New Labor Rules Bring Overtime Pay To Millions Of Salaried Employees

Let’s say you’re an assistant manager at a fast-food restaurant making a salary of $35,000 per year. Your restaurant is drastically understaffed, and even though you work up to 20 hours of overtime per week, you don’t receive any additional compensation for the extra hours. Is this OK?

Somewhere between 4.5 and 12.5 million Americans find themselves in a similar situation every week. Under the current Fair Labor Standards Act, salaried workers making more than $23,660 per year are not eligible for overtime pay if their jobs include some traditionally “white collar” duties (such as restaurant management).

New rules announced on May 18 by the Department of Labor will change that. Starting December 1, 2016, salaried employees who make less than $47,476 per year will be eligible for time-and-a-half overtime pay when they work more than 40 hours in a week. The new rules also include a system that will automatically increase the salary threshold every three years, meaning that, in the future, even more employees will qualify for overtime pay.

To comply with the new regulations, your employer may choose to do one of three things:

  1. Your employer may begin paying you time-and-a-half for your overtime.
  2. Your employer may raise your salary above $47,476.
  3. Your employer may limit the amount of hours you can work to 40 hours per week, increasing the amount of time you have to spend with family or on additional training.

Importantly, if you currently earn regular bonuses or performance incentives, your employer may choose to use that money to satisfy up to 10 percent of your new overtime pay.

If you are a salaried employee and are not used to keeping track of your hours, you may have questions about how your wages will be paid after December 1. You should seek the advice of counsel to determine whether you are eligible for overtime pay, and when the time comes, whether your employer is compliant with the new rules.

 

WHO’S TO BLAME: THE ISSUE OF JOINT LIABILITY WITH TEMP WORKERS

Under Kentucky and Federal law, temporary, or “leased,” workers are entitled to the same rights and privileges as any permanent employee. Unfortunately, many employers take advantage of and discriminate against temporary workers because they believe only the temporary agency supplying the workers is liable for such actions. While it is true that temporary agencies are considered employers for the purposes of liability, there are certain circumstances where both the temporary agency and the client employer can be held liable for any injuries to the employee. When this is the case, employees can recover damages from either, or both of, their employers.

The Sixth Circuit Court of Appeals has commented on joint-liability for employers on a number of occasions, and recently confirmed that joint-liability could be attributable to both a temporary agency and “client” company in EEOC v. Skanska USA Bldg., Inc., 550 Fed. Appx. 253 (6th. Cir. 2013). In Skanska USA, the Equal Employment Opportunity Commission filed a complaint on behalf of three African American leased workers who were subjected to discrimination based on race, a hostile work environment, and unlawful termination. Initially, the District Court decided in favor of the client company, holding that it was not the legal employer of the three men. On appeal, this decision was reversed, and it was concluded that both the company and the temporary agency were joint employers of the three men. The Sixth Circuit held that entities are joint employers if they “share or co-determine those matters governing essential terms and conditions of employment.” In reaching this determination, the Court considered such factors as “an entity’s ability to hire, fire or discipline employees, affect their compensation and benefits, and direct and supervise their performance.”

This case supplies the framework for which temporary employees in Kentucky can go about recovering damages resulting from discrimination, FMLA violations, and other sources of employee abuse from both of their employers. If the client company utilizes extensive control over their temporary employees, they are typically found to be a joint employer with the leasing company.

If you have been subjected to abuse in the workplace as a temporary employee, you should seek counsel immediately to determine the legal options available to you. It is quite possible that you have been subjected to unlawful activity, and may have a potential claim for the damages you have suffered.

WORKPLACE BULLYING UPDATE: NIED CLAIMS MAY PROVIDE PATH TO RECOVERY

In Kentucky, prior to the landmark case of Osborne v. Keeney, negligent infliction of emotional distress (NIED) applied only to situations in which physical contact or impact occurred and was the cause of harm. While this “impact rule” was designed to provide a well-defined line of where liability starts and ends, it led to some controversial rulings on the matter. For example, in Deutsch v. Shein, the Supreme Court decided that an X-ray hitting the body was sufficient contact to claim damages based on negligent infliction of emotional distress, proving that the impact could in fact, be very minimal. Conversely, in Wilhoite v. Cobb, a mother was denied damages after witnessing a truck hit her infant daughter. According to the Supreme Court in this particular case, the sound and light waves from the accident that hit the mother were not a physical impact; therefore, she could not claim damages for negligent infliction of emotional distress. Osborne, however, dramatically changed a plaintiff’s ability to claim negligent infliction of emotional distress by eliminating the “impact rule.”

In 2002, the plaintiff in Osborne was sitting at home when a pilot crashed a plane into the second level of her home. The initial crash caused significant damage to her home and belongings and set her house afire. Luckily, the plaintiff managed to escape her home before she was hit by any sort of debris from the home or from the plane, and she did not suffer any physical injuries from the event. In the initial lawsuit, the plaintiff claimed that she was physically impacted by the shockwaves of the crash, and suffered emotional distress while watching her house burn. This fact became irrelevant though, as a consequence of the Supreme Court’s ruling that the “impact rule” was no longer the threshold for determining liability in these types of lawsuits. The Supreme Court ruled that in order to claim negligent infliction of emotional distress, a plaintiff must now only satisfy the general elements of a negligence claim and prove serious injury that is supported by expert testimony. This new framework has been further affirmed in cases following Osborne.

Although there has only been a scarce amount of cases that have dealt with NIED since the ruling of Osborne, the implications for employment law are clear. The elimination of the impact rule has opened a door for plaintiffs who have been injured emotionally by an employer’s negligence, even though no physical contact has occurred. This is especially beneficial in cases involving workplace bullying, for which there is currently no statutory protection offered.

Although Kentucky courts have yet to decide a case involving NIED claims related to workplace bullying, such a claim is likely viable. In theory, if an employer negligently allows an employee to suffer severe emotional distress through the actions of co-workers or managers, that employee should be able to recover damages for the emotional injury suffered. We’ve discussed before a potential framework for workplace bullying claims through KRS 446.060 in conjunction with various criminal statutes. Now that the impact rule is no longer a valid measuring stick, NIED claims could very well be used to supplement those claims through the KRS 446.060 framework.

If you have been subjected to extreme verbal abuse in the workplace, you should seek counsel immediately to determine the legal options available to you. It is quite possible that you have been subjected to unlawful activity, and may have a potential claim for the damages you have suffered.

UPDATE: MINIMUM WAGE ON THE RISE

A few weeks back, we discussed the proposed changes in Federal minimum wage laws, as well as Louisville-Metro’s attempts to raise the minimum wage.  This week we have more good news.  On November 4, voters in a number of states approved ballot measures that would raise their respective state minimum wages.  From the New York Times:

The wage increase won its biggest margin of victory in Alaska, where it garnered 69 percent of the vote. In Arkansas, it received 65 percent; in Nebraska, 59 percent approved raising the minimum wage, while in South Dakota, the margin was 53 percent.

 

The proposals differed in their particulars. Alaska would set its minimum wage the highest, with a gradual rise to $9.75 by 2016. Nebraska would go to $9 in 2016, South Dakota to $8.50 in 2015 and Arkansas to $8.50 by 2017. In Alaska and South Dakota, the minimum wage would continue to rise in line with price inflation in following years, which makes an enormous difference in the long term.

This is a promising development in the push for creating a livable wage for American workers, especially considering the political environments of the states in which these measures were passed.  As more states begin reforming their wage laws, it will likely be only a matter of time before Congress is obliged to do the same with Federal law.

H/t to Workplace Prof Blog.

THE CUSTOMER IS NOT ALWAYS RIGHT: THIRD PARTY HARASSMENT

We’ve discussed sexual harassment pretty extensively through a number of articles. There is one scenario, however, that we haven’t tackled yet – third party harassment. It goes without saying that sexual harassment by a co-worker, manager, or executive is unlawful activity. But what about third parties – customers, vendors, and the like? Does your company have any duty to protect you from harassment by a person that it doesn’t even employ?

The answer, most likely, is yes. While there do not appear to be any Kentucky state court opinions on this particular matter, a number of Federal District and Circuit Courts, including courts within the Sixth Circuit, have held that employers have a duty to provide employees with an environment free of illegal harassment. This prohibition against workplace harassment is applicable to all persons entering onto the employer’s premises, or conducting business with the employer.

Generally, an employer will be liable for harassment by a third party if the employer “fail[ed] to remedy or prevent a hostile or offensive work environment of which management-level employees knew, or in the exercise of reasonable care should have known.” Lockard v. Pizza Hut, Inc., 162 F.3d 1062, 1074 (10th Cir. 1998). In other words, if the harassed employee has reported the harassment, or if a company’s management is otherwise somehow made aware of the harassment, the employer must correct the work environment. The other requirements of a hostile work environment claim remain the same, which can be viewed here. Below are some examples of cases involving third party harassment:

In Rodriguez-Hernandez v. Miranda-Velez, 132 F.3d 848 (1st Cir. 1998), a female employee complained to her employer about harassment she was subjected to by an executive officer of one of the employer’s most important clients. The employer instructed the woman to give in to the sexual advances of the executive in order to satisfy the client. After she refused, the employee was terminated. At trial, the jury found in favor of the employee. The First Circuit upheld the jury’s verdict, stating that “employers can be held liable for a customer’s unwanted sexual advances, if the employer ratifies or acquiesces in the customer’s demands.” Id. at 854.

In Crist v. Focus Homes, Inc., 122 F.3d 1107 (8th Cir. 1997), two caregivers working for a residential home for individuals with developmental disabilities were repeatedly sexually assaulted by a resident of the home. The caregivers reported the assaults to management, who responded by asking one of the caregivers to allow the resident to assault her in front of the home’s executives so they could view the conduct. The Eighth Circuit held that the home could be liable for the conduct of the resident, stating that the home “clearly controlled the environment in which [the resident] resided, and it had the ability to alter those conditions to a substantial degree.” Id. at 1112.

And in Lockard v. Pizza Hut, 162 F.3d 1062, 1074 (10th Cir. 1998), a female server for a restaurant was severely harassed by two male customers who visited the restaurant on a number of occasions. The two men made multiple offensive comments to the server during their visits, prompting the server to file a complaint with her manager. The restaurant took no action to prevent the men from further harassing the server. Following her complaint, the men came into the restaurant again, and when the server came to their table, one of the customers pulled the server’s hair, then grabbed her breast and placed his mouth on it. The Tenth Circuit held that the restaurant was liable for the conduct of the customers, stating that the restaurant’s manager had “notice of the customers’ harassing conduct and failed to remedy or prevent the hostile work environment.” Id. at 1075.

In all of the above cases, the employer was made aware of the harassment that was occurring, but failed to prevent the harassment from continuing. If you have encountered a situation similar to those experienced by the plaintiffs in the cases mentioned here, you should seek counsel immediately to learn about the legal remedies that are available to you.

DOES THE KENTUCKY WAGE AND HOUR ACT PROHIBIT RETALIATION?

If an employer is illegally withholding wages from an employee, there are a number of avenues available for the employee to recover those wages. In Kentucky, an employee can file a complaint with the Labor Cabinet for the wages to be turned over, or alternatively, the employee can bring suit against the employer for the withheld wages. As can be imagined, this can often result in a very contentious relationship between the employer and employee. In some situations, the employer, angered by the complaint or lawsuit, may react by taking an adverse action (termination, demotion, reassignment with significantly different duties) against the employee. If such retaliation occurs, what protection is provided to the employee under Kentucky law?

The answer has not been fully resolved. KRS Chapter 337, or the Kentucky Wage and Hour Act, governs the rights and privileges afforded to Kentucky workers regarding minimum wages, meal and rest breaks, and overtime. The Act does not provide a specific civil remedy for retaliation against an employee for protesting an employer’s unlawful acts under the Chapter. However, KRS 337.990, the statute which outlines penalties for violations of the Act, provides a provision that, for all intents and purposes, prohibits an employer from retaliating against employees. The statute reads, in relevant part:

(14) A person shall be assessed a civil penalty of not less than one hundred dollars ($100) nor more than one thousand dollars ($1,000) when that person discharges or in any other manner discriminates against an employee because the employee has:

(a) Made any complaint to his or her employer, the commissioner, or any other person; or

(b) Instituted, or caused to be instituted, any proceeding under or related to KRS 337.420 to 337.433; or

(c) Testified, or is about to testify, in any such proceedings.

The language in the statute is fairly clear that retaliation or discrimination against an employee for making complaints about illegal conduct under the Act is prohibited. However, while this provision does provides a civil penalty for acts of retaliation, it does not explicitly authorize a private cause of action for violations. Nevertheless, a number of plaintiffs have used KRS 337.990 as the basis for a cause of action against their employers.

Some plaintiffs have used this provision as the basis for a “wrongful discharge in violation of public policy” claim, through the use of KRS 446.070, see Berrier v. Bizer, 57 S.W.3d 271, 274 (Ky. 2001), and two plaintiffs simply brought causes of action for retaliation, generally, after being terminated for filing complaints for unpaid wages. See Smith v. Hous. Auth. of Middlesborough, 2005 Ky. App. Unpub. LEXIS 554; see also Sparks v. Wal-Mart Stores, Inc., 2010 Ky. App. Unpub. LEXIS 709.

The courts addressing these cases have not addressed directly whether such theories of recovery are viable, but the Supreme Court in Berrier seems to at least tacitly recognize the existence of the wrongful discharge claim, and the Court of Appeals in Sparks analyzes the retaliation claim under the framework of common prima facie civil rights claims.

Therefore, while no authoritative decision has announced that 337.990 provides a cause of action for retaliation, it seems highly likely that such a claim is available to employees, which fits with the overall scheme of the Kentucky Wage and Hour Act. So if you have reported or complained about illegally withheld wages, unpaid overtime, or not receiving proper breaks, and have subsequently been retaliated against, you may have a claim against your employer. You should immediately seek the advice of counsel to determine what legal options are available to you.

PAY UP: CAN YOUR EMPLOYER WITHHOLD WAGES FOR WORKPLACE INCIDENTS?

Let’s say you work at a busy filling station. Hundreds of people a day stop by the station to get gas, food, beer, cigarettes, etc. In the bustle of business, one of your patrons filling up his car decides to drive off without paying, and you can’t catch him in time to prevent the theft, or at the very least, get his license plate number. Your employer gets angry with you, even though trying to stop a moving automobile from leaving is about as easy as catching lightning. As punishment the employer takes the cost of the driveoff out of your paycheck. Can they do that?

Or maybe you’ve got a long line of customers at the counter, waiting to pay for their items. Trying to move things along as quickly as possible, you accidentally sell a pack of cigarettes to a minor, who turns out to be an operative of the Tobacco Administration. Your employer gets slapped with a $100 fine. Your employer, upset with your mistake, makes you pay the fine. True, you should have been more careful about who you were selling cigarettes too, but can they make you pay the fine?

What about a construction worker, operating an expensive piece of equipment who accidentally breaks the equipment during use? Can the employer force the employee to pay for the cost of repair or replacement? Or maybe a clerk working for a retail store who accepts a check for payment, but the check turns out to be cold? Can the clerk’s paycheck be docked for the price of the item sold or the cost of the returned check?

The answer to these questions is a resounding NO. Kentucky law is very explicit in what employers can and cannot do when withholding wages. KRS 337.060 states:

[N]o employer shall deduct the following from the wages of employees:

(a) Fines;

(b) Cash shortages in a common money till, cash box or register used by two (2) or more persons;

(c) Breakage;

(d) Losses due to acceptance by an employee of checks which are subsequently dishonored if such employee is given discretion to accept or reject any check; or

Losses due to defective or faulty workmanship, lost or stolen property, damage to property, default of customer credit, or nonpayment for goods or services received by the customer if such losses are not attributable to employee’s willful or intentional disregard of employer’s interest.

Despite the dictates of KRS 337.060, many employers still choose to deduct losses from their employees paychecks. Unfortunately a number of these clear violations of law go unreported by employees, either because employers wrongfully inform them that they can legally take the money, or because employees may feel guilty that their actions resulted in a loss to the employer. Whatever the reason, an employer withholding wages from an employee for any of the above reasons remains illegal, and the resulting lost wages are recoverable from the employer. Furthermore, employees can recover liquidated damages equal to the amount of the unpaid wages, as well as attorney’s fees for bringing an action to recover the lost wages.

So if you find yourself in a position where your employer is forcing you to pay for a fine, or for theft, or even for breaking or damaging the employer’s equipment, you should immediately seek the advice of counsel to determine the legal options available to you. The actions being taken against you are likely illegal, and you’ll need help to recover what you are rightfully owed.

TURNING MINIMUM WAGE INTO A LIVABLE WAGE

LOUISVILLE METRO TAKES STEPS TOWARD INCREASING THE MINIMUM WAGE

Since 2008, the Federal minimum wage has remained at $7.25 an hour. Since that time, however, inflation has continued to rise, with a cumulative rate of 10.7%. Simply put, the current minimum wage isn’t as effective in reducing poverty and increasing the standard of living for workers as it once was. While the costs of goods and services have risen steadily over the years, wages for low income workers have remained stagnant, resulting in increased hardship for those in our communities with the least opportunities.

Members of the Louisville Metro Council, however, are taking steps to alleviate this predicament, introducing a proposal to raise the minimum wage for workers in Jefferson County to $10.10 an hour by 2017.

From the Courier-Journal:

As drafted, the ordinance — sponsored by [Councilwoman Attica] Scott and fellow Democratic council members Barbara Shanklin (2nd), Cheri Bryant Hamilton (5th), David James (6th) and Tom Owen (8th) — would boost the mimimum wage to at least $8.10 an hour on July 1; $9.15 on July 1, 2016; and $10.10 by July 1, 2017.

 

“Costs for gas, groceries, everything continue to rise. Everything has gone up, except wages,” Scott said. “The economic recovery has not helped people at the bottom.”

 

She said the higher guaranteed wage would increase consumer purchasing power and thus help business.

This proposal follows on the heels of a recent push by the Obama administration to raise the Federal minimum wage in order to curb the growing gap in income inequality. On September 1, the President renewed his call to raise the Federal minimum wage at a speech in Milwaukee, Wisconsin. President Obama challenged Congress to enact legislation that would echo his recent executive order requiring Federal contractors to pay employees a minimum of $10.10 an hour. That executive order, which was issued by President Obama in February of this year, applies to new contracts entered into with the Federal government after January 1, 2015, as well as replacements for expiring contracts.

All of these developments point to good news on the horizon for low income workers: wages will be increasing soon. It’s likely only a matter of time.

We’ll keep you updated as these events develop further.

 

SEXUAL HARASSMENT WITHOUT “SEX”

THE EFFECT OF SEX-NEUTRAL CONDUCT ON HOSTILE WORK ENVIRONMENT ACTIONS

The terms “sexual harassment” and “hostile work environment” together can invoke a great deal of images and scenarios in the mind of the listener:  graphic language and gestures, sexual advances, propositions, leering, touching, groping – the list can go on indefinitely.  However, a work environment does not necessary need to include acts or statements that are explicitly sexual in nature to be considered hostile under Title VII.  Often, such an environment can be created through acts that courts have termed “facially sex-neutral.”  Essentially, this term applies to abusive conduct that, on its own, would not normally be considered to be based on sex, but taken in the “totality of the circumstances, is indicative of a sexually hostile atmosphere.

Take, for example, the case of Moll v. Telesector Resources Group, Inc., recently decided by the Second Circuit Court of Appeals.  The facts in that case state that the Plaintiff, Cindy Moll, was subjected to fairly frequent offensive sexual behavior from her supervisor for a number of years.  Ms. Moll’s supervisor left her a number of inappropriate notes, one of which suggested he “thought of her” while showering, and would try to persuade her to come to his hotel room while the two were on a business trip.  This was the entirety of her supervisor’s expressly sexual conduct.  However, a number of other actions were taken against Ms. Moll that were not sexual in nature.

For example, Ms. Moll’s supervisor only allowed her to communicate with him in person, and would not respond to or accept communication by phone or email.  Ms. Moll was also told that she would not be eligible for a promotion during a “company-wide” promotion freeze, although two male co-workers were promoted during this time.  Furthermore, Ms. Moll was placed on a performance improvement plan, was told she could no longer work from home despite male employees being allowed to do so, and was denied vacation time that male employees were granted.  This type of treatment even extended into extracurricular work activities, with Ms. Moll being excluded from a number of work-sponsored social events.

Ms. Moll filed suit in the Western District of New York, bringing a cause of action for hostile work environment on the basis of sex.  The Defendant moved for summary judgment, arguing that the statute of limitations had ran for all  sexually hostile actions taken against Ms. Moll.  The Defendant further argued that, although the incidents involving the lack of promotion, the performance improvement plan, the denied vacation, and the exclusion from social events, had occurred before the statute of limitations expired, those actions were not sexual in nature, and therefore weren’t actionable.  The District Court agreed and found for the Defendant.

The Second Circuit, however, reversed, holding that summary judgment was improper. The Second Circuit found that in the totality of Ms. Moll’s circumstances, the sex-neutral actions she had been subjected to could have been viewed as contributing to a sexually hostile work environment by a finder of fact:

To decide whether the threshold has been reached, courts examine the case-specific circumstances in their totality and evaluate the severity, frequency, and degree of the abuse. . . Facially sex-neutral incidents may be included . . . among the “totality of the circumstances” that courts consider in any hostile work environment claim, so long as a reasonable fact-finder could conclude that they were, in fact, based on sex.

This implications of the Second Circuit’s holding could have far reaching effects for people who are experiencing a hostile work environment, but the majority of the harassment is not sexual in nature.  This is a scenario we hear from our potential clients quite often.  While this case does not hold any authority in Kentucky state courts, or in the Sixth Circuit, it may be highly persuasive in a hostile work environment action.

If you feel you’ve been subjected to a hostile work environment, you should seek legal counsel immediately to learn more about the options available to you.

NEW EEOC CASE ILLUSTRATES THAT GENDER WAGE GAP IS STILL WIDE AS EVER

A recently settled EEOC case shines more light on the issue of unequal pay between male and female American workers.

The case involved Royal Tire, Inc., a Minnesota corporation, that was alleged to have paid a female executive tens of thousands of dollars less than her male counterparts. Not only was the female employee receiving a significant amount less than male employees, but the suit also charged that the woman was being paid $19,000 less than the minimum requirement for her title under Royal Tire’s compensation structure.

From the EEOC:

[B]etween January 2008 and June 2011, Royal Tire discriminated against its female human resources director, Christine Fellman-Wolf, by paying her lower wages than it paid a male employee who held the very same position. The EEOC’s investigation showed that when Fellman-Wolf became HR director she was paid $35,000 less per year than her male predecessor, and $19,000 less than the minimum salary for the position under Royal Tire’s own compensation system. Fellman-Wolf complained about the disparity and asked to be compensated fairly, but Royal Tire did not make up the difference.

The suit, which very correctly alleged violations of both Title VII of the Civil Rights Act of 1964, and the Equal Pay Act, was settled on July 31, 2014, with Royal Tire agreeing to pay $182,500 and submitting to a detailed consent decree:

In addition to substantial monetary relief to Fellman-Wolf, Royal Tire must comply with the three-year consent decree, which contains an injunction prohibiting the company from any future discriminating based on sex, paying men and women different wages for doing equal work, and retaliating against employees who exercise their rights under federal law. Additionally, the consent decree requires Royal Tire to evaluate its pay structure to ensure compliance with the Equal Pay Act and Title VII, and if it discovers employees who are being paid less than required by law, it must immediately raise the wages for those employees. The decree requires training for Royal Tire’s managers and employees under the Equal Pay Act and Title VII, and allows the EEOC to monitor Royal Tire’s compliance with the decree. Royal Tire must report to the EEOC any complaints it receives about pay discrimination and provide information on how it handles those complaints.

This case, which also follows an EEOC report made earlier this year about gender inequality in federal government positions, very clearly shows that the gender equality battle still has many more miles left to go. If you feel that you are not being compensated fairly, you should seek legal counsel immediately to learn what remedies you have available to you.

 H/t Workplace Prof Blog