, 2012), and held that the pharmaceutical sales representatives, also known as “detailers,” qualify as “outside salesmen” under the Fair Labor Standards Act (“FLSA”), and thus, they are not entitled to overtime wages. The plaintiffs in Christopher were pharmaceutical sales representatives.  As such, they visited doctors’ offices, encouraging them to prescribe their companies’ drugs to their patients.  Pharmaceutical sales representatives, however, do not actually sell anything to the doctors.  The plaintiffs often worked more than 40 hours per week, but they did not receive time-and-a-half for the overtime work.  The plaintiffs, therefore, sued their employer for overtime pay.  In turn, the defendant argued that pharmaceutical sales representatives are not entitled to overtime pay because they qualify as “outside salesmen,” and thus, are exempt from the FLSA’s overtime requirement. In enacting the FLSA, Congress delegated authority to the Department of Labor (“DOL”) to issue interpretative regulations.  The DOL’s regulations provide that to qualify as an “outside salesman,” the employee’s primary duty is to make sales within the meaning of the statute.  The statute defines a sale to include “any sale, exchange, contract to sell, consignment for sale, shipment for sale or other disposition.”  The DOL’s regulations further provide that a sale includes the transfer of title to tangible property.  The DOL filed an amicus brief in this matter stating that to qualify as an outside salesman, there must be an actual transfer of title to the property at issue.  As a result, the DOL stated that the regulations do not exempt pharmaceutical companies from paying its sales representatives overtime wages. In reaching its decision, the Court disregarded the DOL’s interpretation of an “outside salesman” under the FLSA.  Although courts generally defer to agencies’ interpretations of statutes and of their own regulations, the Court withheld deference because the DOL’s interpretation would result in “unfair surprise” on the pharmaceutical industry, which has been engaging in this practice for over 70 years.  Read More

West Virginia Supreme Court Of Appeals Affirms Seven Figure Verdict

June 13, 2012

In CSX v. Smith,  the West Virginia Supreme Court affirmed a seven figure verdict in a sexual harassment hostile work environment and retaliatory discharge case.  Plaintiff, Smith, claimed that a co-worker, Knick, made disparaging comments regarding her sexual orientation.  Mr. Knick was disciplined and removed from management, but was not fired.  After his demotion, he was transferred and, due to his union seniority, he was under Smith’s supervision.  Smith advised CSX that she was frightened of Knick because of violent and retaliatory comments.   Due to apparent concern for Plaintiff’s safety, CSX placed Plaintiff on administrative and then medical leave. While on leave, Plaintiff alleged that an unidentified male came to her house and made threats. She also experienced threatening phone calls, and car tampering. CSX offered to transfer Plaintiff to Tennessee or Kentucky where she would not have to supervise Mr. Knick.  She refused these proposed transfers and when she returned to work, she accepted a position at a prior work location with a $35,000 cut in pay.   She filed a complaint in the Circuit Court of Boone County alleging sexual harassment, hostile work environment, constructive discharge, retaliation for her complaints of sexual harassment, and negligent retention of Mr. Knick.    Thereafter, CSX terminated Plaintiff for using work taxis improperly, for which Plaintiff claimed she had express permission.  As a result, she added a claim against CSX for retaliatory discharge. As to the liability phase of the trial, the jury concluded:  (1) Plaintiff was subjected to a hostile work environment; (2) CSX did not investigate and adequately respond to the misconduct alleged by Plaintiff; (3) CSX retaliated against Plaintiff as a result of her complaints of sexual harassment and/or her filing of a lawsuit against it; and (4) CSX negligently retained Mr. Knick as an employee and that such negligence proximately caused the damages suffered by Plaintiff. Read More

Are Arrestees And Convicts A New Protected Class?

June 7, 2012

Recently, the EEOC issued an updated Enforcement Guidance on Employer Use of Arrest and Conviction Records in Employment Decisions under Title VII of the Civil Rights Act of 1964.  This new Guidance places a heavy burden on employers who wish to continue to use prior criminal information in employment decisions.  The EEOC will analyze whether a criminal record exclusion policy violates Title VII under two analytical frameworks: “disparate treatment” and “disparate impact.”  Under the disparate treatment analysis, the employer may be liable for violating Title VII when a plaintiff can demonstrate that the employer treated him differently because of his race, national origin or other protected basis.  For instance, disparate treatment analysis would be applicable where there is evidence that a covered employer rejected an African American applicant based on his criminal record but hired a similarly situated white applicant with a comparable criminal record.  Under the disparate impact analysis, an employer has violated Title VII through its use of criminal records where the employer’s neutral policy or practice has an effect of disproportionately screening out a Title VII-protected group and the employer cannot demonstrate that the policy is job related for the position in question and consistent with a business necessity. In investigating a claim relating to a criminal exclusion policy under a disparate impact analysis, the EEOC will require an employer to show that its criminal conduct exclusion policy does not cause a disparate impact on the protected groups.  The employer may present regional or local data, for instance, showing that African American or Hispanic men are not arrested or convicted at a disproportionately higher rate in that employer’s particular geographic area.  An employer also may use its own applicant data to demonstrate that its policy or practice did not cause a disparate impact.  However, an employer’s evidence of a racially balanced workforce is not sufficient to dispute disparate impact because an employer’s application process may itself be found to not adequately reflect the actual potential applicant pools since otherwise qualified people may be discouraged from applying because of the alleged discriminatory policy or practice.  Read More

Will Arbitration Provisions In Employment Contracts Be Enforced? The Third Circuit Clarifies The Standard In Quilloin V. Tenet

April 5, 2012

Many employers routinely include arbitration provisions in their employment contracts or employee handbooks.  Should your organization have one?  If so, how can its provisions be made enforceable?  It will only be enforceable if the language is carefully and appropriately drafted.  In Quilloin v. Tenet Healthsystem Philadelphia, Inc., the Third Circuit continued to clarify the circumstances under which arbitration provisions in employment contracts will be enforced. In Quilloin, the subject arbitration provision provided that:  the employee agrees to final and binding arbitration on any and all claims, – covering all disputes relating to or arising out of an employee’s employment with the company or termination of employment; arbitration was the sole and exclusive remedy for any such claim; a waiver of the right to a trial by a jury; the employee’s maximum out-of-pocket expense for the arbitrator and the administrative costs of the American Arbitration Association would be an amount equal to one day’s pay (if the employee was exempt) or eight hours pay (if the employee was non-exempt); the request for arbitration must be made within one year, however, if there is a statute of limitations covering such claim, then the claim would be subject to the longer limitations period provided by the statute; fees and costs of the employee’s legal counsel, as well as other expenses such as costs associated with witnesses or obtaining copies of hearing transcripts, would be borne by the employee; and no remedies would be forfeited. The Plaintiff initiated the action by filing a Fair Labor Standards Act claim (“FLSA”), and the Defendant moved to compel arbitration under the employment agreement.  The district court refused to compel arbitration, concluding that the potential prohibition against recovery of attorneys’ fees and costs, the potential inclusion of a class action waiver, and the possibility that Tenet could “run out the clock” on the statute of limitations were not enforceable.  Read More

English Only Rules In The Workplace Still Subject To Scrutiny

March 6, 2012

According to the U.S. Census Bureau, between 1980 and 2007, the number of Americans who speak languages other than English at home grew by 140 percent. Correspondingly, there has also been an increase in non-English speaking workers in the U.S. labor force. Linguistic diversity can present both opportunities and challenges for employers. Over 30 states have enacted legislation making English their official language for purposes of state and even local government functions. Pennsylvania may join those states, as two bills introduced in 2011, House Bill Nos. 361 and 888, would require the use of the English language for official state government, and possibly county, municipal and school system, functions. Similarly, private employers have also decided to implement “English-only” rules in the workplace. Although some court decisions and potential changes to the applicable guidelines regarding English-only rules may provide some support to employers who implement such rules, employers should remain cautious and be sure that their rules follow the guidelines, so as to avoid potential national origin discrimination claims under Title VII of the Civil Rights Act of 1964 and similar state discrimination statutes, including the Pennsylvania Human Relations Act. Under the current state of the law, guidelines established by the Equal Employment Opportunity Commission (“EEOC”) in its regulations and its Compliance Manual permit employers to adopt English-only policies only in certain circumstances. The EEOC distinguishes English-only rules that apply “at all times” from those that apply “only at certain times” in the workplace. According to the EEOC’s guidelines, blanket English-only rules that apply at all times are presumed to constitute national origin discrimination in violation of Title VII and are, thus, “closely scrutinized.” As a result, employers should avoid policies that require employees to speak English at all times and in all situations. Business Necessity Exceptions The EEOC guidelines, however, do not prevent an employer from implementing an English-only rule that applies only at certain times, as long as the rule is justified by “business necessity,” or necessary for an employer to operate safely or efficiently. Read More

Employers Must Listen For The Magic Words

February 21, 2012

The United States Equal Employment Opportunity Commission recently announced that retaliation charges accounted for the highest overall percentage of private sector complaints in fiscal year 2011.  Employers, therefore, must be on the lookout for those “magic words” spoken by an employee that may qualify as a protected activity triggering a subsequent claim of retaliation. An employee states a claim for retaliation by demonstrating that she (1) engaged in protected activity, (2) suffered an adverse employment action either contemporaneously with or after the protected activity, and (3) there was a causal connection between the protected activity and the adverse employment action.  The employer may defeat Plaintiff’s claim by showing a legitimate, non-retaliatory reason for the adverse action. Unquestionably, protected conduct includes the filing of formal charges of discrimination and informal protests of discriminatory activities, including complaints to management.  It also includes the expression of support by an employee for a co-worker who has filed a formal charge of discrimination.  Protected conduct, however, does not include generalized complaints by an employee to a supervisor or other management team member about unfair treatment.  The conduct – if it is to be protected – must convey a protest of discriminatory practices.  Therefore, an employee’s complaint that a manager treated her unfairly, rudely or is too tough on her, likely will not constitute a protected activity.  Similarly, an employee’s complaint that he is being treated differently than another employee – with nothing more – is insufficient to constitute a protected activity.   The United States Court of Appeals for the Third Circuit recently found in favor of the employer in a retaliation claim because, while the employee complained to her supervisor that she was treating her differently than other employees, the employee failed to provide evidence that she specifically complained that the treatment was based on her race or gender.  Read More

Supreme Court Recognizes Ministerial Exception

January 23, 2012

In a major decision regarding how the Americans with Disabilities Act (“ADA”) applies to religious employers, the United States Supreme Court has unanimously recognized a “ministerial exception,” grounded in the First Amendment. The Court’s decision bars employment discrimination claims brought pursuant to the ADA by ministers against the religious institutions that employ them.  The exception, in essence, grants religious institutions the freedom to select their leaders without government interference. The plaintiff in Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, 2012 WL 75047 (S.Ct. Jan. 11, 2011), a teacher at a religious based school, brought a retaliation suit against her former employer, Hosanna-Tabor Evangelical Lutheran Church and School. As a “call” teacher at the school, the plaintiff had completed religious training and was given the title “Minister of Religion, Commissioned.” She taught both secular and religious curriculum and regularly led student prayer and worship. In total, she spent 45 minutes of the seven hour school day on religious instruction. The plaintiff claimed she was fired after informing Hosanna-Tabor that she was planning to bring a disability discrimination claim against the school. Hosanna-Tabor argued that the suit was barred by the ministerial exception. It claimed the plaintiff was a minister who was fired for a religious reason, namely violating church doctrine by threatening litigation instead of trying to resolve her dispute with the Church internally. The District Court agreed and granted summary judgment to Hosanna-Tabor, finding that because the plaintiff was a minister, it could not inquire any further into her claims of retaliation. In an opinion authored by Chief Justice Roberts, the Supreme Court, for the first time, recognized the application of the ministerial exception to employment discrimination laws. The Court reasoned that while the interest of society in the enforcement of employment discrimination laws is undoubtedly important, “so too is the interest of religious groups in choosing who will preach their beliefs, teach their faith and carry out their mission.” Read More

When Can An Employee Take FMLA Leave For Reasons Related To The Birth Of A Grandchild?

December 15, 2011

Employees often request to take leave for reasons that, at first blush, may appear to qualify under the Family and Medical Leave Act of 1993, 29 U.S.C. §§ 2601-2654 (“FMLA”).  Closer scrutiny, however, often reveals that the reason for the requested does not qualify for leave under the FMLA.  One such example pertains to employees who request leave related to the birth of a grandchild. Eligible employees may take a maximum of twelve (12) workweeks of FMLA leave in a twelve (12)-month leave period for the following reasons:  (1) the birth or care of their newborn; (2) the care of a child newly placed in the employee’s home via foster placement or adoption; (3) the care of a seriously ill spouse, child or parent; and (4) the employee’s own serious health condition. The FMLA does not contemplate that employees take FMLA to care for a grandchild.  Novak v. MetroHealth Medical Center, 503 F.3d 572, 581 (6th Cir. 2007).  While caring for a child is covered under the FMLA, the FMLA differentiates between minor children (under eighteen years of age) and adult children (eighteen years of age or older).  A parent is entitled to leave to care for an adult child only if that child is “incapable of self-care” because of a disability.  According to the FMLA regulations established by the Secretary of Labor, “incapable of self-care” means that the adult child “requires active assistance or supervision to provide daily self-care in three or more of the ‘activities of daily living’ (ADLs) or ‘instrumental activities of daily living’ (IADLs).”  ADLs encompass “adaptive activities such as caring appropriately for one’s grooming and hygiene, bathing, dressing and eating,” while IADLs “include cooking, cleaning, shopping, taking public transportation, paying bills, maintaining a residence, using telephones and directories, using a post office, etc.”  The regulation further states that “physical or mental disability” means a “physical or mental impairment that substantially limits one or more of the major life activities of an individual” as these terms are defined by the regulations for the Americans with Disabilities Act (“ADA”). Read More