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Employer Law Report

Is your workplace ready for Fall? Check the Employer Law Forecast

Posted in Porter Wright News

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Check the Fall forecast for your workplace at

Porter Wright’s Employer Law Forecast

Fall is here – time for football, back to school activities and planning for the holidays.

For many employers, however, Fall also comes with its fair share of seasonal headaches, including:

Paying employees correctly during daylight savings Holiday pay and FMLA issues during the Fall holidays
Fantasy football in the workplace Voting leave laws during Election Day

To address these and other seasonal concerns, Porter Wright is pleased to share the latest posts on our microsite – Employer Law Forecast, a new way to deliver insightful legal content to readers.

The Employer Law Forecast is an online tool that helps employers and human resource professionals plan for employment law issues that occur seasonally. The site offers visitors a wealth of knowledge on employment law, combining relevant and educational information within entertaining and thought-provoking content.

In the Forecast’s posts, Porter Wright’s attorneys provide analysis and insight into new developments in employment law and provide links to helpful resources.

The Employer Law Forecast is a supplement to the firm’s long-standing Employer Law Report Blog – www.employerlawreport.com. The Forecast’s user-friendly seasonal format makes it easier for human resource professionals to find relevant information before it’s needed, and to serveas a helpful reminder of what employers can expect next.

The Forecast was designed to provide easy access from mobile devices, optimizing the user experience depending on the type of device used to view the site. The Forecast functions like a smart phone app, but is still available on desktop computers, making it easy for readers to find the content they seek without downloading an app.

Click here to view the Forecast and sign up for its seasonal updates.

OSHA modifies rules for reporting of severe injuries and fatalities – updates exemptions from record-keeping requirements

Posted in Workforce Strategies

Recently, the federal Occupational Safety and Health Administration (OSHA) announced a final rule changing requirements for reporting severe injuries and fatalities. The rule also modifies OSHA’s exemptions from its record-keeping requirements. The new rule takes effect January 1, 2015.

In most circumstances, there is no obligation to notify OSHA when there is an injury or illness incurred at work. Employers are required to log work-related injuries and illnesses on OSHA forms. OSHA does inspect those logs when they conduct workplace investigations. But, in most cases there is no general obligation to notify OSHA when an employee becomes ill or injured at work except in two instances.

Employers do have an obligation to notify OSHA within eight (8) hours if there is a fatality at work. Even though the obligation relates to “work-related” fatalities, OSHA interprets the obligation broadly and requires, for example, that every heart attack that occurs at the workplace must be reported, even if the employer feels circumstances suggest there was no work causation. Under the old OSHA regulation, the other circumstance under which an employer was required to notify OSHA was if a single workplace accident resulted in in-patient hospitalization of three or more workers. In that case, notice to OSHA was required within 24 hours.

OSHA’s revised rule keeps intact the obligation to notify OSHA of work-related fatalities within eight (8) hours. The new rule expands the obligation for notice to OSHA of other kinds of workplace incidents. Under the new rule, employers will be required to notify OSHA within 24 hours if a workplace incident results in any in-patient hospitalization, regardless of how many employees are affected, and also in the case of any amputation or the loss of an eye.

The new rule does not change OSHA’s basic obligations for record-keeping. Employers with 10 or fewer employees are still exempt from the basic OSHA record-keeping requirements. However, OSHA has updated the list of specific industries that are exempt from the requirement to keep routine injury and illness records. Certain low-hazard industries have always been exempt from the basic record-keeping requirements. The new rule establishes a new list of exempt industries. The basic OSHA record-keeping requirements will now be extended to some industries that were previously exempt. The list of newly-covered industries includes, but is not limited to, automobile dealers, many retailers, industries providing services to buildings and dwellings, and various amusement and recreation industries. The changes are a result of OSHA switching from reliance on the old Standard Industrial Classification system over to the new North American Industry Classification System.

Join Us In Cleveland On Thursday, October 23 for The Greatest Seminar on Earth!*

Posted in EEO, Employee Benefits/ERISA, Events, Traps for the Unwary, Workers' Compensation, Workforce Strategies
Come one, come all!

 Register here

There is no charge for this seminar; however, seating is limited. Please RSVP by Monday, Oct. 20. If you have questions, please contact
Erin Hawk.

Thursday, Oct. 23, 2014 

7:45 – 8:30 a.m.
Registration and Breakfast 

8:30 – 11:00 a.m.
Program

LockKeepers Restaurant
8001 Rockside Road
Valley View, OH 44125

 

Come One, Come All!

Feel like a lion tamer or a trapeze artist trying to avoid a risky move or a dangerous misstep? 

Join Porter Wright’s Labor and Employment Group in Cleveland on Thursday, October 23 as we present . . .

The Greatest Seminar On Earth!*
The Circus Is Coming . . . To A Workplace Near You

Walking the Tightrope: Balancing Your HR Decision-Making Process to Reduce Risk
Tracey L. Turnbull

In your role, every day is a balancing act. You face significant challenges where one misstep can put your business at risk. In this session, we will review recent significant judicial and administrative decisions addressing a variety of employment law issues. This review will highlight the best practices and instincts that will keep you in balance and aloft. 

Become the Accommodation Ringleader: Managing Workers’ Compensation and ADA Issues Effectively
Fred J. Pompeani and Leigh Anne Benedic 

Feeling like ADA and Workers’ Compensation issues are a juggling act? In this session, we will help you keep from dropping the ball by discussing key Workers’ Compensation and ADA concerns that any employer might face, and walk you through some of our best practices so you can keep accommodation issues from becoming a circus.

The Healthcare Reform Sideshow Takes Center Stage
Ann M. Caresani

Keeping up with the latest developments in healthcare reform is not a task for the faint of heart. In this session, we will discuss some of the most recent guidance, strategies and issues that employers are dealing with as they strive to get their workforce and their healthcare plans into shape prior to compliance deadlines.

You won’t want to miss this one!

*In our humble opinion

The greatest seminar on Earth! In our opinion...

Circuit Courts remind employers that notice is the key in administering the FMLA!

Posted in Leave Administration, Other Articles, Traps for the Unwary

Both the Third and Sixth Circuit Courts of Appeal issued decisions last month reminding employers that providing proper notices to employees is a key to administering the FMLA. In Wallace v. FedEx Corporation, the Sixth Circuit upheld the district court’s ruling that the employer interfered with its employee’s FMLA rights when it failed to notify her of the consequences of not turning in an FMLA leave certification. Similarly, in Lupyan v. Corinthian Colleges, Inc., the Third Circuit reversed a summary judgment finding in favor of the employer because there was a factual dispute regarding whether the employer had informed the employee that her leave from work had been designated as FMLA leave and that she had to return to work within twelve weeks or be terminated.

Wallace v. FedEx Corp.

Tina Wallace worked for FedEx in 1986 as a part-time package handler until June 2007, when she was promoted to senior paralegal, and worked under supervisor Rusty Phillips. Shortly after the promotion Wallace suffered from temporomandibular joint disorder (“TMJ”). She suffered with severe headaches, facial pain, chest pain and significant weight loss. Wallace did not inform Phillips of her medical condition. Wallace arrived to work late several times, and Phillips reminded her of the importance of arriving to work on time. Wallace apologized and stated she would try to be at work at or before 9 o’clock. By August, Wallace was struggling to get to work.

In early August, Wallace e-mailed Phillips stating she was not sure what to do and explained she had struggled with whether to tell someone at FedEx about what she was experiencing. Phillips responded to Wallace’s e-mail, encouraging her to keep an open and honest line of communication, so she could successfully perform the job duties of her new position. He also offered to find someone with whom she could comfortably speak about any issues. Wallace missed Monday and Tuesday of the following week, and on Tuesday she e-mailed Phillips stating she would be away from work the remainder of the week.

Wallace returned to work the following Monday, albeit, 90 minutes late. Phillips e-mailed her again about her attendance issues and both agreed to start fresh. The fresh start never happened, however, because the next day Wallace was 30 minutes late. Phillips prepared a written warning documenting Wallace’s tardiness and the on-going attendance issues. On August 15th, Wallace met with Phillips and a FedEx Human Resources Manager to discuss the written counseling. Wallace alerted Phillips and the Human Resources Manager she was having difficulty, in part, because her doctor had adjusted her medication. Phillips gave Wallace three options:

  1. Comply with the attendance policy and complete work assignments in a timely fashion;
  2. Consider taking a period of time for medical leave until she felt capable of adhering to the attendance policy and completing her work tasks; or
  3. Elect to not comply with the work requirements and suffer the consequences of the progressive discipline process.

Immediately following the conclusion of the meeting, Wallace went to a pre-scheduled appointment with her physician. During the visit, Wallace’s physician noticed she was not physically well, and recommended she take off at least two weeks due to her medical condition. The physician stated she would reassess Wallace after the two-week period. Wallace’s physician also indicated her absences on August 7-10 should be excused for medical reasons. Wallace met with Phillips after the appointment and gave him both letters from her physician. Wallace also met with Phillips and a FedEx labor & employment attorney. The three discussed Wallace’s medical leave, and the attorney gave Wallace several FMLA forms. The attorney told Wallace FedEx needed to receive the completed forms within 15 days.

Wallace took the forms to her physician, who completed them by August 20th. The physician also wrote a letter recommending Wallace take an additional three weeks of sick leave. Although Wallace left the physician’s office with the forms and letter, she never turned them into FedEx. The original two-week period came and went, and when Phillips did not hear from Wallace, he tried to call her several times. Phillips kept getting a busy signal, so he emailed her to inform her that her leave had ended and that he had received no additional documentation from her. Phillips also explained that if her physician had provided her with additional sick time, she must notify him of her absences as required by the Company’s policy.

On Tuesday, September 4—seventeen days after receiving the FMLA form, Wallace notified the HR Rep she was on her way to the hospital for emergency surgery on her right ear. The same day Phillips drafted a termination letter ending Wallace’s employment with FedEx. He cited to FedEx’s no-call, no-show policy, which provided that absences on two consecutive work days without notice was a violation FedEx’s attendance policy. Phillips and the HR Rep also left a voicemail for Wallace advising her she had been terminated. The next day Wallace received the letter and the voicemail message and immediately called Phillips, the HR Rep, the General Counsel and Vice President at FedEx. She explained she had a completed medical examination form, but was told it didn’t matter.

The Suit

Wallace filed suit in federal court about six months later, alleging FedEx violated the FMLA by terminating her employment. A few days into the jury trial, FedEx moved for judgment as a matter of law. The trial court denied the motion, finding that a reasonable jury could conclude that FedEx failed to comply with 29 C.F.R. § 825.305, when it failed to advise Wallace of the anticipated consequences if she failed to provide adequate certification within the fifteen (15) day period. After another day of testimony, FedEx moved again for judgment as a matter of law. FedEx argued that Wallace failed to put the company on notice that she was taking FMLA leave. Again, the court denied the motion, finding sufficient evidence in the record to support a reasonable juror’s finding in favor of Wallace. The court then submitted the liability issues to the jury, which found in Wallace’s favor on her FMLA interference claim. Following a series of post-trial motions, FedEx appealed the liability finding to the Sixth Circuit.

Lupyan v. Corinthian Colleges, Inc.

Lisa Lupyan was employed as an instructor in Corinthian Colleges, Inc.’s (“CCI”) Applied Science Management program for approximately three years, when her supervisor, James Thomas, encouraged her to take a personal leave of absence. Lupyan had been suffering with depression. On her request for leave form, Lupyan specified that she was taking “personal leave” from December 4, 2007, through December 31, 2007. Lupyan’s supervisor suggested she take short term disability leave instead of personal leave. Lupyan obtained the necessary certification from her physician, which indicated she had a mental health condition. CCI’s human resources department determined Lupyan was eligible for leave under FMLA rather than personal leave.

On December 19, 2007, CCI’s administrator met with Lupyan and instructed her to select FMLA on the leave form. The administrator also extended her projected return to work date to April 1—three months beyond the original date. The administrator did not explain Lupyan’s FMLA rights during the meeting; however, later than afternoon CCI allegedly mailed a letter to Lupyan advising her that the leave was being designated as FMLA leave. CCI sent the letter by regular U.S. mail.

On or about March 13, 2008, Lupyan informed CCI that she had a return to work release from her physician and planned to return to her teaching position with certain restrictions. Lupyan’s supervisor informed her she could not return to work if she had any restrictions. Lupyan received a full release from her psychiatrist within the next few weeks; however, on April 9, 2008, Lupyan received notice that her position had been terminated from CCI due to low student enrollment, and because she had not returned to work within the 12 weeks permitted under the FMLA.

The Suit

Lupyan filed suit against CCI alleging FMLA interference when CCI failed to inform her that her leave was under the FMLA, and retaliation when she was terminated for taking FMLA leave. The district court granted CCI’s motion for summary judgment as to both claims. Although the district court sua sponte reversed its ruling regarding the FMLA interference claim, CCI provided additional affidavits and support that Lupyan had, in fact, been provided notice that her leave was covered under the FMLA and the district court again entered summary judgment in favor of CCI.

Circuit Courts weigh in

In Wallace v. FedEx Corp. the Sixth Circuit affirmed the trial court’s ruling, finding that FedEx failed to comply with the FMLA notice requirements and that the Wallace’s termination interfered with her ongoing FMLA leave. The Court reminds employers that 29 C.F.R. §825.305(d) states, “at the time the employer requests certification, the employer must also advise an employee of the anticipated consequences of an employee’s failure to provide adequate certification.” The court found FedEx failed to provide the necessary notice and reinstated the jury verdict.

In Lupyan v. Corinthian Colleges, Inc., the Third Circuit explained that there was a genuine issue of fact as to whether Lupyan actually received CCI’s notice, which had been sent by regular U.S. mail. To prove that it provided proper notice to Lupyan of the consequences of not returning to work within twelve weeks, CCI relied on the “mailbox rule,” which provides that when it is proven that a letter was “either put into the post-office or delivered to the postman, it is presumed . . . that it reached its destination at the regular time, and was received by the person to whom it was addressed.” The mailbox rule is not a conclusive presumption of law, rather it is a rebuttal “inference of fact founded on the probability that the officers of the government will do their duty and the usual course of business.” The court explained a strong presumption exists when notice is sent by certified mail, because there is evidence of delivery in the form of a receipt. The court further opined that computerized communications and handheld devices, provide a convenient and cost-effective method for employers to confirm receipt of important notices. CCI employed none of these advanced methods for providing the notice to Lupyan. In addition, CCI could provide no corroborating evidence that Lupyan received the letter, so the court reversed the district court’s grant of summary judgment on the interference claim, and remanded for determination of whether Lupyan received the notice. The court held the employee’s denial of receipt of letter sent via regular mail was enough to create a genuine issue of material fact.

Take-a-ways

Now is as good a time as any for employers to review their FMLA certification and notice documents and procedures to ensure that they not only include all of the necessary instructions to employees, but also are calculated to provide proof that the documents actually were provided to the employee. The FMLA is very stringent in its requirements and, as the Lupyan court noted, the digital age provides several ways for employers to communicate with employees and to document such communications. Both FedEx and CCI had to learn expensive lessons for not being able to prove that they provided their employees with the necessary notices of the consequences under the FMLA of their failing to act.

Join us on Thursday, September 18 in Cincinnati for a free, half-day seminar

Posted in Events

Join Porter Wright labor and employment attorneys Dave Croall and Rachel Burke on Thursday, September 18, 2014 for a seminar — Renovating your workplace: Employment relations best practices for HR professionals. Reserve your spot today for this free, half-day seminar sponsored by the Ohio Chamber of Commerce’s HR Academy, which will cover these topics:

Tricks of the trade: How the pros deal with an FMLA abuser

Attendees will hear key strategies for managing the primary situations in which FMLA abuse by employees occurs, learn how to counteract that abuse within the confines of the law, and how to avoid pitfalls when doing so. Of particular focus will be how to use the provisions of the FMLA to the employer’s advantage to legally and permissibly root out abuse and fraud by employees.

Danger zone: Avoiding the 10 most common mistakes under the FLSA

Employer compliance with the Fair Labor Standards Act continues to be one of the most litigated areas in employment law. This session will address the 10 most common mistakes made under the FLSA and key takeaways to keep your workplace out of the danger zone.

What’s in your toolbox?

Defining a blueprint for your HR decision-making process to reduce risk: As a busy HR professional, you need to make sure you have the right tools in your toolbox and a solid blueprint for success. One wrong move can put your business at risk. In this session, we will train your HR reflexes to help you navigate the decision making process effectively. We will help you manage each important step, focusing on workplace investigations and other fact-gathering efforts, best practices for making fair and defendable decisions, and the importance of documentation along the way.

DATE:
Sept. 18, 2014

TIME:
8:15 a.m. – 12:00 p.m.

LOCATION:
Receptions, Inc.
10681 Loveland-Madeira Rd.
Loveland, OH 45140

COST:
Free

RSVP by Sept. 16 to:
Andrea Wise
awise@ohiochamber.com
614.228.4201

 

NLRB reinstates food industry employees following work-related complaints

Posted in Labor Relations, Traps for the Unwary

Employees today are certainly more media and marketing savvy than they were even 10 years ago, and they have more tools through which they can reach the public and each other to let their voices be heard. Two recent NLRB cases demonstrate that if employers are too aggressive in attempting to combat these employee communications, they can end up on the wrong end of an unfair labor practice finding.

In Triple Play Sports Bar & Grille, the National Labor Relation Board held that two employees had engaged in protected concerted activity under the National Labor Relations Act (“Act”) when they responded to a co-worker’s post on Facebook complaining that the employer had incorrectly withheld taxes from their paychecks. The error apparently resulted in several employees having an unpleasant surprise on tax day. One employee commented “I owe too. Such an asshole.” The other employee merely clicked on the “Like” button.

The Board concluded that both employees had lawfully engaged in dialogue about terms and conditions of employment and that they had not been “so disloyal as to lose the Act’s protection” because they did not disparage their employer’s products or services or defame the employer. In addition, the Board concluded that the one employee’s use of a single expletive did not deprive him of the protections of the NLRA.

In MikLin Enterprises dba Jimmy John’s, pro-union employees engaged in a campaign to bring public attention to their goal of getting paid sick leave from their employer. As part of their campaign, they created posters that showed two identical looking sandwiches and asked whether the viewer could tell which sandwich was made by the sick Jimmy John’s employee. The point of course was to show potential customers that there was no way to know. The poster then stated that Jimmy John employees were not permitted to call in sick and asked people to call a phone number to encourage the company to provide its employees with paid sick leave.

“Like” the employer in Triple Play (sorry, pun intended), the employer terminated its employees who were involved in the campaign. The Board, in a 2-1 decision, however, ordered the employees reinstated with back pay. The Board concluded that the posters were prepared as part of an ongoing labor dispute, were essentially true, and were not maliciously motivated. Although the dissent agreed that the posters were created as part of an ongoing labor dispute, it disagreed with the majority on the poster’s truthfulness and maliciousness. First, the dissent noted that the employees in fact could call in sick, so long as they were able find a replacement for the day. In addition, the dissent contended that even the intimation that a food industry employer’s food was contaminated was so malicious as to be disloyal.

The bottom line for employers is simply this: While the desire to discipline or terminate employees who say things that feel overly critical or disloyal is certainly understandable, it is important to take a step back and consider whether the communications may be protected under the NLRA. If the communication addresses employees’ working conditions or issues in an ongoing labor dispute, the employer can expect the Board to give the employees the benefit of the doubt except in the most extreme cases where the employee’s comments can be shown to be defamatory or so disloyal as to lose protection under the Act.

Introducing Porter Wright’s newest blog – Antitrust Law Source

Posted in Business Competition, Porter Wright News

We wanted to take a moment to announce Porter Wright’s newest endeavor, Antitrust Law Source. Antitrust Law Source is a new site designed for visitors to quickly and easily learn about developments in this growing arena. The site primarily will focus on providing news and legal updates in the antitrust arena in a podcasting format. The podcasts will feature a variety of insights, educational offerings, discussions and interviews with thought leaders across a variety of industries.  For those of you who are frequent readers of this blog you may recall two recent blog posts by Jay Levine (editor of the Antitrust Law Source blog) and Jason Starling that address some recent examples of how antitrust law and employment law can intersect.

Antitrust Law Source is prepared by members of our firm’s and will feature news and information on a wide range of areas, including:

  • Agriculture
  • Civil litigation
  • Compliance programs/audits
  • Consumer protection
  • Criminal and civil government enforcement
  • Distribution, pricing and promotional allowance programs
  • Healthcare
  • Intellectual property/Technology
  • International issues
  • Legislative matters
  • Mergers, acquisitions and joint ventures
  • Privacy and data securityWe encourage you to visit the site and share your thoughts with us.

Covered affirmative action employers — more scary news from the OFCCP

Posted in EEO

On August 6, 2014, the Office of Federal Contract Compliance Programs (OFCCP) announced a proposed rule that should be of real concern to covered affirmative action federal contractors. The OFCCP is the agency that enforces federal affirmative action laws. If the proposed rule is adopted, it will add compensation data to the information that covered employers must submit with their annual EEO-1 reports. Keep in mind the “web” of coverage under affirmative action laws reaches far. Coverage is triggered not just by direct federal contracts but also by contracts to provide goods or services to any private sector entity, as long as those goods or services are used in connection with fulfilling some federal contract that your customer or their customers may have. Coverage of financial institutions is triggered by being a depository for federal funds or by being an issuing or paying agent for U.S. Savings Bonds or Notes. Coverage issues and obligations can vary with the dollar volume of the covered work.

The Specifics:

What:

Currently, the annual EEO-1 report contains race, ethnicity, and gender information about your workplace, sorted by nine EEO job-type categories. The proposed rule would expand the report to include the following information for each of the EEO categories by race, ethnicity, and gender: total number of employees; total W-2 income; total hours worked.

Who:

The obligation to provide compensation information on EEO-1 reports would apply to covered affirmative action employers with more than 100 employees and a covered federal contract or subcontract for $50,000 or more covering a period of at least 30 days, including modifications.

The Concerns:

The employer community which is subject to affirmative action obligations has very legitimate concerns about this new reporting obligation. OFCCP will use the data as part of its method for identifying contractors for compliance reviews. An OFCCP compliance review can involve not just review of the Company’s written affirmative action plan, but, also, a detailed review of its employment practices including compensation, hiring, and terminations. Employers have a legitimate question whether this broad-based compensation data is a legitimate basis for identifying a contractor for compliance review based on alleged concern about equal pay. A second, very real concern for the covered employer community is confidentiality of compensation information. OFCCP assures that the information can be submitted on a web-based data tool conforming with government IT security standards. But, EEO-1 reports are subject to Freedom of Information Act requests from the public. Even though OFCCP assures companies they will be given notice of any FOIA requests for their data and an opportunity to object, there is no assurance that the objections would be successful. Therefore, this proposed rule opens the door for confidential compensation information to be made available to competitors and the general public.

OFCCP intends to release aggregate summary compensation data by race and gender annually to the public. OFCCP believes that public dissemination of the aggregate data will give employers an opportunity to evaluate their own compensation structure against that of others in their industry.

Public comment on the proposed rule can be submitted through November 6, 2014.

Federal judge rejects the proposed settlement for tech companies who allegedly violated antitrust law by agreeing not to solicit each other’s employees

Posted in Business Competition

We previously discussed here the antitrust case involving several high-tech companies who allegedly entered into bilateral agreements in which they agreed not to solicit each other’s employees. These companies settled with the U.S. Department of Justice and were subsequently sued by a class of software engineers. Early on, Intuit and Pixar/Lucasfilm settled, and recently the plaintiffs and the remaining tech companies reached an agreement to settle the case for $324.5 million. Or maybe they thought they had, but guess what? The federal judge overseeing the case rejected that settlement, finding that it did not provide adequate monetary compensation.

U.S. District Judge Lucy Koh rested her decision primarily on the fact that, in the present settlement, the plaintiffs would recover proportionally less than the plaintiffs in the earlier settlements. The settling parties argued that the settlement was fair because the plaintiffs had “weaknesses in [their] case such that [they] face[] a substantial risk of nonrecovery . . . .” But, the judge found this explanation dubious, at best. In fact, the judge found that the plaintiffs had overcome substantial hurdles such as achieving class certification and overcoming dispositive motions. As the judge saw it, achieving class certification and beating dispositive motions provided greater settlement leverage, which the earlier settling defendants lacked, and thus should result in a larger settlement. Plus, and this should really scare the remaining defendants, the judge wrote that she believed that the plaintiffs had presented overwhelming documentary evidence in support of their antitrust claims. Thus, about the only remaining risk faced by the plaintiffs would be the unpredictability of trial. Yet, for the remaining defendant tech companies, they faced the potential of $9 billion in damages exposure.

The judge did throw a bone to the defendants by noting what settlement offer she would approve. She stated that the plaintiffs should receive at least $380 million—a mere $59.5 million raise—as that figure would be proportionate to the recovery against the earlier settling companies.

Now, the parties go back to settlement negotiations where the plaintiffs clearly have the momentum and leverage on their side given the judge’s favorable decision. It will be interesting to see what settlement results from those negotiations and how much the remaining tech companies will need to pay to resolve the civil claims by their software engineers.

Appellate Court throws exemptions to minimum wage laws in Ohio out the window

Posted in Other Articles, Wage & Hour

A divided Montgomery County Court of Appeals has determined that the Ohio minimum wage statute unconstitutionally restricted the definition of “employee” in the Ohio constitution and declared the law invalid, thereby eliminating exemptions to Ohio’s minimum wage laws.

John Haight and Christopher Pence were employed as advertising salespeople for Cheap Escape Company dba JB Dollar Stretcher, which published a coupon magazine and website for electronic coupons, and were paid mostly through commissions. In 2012, Haight and Pence sued Cheap Escape alleging they were employees of Cheap Escape and that the company failed to pay them minimum wages each week. Cheap Escape denied Haight and Pence allegations and claimed that as outside sales representatives, Haight and Pence were exempt from Ohio’s minimum wage law and had been paid properly. Haight v. Cheap Escape Co., 2014-Ohio-2447.

The Ohio Fair Minimum Wage Amendment to the Ohio Constitution, approved by voters in November, 2006, states in part that every employer is required to pay their employees a wage of not less than six dollars and eighty-five cents per hour beginning January 1, 2007 with the amount to be adjusted annually. In addition, the amendment provides that future laws may be passed to increase the minimum wage rate and extend coverage of the section, but no laws could restrict any provision of the law. The Amendment defines an employee to have the same meaning as under the Fair Labor Standards Act (“FLSA”). Haight and Pence asserted that they were Cheap Escape’s employees as defined by the Ohio constitutional amendment as well as the FLSA.

After voter approval of the amendment, the Ohio General Assembly enacted a statute which acknowledged that the amendment defined “employee” to have the same meaning as under the FLSA, but also added its own definition of “employee” which included “individuals employed in Ohio, but does not mean individuals who are excluded from the definition of ‘employee’ under the FLSA.” The FLSA specifically excludes outside salespeople from the minimum wage requirements. Hence, the statute excluded outside salespeople from being considered employees of an Ohio employer for purposes of minimum wage laws.

Haight and Pence’s appeal stemmed from their allegation that they were entitled to be paid the Ohio minimum wage even though they were outside salespeople. They alleged that the exemptions for outside sales representatives from the minimum wage requirements set forth in the statute and in the FLSA did not apply under the Ohio constitution. They argued that the definition of “employee” as contained in the amendment to the Ohio constitution was broad and did not exclude employees who are exempt from the federal minimum wage laws. They argued that the statute, by excluding outside sales representatives from minimum wage protection, was unconstitutional. In essence, they argued that by including its own definition of employee in the statute, the Ohio legislature impermissibly narrowed the definition of employee as laid out in the amendment.

The Court of Appeals determined that even if individuals such as salespeople are exempt from the FLSA’s minimum wage provisions, they remained “employees” as defined by the FLSA. The court concluded that the definition of employee is “any individual employed by an employer,” which includes outside salespeople. Hence, the court held that the Ohio legislature impermissibly narrowed the definition of employee in the statute when it excluded outside salespeople from the definition of an employee. Consequently, the court found that the statute was invalid and the judgment of the trial court was reversed. Now, the case will return to the trial court for a determination as to whether or not Haight and Pence should have received minimum wages while employed by Cheap Escape as outside sales representatives.

One judge dissented from the court’s decision, concluding that the statute did not conflict with the constitution because the meaning of employee included the FLSA exemptions. This split among the judges indicates that it is likely that Cheap Escape will appeal to the Ohio Supreme Court for a final decision.

If Cheap Escape does not appeal this decision to the Supreme Court and this decision stands, this case may have far-reaching implications. Ohio employers could lose any minimum wage exemptions for all employees and would be subject to recordkeeping and reporting procedures that currently apply to non-exempt, hourly employees. Some employees may be considered exempt employees for federal wage purposes, but would not be considered exempt employees in Ohio. As a result, employers will need to change their payroll practices and recordkeeping and reporting procedures to include all employees, not only non-exempt employees.