Monthly Archives: April 2008

A Reminder on Congress’ Amendments to Family and Medical Leave Act (FMLA)

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The Family and Medical Leave Act experienced much needed changes in 2008. Congress amended the Family and Medical Leave Act (FMLA) earlier in the year to afford employees two new types of leave. First, employees may take 26 weeks of leave in a single 12 month period to care for an injured or ill servicemember. This provision only applies where the servicemember is the employee’s spouse, child or parent, or when the employee is the servicemember’s next of kin. Second, employees may take 12 weeks of exigency leave where a family member is on active duty or is notified of a call to active duty status. The latter does not take effect until the Department of Labor (DOL) issues final regulations. The DOL, however, is encouraging employers to offer exigency leave immediately.

Wage & Hour Violations Face Mandatory Treble Damages

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Wage and hour violations will be taken seriously in Massachusetts. Bill S.1059 proposed that treble damages must be awarded to plaintiffs who prevail in wage and hour lawsuits. On April 14, 2008, the bill was enacted into law. The new law essentially reverses the Supreme Judicial Court’s ruling in Wiedmann v. The Bradford Group, Inc., which held that treble damages should only be awarded where the employer’s conduct was “outrageous, because of [its] evil motive or [its] reckless indifference to the rights of others.”

S.1059’s enactment followed an interesting course. The Massachusetts Legislature initially submitted the bill to Governor Deval Patrick in February 2008. Governor Patrick returned the bill without signature and urged that certain exceptions be provided, which the Legislature rejected. Governor Patrick ultimately declined to veto S.1059.

The new law states that employees who prevail in court “shall be awarded triple damages, as liquidated damages, for any loss of wages and other benefits.” The treble damages provision applies to a host of wage and hour violations:

Payment of wages, including commissions and vacation pay
Overtime pay for nonexempt employees
Minimum wages
Improper deductions
Misclassification of employees as independent contractors
Tip pool sharing
Retaliation for asserting wage complaints

To read more about mandatory treble damages in Massachusetts, please visit Forbes’ article entitled, Massachusetts Passes Bill Restoring Triple Damages for Non-Payment of Wages.

Equal Pay Across Genders Faces Resistance from White House

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In 1996, civil rights advocates established Equal Pay Day to acknowledge the pay gap between genders in which female employees earn approximately 75% of the wages of their male counterparts. Ensuring equal pay across genders continues to be a struggle. Numerous lawsuits have been brought on behalf of women throughout the United States who, despite performing the same work as their male counterparts, are paid substantially less. In December 2007, for example, the Ninth Circuit affirmed class action certification in Dukes v. Wal-Mart, which seeks redress for approximately 1.6 million current and former female Wal-Mart employees consistently passed up for promotions and salary increases that went to lesser qualified males (See Gender Discrimination Class Action Certified by Ninth Circuit Against Wal-Mart).

Perhaps the most important suit to-date has been the United States Supreme Court’s May 2007 ruling in Ledbetter v. Goodyear Tire & Rubber Co., which signifies a near-fatal blow to an employee’s right to seek redress for pay discrimination. Lilly Ledbetter worked at Goodyear for 19 years before realizing she was being paid much less than many of her male counterparts. Although a jury agreed that Ms. Ledbetter had been paid unfairly, the Supreme Court reversed on the basis that her claim was time-barred by Title VII’s 180 day limitations period. For a more detailed discussion about the Ledbetter case, please visit: Supreme Court Routs Title VII in 2007: Goodyear Wins Right to Discriminate Based on Gender.

To undo the harsh effects created by the Ledbetter decision, Senator Edward Kennedy (D-Mass) proposed the Fair Pay Restoration Act, which would re-establish the long-standing rule that each discriminatory paycheck constitutes a new act of discrimination and re-starts the 180 day statute of limitations clock.

In July 2007, the U.S. House of Representatives passed the Fair Pay Restoration Act by a vote of 225 to 199. Unfortunately, the White House recently threatened to veto the bill in an effort to keep the Ledbetter decision as the status quo. This will likely be a talking point in the 2008 Presidential Race. While most Democrats support the bill, most Republicans oppose the legislation. The likely Republican nominee, Arizona Senator John McCain, opposes the Fair Pay Restoration Act:

I am all in favor of pay equity for women, but this kind of legislation, as is typical of what’s being proposed by my friends on the other side of the aisle, opens us up to lawsuits for all kinds of problems. This is government playing a much, much greater role in the business of a private enterprise system.

For more information on this issue please visit the Washington Post’s article entitled, White House Threatens to Veto Discrimination Bill.

Workplace Tort Highlighted: Employee Suffers Waterboarding Incident

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Preventative measures pay dividends. Prosper Inc. of Provo, Utah could certainly use some helpful tips from its employment counsel. In a story that seems more fiction than news, the company is accused of, among other things, waterboarding an employee as part of a “team-building exercise.”

Supervisor, Joshua Christopherson, was not pleased with his sales team, whose numbers were evidently not up to par. Christopherson brought his employees outside, told them they would do an exercise, and asked for a volunteer. Chad Hudgens unsuspectingly raised his hand. Christopherson instructed Hudgens to lie down on the hill on which they stood. Chistopherson then poured water from a gallon-sized container over Hudgens’ nose and mouth.

From Hudgen’s perspective, the experience was anything but pleasant:

So they held me down and the next thing I know, Josh has a gallon jug of water and he’s pouring it on my face. I can’t scream because the water’s going down my throat. And halfway through he stopped for a second. I tried to mumble the words, “Stop, knock it off.” I tried to get that out and he continued to pour. I’m not getting any air. Toward the end, I’m starting to black out. I’m getting very dizzy, light-headed. The sensation that’s going through my head is, “I’m going to drown.”

According to Prosper, Christopherson told executives that he was inspired by reading about the Greek philosopher Socrates, who is believed to have once submerged a student’s head under water and telling him that he must desire to learn as much as he wanted air. The Company’s General Counsel, George Brunt, did not deny the fact that Hudgens was essentially waterboarded. Amazingly, Brunt boldly commented: “I don’t know if this would even be an issue if it weren’t for Guantanamo Bay.” Company President, David Ellis, attempted to downplay the waterboarding incident as well: “How many times did the CIA even do waterboarding? Three times?”

To read more, check out the Washington Post’s article entitled, Team-Building or Torture? Court Will Decide.

Garden Leave Provisions Not Subject to Preliminary Injunction

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The garden leave provision in your employment contract may be unenforceable. In Bear, Stearns & Co., Inc. v. Sharon, the U.S. District Court for the District of Massachusetts refused to issue a preliminary injunction to enforce a contractual provision requiring an employee to provide 90 days before resigning or retiring (aka “garden leave”).

Douglas A. Sharon was a Broker and Managing Director of Bear, Stearns & Co., Inc.’s private client services group in its Boston office. According to Bear Stearns, Sharon was the Boston office’s top producer, generating $5.2 million annually in commissions and managing more than $867 million in assets. In December, 2005, the company distributed a memorandum to all of its Senior Managing Directors, including Sharon, which allowed recipients to accept a raise in their base salary, among other benefits, subject to the acceptance of the above-described garden leave provision. Sharon agreed to the garden leave provision.

On March 17, 2008, Sharon resigned from Bear Stearns, effective immediately. He began work for his new employer, Morgan Stanley, the next day. Following Sharon’s resignation, on March 26, 2008, Bear Stearns filed a Complaint, Motion for a Temporary Restraining Order (“TRO”), and a Preliminary Injunction to enjoin, among other things, Sharon’s continued employment at Morgan Stanley.

As an aside, an important distinction exists between a TRO and Preliminary Injunction. Under Rule 65(a) of the Massachusetts Rules of Civil Procedure, a TRO does not generally exceed 10 days. In sharp contrast, a Preliminary Injunction will last until the case has been decided.

On March 27, 2008, the Court entered Bear Stearns’ request for a TRO. After the TRO expired, Bear Stearns sought injunctive relief. To obtain preliminary injunctive relief, Bear Stearns was required to show: (1) a substantial likelihood of success on the merits, (2) a significant risk of irreparable harm if the injunction is withheld, (3) a favorable balance of hardships, and (4) accord with the public interest.

The Court denied Bear Stearns’ request for Preliminary Injunction for three main reasons. First, the company could not establish that it would suffer irreparable harm because any alleged harm could be recompensed through a monetary award. Second, the harm to Bear Stearns was outweighed by the potential harm to Sharon’s “professional standing and the inability to advise his clients in times of economic turmoil.” Finally, the Court noted an inherent inconsistency in the garden leave provision. Specifically, Sharon’s employment was at-will, which meant that Bear Stearns could terminate his employment at any time, for any reason or no reason. Likewise, because he was an employee-at-will, Sharon should be able to resign at any time. Accordingly, enforcing the garden provision would run afoul of the employee-at-will doctrine:

Because the effect of specific performance in this case would be to require the defendant to continue an at-will employment relationship against his will, it is unenforceable in that manner.

Although the court refused to issue the Preliminary Injunction, it is important to note that Sharon could still be held liable for monetary damages. This case, however, sheds much needed light on “garden leave” provisions.

Race Discrimination Class Action Against New York City Settles for $21 million

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Employment discrimination cases do not resolve themselves overnight. In 1999, twenty employees of the City’s Department of Parks and Recreation filed complaints with the federal Equal Employment Opportunity Commission (EEOC) alleging discrimination on the basis of race and national origin in both hiring practices and promotion decisions. After approximately nine years of litigation, New York City has agreed to pay more than $21 million to settle what has grown to become a class-action lawsuit on behalf of 3,500 former and current workers.

Beginning in December 2006, the NAACP Legal Defense and Educational Fund helped coordinate the effort to reach a settlement with the City. Theodore M. Shaw, of the Legal Defense and Educational Fund, had this to say:

Today’s settlement is a clear victory for those who were denied equality in the workplace for so long. L.D.F. commends the black and Latino workers of the New York City Department of Parks and Recreation who stood up to this injustice and had the courage to fight for change.

In reaching such a successful result, the plaintiff’s relied on well-known economist, Dr. Stephen A. Schneider of Nathan Associates, Inc., who testified as an expert witness on the issue of liability and damages.

To read more about the settlement, visit the New York Times article entitled, City Settles Parks Bias Suit for $21 Million.