Service Writers Covered By Auto Dealership Exemption

We have heard so much recently about the new white collar regulations it is good to remember that tucked throughout the Fair Labor Standards Act are other exemptions, usually tied to a certain business or industry. One of those is 29 U.S.C. § 213(b)(10)(A), the automobile dealership workers exemption. The position in question is that of a service writer, which as many of us had suspected from personal experience, are paid at least in part on a commission for the amount of work that they "write" to be performed on a vehicle. The question was whether or not this person fell within the exemption and the regulations promulgated by the Department of Labor. In 1973 the 5th Circuit, the only other circuit court to deal with the issue, found such service writers exempt. The 4th Circuit agreed, but on different grounds. Rather than using a "functional analysis" as did the 5th Circuit, the 4th Circuit instead struck down the DOL's interpretative regulation as contrary to the statute. Walton v. Greenbrier Ford, Inc.(4th Cir.5/28/04)[pdf]. Notwithstanding the difference in how, the bottom line in both the 4th and 5th Circuit is - service writers get no overtime. But before despairing for their lot, remember those commissions.

MSHA Covers Mines Whose Only Sales Are Intrastate

Rebuffing a jurisdictional challenge, the Court of Appeals for the Second Circuit holds Congress was within its power under the commerce clause in extending safety regulations for mines to those whose product is sold solely to intrastate purchasers. D.A.S. Sand & Gravel, Inc. v. Chao (2nd Cir. 5/26/04) [pdf]. Although it does not say it is a case of first impression, it cites no other circuit or district court decisions.

Corporate Ethics - Two Years After Sarbanes Oxley

Not really making that much progress, at least that is the view coming from research done for the Center for Corporate Change, a Denver based organization seeking to drive ethical reform in American business. Quoted in the Denver Business Journal article,

"It's gotten kind of bipolar," said Bruce Hutton, professor of marketing for Daniels School of Business at Denver University, who handled the integrity-based management piece of the research. "And it's pretty clear that leadership hasn't been spending very much time redefining internal cultures of their companies to be more ethically responsible."

More of the research will be released at CCC's annual seminar, Changing the Game 2004 [pdf], to be held in mid-June.

Call It Employee Relations, Call It Union Avoidance - Discover and Do What Employees' Really Want

A Boston Business Journal story is a good Memorial Day reminder of what is important to employees. And you get the flavor of what's in store with the leading hint, "Even in business, money can't buy your employees' love ..."



The top 10:



1. Bend (flexibility)

2. Tell them everything (good communication)

3. Audience for the people (listen to employees, not just talk to them)

4. Tailor your offerings (workforce is not all the same)

5. Rewards and recognitions (almost impossible to overdo)

6. Be open (and creative)

7. Expect more (set high standards)

8. Keep your word (what a concept)

9. Learn. Train (make employees better)

10. Don't Go Overboard (the basics, if done, are often enough)



Another point to ponder, since most of these steps don't require greater resources, just better people skills, these are things every manager/supervisor can do, without permission or action from higher management.

Enjoining Picketing Activity Because of a "Wink and a Nod" and Perhaps the Use of an Ellipsis

Although there is not a significant amount of strike activity these days, it does still happen and still employers are required to go to court to seek injunctive relief from unlawful picketing activity. Last week, the 1st Circuit had occasion to affirm the Rhode Island District court which had enjoined Teamsters Local #251. Arguing that courts are enjoined themselves to tread gingerly when considering picket line injunctions, the Teamsters nevertheless came up short. Both courts found significant that even though the local president issued instructions that the strikers were to picket in a lawful manner, what they found more telling was his conduct on the scene the next day when a train was improperly blocked. Rather than ordering the picketers to allow it to pass, he talked with the engineer and first gained his assurance that no delivery would be made that day. This conduct, plus the fact that through cell phone either the President or another senior union official was in contact at all times with the picketers, led the courts to find that the union had ratified the conduct. In the trial court's word, with a "wink and a nod." Univar, USA, Inc. v. Teamsters Local #251 (1st Cir. 5/25/04)(unpublished) [pdf]. And as a possible indication that court's don't like parties seeking to pull the wool over their eyes, the court left a pointed footnote.

1. Indeed, in quoting the allegedly "relevant" portion of the court's ruling in its Statement of Facts, the Union omits the underlined language quoted above and replaces it with an ellipsis.

And of course the underlined part was: "This activity on the part of Mr. Bairos, as president of the union, in my mind is the equivalent of [a] wink and nod. That is, it is as though he's saying to the members that it's fine to congregate as they did and to remain in place, in other words, to do as I do rather than to do what I told you to do yesterday ...."

One More Area Where Employers May Soon Have More Responsibility - Domestic Violence

Although it was intended more for political purposes than with actual hopes of passage this time, the Paul and Sheila Wellstone Domestic Violence Protection Act, discussed here, was just the tip of the iceberg of what is likely to be a major issue in the coming years. The Milwaukee Business Journal story illustrates how some employers are already ahead of the curve. I would be very surprised if we don't see increased calls for statutory intervention that will place more responsibility on employers for dealing with what is still a very "hidden" issue.

Religion in the Workplace - A View from the Aloha State

Hawaii is experiencing an upturn in issues related to religious practices in the workplace, not in the more usual area of accommodation, but more in the area of proselytizing. The Pacific Business News has the story. The mix is made even dicier for employers since the state's civil rights law extends protection on the basis of sexual orientation which often seems the source of many of the more publicized conflicts.

Some Cosmetic Changes to Jottings By an Employer's Lawyer

Regular readers may note that the old "comments, permalink" have disappeared. If anyone really, really desires to comment (which few have in the past) you can open a comment page by clicking on the date/time stamp (which also serves as a permalink.)



The blogroll on the side has been updated and limited to blawgs which deal primarily with the same subject matter I do, employment law related matters. If there are others which should be noted, please call them to my attention.



Finally, the search function which was on the side of the page has been replaced by a "google search" located at the bottom of the main page, which hopefully will be more powerful.

Fee Splitting Provision Needs Evidence Not Speculation - 8th Circuit

Unlike the district court which jumped to a conclusion about the impact of requiring a plaintiff to split the costs of arbitration, the 8th Circuit requires proof that it would deprive a potential litigant of his right to have his claim heard. Even on remand, if such evidence should be forthcoming, the Court finds that the offending clause should be severed and the case sent to arbitration. Faber v. Menard, Inc. (8th Cir. 5/21/04) [pdf]. Completing what can only be called a very pro-arbitration decision, the Court found that the provision that each party should bear their own attorneys' fees should first be heard by the arbitrator, to determine "whether Faber has in fact waived his statutory right to recover attorneys’ fees or whether an appropriate remedy may still include them."

Where Title VII Doesn't Make A Difference, But the New §1981 SOL Did

Talking about being bailed out. In Jackson v. Homechoice, Inc. (8th Cir. 5/21/2004), an employer who thought it had dodged a bullet, now gets to address the merits of a 1999 termination. When first brought, the employer prevailed showing that plaintiff did not timely file his charge with Title VII, and although the claim was based on race and thus potentially actionable under §1981, it was barred by the Arkansas one year statute of limitations. And it was, until the Supreme Court's decision earlier this month in Jones v. R.R. Donnelley & Sons Co., 124 S. Ct. 1836 (5/3/04) [pdf]. That makes at least two plaintiffs whose claims have been revived by the R.R. Donnelley decision. For the other see our report here of a similar result in the 9th Circuit.

After the Sale - Looking Back At the Contract Language When It Really Matters

When a company is selling a business, the existence of a union and a collective bargaining agreement complicates things, as the seller found out in Smurfit Newsprint Corp. v. Southeast Paper Manufacturing Co. (7th Cir. 5/21/04) [pdf]. After Smurfit sold one of its plants to Southeast Paper, the purchaser interviewed each current employee for employment, and having hired a majority of employees represented by the union bargained and entered into a contract on very similar terms to the CBA between Smurfit and the union. Including using the same formula for retirement benefits, which was based on most recent hire date. The result was that employees were not given credit for their prior service in determining their pension.



Although not as dire as it sounds, since most now got two pensions, it did economically impact and certainly ired the union and its members who filed a grievance. At arbitration, the arbitrator found that the plant had been "permanently closed" as for as Smurfit was concerned triggering approximately $3.5 million in severance benefits. Something obviously not planned for by Smurfit, since they then initiated an indemnity action to recover the $3.5 million under the sale contract against Southeast Paper. Although they overcame the hurdle of showing they were entitled to bring an indemnity claim, they ultimately failed on the merits.



Under the purchase agreement, Southeast Paper had agreed "to offer employment to substantially all of the employees of the mill who were members of ... Local No. 60 (the “Union”) on terms comparable with those in an existing collective bargaining agreement between Smurfit and the Union." And since the contract it entered into was almost identical to the one that Smurfit had with the union on how pensions would be calculated, Southeast Paper had kept its end of the bargain. Even if it may not have turned out the way Smurfit had envisioned.

Good Discussion on Various Aspects of a "Typical" ADA Case by 7th Circuit

Although calling anything a typical ADA case is probably stretching the point, it is at least not uncommon to have an employee who following an injury can no longer work at the physical level he or she could before. In Ammons v. Aramark Uniform Services, Inc. (7th Cir. 5/21/04) [pdf] the Court dealt with just such a case. After almost 40 years as a boiler engineer and lead mechanic, Clyde Ammons injured his right knee. The result:

Dr. Krieger also concluded that Ammons could not return to his normal duties at Aramark and that he was limited to a light-medium level of work with the following restrictions: minimal kneeling (no longer than five minutes at a time); a limited period of “static standing” (no longer than eight minutes at a time); a maximum of one hour of “dynamic standing”; limited climbing; and restricted walking on “pain-level basis.” Dr. Krieger also concluded that Ammons could not resume a heavy level of work activity. Such a level would include occasional lifting of 100 pounds, frequent lifting of 35 pounds or less, and constant lifting of 15 pounds.

When his condition did not improve prior to the passage of the 18 month maximum leave of absence permitted under the collective bargaining agreement, Ammons was terminated.



Although both parties agreed that Ammons was disabled, there was a dispute as to whether he was qualified. In upholding the summary judgment granted by the district court, the appeals court also upheld striking an expert's testimony that he could perform the job, in large part because it was speculative. Most telling was the expert's inability to give an opinion as to whether or not Ammons could perform work on a number of specific machines given his physical condition. The court also rejected the argument that the company had not engaged in the interactive process because it would not hold a meeting with plaintiff's attorney and his vocational counselor, holding instead that the face to face meeting with the plaintiff was sufficient. Finally, while it agreed that plaintiff had identified two jobs he could perform, it also agreed with the employer that such duties would only fulfill half a day, and thus did not show that he could perform the essential functions of the job. Employers should be especially thankful that the court did not accede to the argument that would have required a meeting with plaintiff's counsel. This is not an atypical case and particularly as the work force ages, one would expect to be played out many more times.

Licensing Agency Not An Employer for ADEA Purposes

Deciding what it called an "important question", the First Circuit reverses a district court's determination that the Puerto Rico Ports Authority, which has the power to license harbor pilots was an employer for purposes of the ADEA. Camacho v. Puerto Rico Ports Authority (5/21/04) [pdf]. The issue arose following Hector Camacho's 70th birthday which was celebrated by the revocation of his pilot's license by the Authority, under its rule. Checking the indicia of what it takes to be an employer, the Court found the Authority fell far short of what is required. And did so with definitive language: "The sockdolager here is that the statutory power to license and regulate harbor pilots does not imbue the Authority with the level of control necessary to make it their employer for ADEA purposes."

Timing Is Everything - New Statute of Limitations Saves Corporate Plaintiff Under § 1981

A case from the 9th Circuit reflects the benefit of timing as well as addressing the question of whether a corporation with a distinct racial identity can bring a claim under §1981. The district court had dismissed a number of §1981 claims as time barred by a one year statute of limitations. It was a correct decision at the time, but had been overtaken by the Supreme Court's decision earlier this month finding a federal four year statute of limitations. Thinket Ink Information Resources, Inc. v. Sun Microsystems, Inc. (9th Cir. 5/17/04) [pdf]. The Court also aligned itself with other circuit courts in finding that a corporation which has acquired a racial identity, done here because the plaintiff had been certified by the SBA as a minority owned business, has standing to bring a §1981 claim.

Performance Appraisals - Some Recent Survey Data

Performance appraisals are a constant source of legally related issues, and now comes a consultant with survey data raising questions as to how effective they are. Although the headline,Little value to employee reviews, survey finds from the Seattle Times seems a little overstated, there is no question the problems discussed in the article are real. Starting with the lack of supervisory candor.

Just At the Lawsuit Stage, But Employee Challenges Management Proselytizing

In this case not only for a religious view of the world, but for a Baptist one. The Lakeland, Florida Ledger has the story, Lawsuit Alleges Religious Coercion.

One More Confusing Factor: State Law and the New Part 541 Regulations

I have mentioned several times the confusion caused by the political battles over the Department of Labor's attempt to modernize the regulations which govern the so called white collar exemptions to the wage and hour law. But as if that weren't enough, the AP story this weekend points out yet another layer, the interaction with existing state law. Illinois voted even before the final regulations were published to ignore them. But another 17 states have existing laws which will not be automatically supplanted by whatever version emerges from the Washington political wars. The Las Vegas SUN headline sums it up, New Overtime Changes Spark Confusion and the story lists the states which will stay in flux no matter what finally happens in Washington. Fortunately, Texas is not one. All we have to do is understand the new regulations and any accompanying legislation and have a crystal ball for prognosticating what will ultimately happen on the legislative scene.

Who Says The IRS Is Never Fun and Games?

It may be a more exciting place than I would ever have thought given the one piece of evidence that a white male provided to bolster his claim of reverse discrimination, required for such a claim in the 7th Circuit. His evidence,

at a training exercise early in his term of employment with the IRS, two female employees climbed onto a government vehicle, danced on top of it and proceeded to “moon” the audience, yet were not disciplined.

Without commenting on such a sight, the Court merely noted it failed to see how such evidence showed the IRS favored minorities or women in its employment practices.Katerinos v. U.S. Dept. of Treasury (7th Cir. 5/12/04).

Famous Last Words - "I Don't Think I Will Have Any Trouble Proving...."

In this case, the rest of the sentence was "that a lady with one hand is disabled," but as any experienced trial lawyer knows, almost anything can prove a stumbling block at trial. Here, a jury verdict for Caterpillar is affirmed when the quoted lawyer was unable to prove that a one handed lady was disabled and could operate a high speed scanner at the employer's required productivity level. Hoffman v. Caterpillar, Inc. (7th Cir. 5/11/04). Here the real key was an in court showing of a videotape of the plaintiff operating the equipment, a showing which not only convinced the jury that she could not meet the standard, but also made the exclusion of her expert who would have said she could, irrelevant.

4th Cir. Explores Parameters of "Adverse Employment Action" In Assignment Case

As discrimination claims become more nuanced, one of the more frequent battlegrounds is whether an employer's decision is an "adverse employment action" sufficient to merit Title VII protection. Anyone who has any familiarity with corporations and the politics that are often played in those organizations, know that assignments that may appear similar in some respects may have substantially different impacts on the upward mobility of one's career. That certainly is what the plaintiff, who was heading a large contract with the Washington Metro for his employer thought when he was reassigned to a marketing and business development position and relieved of his managerial duties on the Metro project.



Resigning a month later he sued for racial discrimination. In granting summary judgment the district court found:

There was no demotion. There was a transfer of responsibilities. The man’s salary was not affected. He received his bonus. He still had professional-level work. He was still, if he wanted to be, on track for promotion. There simply is not in this record the adverse action that would satisfy that element.

In affirming the Court noted the obligation to balance the need for protection against discrimination with the need to make sure that a possible lawsuit did not hang over an employer's head on every employment decision. A balance it found the district court properly struck. James v. Booz Allen & Hamilton, Inc. (4th Cir. 5/14/04) [pdf]. A strong argument can be made that federal courts and discrimination litigation are not calibrated finely enough to be an effective tool for resolving such questions. The question does remain -- what is the best way to address legitimate questions concerning discrimination where decisions are of necessity more subjective.

Unusual Twists - But Still A $1.3 Million Verdict for San Diego Detective

The headline from The San Diego Tribune site gives the outcome, $1.3 million awarded in bias case, but the story itself is even more interesting. The basic claim of the undercover detective Felipe Arroyo was that he was given more work because of his ability to speak Spanish. He converted that to a discrimination claim based on national origin. When he filed a formal complaint, two weeks after a failed mediation, he was reassigned closer to home, which he said was retaliatory because it made his undercover work more dangerous. After three hours of deliberations, the jury agreed with his position, awarding $425,000 on his discrimination claim and more than doubling that amount with a $900,000 award for retaliation. The San Diego Police Department's position was that he was a cop and being a cop is a dangerous business. Obviously, not an argument that sat well with this jury.

What You Can Find On the Web - the Board's §10(j) manual

Having been mostly out of pocket last week, I am sure this is old news now, but checking up this morning through Tom Mighell's (of Inter Alia fame) newsletter, I found mention of a new blog (to me) from the library at Lewis & Clark Law School, the BoleyBlogs, and a quick trip there found a reference to the allegedly complete (but bootlegged) copy of the National Labor Relations Board §10(j) manual. If I had been reading my regular blogs I would have found Robert Ambrogi's LawSites original post, last Monday, just like BoleyBlogs did, and I could have referred you to it then. I had difficulty getting the link to work, although it finally did. Hard to believe that there are that many people interested in Section 10(j) of the National Labor Relations Act, but if you have a real passion, just keep trying.

Wage and Hour Regulations - What Else You May Feel - What A Mess

Regardless of your view on the now published and theoretically to become effective August 23, 2004 regulations revising the white collar regulations that regulate the most common exemptions to the wage and hour law, you would have to agree that the process is nothing less than a mess. There is surprisingly little comment in this week end's news, although the story is far from finished. For a quick recap of the week's happenings see the CBS MarketWatch story,Senate votes to block new overtime regulations. However, it was not only the Harkin amendment that passed but also the Gregg amendment, which permanently exempts 55, many not well described occupations. What would happen if all of this became law would be a hopelessly confused situation, where you now might have to analyze exemptions under the old regulations, the new regulations, and the Gregg amendment and in order to be exempt it would have to pass all three. So much for simplicity. Of course both the Gregg and Harkin amendments have to complete the Congressional gauntlet and if they should, the President will then have a tough election year choice. Hard to predict what will happen, but pretty easy to know that it will be a mess no matter what.

The Million Dollar Verdict Back - In A Big Way - $15 Million for Sexual Harassment

A two week trial in U.S. District court in Albany, N.Y. ended in a $15 million verdict for 25 year old Kristen Nestler, who brought sexual harassment charges against Chartwell Dining Services. Although because of caps, the recovery will only be $450,000, it still is an impressive statement. Check out the story in the Albany Times Union or the one in the Troy Record. The jury was apparently upset as much about the "sham" investigation as it was the conduct of the middle age manager who harassed the much younger marketing manager. The final blow was when the company told her that none of her co-employees corroborated her story, which was not true.

New Drug Testing Rules and Methods - Hair, Saliva and Sweat

The Houston Business Journal has a story on new drug testing methods that are mentioned in the proposed revisions for the Federal Workplace Drug Testing Programs.

Where is a Jury When You Need One?

Must be what the plaintiff was thinking in Koons v. Aventis Pharmaceuticals, Inc. (8th Cir. 5/7/04) [pdf]. After working 15 years, the plaintiff, the head of security for the company was losing his position because he did not want to transfer to New York from Kansas City. He worked on under both a severance and a key employee retention plan. What had been an exemplary performance record soured during the transition period as he was forced to end another employee's termination early. When his replacement was hired more than 6 months before his departure date he was left with relatively little to do and in fact he was urged to retire by his successor. Instead he agreed to an earlier termination date of about six weeks. Although still on the payroll he had little to do and in fact with full knowledge of the company he began to pursue a real estate career. In doing so, one thing he did was talk a lot on his company cell phone, including 3,321 minutes in August. The same month there was also a complaint from an employee who had received an announcement from the plaintiff about his new real estate adventure. That email was from a list the company considered and marked confidential. After that it becomes less clear what happened, but the plaintiff was ultimately confronted with these two issues and when he maintained they were appropriate under company policies, was terminated one month before his agreed date for violation of company policy. The problem, for him, was that the termination for policy violations cost him the $200,000 or so he was entitled to in severance pay. His claim, or at least the one that made it to the 8th Circuit, was whether he was entitled to the benefits and also whether or not he had been terminated to interfere with his receipt of an ERISA benefit. The answer by the magistrate who tried the case was no, and the 8th Circuit noting the deference it was required to give to such decisions upheld it. Since it seems a very favorable set of facts and an unusual course of conduct by the employer, the extremely favorable outcome for the employer, makes one wonder what is missing from the record. Maybe nothing more than strict adherence to the rule of law, but I am almost certain that this is one case where the plaintiff most sorely wished he had been allowed to argue his case in front of a jury of his peers.

For Certain Texas Plaintiff's, Supreme Court's Action Gives Two More Years

Race and most national origin claims, can be brought under §1981 as well as Title VII or the TCHRA. Doing so avoids the administrative prerequisites, the salary caps and now thanks to today's Supreme Court decision, plaintiffs have two more years to bring such claims. Jones v. R.R. Donnelley & Sons Co. (U.S. 5/3/04). Although it had earlier held that the most applicable state statute of limitations should apply to §1981 claims, today's decision was to determine whether that had changed because of a Congressional statute which applies a four year catchall statute of limitations to all statutes passed since 1990. The question was whether the revisions to §1981 contained in the Civil Rights Act of 1991 were enough to bring it within that statute. The answer,unanimousous yes. And so in Texas where we have the two year tort statute of limitations, these claims will now live for another day, actually another 730 days.

6th Circuit Supportive of Arbitration - Except for Problems With Costs

Reversing a Tennessee trial judge who among other things thought philosophically that Title VII cases should be in court, the 6th Circuit generally upholds an arbitration agreement. The one caveat has to do with possible cost splitting. The agreement which incorporated AAA's cost structure was sent back to the district court to see if plaintiff can show it would be prohibitively expensive. The Court also rejected the employer's offer to pay the costs, agreeing with the 11th Circuit that allowing post contractual modification would only encourage employers to put in onerous provisions. Still, with care about the cost splitting provisions, it is basically a green light for arbitration in the 6th Circuit. Cooper v. MRM Investment, Inc. (6th Cir. 5/3/04) [pdf].