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Attempts to Shorten Limitations for FLSA Claims Rejected

Posted on Mon, Aug 26, 2013 @ 06:43 AM

Jack B. Harrisonby Jack B. Harrison

United States Court of Appeals for the Sixth Circuit Rejects Attempts by Employers to Shorten the Limitations Period for Claims Under the Fair Labor Standards Act Through Employment Agreements

On August 6, 2013, the United States Court of Appeals for the Sixth Circuit issued a decision in Boaz v. FedEx Customer Information Services, Inc., in which the Court held that the inclusion of language in an employment agreement designed to shorten to six months the statute of limitations for bringing an employment claim did not waive the employee’s rights under the Fair Labor Standards Act (FLSA).

In Boaz, the plaintiff, Margaret Boaz, was employed by FedEx beginning in 1997.  The employment agreement that Ms. Boaz signed included the following language:

To the extent the law allows an employee to bring legal action against Federal Express Corporation, I agree to bring that complaint within the time prescribed by law or 6 months from the date of the event forming the basis of my lawsuit, whichever expires first.

In April, 2009, Ms. Boaz sued FedEx under the FLSA and the Equal Pay Act, a provision of the FLSA.  Ms. Boaz’s claims were based on allegations that, from January 2004 through June 2008, FedEx had paid her less than it had paid the male employee who previously held her position and who had performed the same duties.  Ms. Boaz claimed that these actions by FedEx violated the Equal Pay Act.  Additionally, Ms. Boaz claimed that FedEx had violated the FLSA by failing to pay her required overtime.

While Ms. Boaz’s claims under the FLSA were filed within the statute of limitations set forth in the FLSA (two years for non-willful violations and three years for willful violations), FedEx argued, in filing for summary judgment, that the six month statute of limitations contained in the employment agreement controlled.  FedEx asserted that the last illegal activity alleged in Ms. Boaz’s claim was the issuance of Ms. Boaz’s June 30, 2008 paycheck.  Because this occurred more than six months before Ms. Boaz filed suit, FedEx claimed that her FLSA claims were time barred under the terms of her employment agreement.  The district court held that the employment agreement superseded the statutory statute of limitations and dismissed Ms. Boaz’s claims as time barred.

On appeal, the United States Court of Appeals for the Sixth Circuit reversed the decision of the district court.  The Court of Appeals determined that the Supreme Court had previously held in Brooklyn Savs. Bank v. O’Neil, 324 U.S. 697, 706–10 (1945), that employees could not waive their rights under the FLSA by contract.  In O’Neil, the Supreme Court had held that allowing such waivers would “nullify” the purpose of the FLSA of “achiev[ing] a uniform national policy of guaranteeing compensation for all work or employment engaged in by employees covered by the Act.”  Id. at 707.  In its decision, the Court of Appeals rejected FedEx argument that it could contractually shorten the limitations period for FLSA claims because courts previously have allowed employers to contractually shorten the limitations period for claims under Title VII of the Civil Rights Act of 1964.  The Court of Appeals rejected this argument by analogy, pointing out that the Supreme Court had already articulated the difference between claims under the FLSA and Title VII in Alexander v. Gardner-Denver Co., 415 U.S. 36, 52 (1974), as related to an employee’s waiver of rights.  According to the Supreme Court, an employer does not gain a competitive advantage by requiring employees to contractually waive rights under Title VII, but does gain such a competitive advantage by requiring the waiver of rights under the FLSA, in that such a waiver may allow an employer to pay less than minimum wage to its employees.

The decision in Boaz certainly does not eliminate advantages that may be gained by the inclusion of language in employment agreements that shorten the statute of limitations for employment claims.  In some cases, such as in the case of Title VII claims, such language may well be enforceable.  However, Boaz does point out the limits of such language in employment agreements.  Based on Boaz, prudent employers must understand that contractual language shortening the statute of limitations for employment claims is likely to be unenforceable as related to claims under the FLSA and/or the Equal Pay Act.  In those cases, if the employee’s claim is brought within the statutory statute of limitations, the employer must prepare to defend the claim.

 

Tags: 6th Circuit Court, FLSA

Unionizing Nursing Home RNs More Difficult

Posted on Tue, Aug 13, 2013 @ 08:33 AM

Jack B. Harrisonby Jack B. Harrison

On July 2, 2013, a divided panel of the United States Court of Appeals for the Sixth Circuit in GGNSC Springfield LLC, d/b/a Golden Living Center-Springfield v. NLRB, No. 12-1529 (6th Cir. July 2, 2013), held that registered nurses (“RNs”) who worked as charge nurses in a nursing home were supervisors under the National Labor Relations Act.  In so holding, the Court determined that the RNs exercised sufficient independent judgment in issuing discipline to non-RN employees to be considered supervisors.  The net impact of this decision was to make clear that the RNs in this case did not have the right to organize and collectively bargain.

FACTS AND PROCEDURAL BACKGROUND

The nursing home at issue in this case, Golden Living Center, is located in Springfield, Tennessee.  Golden Living Center has approximately 100 employees, including 12 registered nurses (“RNs”), 10 licensed practical nurses (“LPNs”), and 46 certified nursing assistants (“CNAs”).  Under the organizational structure of Golden Living Center, RNs and LPNs are considered “charge nurses,” who report directly to the Director of Nursing.

In 2011, the International Association of Machinists and Aerospace Workers, AFL-CIO filed a petition with the National Labor Relations Board (“NLRB”) seeking to represent the RNs employed by Golden Living Center in collective bargaining.  Golden Living Center challenged the petition, arguing that the RNs, as charge nurses, were supervisors under the National Labor Relations Act and, thus, not allowed to unionize.  In November 2011, the Regional Director of the NLRB determined that for the purposes of the Act, the RNs were not supervisors.  The Regional Director, therefore, granted the petition, certified the bargaining unit, and ordered an election.  Subsequently, an election was held and the RNs elected the union as their bargaining representative.  However, Golden Living Center refused to recognize or to bargain with the union.  As a result of this refusal to bargain, an unfair labor practice complaint was filed with the NLRB by the union.  The NLRB upheld the complaint and ordered Golden Living Center to bargain.  A petition for review of the NLRB decision was then filed by Golden Living Center.

COURT OF APPEALS DECISION

The first issue addressed by the Court of Appeals was whether the NLRB even had the authority to issue an order.  This argument centered on the decision by the Court of Appeals of the D.C. Circuit in Noel Canning v. N.L.R.B., 705 F.3d 490 (D.C. Cir. 2013), holding that three of the Board’s five members, whom President Obama had appointed during a Congressional recess, had been appointed in violation of the Constitution because they were appointed without the advice and consent of the Senate.  The Court of Appeals refused to consider this argument, asserting that “[e]rrors regarding the appointment of officers under Article II are ‘nonjurisdictional.’”

In considering the merits of the case before them, the Court of Appeals focused on whether or not the RNs, as charge nurses, had the authority to “discipline” CNAs, such that they would be considered supervisors under the Act.  A majority of the panel found that the RNs in question did have disciplinary authority, such that they were supervisors.  Under Golden Living Center’s discipline policy, CNAs were to receive four written warnings before being terminated.  Under this disciplinary policy, RNs were given the authority to issue written memoranda in the event of misconduct by a CNA, with the written memorandum by the RN immediately triggering a written warning.  A majority of the panel found that these written memoranda constituted “discipline” because they “’lay a foundation’ for future adverse employment action.”  Additionally, the majority found that under the policies of Golden Living Center, the RNs exercise independent judgment when issuing discipline, in that they “can either do nothing, provide verbal counseling (and decide whether to document the counseling), or draw up a written memorandum.”  In dissent, Judge Merritt strongly disagreed with the findings of the majority, arguing that the majority’s decision was simply results driven and anti-union.  Judge Merritt asserted that the majority was indulging in “linguistic wordplay over the word [discipline] without even referring to or trying to understand the purpose of the statutory language at issue.”

CONCLUSION

While this decision is certainly a victory for healthcare workers and provides some guidance to employers as to what may constitute the exercise of discipline for the purposes of determining the supervisory status of an employee, the split in the decision certainly makes it clear that disagreement remains in the courts as to what constitutes “discipline” for the purposes of determining whether an employee is or is not a supervisor.  However, this decision does make it clear that, at least in some situations, the exercise of discipline may include more than just suspensions and terminations.  Prudent employers should continue to pay attention to the roles various employees may play within their disciplinary policies and programs and continue to monitor developments in the courts regarding these issues.

Tags: Unionizing Nursing Home RNs, Sixth Circuit, NLRA, NLRB, National Labor Relations Board

Supreme Court Defines—Who Is a Supervisor in Employment Matters

Posted on Tue, Aug 06, 2013 @ 01:59 PM

Jack B. Harrisonby Jack B. Harrison

INTRODUCTION

On June 24, 2013, the United States Supreme Court issued an important decision regarding the reach of Title VII in an employment context.  In Vance, the Court was faced with the question of whether the “supervisor” liability rule established by the Court in earlier cases applied to harassment by employees who had the authority to direct and oversee an employee’s daily work or whether the rule was limited to only those “supervisors” having the power to “hire, fire, demote, promote, transfer, or discipline” the employee.  In a 5-4 decision, with Justice Alito writing the opinion of the Court, the Court held that an employee is a “supervisor” for purposes of Title VII only where the employee has the power to take tangible employment actions against the complaining employee (i.e. having the power to “hire, fire, demote, promote, transfer, or discipline”).

FACTS AND PROCEDURAL HISTORY OF VANCE

Maetta Vance, an African-American woman, worked for Ball State’s Banquet and Catering Department for over 15 years.  For the entire time that Ms. Vance was employed in that capacity, her direct supervisor was Bill Kimes, general manager of the Banquet and Catering Department.  In 2005, Ms. Vance complained about treatment she had received in the workplace at Ball State.  She alleged that she had been threatened by Saundra Davis, catering specialist, and that another employee, Connie McVicker, had directed racial epithets toward her.  Ball State investigated Ms. Vance’s allegations and, as a result, issued a written warning to Ms. McVicker.  Regarding Ms. Vance’s complaints against Ms. Davis, the investigation resulted in conflicting accounts of what had occurred between Ms. Vance and Ms. Davis.  As a result of the conflicting information received during the investigation, Ball State counseled both employees regarding their behavior.  Throughout 2006 and 2007, Ms. Vance continued to complain about her treatment by Ms. McVicker and Ms. Davis.

Ultimately, Ms. Vance filed a lawsuit against Ball State, Ms. Davis, Ms. McVicker, and Mr. Kimes.  In part, Ms. Vance claimed that the conduct of Ms. Davis created a hostile working environment for which Ball State should be held liable, because Ms. Davis was a supervisor. 

Ball State moved for summary judgment on all claims brought by Ms. Vance.  Based on precedents of both the Supreme Court and the Seventh Circuit Court of Appeals, the district court concluded that Ball State could not be held liable under Ms. Vance’s hostile work environment claims because Ms. Davis was not Ms. Vance's supervisor, in that Ms. Davis did not have the power to "hire, fire, demote, promote, transfer or discipline" Ms. Vance.  Thus, the district court held that the acts of Ms. Davis could not be imputed to Ball State, which would have given rise to supervisor liability under Title VII.

Ms. Vance appealed the district court's decision to the Seventh Circuit Court of Appeals.  The Court of Appeals affirmed the decision of the district court, concluding that because Ms. Davis did not have the power to "hire, fire, demote, promote, transfer or discipline" Ms. Vance, she did not have sufficient authority to be her “supervisor” for the purposes of liability under Title VII.

SUPREME COURT DECISION

In its decision, the Supreme Court determined that the test for who is to be considered a “supervisor” for Title VII purposes is the bright-line standard adopted by the Seventh Circuit.  Under this test, an employer can be vicariously liable under Title VII for the actions of one of its employees "when the employer has empowered that employee to take tangible employment actions against the victim, i.e., to effect a 'significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, a decision causing a significant change in benefits.'"  With this decision, the Court attempted to provide clear guidance to employers and employees regarding who qualifies as a supervisor for purposes of Title VII.  In adopting this standard, the Court rejected the position the set forth by the EEOC in its Enforcement Guidance.  Under the EEOC’s Enforcement Guidance, a supervisor is described as someone who either has the authority to undertake or recommend tangible employment decisions affecting the employee or has the authority to direct the employee's daily work activities.  In its rejection of the EEOC position, the Court described this position as "a study in ambiguity".

By adopting a bright-line rule, the Court indicated that lower courts should be able to determine early on in Title VII litigation whether any basis exists for imposing vicarious supervisory liability on an employer, by determining whether or not the employee in question had the power to "hire, fire, demote, promote, transfer or discipline" the complaining employee.

CONCLUSION

The decision by the Court in Vance is good news for employers, in that it limits circumstances where vicarious liability may be imposed under Title VII and provides clear guidance as to what those circumstances are.  However, the decision does not impact the ongoing responsibilities imposed on employers to provide a workplace that is free from discrimination and discriminatory hostility.  Prudent employers should continue to provide regular periodic training to their workforce regarding discrimination and harassment, with additional training to their managers, including those managers where there may be a question as to whether they are "supervisors" for purposes of Title VII.  Employers should be certain that the training provided makes it clear that all managers have an obligation to take steps to prevent and to correct any discriminatory or harassing behavior.

Tags: Employment Law, Title VII

UPDATE: DOMA Impact on Employer Benefit Plans - Q&A

Posted on Thu, Aug 01, 2013 @ 09:17 AM

Jack B. Harrisonby Jack B. Harrison

On June 26, 2013, the Supreme Court issued its long-awaited decision in Windsor v. United States, No. 12-307, a case challenging the section of the Defense of Marriage Act (DOMA) under which same-sex marriages validly entered into under applicable state law were not recognized for the purposes of federal laws.  The Court ruled, in a 5-4 decision, that this section of DOMA is unconstitutional.  The Supreme Court first determined that those defending the law, representatives of the United States Congress, actually had standing to defend the law, this giving the Supreme Court jurisdiction to hear the case.  The majority, with Justice Kennedy writing for the Court, held that the equal protection clause of the Fourteenth Amendment prohibited the federal government from refusing to recognize same-sex marriages that have been entered into validly under the law of a state.  A primary basis for this decision was that states have historically defined the parameters for those marriages they consider valid.  In this specific case, since New York had chosen to protect same-sex relationships by allowing same-sex couples to marry, it was a violation of equal protection for the federal government to make unequal a subset of state-sanctioned marriages.

While the holding in Windsor will have an immediate impact on benefits, as well as the tax treatment of those benefits, the federal government has yet to provide guidance as to whether and when the ruling may be applied retroactively by the government.  It is certainly likely that the ruling will be applied retroactively, at least in some circumstances, such as allowing couples in valid same-sex marriages and their employers the opportunity to amend prior-year tax returns to seek refunds of taxes paid on imputed income resulting from health plan coverage for same-sex spouses.

It is likely that the Windsor decision will impact the design and operation of private employer benefit plans, including 401(k) plans and other retirement plans, governed by ERISA, health benefit plans, and leave policies.  At this immediate time, the specific impact on benefit plans remains unclear.  It is likely that the IRS will issue some guidance regarding the impact of this decision.  However, the Windsor decision raises questions that will need to be considered by employers as the federal government and employers adjust to the various definitions of marriage in state and federal law.  Employers must consider these emerging issues in light of their own specific benefit plans and business needs.  Employers should be in consultation with their benefits counsel to determine what approach may be best suited to their specific needs.

What Same-Sex Marriages Will The Federal Government Recognize After Windsor?

Under Windsor, the federal government is to look to state law to determine whether or not a same-sex couple is validly married.  One question that Windsor left open is which state law the federal government is to follow: the law of the state in which the marriage occurred (state of celebration) or the law of the state in which the couple currently resides (state of residence).  This question is critical for same-sex couples and for employers, given that the majority of states currently do not recognize same-sex marriages.  For federal purposes, it appears likely that under Windsor, the federal government will recognize the same-sex marriages of couples residing in states that allow same-sex marriages.  However, it is less clear at the moment how the federal government may treat married same-sex couples residing in other states.

What States Currently Allow Same-Sex Couples To Be Married?

California, Connecticut, Delaware, Iowa, Maryland, Massachusetts, Maine, Minnesota, New Hampshire, New York, Rhode Island, Vermont, Washington, and the District of Columbia allow same-sex couples to be married.  In most cases, states that allow same-sex couples to marry recognize valid same-sex marriages from other states and foreign countries, such as Canada.

Does Windsor Impact Health Plans Already Providing Benefits To Same-Sex Spouses Of Employees Residing In A State That Recognizes Same-Sex Marriages?

Prior to Windsor, the IRS treated the value of employer-provided health coverage to an employee’s same-sex spouse as wages or imputed income to the employee, thus subject to federal income and employment taxes.  After Windsor, where an employer provides health care coverage to a non-employee same-sex spouse in a state that recognizes same-sex marriage, that coverage will be tax-free to employees, without any showing of tax dependency.  Also, after Windsor, other federal rights historically provided to spouses in health plans, such as independent rights to COBRA continuation coverage and certain HIPAA special enrollment rights, will now also be available to same-sex spouses in states that recognize same-sex marriage.

Does Windsor Impact Health Plans In States That Do Not Recognize Same-Sex Marriage?

Windsor only requires that the federal government recognize same-sex marriages for the purpose of federal benefits, not that state governments recognize them.  Therefore, it is unclear what impact the decision may have on employer health plans in states that do not recognize same-sex marriages.  Where an employer in a state that does not recognize same-sex marriages elects not to provide health coverage to same-sex spouses under its health plan, Windsor will likely have no effect on the employer’s health plan.  Where an employer in a state that does not recognize same-sex marriages elects to provide coverage to same-sex spouses, it is likely that the IRS will issue guidance on whether the rules and rights for those same-sex spouses residing in states that recognize same-sex marriages, such as tax-free coverage and COBRA continuation coverage, will extend to same-sex spouses who entered into valid marriages in another state, but now reside in a state that does not recognize such marriages.  It is likely that the IRS will extend these rules in this manner.

What Impact Does The Ruling In Windsor Have On Employees And Their Same-Sex Partners Who Are In A Domestic Partner Or Civil Union Relationship, But Not In A Valid Marriage?

While Windsor specifically states that the “opinion and holding are confined to those lawful marriages,” it is possible that the decision will have an impact on domestic partner treatment.  For example, the IRS previously determined that an opposite-sex couple in a civil union in Illinois could file a joint income tax return as a married couple, even though they were not married under Illinois state law.  This determination by the IRS was predicated on the fact that, under Illinois law, individuals who were in valid civil unions were granted the same rights and responsibilities as married couples in Illinois.  Several states (Illinois, Colorado, New Jersey, Oregon, Hawaii and Nevada) have domestic partnership or civil union laws similar to the Illinois civil union law, granting registered domestic partners or those in civil unions all of the rights and privileges of married couples, while not allowing “married” nomenclature.

Is There Any Federal Law Requiring An Employer To Provide Health Plan Coverage To Spouses, Whether Or Not The Married Couple Is Opposite-Sex Or Same-Sex?

No federal law requires employers to provide health coverage to the spouses (opposite-sex or same-sex) of employees.  Currently, federal law allows an employer to have a health plan that provides coverage only to employees or only to employees and their children.  Under the Affordable Care Act, it seems likely that penalties will not be imposed on employers if they elect not to provide coverage to spouses.  However, a penalty could, in fact, be imposed under the Affordable Care Act on the employee’s spouse if he or she does not have health coverage from some source.

While Waiting For The Federal Agencies To Give Guidance On Windsor, Are There Any Steps Employers Should Immediately Take Regarding Their Benefits And Benefit Plans?

In the immediate aftermath of the Windsor decision, prudent employers and other plan sponsors should take the following steps:

  • Send appropriate communications to employees about how the Windsor decision potentially impacts their benefits, describing what changes are being made to the benefit plans or policies in light of the decision;
  • Review benefit plans and employee policies to determine the impact of Windsor, if any, on their plans and policies;
  • Determine whether current plan eligibility rules, definitions and policies, specifically as related to the definition of spouse, need to be revised in light of Windsor and then revise applicable documents and forms, as necessary;
  • Where the employer provides domestic partner/civil union partner health benefits, consider whether those benefits should be continued or revised, given that same-sex spouses will be recognized as spouses for purposes of federal law, considering carefully applicable state law requirements and risks; and
  • Ensure that outside administrators, insurers and service providers are administering plans in a manner consistent with the employer's intent and the applicable legal requirements, including with respect to payroll and tax issues, in light of the decision in Windsor.

Tags: DOMA, Defense of Marriage Act, Employer Benefit Plans