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Who's Your Supervisor? — Guidance From Kentucky Federal Court

Posted on Thu, Jan 17, 2013 @ 09:30 AM

by Jack B. HarrisonJack B. Harrison

The United States District Court for the Western District of Kentucky recently dismissed a putative class action suit against Family Dollar, Inc. brought by Family Dollar Store Managers.  Plaintiffs in the case had sued Family Dollar, alleging that the conditions of their employment at Family Dollar prevented them from receiving applicable overtime pay, mandatory rest breaks, and additional compensation due for working seven days a week.  In his opinion, Judge John G. Heyburn, II, held that under Kentucky labor law, Plaintiffs were exempt from receiving these benefits because they were, in effect, supervisory employees.

In this case, Plaintiffs, Store Managers of Family Dollar Stores, were paid weekly salaries but worked the equivalent of seven days a week, with weeks that often exceeded sixty hours.  On average, the pay of these Store Managers amounted to between $8.04 per hour and $10.83 per hour, while hourly employees at the same stores made between minimum wage and $9.00 per hour.  Thus, Plaintiffs alleged that they were Store Managers “in name only.”  Plaintiffs asserted that because they performed essentially the same duties as the nonexempt Family Dollar employees, they should not be treated as “supervisors” for the purpose of deciding whether of not they were required to receive overtime pay, mandatory rest breaks, and additional compensation due for working seven days a week.

The Court, in finding in favor of Family Dollar, held that unlike the federal wage and hour regulations contained in the Fair Labor Standards Act, Kentucky law places the burden of proving that he or she is not an exempt employee on the plaintiff.  In contrast, the FLSA contains narrower exemptions to its application and places the burden to prove an exemption upon the employer, rather than the employee.  Under the Kentucky statute, for an employee to be considered an exempt employee, the employee must generally supervise or direct the work of two or more employees and must be compensated at a rate of more than $455.00 per week.  Judge Heyburn held that the Plaintiffs in this case fit this supervisor exemption, in that, as store managers, Plaintiffs set employee schedules, apportioned job responsibilities, supervised other employees’ job duties and tasks, and gave directives to other employees in their stores.  Additionally, Plaintiffs customarily had two or more employees working in their stores under their “supervision.”

While Judge Heyburn agreed that Plaintiffs had shown that much of their time was spent attending to nonsupervisory activities, he concluded that such a showing was not conclusive evidence under Kentucky law of Plaintiffs’ “primary” duty.  Rather, Judge Heyburn indicated that what mattered was the crucial nature of the supervisory duties performed by Plaintiffs in their role as Store Managers.  Judge Heyburn stated that without Plaintiffs’ direction as Store Managers, the other employees at Family Dollar would not perform their jobs and “Family Dollar…could not function.”

Judge Heyburn’s decision in this case will likely be appealed to the United States Court of Appeals for the Sixth Circuit.  However, the lesson for employers from this decision is that where an employer has supervisory employees who perform a majority of non-supervisory duties, employers must take care to ensure that employees who are placed on salary, and who the employer considers to be exempt, meet both the salary basis and duties tests under applicable federal and state statutes.  Employers should review with their labor and employment counsel decisions as to who is a “supervisor” in their workforce with a careful eye on both federal and state law.

Tags: Labor & Employment, Labor Law

EEOC Issues Broad Strategic Enforcement Plan for 2013-2016

Posted on Mon, Jan 14, 2013 @ 11:50 AM

by Jack B. HarrisonJack B. Harrison

On December 18, 2012, the U.S. Equal Employment Opportunity Commission (EEOC) approved a Strategic Enforcement Plan for 2013-2016 (SEP).  Three of the four sitting Commissioners voted for the SEP.  These were Chair Jacqueline Berrien (D), Commissioner Chai Feldblum (D), and Commissioner Victoria Lipnic (R).  Voting against the SEP was Commissioner Constance Barker (R).

The final version of the SEP is a revised version of the draft SEP the EEOC issued on September 4, 2012.  The SEP focuses on the six high-priority target areas outlined below.  Additionally, the SEP makes it clear that the EEOC will continue its focus on increased systemic litigation and private enforcement actions.

The six items highlighted as national priorities in the SEP are:

  1. Eliminating Barriers in Recruitment and Hiring.  According to the SEP, the EEOC will focus on class-based recruitment and hiring practices that discriminate against racial, ethnic and religious groups, older workers, women and people with disabilities.

  2. Protecting Immigrant, Migrant and Other Vulnerable Workers.  According to the SEP, the EEOC will focus on disparate pay, job segregation, harassment, trafficking and discriminatory policies affecting vulnerable workers who may be unaware of their rights under the equal employment laws, or reluctant or unable to exercise them.

  3. Addressing Emerging and Developing Issues.  According to the SEP, the EEOC will focus on emerging issues in equal employment law.  These emerging issues will include: (1) coverage, reasonable accommodation, qualification standards, undue hardship and direct threat under the ADA; (2) accommodating pregnancy-related limitations; and (3) coverage of lesbian, gay, bisexual and transgender individuals under Title VII’s sex discrimination provisions.

  4. Enforcing Equal Pay Laws.  According to the SEP, the EEOC will focus on compensation systems and practices that discriminate based on gender.

  5. Preserving Access to the Legal System.  According to the SEP, the EEOC will focus on policies and practices that discourage or prohibit individuals from exercising their rights under employment discrimination statutes, or that impede the EEOC’s investigative or enforcement efforts.

  6. Preventing Harassment Through Systemic Enforcement and Targeted Outreach.  According to the SEP, the EEOC will focus on the pursuit of systemic investigations and litigation and on conducting a targeted outreach campaign to deter harassment in the workplace.  The EEOC is currently pursuing 62 systemic cases, roughly 20 percent of its active litigation.  The EEOC also claims to have resolved 240 systemic investigations in FY 2012, a 45 percent increase from FY 2010.  Additionally, the EEOC states that it secured $36.2 million through conciliation and pre-determination settlements in FY 2012, an amount four times greater than in FY 2011.

The SEP also encourages greater cooperation and collaboration between the agency and private attorneys in seeking to enforce federal anti-discrimination laws.  This move will allow EEOC staff to share information with individual plaintiffs and their attorneys in order "to facilitate swift enforcement and early resolution of charges."  This increased cooperation and collaboration will likely increase private enforcement litigation, which often is more costly and time consuming to employers than government enforcement.

The SEP should provide prudent employers better guidance into the EEOC’s priorities and goals over the next several years.  The guidance offered by the SEP should be used by employers and their counsel in reviewing compliance systems and eliminating any corporate weaknesses in the identified target areas. At the same time, employers must remain aware of the increased chance of encountering a systemic lawsuit or private enforcement action.

Tags: Stategic Enforement Plan, EEOC, Equal Employment Opportunity Commission

Ohio Employers: Entitled to Worker's Compensation Premium Reimbursement?

Posted on Thu, Jan 03, 2013 @ 10:19 AM

by David J. SchmittDavid J. Schmitt

Pursuant to a recent court ruling, employers who paid Ohio Worker’s Compensation premiums between 2001 – 2008, and which were not group-rated, may be entitled to reimbursement for a portion of their premiums.

In the case of San Allen, Inc., et al, v. Stephen Buehrer, Administrator of the Ohio BWC, Cuyahoga County Court of Common Pleas, Case No. CV-07-644950, the plaintiffs consist of Ohio employers who paid workers compensation premiums during the indicated period, which did not receive group-rated premium discounts. The lawsuit contended that the BWC’s premium discounts for group-rated employers were too steep and that the BWC overcharged other employers to make up the difference.

The case was granted class-action status meaning that any employer that paid premiums to the BWC on a nongroup-rated basis during any one or more of the policy years in question is automatically part of the class unless it affirmatively opted-out.

The plaintiffs initially requested close to $1.3 billion in reimbursement for class members. In a decision issued December 28, 2012, Judge Richard McMonagle determined that the BWC did indeed overcharge the plaintiff employers and that the class is entitled to reimbursement. However, the judge also determined that the plaintiffs are not entitled to interest on these amounts and therefore ordered the plaintiffs’ counsel to recalculate the damages and submit a new figure by January 28, 2013. While this will reduce the ultimate award, the figure is still expected to be close to $1 billion in damages.

The formula for how individual employers will be reimbursed has not yet been released or approved by the court.

The Ohio BWC has stated that it is disappointed in the decision and intends to appeal, so even if this decision is ultimately upheld, it will likely be many months before any distribution would be made to class members.

Regardless of whether it is a class member, all Ohio employers should continue to follow this case. Class members will naturally be interested in how much reimbursement they may be entitled to. Non-class members may still be impacted because if the BWC’s appeal fails and it has to pay this judgment, it may have to raise premiums in order to recoup some or all of its losses.

As developments continue to arise in this case, Cors & Bassett will provide further information and guidance to assist you. Please contact David Schmitt at djs@corsbassett.com or by phone at 513-852-2587 if you would like to discuss this matter further.

Tags: Ohio Worker's Compensation