Some of you may be surprised to learn that conventional wisdom was that claims arising under the Fair Labor Standards Act (the federal law requiring the payment of minimum wage and overtime to most employees) cannot be released or waived without court or Department of Labor supervision. I certainly thought that until several years ago when I had to some in-depth research to enforce a settlement agreement releasing FLSA claims an employer entered with an employee. I learned then that the law was nearly as clearly developed nor black and white as I had initially thought.

Because of the uncertainty about the enforceability of the release of FLSA claims, employers wanting to settle threatened or pending FLSA claims have had to consider whether they wanted to seek DOL or court approval of the settlement. I have been told that some local offices of the DOL will not review or supervisor private settlement agreements between litigants and I have seen at least one court that likewise refused to do so. While Texas employers have had some limited judicial authority supporting enforcement of these private settlement agreements when bona fide disputes over wages existed (i.e,. one reported case), it was risky to seek the release of significant FLSA claims without seeking out and obtaining court approval of those settlements. 

A recent case from the Fifth Circuit provides the parties some comfort in recognizing that where there is a bona fide dispute over the hours worked or compensation due, private settlements of FLSA claims do not required DOL or court supervision. 

In Martin, union employees involved in the production of movie filmed in Louisiana filed a grievance with the union claiming that they had not been paid all contracted wages by the employer for the work they performed. The union investigated the employees’ grievance and concluded that it was impossible to determine whether the workers had worked on the days they claimed to work. The company and union negotiated a settlement of the disputed hours and the union entered the agreement on behalf of its members releasing the company for claims related to the disputed hours. The beneficiaries of the settlement received the contracted payments and cashed the checks for the disputed wages. Thereafter, some of the union members sued for additional wages they claimed they were owed. The Fifth Circuit, in a case of first impression, held that where there is a bona fide dispute over the hours worked or compensation owed, private settlement agreements releasing FLSA claims are enforceable and the parties need not seek DOL or court supervision for those releases to be valid.

You can download a copy of the opinion here.

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In another same-sex harassment opinion, the Fifth Circuit reversed a substantial jury verdict in favor of a steel worker who claimed he was subjected to unlawful sexual harassment by his same-sex supervisor.

Woods was employed as an ironworker for the company in 2005. In 2006 he was assigned to work on a crew responsible for repairing a bridge damaged during Hurricane Katrina. Woods’ crew superintendent (Wolfe) subjected him to a number of “raw homophobic epithets and lewd gestures.” For example, the supervisor referred to Woods by name like “faggot” and princess”; approached him from behind while Woods was bent over and simulated sex acts; and exposed himself on more than one occasion. 

While Woods was being investigated for an unrelated work rule violation, he reported the supervisor’s conduct to the supervisor’s boss. During the pendency of the resulting investigation, Woods was sent home without pay for three days (whether as punishment for the work rule violation or to allow the company to find Woods a new job assignment was undetermined). The complaint was investigated, and while the supervisor’s conduct was deemed to be unprofessional, it was not concluded to be unlawful sexual harassment.

When Woods was removed from the bridge maintenance crew and later laid off, he filed a charge with the EEOC. The EEOC ultimately brought suit on Woods’ behalf. The jury awarded Woods $200,000 in compensatory damages and $250,000 in punitive damages which were reduced to the Title VII damage caps.

On appeal, the Court evaluated the circumstances where a plaintiff can make out a same-sex sexual harassment claim based on the theory of sex stereotyping.  Acknowledging the unprofessional, crass and boorish behavior, the Fifth Circuit noted that there was an abundance of evidence that “Wolfe [was] a world-class trash talker and the master of vulgarity in an environment where these characteristics abound.”  Notwithstanding Wolfe’s inappropriate behavior, the Court’s analysis in a same-sex stereotyping harassment case mandates that the plaintiff act in a manner inconsistent with his gender. Of apparent importance to the Court’s decision was the supervisor’s testimony that he did not view the plaintiff as feminine. Moreover, except for the evidence that the plaintiff used Wet Ones in the restroom, there was no evidence that Woods acted in an overtly feminine manner. In contrast, there was evidence that the harasser was an equal opportunity harasser and the workplace was generally and rough and wild environment. As the court observed: 

The record further shows that, although Woods may have been Wolfe’s primary target, he was by no means his only target. Nor was Wolfe the sole offender. To the contrary, misogynistic and homophobic epithets were bandied about routinely among crew members, and the recipients, Woods not excepted, reciprocated with like vulgarity.

While expressly reserving the issue of whether a sex stereotyping theory of same-sex harassment is cognizable in the Fifth Circuit, the Court held that a “plaintiff may not recover based on nonconformance to gender stereotypes unless the plaintiff conforms to nonconformance gender stereotypes.” Because the only evidence that Woods’ failed to conform to masculine stereotypes was his use of Wet Ones, the Fifth Circuit reversed the judgment in favor of the employee.

You can download a full copy of EEOC v. BOH Brothers Construction Company LLC here.

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Last week the U.S. Supreme Court ended its 2011-12 Term.  Here are summaries of the labor and employment cases decided this term.

Hosanna-Taylor Evangelical Lutheran Church and School v. EEOC, (No. 10-553) (holding that teacher at religious school qualified as a "minister" within the meaning of the ministerial exception to Title VII and therefore First Amendment barred her employment discrimination claim against her religious employer).

Christopher v. SmithKiline Beecham Corp., (No. 11-204) (holding that pharmaceutical representatives who visit physician offices to encourage physicians to prescribe employer’s products qualify as outside sales representatives rejecting DOL interpretation of its own regulation).

Coleman v. Court of Appeals for Maryland (No. 10-1016) (holding that the self-care provisions of the FMLA are inapplicable to state governmental employers under the 11th Amendment and sovereign immunity).

Knox v. Service Employees International Union, Local 100, (No. 10-1121) (holding that First Amendment does not allow public-sector union to impose special assessment on members without Hudson notice and affirmative consent of union members being assessed). 

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When is an employee’s claim for injuries against its nonsubscriber employer occurring in the course and scope of employment a health care liability claim?  According to the Supreme Court of Texas, when the employer is a health care provider. 

In Texas West Oaks Hosp. v. Williams, Williams was employed by a nonsubscriber psychiatric hospital.  Williams was injured by a patient of the facility.  Williams sued his employer for the injuries sustained in course and scope of his employment under theories of negligent training, supervision, risk-mitigation, and safety.  The employer moved to dismiss arguing that Williams’ claims were health care liability claims under the Texas Medical Liability Act.  The TMLA requires a plaintiff filing a health care liability claim to submit an expert report within 120 days of filing suit to maintain the action.  Williams did not file an expert report and the trial court dismissed the claim. The Supreme Court of Texas granted review to determine whether the claims of an employee against his employer, both of whom are health care providers, alleging injuries from the negligence of the employer, constitute health care liability claims subject to the procedures of the TMLA. 

In holding that the employee’s claims for injuries against his nonsubcriber employer were health care claims rather than claims for on-the-job injuries, the court was more persuaded by the character of the plaintiff’s claims (i.e., lack of safety) than the relationship between the parties (i.e., employer/employee).  Because the lawsuit alleged that the hospital defendant deviated from accepted standards of safety, the court concluded that the TMLA reached Williams’ claims even though he was not receiving any treatment nor was he a patient when the injuries occurred. Because the TMLA governed the employee’s claims against the hospital, the employee had to satisfy all of the procedural requirements of the TMLA in bringing his claim.  Because he failed to timely file an expert report, his claim was barred.  Three justices joined in a dissent that argued the majority went to far in transforming an employee’s personal injury claims against its nonsubscriber employer into health care liability claims.  Full copies of the majority and dissenting opinions can be linked to below.  

Majority opinion here.

Dissenting opinion here. 

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The Texas Supreme Court held that an age discrimination plaintiff is never entitled to an inference of age discrimination at the prima facie case where the employee’s replacement is older than plaintiff-employee. In that situation, the plaintiff must establish a prima facie case through direct evidence of age discrimination.

Gloria Garcia (age 48) was terminated from her school district employment after twenty-seven years.  She was replaced by a female employee of the same national origin and who was three years older than Garcia.  She sued alleging that she was retaliated against for participating in protected activities and discriminated against based on her race, national origin, age and gender. The trial court dismissed Garcia’s claims because she could not prove she was replaced by an employee outside her protected categories.  

The Texas Supreme Court granted review in the case to determine whether a plaintiff can establish a prima facie case of age discrimination when undisputed evidence shows that the plaintiff was replaced by someone older.   The answer, according to the court, was plainly, no.

The reasoning for the Supreme Court’s holding is best summarized in considering the following passage referring the U.S. Supreme Court’s opinion in O’Conner v. Consol. Coin Caterers Corp., (which held that an age discrimination plaintiff needs to show replacement by someone not insubstantially younger than the plaintiff:

If an inference of discrimination cannot be draw from replacement by an ‘insignificantly younger’ worker, then one certainly cannot be draw from replacement by an older worker.  That is the situation confronting us today, and that is the reason we hold that a plaintiff in Garcia’s situation cannot make out a prima facie case of age discrimination.

The holding may have limited applicability in non-replacement cases (i.e., reduction in force cases where the plaintiff is not replaced); cases where the employee alleges that work rules were applied more harshly to older workers than younger workers; or cases where the plaintiff has direct evidence of age discrimination.  Notwithstanding the opinion’s limitations, in age discrimination cases where the replacement employee is older than the plaintiff, and in the absence of direct evidence, Garcia strongly supports the dismissal of the age discrimination claim.

The result of this holding is that plaintiffs wanting to assert age discrimination claims in cases where the plaintiff was replaced by an older worker will likely elect to pursue those claims in federal court under the Age Discrimination in Employment Act rather than under state law.  Moreover, Garcia gives support to the argument that other TCHRA discrimination claims should be dismissed where the plaintiff is replaced by someone in the the same protected category.  The trial court dismissed Garcia’s race, sex and national origin claims on that basis and Garcia did not appeal those conclusions.  The logic of the Court’s opinion that an absence of discrimination exists when the plaintiff’s replacement is older than the plaintiff seems to apply equally to other kinds of discrimination claims where the replacement employee is also a member of the plaintiff’s protected category. Time will tell if the courts of appeals will apply this argument outside the age discrimination context.

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Majority opinion in Mission Consol. Indep. Sch. Dist.

Dissenting opinion in Mission Consol. Indep. Sch. Dist.

Prevailing plaintiffs in employment discrimination, harassment and retaliation cases can recover attorney’s fees their attorney’s incur in prosecuting those claims.  In many instances the attorney’s fees sought can exceed the monetary relief the plaintiff obtains and can act as a serious impediment to prompt settlement. 

Since most of these cases are done on a contingency fee basis (i.e., the employee’s attorney only gets paid if the plaintiff recovers either through settlement or trial), there is wide disparity of the type of records plaintiff employment lawyers keep.  The Supreme Court of Texas recently clarified that in order for an attorney to recover fees under the lodestar method, at a minimum, the attorney must present documentation showing: 1) the services performed; 2) the identity of the person performing the services; 3) the amount of time spent by the person; 4) the hourly rate of the person; 5) when the services were performed; and 6) how much time was spent performing the services.

This result will not seem shocking or surprising practitioners used to federal court practice where lodestar fees and contemporaneous time records are the norm; however, it is good to see the Texas Supreme Court formally adopt this practice for proceedings under state law in state court.

A copy of the Court’s opinion can be downloaded here.

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Yesterday, I had the privilege of speaking to the Texas Society of CPAs, Tarrant County Chapter, Nonprofit Study Group on current employment law issues affecting nonprofit organizations. Some of the topics we covered included the use of volunteers and unpaid interns by nonprofit organizations, proper classification of independent contractors and employees, and employment policies that are useful for nonprofits to adopt.  

 

If you were unable to attend the luncheon, but are interested in reviewing the materials, they are available to download here.  

 

Follow me on Twitter @RussellCawyer 

Last week I had the privilege of volunteering at my firm’s pro bono legal clinic at the U.S. Department of Veterans Affairs.  The clinic provides pro bono legal services and advice to our country’s veterans.  The veterans who served have a wide variety of need for legal advice –primarily in the area of family law, estate and probate, employment and criminal law.  It was my privilege to be able to assist five different veterans and their families who collectively served in every conflict since the Korean war.

While most employers cannot provide pro bono legal services to our veterans, one of their biggest needs is employment opportunities.  The U.S. Department of Veterans Affairs provides a variety of services that will assist employers in hiring and retaining veterans such vocational rehabilitation and Vetsuccess programs.  Similarly, the 501(c)(3) Hire Heros USA assists in creating job opportunities for US military transitioning service members, veterans, and their spouses through personalized employment training and corporate engagement.

When you have hiring needs, consider whether you can make that opportunity available to a military veteran.  Those men and women served our country and each of us should do what we can to thank them for their service. 

Follow me on Twitter @RussellCawyer.

A federal judge in the Northern District of Texas has enjoined the National Mediation Board from conducting a union representation election involving the passenger-service employees of a major air carrier and the Communication Workers of America. You can read the TRO here.

 

 

I like to emphasize the importance that an employee’s personnel file accurately reflect the employee’s performance in reality.   When an employer’s defense of a personnel action is based on an employee’s poor performance, fact finders expect that the poor performance to be documented in the employee’s file.  Fact finders do not expect, without plausible explanation, to see satisfactory performance reviews and absence of written discipline or corrective action.

This brings me to today’s topic –accurately describing an employee’s increase in pay.  I frequently see increases in employee pay described in the personnel file as "merit increases" when they are not, in fact, merit increases.  When all employees receive a pay raise (e.g., 2.5 percent) and the increase is not based on an individual’s performance, it is my opinion that the increase should be characterized as a cost of living increase; longevity increase or something other than a "merit increase".   Merit increases suggest that the individual employee is performing at least satisfactorily.  If that is the case and wage rate increases are based on satisfactory (or even good to outstanding) performance then there is nothing inconsistent with characterizing the increase as being based on merit. 

It is difficult to explain to a jury or judge that an employee’s performance was poor when the employer has characterized the employee’s annual increases in pay as "merit increases".  It further undermines the employer’s position, potentially creating factual issues for the jury to resolve, when the employee lacks any written discipline, has satisfactory performance reviews, and shares in annual increases in pay (along with all other employees) that are characterized as merit increases.  Remember, the personnel file should reflect reality.  If an employee’s performance needs improvement, perhaps his or her wage increase should not suggest that it was earned based on merit.

Follow me on Twitter @RussellCawyer.