Employment and Labor Insider - Legalese Is Not Spoken Here

It seems like such an insignificant little case, but it's really a can of exploding snakes.

An Illinois woman who was terminated after she was caught working during her lunch period has won her claim for unemployment. (The employer said that she was not terminated for working but for her behavior after she was confronted about the unauthorized work.)

Your gut reaction was probably the same as mine -- they terminated this lady for working? What, are you kidding me? What is wrong with this employer?

But after I came to my senses, I had a few more thoughts:

*The Land of Lincoln requires that employees who work 7 1/2 hours or more get a 20-minute unpaid meal break after their first five hours of work or earlier. So, presumably, this employer faced potential liability if it looked the other way when employees skipped their meal breaks to work.

*The Fair Labor Standards Act requires that non-exempt employees be compensated whenever they are required or "suffered" to work. "Suffered," for those of you who don't read the King James Version of the Holy Bible, or Stephen King, means "allowed." Therefore, if an employee chronically skips unpaid breaks of 20 minutes or more, the employer could be liable for back pay and (potentially) overtime.

*According to the employer in this case, the employee had been warned several times in the past about working during her breaks.

In other words, this case raises a nice thorny set of issues about "off-clock work."

The problem. It helps to recall that the FLSA was enacted in the 1930's, when the work force consisted of men (as in, "males") going to heavy, dirty factories, doing heavy, dirty labor, punching out at the end of the day, and going home to simple-but-delicious dinners cooked by their loving wives, and surrounded by their obedient children, and listening to FDR's Fireside Chat on the Wurlitzer. (Yeah, I'm sure it was exactly like that, but you get my point.) Or, for a 1960's version, think Fred Flintstone and "the fights" on TV.

As a result, the FLSA still works pretty well in what manufacturing we have left in this country but less so in the Buck Rogers world of the salaried non-exempt employee, who is equally likely to be female and who may place more value on a flexible schedule and be more inclined to "work straight through" so she can leave early and get little Addison and Liam picked up before the day care center closes. (PS - Sometimes guys like flexibility, too.) Not to mention that we now have these devices called "cell phones" and "home computers," which greatly heighten the risk that some "off-clock work" will be performed on any given day. And not to mention that the supervisors of these employees are FLSA-exempt and can work whenever they feel like it with no problem . . . which makes them more inclined to think nothing of their direct reports' doing likewise.

My own opinion is that salaried, non-exempt employees should be able to make their own schedules and be flexible if the job allows it. But nobody consulted me when they enacted the FLSA. (I'm sure they wanted to, but my parents were only preschoolers at the time and hadn't met yet.) So, according to the "Stone Age" law, employers are faced with two unattractive alternatives: (1) keep employees happy by letting them do their thing as long as the work gets done, but risk liability for off-clock work; or (2) obey the law by requiring employees to stick to their required shifts and take all required breaks on schedule, no ifs, ands, or buts, which will make the employees very unhappy, not to mention insulted because they identify with the Buck Rogers world, not the Flintstone world.

I suspect that our Illinois employer chose option 2 because it understandably wanted to stay out of legal trouble. And it's very difficult for an employer to win an unemployment case anyway, especially in Illinois. (Scroll down to "Disqualifications" and "Definitions.") This employer will still probably be in great shape to defend a wage and hour lawsuit.

The solution? I'm not only a lawyer, but I'm also an employer, so "I've looked at life from both sides now." Here are my suggestions for minimizing your exposure for off-clock work while keeping your non-exempt employees relatively satisfied with their jobs:

*Set a "regular" work schedule that fits the needs of your non-exempt employee. Even though you may need to make adjustments as her needs require, get as close as you can with her "regular" schedule. For example, if she has to leave at 3 p.m. to get the kids from school, make the "regular shift" 7:30 a.m. to 3 p.m. if you can. This will not resolve all of your "off-clock" problems but will at least make it likelier that she will be able to put in a full day's work without wreaking havoc in her personal life.

*Tell your non-exempt employee that you do not expect him to work outside his normal hours even if you leave voice mail messages or send emails to him outside his normal hours. If you're like me, you think of all kinds of crazy things at 3 a.m. and want to send an email or leave a message right away because you know you'll have forgotten it by the time all the normal people are at work. Make sure your employees know that you are doing that for yourself and that there is no expectation that they act on your crazy-hour messages, or even read or listen to them, until their regular work day starts. Better yet, do your reminders to yourself in "Tasks" in Outlook or an app like Evernote so that your employee will not feel that you're pressuring him to work outside of his normal hours.

*Constantly REMIND your non-exempt employee that you do not expect him to work outside of his regular schedule even if you leave messages after his normal hours. Whenever you leave an outside-work-hours message, be sure to preface it with "When you come in tomorrow . . ." or "This can wait until you're back in the office, but . . ." so that he clearly understands you're not expecting him to take care of it right then and there.

*Make sure your non-exempt employee knows to include on her time records any "extra" hours she put in. You will never be able to avoid some work outside normal hours. But make sure your non-exempt employee understands that she is to be paid for this time and must put it on her timesheet. A lot of non-exempt employees do not realize this -- they think of themselves as professionals, just as you do.

*If you can't afford to pay overtime, let your non-exempt employee "make up" the extra work time by taking off early . . . in the same workweek. Unless you're a government employer, there is no such thing as "comp time." But the FLSA overtime requirements apply only to hours worked in a single workweek. So if you need for your non-exempt employee to work late on Monday, give her Friday afternoon off. She'll probably love it, and if the afternoon off gets her hours for the week to 40 or less, you won't owe any overtime. (This is what they call a "win-win.") To repeat: the "make-up" time off must be taken in the same workweek. If it can't be made up in the same workweek, you will owe the overtime pay.

NOTE TO CALIFORNIA EMPLOYERS: In California, overtime is calculated on a daily basis, so this won't work for you.

OK, OK, but what do you do if your employee continues to disobey your instructions to avoid off-clock work?

*Do treat it as a disciplinary issue. First, make sure your expectations have been clearly communicated and that you are not "winking" at off-clock work. Realize that most employees want to do a good job and please their bosses, so make sure you aren't giving off vibes that make your employees think off-clock work is expected, no matter what you may say.

If you have not communicated your expectations clearly before, do so now. If you used to "suffer" off-clock work and have decided to turn over a new leaf, make sure your employees know that the rules have changed and that you sincerely mean it. Once you are comfortable that they know (and believe) the expectations, start with an oral counseling the first time you catch them working off the clock. If it happens again, up it to a written warning. Continue with the progressive steps, and if you have to eventually terminate, then terminate. Even if you don't win your unemployment case, that's not the end of the world. Much better to lose the unemployment "battle," but prevent or win a collective or class action "war" under the FLSA or state wage-hour law.

*Do. Not. Dock. There may be some very limited instances in which you can dock (but don't ever try it without the advice of qualified counsel), but in 99.9999 percent of the cases, you should not dock an employee's pay when the employee worked without authorization.

One final word of caution: Pay attention to your surroundings. You may see employees looking like former President Ford in the black-and-white photo above, or coming in early, or leaving late. If you see those goings-on and don't do anything, chances are you will be found to have "suffered" your employees to work.

Bonus word of caution: In case the preceding post has not made this clear, "salaried" does not equal "exempt." (Scroll down to Number 3.)

After a great holiday feast, isn't it fun just to eat the leftovers? Like a nice, cold roast beast sandwich with a wedge of leftover pie? Yum!

Here are some great labor and employment blog "leftovers" from the holidays that I hope you will enjoy as much as I did, followed by a few new year's resolutions for employers and employees. Please add to my list!

In case you were chillaxin' last week and missed it, here is a link to my 2011 labor and employment year in review. With President Obama's recess appointments (thanks to Eric B. Meyer of The Employer Handbook), it's already getting stale, so hurry up and eat!

More tasty cold stuff from around the internet:

The Evil HR Lady tells you how to know if you are the "Kim Jong Il" of your company. Funny, and good advice, too.

Daniel Schwartz of the outstanding Connecticut Employment Law Blog uses his Magic 8 Ball to let us know what to expect in the world of employment law in 2012.

And Donna Ballman of Screw You Guys, I'm Going Home uses the magic 8-ball app on her iPad to make her 2012 predictions from a plaintiff's perspective. Donna, you are so high-tech!

Philip Miles of Lawffice Space shares with us his Top 5 Employment Law Cases of the Week for 2011. If you ever wanted to know about "Crazy Bi**h Bingo" (and who doesn't?), be sure to check Philip out!

Here's a favorite from Jon Hyman of Ohio Employer's Law Blog: Resolve this year to properly handle no-fault attendance policies. Since the $20 million EEOC/Verizon settlement, this is more important than ever.

OK, is that tryptophan kicking in yet? But, wait! Don't get too comfy, because now it's time for some employment New Year's resolutions:

1. If I am an employer, I will make sure all of my supervisors and managers have harassment training this year. At a minimum, the training will cover harassment based on race, national origin, religion, disability, and age, as well as sex. If my state or company policy prohibits other types of harassment, I will be sure that those types are covered as well.

2. If I am an employee, I will refrain from using social media to bad-mouth my boss, my company, my co-workers, or my customers . . . even if the National Labor Relations Board says it's legal for me to do so.

3. If I am an employer, I will review my attendance, medical leave, and reasonable accommodation procedures to make sure that they comply with the Americans with Disabilities Act. If they don't, I will make the appropriate changes right away. No procrastination!

4. If I am an employee, I will show up for work on time every day unless I have a very good reason not to, and I will give my employer a fair day's work for a fair day's pay, with no "drama."

5. If I am an employer, and if I haven't done it recently, I will have a wage-hour audit in 2012 to ensure that my employees are properly classified as exempt/non-exempt, that the non-exempt employees aren't working off the clock, that I'm not violating child labor laws (especially if I'm in the food or hospitality industry), and that I don't have any employees whom I am improperly treating as "independent contractors." If it turns out that I'm doing anything wrong, I will promptly fix it. No dawdling!

6. If I am an employee, I will comply with my employer's rules about appropriate behavior at work, including but not limited to rules pertaining to honesty, harassment and bullying, and safety.

7. If I am an employer, I will make sure that I am in compliance with the Genetic Information Non-Discrimination Act, and in particular that I am providing the "safe harbor" language whenever I sent one of my employees to the doctor.

8. If I am an employer, I will re-familiarize myself with the concept of "retaliation" and consult with an attorney whenever an employment decision looks like it may be close to the line. I will not wait until after the damage has been done.

Ugh. And this post started out so nice. Please add any resolutions you think employers or employees should make this year. And a safe and prosperous 2012 to you all!

Don't eat that pretty red apple, Snow White!!! It has poison in it!!!!

You know the old saying, "If it seems too good to be true, it probably is"? Well, it appears that this may be the case with the new "sweet deal" the Internal Revenue Service is offering to employers who agree to reclassify their "independent contractors" [sic] as "employees" in exchange for some admittedly generous breaks.

The IRS announced this week that it is offering a REALLY, REALLY NICE THING to employers. :-)  If an employer promises that it will treat its independent contractors as employees going forward and enters into an agreement with the IRS, the IRS will assess employment taxes for only the tax year before the agreement was entered and at a reduced rate, with no penalties or interest, and no audits. The program is aimed at small employers, but all employers are welcome. Jewell Lim Esposito at our sister blog, Employee Benefits Unplugged, has more details about the IRS deal and thinks it's great from a pure tax standpoint.

I agree. But, as Jewell also notes, the news release says nothing about amnesty on all liability resulting from a misclassification.

I must admit that I wondered why this Administration, which is usually aggressive toward employers, is all of a sudden being so sweet and lovable?

(I am such a cynic.)

It then occurred to me: But, of course! This is to allow that other agency, the U.S. Department of Labor, which presumably will not be a party to the IRS/employer agreement, to come in and sue the pants off the employer for back benefits and wage-hour violations. Because, you see, misclassified "independent contractors" don't get benefits or overtime, and they may not even be getting the minimum wage once their "fee" is divided by hours worked.

My paranoia was really raging now, and I remembered another news item that came out at the beginning of this week: Secretary of Labor Hilda L. Solis announced a "cooperative" initiative in which the IRS, the DOL, and 11 state governments* are going to start working together to fight misclassification of employees as independent contractors. In addition, the Office of Federal Contract Compliance Programs (the affirmative action guys) and the Occupational Safety and Health Administration are among the agencies who will be receiving and sharing information.

*The 11 states who entered into the memorandum of understanding or have agreed to do so are Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah and Washington.

(Hat tip to Bureau of National Affairs for both of these news items.)

So! Aha! Putting it all together, here's what the deal really appears to be: A naive (probably small but could be large) employer who has some misclassified folks will read about the IRS deal and think, "What have I got to lose? I'd be a fool to turn this down!" So he signs the agreement with the IRS.

Bam! Six months later, the DOL -- who has received from the IRS the list of unsuspecting employers who entered into this agreement admitting that they were doing it wrong -- comes out for an investigation and hits the employer for overtime and possibly minimum wage violations. Then, the employer's state government -- armed with the same information -- comes out and clobbers the employer for workers' compensation premiums and benefits, and possibly other benefits that the state requires employers to offer to employees. Bam! Bam!

But, wait! There's more! The newly classified employees might have claims for other employment benefits as well, as Microsoft learned the hard way. Bam! Bam! Bam! Then, OSHA and the OFCCP and who knows who else can come in and kick the employer a few more times while he's down. Bam! Bam! Bam! Bam! Bam! (etc.)

THE MORAL: If you have "independent contractors" who are misclassified, by all means get that fixed as quickly as you can. As long as the workers are misclassified, you are potentially liable for back taxes, including FICA, and penalties, back benefits, and back wages. In fact, you can even be liable for severance pay in the event that the faux independent contractor was let go under circumstances that would have entitled her to severance if she'd been an employee. (I actually had this happen to a client once.)

To repeat, if you're doing it wrong, stop it now. But don't be too eager to enter into this deal with the IRS, and definitely do not enter it without consulting with your attorney. Situations vary, and the IRS deal may be good for some, but you also may be much better off taking your chances with an IRS audit (which may or may not ever happen). Meanwhile, you will not be erecting a large neon sign with flashing lights saying, "Here I am, Hilda Solis and everybody else -- I'm guilty -- come and get me!"

Just call me Jim Garrison.

Odds and ends from the employment law world this week:

Facebook rant about wages didn't create retaliation claim. Molly DiBianca of the Delaware Employment Law Blog reports on a decision from a federal court in Florida saying that a Facebook rant about an employer's alleged violations of the Fair Labor Standards Act overtime provisions was not "protected activity" that would trigger the FLSA's anti-retaliation protections. 

Cavalier about age discrimination? The EEOC reached a $1 million class settlement with Virginia's Cavalier Telephone, LLC, over allegations that the company used recruiters who made comments that showed age-based bias including that they did not want to hire anyone who was "over 40 and pudgy." The two class representatives also alleged that they were demoted and terminated after they complained. The EEOC is on a roll with this one and its recent $20 million settlement with Verizon, which resolved claims related to application of a no-fault attendance policy to employees with disabilities.

FMLA leave for death of a child? Sen. Jon Tester (D-Mont.) has introduced legislation that would expand the Family and Medical Leave Act to include job-protected leave for the death of an employee's son or daughter. The bill, which has no co-sponsors, is entitled the Parental Bereavement Act (S. 1358), and would apply to employers of 50 or more employees.

You go, girls! The federal Bureau of Labor Statistics reports that the wage gap between men and women narrowed slightly in 2010, with women now making 81.2 cents for every dollar that men earn. The "wage gap" statistics do not control for position held, years in workforce, educational level, or any other non-discriminatory reason that might explain the gap. 

How can this be? Jon Hyman of Ohio Employer's Law Blog reports that the EEOC has sued a nursing home called Menorah House for allegedly refusing to accommodate the need of an employee to observe the Sabbath. HUH? Granted, the employee is not Jewish but a Seventh-Day Adventist, but still!

Why couldn't the pony talk? It was a little horse. Eric B. Meyer of The Employer Handbook blog discusses whether a miniature horse can be a reasonable accommodation under the ADA. Inquiring minds want to know!

Plaintiff's lawyer Donna Ballman and The Evil HR Lady have had good posts recently on common employee misconceptions about employment law, including the "right" to see what is in one's personnel file and the "right" to take a break.*

*Depending on where the employee lives, he may have these rights, but in many states he does not. And the federal Fair Labor Standards Act does not require breaks. 

What's good for the goose is good for the gander. So, what are the most common misconceptions about the law by employers? Here are five that I see frequently:

No. 1 - "This is a right-to-work state. We can fire you at any time, and for a good reason, a bad reason or no reason at all." This is wrong on so many levels. First, many states -- particularly in the North and Northeast -- are not right-to-work states. But even assuming the speaker really is in a right-to-work state, he has misunderstood what it means. A right-to-work state is one in which employees cannot be forced to join a union or pay union dues as a condition of employment. The speaker is confusing "right-to-work" with "employment at will," which brings me to my next misconception . . .

No. 2 - "This is an employment-at-will state. We can fire you at any time, and for a good reason, a bad reason or no reason at all." Oh, yeah? I dare ya to try firing someone for a bad reason or no reason, even in an employment-at-will state. I've blogged about this before. Even if your state is technically employment-at-will  (and not all are), you still can't terminate an employee for an illegal reason. And there are an awful lot of illegal reasons -- so many, in fact, that they swallow the rule.

Allow me to use my relatively employer-friendly home state of North Carolina as an example. Even though we are at-will (allegedly), many grounds for termination are unlawful, including (1) because the employee refused to break the law, (2) because the employee filed or is expected to file a workers' compensation claim, (3) because of the employee's race, color, national origin, sex, age, or disability, (4) because the ground for termination is found to have violated a "public policy" of the State, (5) because the employee filed a state workplace safety complaint, (6) because the employee exercised her rights to join or not join a union (see #1, above!), (6) because the employee uses lawful products during non-working hours, and on and on and on, yada yada yada. And this doesn't even count all the federal laws that also protect employees in all 50 states.

And you may say, "But I'm not firing the employee for any of these illegal reasons! I just don't like her hairdo!" Technically and superficially, that would be a "legal" reason to terminate an employee in an at-will state . . . if she's foolish enough to agree that this was the reason. But you can be sure that the employee fired because of her bad hairdo will claim you really fired her because she was a woman (illegal), because of her race or national origin (illegal), or because she testified truthfully in her best friend's unemployment hearing (illegal). Which means, at the very least, an expensive lawsuit for you and, at worst, a jury verdict in her favor because who would ever believe that an employer would get rid of a good employee just because she had bad hair?

3. "Exempt = salaried." This one is very common. Employers frequently believe that they have to pay overtime only to "hourly" employees and that everyone who is "salaried" is FLSA-exempt. Not true, and it can be very expensive to find out you've been doing it wrong, especially if you find that out during a collective action brought by all of your non-exempt "salaried" employees. Under the FLSA, being salaried is usually a necessary condition for exemption, but not a sufficient one. The employee must also satisfy the "duties" requirements for the executive, administrative, or professional exemptions. (There are exemptions for outside salespersons and certain computer employees that do not require payment of a salary.) This is why clerical employees, for example, fill out time sheets and (should) get overtime if they work more than 40 hours in a workweek.

4. "Just treat everyone the same, and you'll never go wrong." This was great advice in 1970, when "non-discrimination" was a new-fangled idea, but not any more. Generally, an employer does want to be fair and be as consistent as possible. However, there are some major exceptions that can really cause problems if the employer is not aware of them. First, there is the Americans with Disabilities Act, which I have discussed at length elsewhere and which requires reasonable accommodation in appropriate cases. "Reasonable accommodation" by definition requires that you treat one employee differently from other employees. Covered federal contractors face similar requirements under the Rehabilitation Act and the Vietnam-Era Veterans Rehabilitation and Adjustment Act and its amendments. In addition to these laws, Title VII requires that employers make reasonable accommodations to the religious beliefs and practices of employees. In this context, as well, "accommodation" means "differential treatment."

As Ralph Waldo Emerson said, "A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines."

5. "Women make only 59 cents for every dollar that men make, and it's because sex discrimination is rampant in the workplace even though it's been illegal for almost 50 years." This one drives me crazy, so I had to save it for last. First, ladies, we are moving up in the world. We are now making 77 cents for every dollar that men earn. So there! More importantly, even the 77-cent statistic is dishonest because it measures only the average pay of all men versus the average pay of all women. Some little details not taken into account include, oh, I don't know -- job held, education, time in workplace, full-time versus part-time . . .. 

Seriously, there is a gender-based pay gap, but it is not at all clear that discrimination is the reason. A more likely explanation is the difference in men's and women's lifestyle choices.

Statistically speaking, women are more likely to start their paid-work lives later and to take more breaks, usually as they bear and rear children. (We break for children.) For family reasons, women are also more likely to work in "clean, safe" jobs with regular hours and minimal travel, and to seek part-time work schedules. The physically demanding, dangerous work with rotten hours or extensive travel is usually performed by men. (Please note that I am speaking statistically and realize that there are exceptions to these rules.)

I have also seen that our bad economy has resulted in more male than female unemployment. (Scroll down to second-to-last paragraph.) So it may be that men are really the ones getting the raw deal, not women. Or, perhaps we can just agree that things are tough all over, and for all of us.

I'd love to hear from you if you have more employer misconceptions to add. And, to all of you readers who are moms, Happy Mother's Day. I hope that you think your kids were well worth the pay gap that "they" caused. Mine were!

The U.S. Department of Labor is planning to impose new “affirmative action” requirements on employers, requiring them to develop “plans” to address workplace safety, equal employment opportunity, and wage and hour/employee classification issues.

For the most part, these requirements – called “Plan/Prevent/Protect” – will not be limited to federal contractors but, rather, will apply to all employers covered by the relevant laws.

The proposed changes are dramatic, and shift from what the DOL calls “catch me if you can” (in other words, employer is presumed compliant unless the government is given reason to believe otherwise) to “Plan/Prevent/Protect” (in other words, employer is presumed guilty unless it can prove otherwise). “[E]mployers and other regulated entities will be asked to assemble plans, create processes, and designate people charged with achieving compliance,” says the DOL, and “compliance will be non-negotiable . . ..” (Emphasis added.)

The “Plan” component will require employers to enlist employees in “identifying and remediating risks of legal violations and other risks to workers.” The plans must be made available to the workers “so they can fully understand them and help to monitor their implementation.”

The “Prevent” component will require employers to “thoroughly and completely implement the plan in a manner that prevents legal violations. . . . The employer . . . cannot draft a plan and then put it on a shelf. The plan must be fully implemented . . ..”

The “Protect” component will require employers to ensure “that the plan’s objectives are met on a regular basis. Just any plan will not do. The plan must actually protect workers from violations of their workplace rights.”

In the context of compliance with the Fair Labor Standards Act, Plan/Prevent/Protect will require that employers provide information to employees about how their pay is calculated, and prepare a “classification analysis” with respect to any job that it treats as FLSA-exempt. Of course, the analysis will have to be made available to the employees and the government. The DOL will issue proposed regulations on Plan/Prevent/Protect at some unspecified point in the future.