Back in the 1990s, employers still had the Anita Hill-Clarence Thomas hearings and the tawdry sexual harassment allegations relatively fresh on their minds. Employment lawyers will tell you that they started to see a bump up in claims in the early to mid 1990s as the issues of workplace harassment raised to the surface.

I raised it in one of my posts 10 years ago this very week.

But even before yesterday’s news that major movie mogul Harvey Weinstein has been accused of sexual harassment of many women over many years, I’d been thinking that we’re seeing another wave.

For employers, this new era should be even more concerning.

Why?

Because back in the 1980s and early 1990s, employers could at least say that “well, we didn’t know we needed to train” or “well, we didn’t know we needed to do an investigation.”  It may not have been plausible (or even good business), but at least it was something.

Now with laws in many states mandating sexual harassment prevention training and with U.S. Supreme Court precedent nearly mandating that employers investigate harassment claims and take prompt remedial action, there’s just no excuse.

And yet, over the last 12-24 months, we’ve seen a series of very high-profile people be brought down over sex harassment cases.

The implications for this are huge — and not for the reasons you may think.

It’ll take a while for statistics to back this up, but my educated guess is that settlements of sex harassment claims, and employee verdicts of sex harassment claims are up and going to continue going up.

As a result, employers are likely to pay more for settlements in the short term to avoid headlines of the type we are seeing. And juries are more likely to punish employers that they think should know better.

The practical implications of this for employers are several, but I’ll highlight three, some of which I’ve said before.

  1. It is absolutely imperative for employers to investigate sex harassment claims. But more than that, employers must take steps to ensure that the harassment STOPS.  Paying off one case, only to have the harasser move on to the next victim just is a recipe for disaster.
  2. When a lawsuit does arise, make sure you are fairly evaluating the case. Even if you think you have a defense, there may be more value to settling the case early on than fighting it and losing big.  Not every case is a home run, but not every case is an outright winner for the employer either.
  3. Train. Train. Train.  And when you’re done training, encourage people to bring issues to your attention.  Sweeping claims under the rug will only hurt the employer in the long run.

A new era of sex harassment claims is upon us.  Employers that allow any such harassment to go on risks headlines AND big payouts.  It’s a place employers should strive really hard to avoid.

The Dialogue – an occasional discussion between myself and a prominent employee-side attorney, Nina Pirrotti returns today after a late summer hiatus. Today’s chat focuses on employee separations and severance agreements.  Share your own tips or observations in the comments below. As always, my thanks to Nina for sharing her insights here.

Dan: Hi Nina! How was your summer? Mine was fine except I can’t stop hearing news about President Trump.

It seems to drown out everything else going on and I think I have a headache from it all. But let’s give it a try, shall we?

I know I’m often confronted with having to fashion separation and settlement agreements for employers.   

What do you find are the items in agreements that you think both sides ought to be paying attention to?

Nina: Drowning in Trump-related noise.  The image is horrifying!  My husband and I were chatting the other day about an old Saturday night live weekend update skit.  As we recall it (it was decades ago), the news media was focused on other events when all of a sudden the character playing Kim Jong Un pops into the screen, holds both arms out and complains:  “What do I have to do to get attention around here?!” 

In the age of Trump that glib remark becomes bone-chilling. 

The art of crafting a fair and balanced settlement agreement isn’t the most riveting of topics in our world but it is among the most important.  

One key strategy I use in evaluating them is to put myself in the position of the employer to ensure I understand company’s (reasonable) priorities. 

Clearly the company seeks to contain the dispute itself, keep the fact that it is settling it confidential, and do everything possible to obtain closure.    If the settlement terms go beyond meeting those priorities, a red flag goes up for me and I scrutinize those terms closely.  

In light of the company’s priorities in containing the dispute and keeping it confidential, I expect to see a confidentiality provision, limiting the disclosure of the settlement agreement to those on a need to know basis (typically immediate family members, financial/tax advisor and lawyer). 

I am also not surprised by a non-disparagement provision which prevents the employee from spreading ill will about the former employer. 

Since I generally advise my client that it rarely reflects well on an employee to speak negatively about his/her former employer (no matter how justified the employee might be in doing so) I usually do not oppose such provisions. 

I will often, of course, make them mutual so that key employees at the company also commit to not disparaging my client. 

In light of the company’s priority in seeking closure, I do not have a one-size fits all response to no re-hire provision.  I understand the company’s concern that should the employee who has settled claims for discrimination apply for a position down the road and the company (for legitimate reasons) declines to hire that employee, it nonetheless remains exposed to a potential retaliation lawsuit by the employee. 

No re-rehire provisions in certain situations can be appropriate but only if they are narrowly tailored to the company itself.  Alarm bells go off for me, therefore, if the employer is large and has numerous affiliates and subsidiaries and the employer insists on including them within the scope of the no-rehire provision. 

In such cases, no-rehire provisions can be tantamount to mini-restrictive covenants and, where they hamper my client’s ability to find comparable work, I will reject them as untenable. 

Speaking of restrictive covenant  provisions, it irks me to no end when an employer tries to slip one into a settlement agreement where the employer was not bound by one during the course of his/her employment!   Such provisions are generally a non-starter for me, absent considerable additional compensation for them. 

Finally, as we discussed in an interview you conducted with me many years ago, I do not abide by liquidated damages provisions. 

If a court determines that my client has breached the agreement, even if that breach is deemed a material one, the employer should still bear the burden of proving that it has been damaged and, to a reasonable degree of certainty, the monetary amount of that damage. 

What are your thoughts, Dan?   Have I articulated the company’s main priorities well?  Are there others I am missing that I should consider the next go-round?   Do tell and I promise to listen with an open mind!

Dan: Well, one day we could talk about Trump-related employment litigation, if you’d like to really talk more about Trump.

You’ve hit on some of the highlights from an employer perspective. When crafting one for an employer, I will let you in on a “secret” – we have a template.

I know — probably not a big surprise to you since our firms have negotiated enough of them.

As a result, I find that agreements at this point are sometimes more of finessing around the edges, rather than major re-writes.

The problem I see is that there are some employers who are using a form separation agreement handed down to them years ago, without understanding what’s in them.

First off, the agreements — regardless of whether you’re trying to comply with federal law or not — should really be written in “plain English”.

Get rid of the “Whereas” clauses.

Use bold language or simply to understand provisions.

And try not to have it be 15 pages.

Second, the agreements should contain: a) a release of all state and federal claims (and local ones if you’re in places like New York City); b) confidentiality (and if it needs to be mutual, so be it); c) non-disparagement (same).  There’s more of course, but start with the basics.

Third, employers should think about provisions that may actually be helpful: a) What are you going to do about references? Is it “name, rank, serial number” or something more? b) Do you want an arbitration provision for any breach of the separation agreement?

Neither is typically a high priority but taking care of some of these details are important.

A few employers are trying to get the “best” deal and negotiate strongly but I find most employers just want to move on; the termination was probably not something that they wanted to do anyways and putting some distance between the employee and the company is probably a good thing for the business ultimately.

Since you’re not finding separation agreements all that exciting, what about how employers handle the termination or termination meeting itself? I’m sure you’ve heard some stories from clients.

Nina: Wow – you hit the jackpot with that question!   

I was once asked at an ABA conference at which I spoke what was one step management lawyers could take to maximize the chances that a departing employee won’t seek out the counsel of someone like yours truly. 

My answer?  Treat them like human beings when you terminate them.   

Don’t do what one Fortune 500 company did to one of my clients which was to call her as she lay in a hospital bed with her infant daughter who had been born earlier that day and inform her that she need not return to work because her job had been eliminated.

Time and again prospective clients had told me that they would have gone quietly into the good night had their employers treated them with a modicum of respect during the termination process. 

I recently settled a case involving a woman in her mid-60s who had worked for the same company for 20 years and proven time and again that she would do ANYTHING for that company and, indeed, had worn a number of hats over the years, shedding one and donning another as the company’s needs shifted.  In her 20th year, a new CEO was hired and you can guess what happened next.  He terminated her and replaced her with a brand new hire, decades younger, who my client had helped train.   

Doesn’t sound kosher right, but that is not the worst part! 

It was the WAY the company terminated her that prompted this lovely, meek, non-confrontational woman to summon up the courage to pick up the phone and call me. 

Her termination consisted of a three minute meeting in which the CEO informed her she was no longer needed and handed her a severance agreement that provided her with two measly weeks’ pay. 

She was literally sobbing as she signed it then and there after which she was immediately escorted out the door.   She contacted me weeks after she signed her agreement.  Too bad, so sad, right?  Wrong. 

The employer neglected to include in her severance agreement language required by the Older Worker Benefits Protection Act (OWBPA), including a 21-day period to consider the agreement and a seven-day revocation period.  She was able to keep her paltry two weeks and I got her many months more on top of that!   

There are so many morals to that story, the least of which is that severance agreements for employees over 40 should comply with the OWBPA.   Employers should be expressing their gratitude to terminated employees who have proven their devotion to the company by providing them with severance that sends the message that they valued that devotion.  

There other ways to go that extra mile to treat such employees with dignity.   Think about how you would want to be treated if you were undergoing one of the worst days of your life and act accordingly.  Thank them for their service, tell them how sorry you are, assure them that you will do everything in your power to facilitate their transition, allow them to say goodbye to their colleagues, hell, even offer to throw them a farewell gathering.  The possibilities are endless.  Sometimes we lawyers get in our own way. 

Dan, I know none of the clients who have had the benefit of your wisdom prior to terminating an employee would succumb to such pitfalls.  But what do you do when you have to clean up after the fact?

Dan: You’ve raised a good question, but I want to address something you said first. 

You said: “Employers should be expressing their gratitude to terminated employees who have proven their devotion to the company by providing them with severance that sends the message that they valued that devotion.”  

It’s that phrase that I think gets to the heart of the issues with severance in 2017. 

When I first started practicing (a few years ago, ahem), there were still many companies that offered severance without ANY release because that just seemed “the right thing to do.”

After all, there was still a bit of an unspoken contract that employers would take care of employees.

Think back to the “Mother Aetna” description of the insurance company.  But as the recessions took their toll and employee mobility took root, that social contract has definitely been frayed over the years.  In part too is the rise of employment litigation. 

Now each employer has to worry: Is THIS going to be the employment termination that leads to a lawsuit?

 I can’t even remember the last time that an employer offered severance without also demanding the employee sign a release. 

In other words, the idea of severance as “gratitude” and “thanks”, has now been replaced with much more of a quid pro quo. 

For employers, the thought ii: If we give you this severance, please don’t sue us. 

And yet for employees, some of them still remember the days when severance was just something companies did without worrying about the lawsuit. And so when the employer demands the release, some employees take offense to it, not realizing that times have changed. 

As a result, I have also seen employers trying to offer less and less; the notion of one week of severance per year of service (with caps) is still strong, but not universal. 

As to being the fixer – yes, sometimes it happens.  The lack of OWBPA provisions is really something that just shouldn’t happen anymore. 

But it’s more that employers go ahead with the termination without thinking about what comes next.  And some employers are moving so fast, that the details such as having two people in the termination meting and having COBRA information available, get lost in the shuffle.

I don’t know of a single employer that has enjoyed firing an employee.  

Even when they catch an employee red-handed, many employers are aware of the consequences that may flow for the employee from a firing. The employee may have a tough time finding a new job, for example. 

But it strikes me that a small subset of terminated employees are LOOKING to bring suit or a payday instead of looking forward to a new time in their life. 

Obviously sometimes past discrimination has to be examined, but what do you think makes employees sue their employers instead of signing severance agreements that are presented to them?

Nina: I think that employer conduct that rises to the level of actionable discrimination and/or retaliation is alive and well, unfortunately. 

The only up side of all of this is that I get to keep my day job, which I love! 

Of course there are those (“small subset” would accurately describe them) who seek to avoid accountability and are looking for a quick pay out of claims. 

Virtually all of those individuals never make it to our front door. 

I say “virtually” because we are human, after all, and one or two may sneak through the cracks in that door. 

But then we have competent lawyers like you for whom we have great respect who (very politely) convince us – – with facts – – that we are being misled. 

That is why I believe that the only situations in which early negotiations are successful are those in which both sides fight their natural inclinations to hold their cards close to their chests and actually share meaningful information from the get go.  

But how to conduct negotiations effectively is a topic worthy of its own separate dialogue, no?

Dan: I think so. Now, I have to save whatever energy I have left to stay up late to watch playoff baseball with the Yankees. Hopefully, it’s a long October filled with lots of late nights and distractions.  Until next time, Nina!  

DSC03212$20,000,000.00.

That, as they say in the legal parlance, is a crooked number with a LOT of zeros behind it.

And that is also the reported amount of settlement between Gretchen Carlson and Fox News over her sexual harassment lawsuit.  Plus an unprecedented apology.  And it doesn’t take into account other cases of harassment that are allegedly being settled concurrently.

Now I’m sure the settlement had all the disclaimers that Fox News was not admitting liability as part of the settlement.

But you don’t need to be a lawyer to know that you aren’t paying a $20M settlement as “nuisance” value.  I have little doubt that the investigation that Fox News conducted turned up some pretty egregious evidence of something and the company figured that paying the settlement was STILL a lot cheaper than having the case go forward.

It’s a big deal in a lot of respects.

First, by my back of the napkin recollection, it has to be one of the largest single-plaintiff sex harassment settlements ever inked. (If there were ones much larger, it’s been kept pretty confidential.).

Second, it demonstrates — as if the allegations didn’t already — that despite pervasive training and years of awareness, that some workplaces are still riddled with sexual harassment.  I noted as much in a prior post back in July but back then it was tough to figure out what was happening.

A $20M settlement sort of avoids any doubt as to what was happening.

Third, companies need to be vigilant and if the CEO/President is condoning the behavior (or worse, is the one engaging in harassing behavior), then it’s up to the Board of Directors to take a stand.

Fourth, it’ll likely be used as a benchmark for other cases of harassment in settlement negotiations. You can just hear it now: “Well, if Gretchen Carlson got $20M, my client’s case is worth at least half as much….”

Lastly, it should put to bed the notion that we are in an environment where sex harassment just isn’t a problem any more.  Back in 2011, there was a notable column in The New York Times that suggested that was the case and I highlighted it in a discussion about this very issue.

Gretchen Carlson will now join the pantheon of people who spoke up when it would’ve been more convenient to remain quiet.  And everyone — employers and employees alike — ought to appreciate the sunlight she has brought to the issue.  Whether this case is a harbinger of more things to come or not, use this case as an opportunity to test your own practices.

Throw out the release?
Throw out the release?

Yesterday, I had the opportunity to talk at the Connecticut Legal Conference about employment law issues. My talk focused on free speech rights in the workplace — a topic I’ve covered well in some prior posts here and here, for example.

One of the other topics of our discussion was the Cheeks v. Freeport Pancake House case — a recent case by the Second Circuit discussing wage & hour claim settlements under the Fair Labor Standards Act.

I’ve talked about this issue in prior posts as well but the general takeaway from the discussion yesterday was a renewed emphasis on receiving approval from either a federal court or the U.S. Department of Labor on any wage/hour claim settlements.

In most employment law cases filed in federal court, when a settlement is reached, the parties typically stipulate to the dismissal of the claim under a rule of civil procedure (Rule 41).

In Cheeks, the Second Circuit said that wasn’t good enough due to the unique nature of wage/hour claims and that employees were particularly susceptible to bad settlements:

We conclude that the cases discussed above, read in light of the unique policy considerations underlying the FLSA, place the FLSA within Rule 41’s “applicable federal statute” exception. Thus, Rule 41(a)(1)(A)(ii) stipulated dismissals settling FLSA claims with prejudice require the approval of the district court or the DOL to take effect. Requiring judicial or DOL approval of such settlements is consistent with what both the Supreme Court and our Court have long recognized as the FLSA’s underlying purpose: “to extend the frontiers of social progress by insuring to all our able-bodied working men and women a fair day’s pay for a fair day’s work.”

The Court pointed out settlements in other cases which might be troubling.

In [one case], the proposed settlement agreement included (1) “a battery of highly restrictive confidentiality provisions ․ in strong tension with the remedial purposes of the FLSA;” (2) an overbroad release that would “waive practically any possible claim against the defendants, including unknown claims and claims that have no relationship whatsoever to wage-and-hour issues;” and (3) a provision that would set the fee for plaintiff’s attorney at “between 40 and 43.6 percent of the total settlement payment” without adequate documentation to support such a fee award….. In [another case], the district court rejected a proposed FLSA settlement in part because it contained a pledge by plaintiff’s attorney not to “represent any person bringing similar claims against Defendants.” … “Such a provision raises the specter of defendants settling FLSA claims with plaintiffs, perhaps at a premium, in order to avoid a collective action or individual lawsuits from other employees whose rights have been similarly violated.”

Would these apply to claims that were not filed in federal court to begin with? The speakers said the decision left that open a bit but still recommended that parties seek USDOL approval or even file the suit in federal court and seek judicial approval at the same time.

While the court noted that this might be difficult, “the burdens…must be balanced against the FLSA’s primary remedial purpose: to prevent abuses by unscrupulous employers, and remedy the disparate bargaining power between employers and employees.”

Note: These same rules do not apply to settlements under the state wage/hour laws and if you’re not covered by the FLSA, there isn’t much of a need to follow that — at least until the issue is raised in state courts.

But suffice to say that if you get a claim by a current or former employee regarding, say, past overtime wages, be wary of settling the claim without receiving outside approval.

franklinSo, in my prior two posts about the new case statistical reports from the Connecticut Commission on Human Rights and Opportunities, I’ve looked at the case statistics to see that harassment and terms & conditions claims are up, and that ancestry, race & color claims filed are also up.

But what else can we glean from these numbers?

First, according to the reports, there are a lot more cases pending at the agency than in the last couple of years resulting in a big backlog of cases.  Specifically, there are 2670 active and pending cases at the agency by the end of the fiscal year. Contrast that with just 757 in 2014, and 209 in 2013.

That means that employers are likely to have many more of these cases floating around and they are moving at the proverbial snail’s pace.  Clearly, if these numbers are right, something isn’t working at the agency.

Second, there has been a (very modest) increase the number of referee decisions at the CHRO — ostensibly being that more cases are being tried through a public hearing.  But before you draw many conclusions, the numbers are still paltry.  In 2015, just 16 cases had a referee decision. That’s up from six in 2014 and three in 2013.

Nonetheless, the calendar schedule for contested hearings looks busy for the rest of the year so it remains to be seen whether this process will continue at the same levels.

Finally, for those that think that every case is a battle that is won or lost, think again. The plurality of cases at the agency alone are still closed through settlement. In 2015, 968 out of 2334 case closures came through a withdrawal with settlement.  And that doesn’t account for the 543 cases that are “released” from jurisdiction so that employees may file in court directly (and whether those cases are settled too).

In short, for employers, the process at the CHRO is slow and you’re still likely to end up trying to settle the case more often than not.

Statistics don’t tell us everything; but to ignore the numbers here is a mistake. Employers do best when they understand and adapt to today’s trends and not simply go by how things were 10 to 15 years ago.

Because the change has been substantial.

DontWorryBeYesterday, the U.S. Supreme Court ruled that the EEOC has a duty to conciliate that has go a bit beyond words before filing suit as a party.  In the case, EEOC v. Mach Mining (download here), the employer argued that the EEOC cannot just say that it has tried to resolve the matter through conciliation; the Supreme Court agreed, but barely, saying that in many cases, an affidavit from the EEOC attesting to its efforts is going to be sufficient. And even if it isn’t, the EEOC can get a do-over (my words, not the courts) if a court finds that its conciliation efforts did not meet the statutory minimum.

To some, this decision is a huge deal: “The implications for employers as a result of this decision cannot be overstated.”  Why? Because the EEOC will have to revisit its litigation strategy and focus on being able to show its conciliation efforts before a “third party”.

To others, the decision is disappointing “because the Court declined to authorize dismissal of the EEOC’s lawsuits if conciliation efforts were not undertaken.”

What are the implications though for Connecticut employers?

For the overwhelming majority of Connecticut employers, my take is different from both of these and is essentially the title to a Bobby McFerrin song: Don’t Worry, Be Happy. 

Sure, be happy that the Court agreed that the EEOC cannot pay lip service to conciliation efforts.  It’s a small “victory” for employers.  It could be worse.

But don’t worry about this decision because you’re very likely to never have to deal with this issue.

Why? Because in Connecticut, the state agency — the Connecticut Commission of Human Rights and Opportunities — mainly calls the shots.  Indeed, in the last ten years since April 2005, the EEOC has brought suit only five times against Connecticut employers in federal court here (though, 3 of those suits are in the last 2 years).

Quite simply, the EEOC plays a very very small role in how employment laws in this state are enforced.  Thus, any decision that affects how the EEOC handles the small numbers of cases it brings against employers is going to have just a minimal impact in Connecticut.

To be sure, in the unlikely event you end up being the subject of an EEOC investigation, you should take your efforts to conciliate with the EEOC seriously and document them. But most employers here will never have that happen. Indeed, you’re much more likely to get a lawsuit by an employee.

So, read the decision if you must. But focus on other areas of compliance instead of getting caught up in the latest and greatest from the Supreme Court.

And feel free to whistle with the earworm that is “Don’t Worry Be Happy” below.

My colleague Peter Murphy and I have been talking a lot about background checks lately.  It’s easier than ever to run a basic Internet search on someone, but what information do you find? And are there any limts?

Today, Peter talks about two recent settlements of background check claims against employers. Both cost the employers big dollars. Here’s what you can learn from them.

Peter Murphy

 

Back in March, Dan noted that plaintiffs’ lawyers were brining an increasing number of lawsuits under the Fair Credit Reporting Act (“FCRA”).

This seems to be occurring for two reasons. First, the FCRA contains very specific steps an employer must follow when obtaining and then using a background check for employment related purposes, including the following:

  1. Make a clear and conspicuous written disclosure to the job applicant that a consumer report may be obtained for employment purposes;
  2. Have the applicant authorize in writing the procurement of the report;
  3. And, before taking any adverse action based in whole or in part on the report, provide the applicant with:
    1. a copy of the report; and
    2. a description in writing of the employee’s rights under the FCRA.

If one of these steps is being systematically violated by an employer, then there is the potential for a lawsuit involving multiple plaintiffs or even a class of plaintiffs across the employer’s operations.

The second reason for the increasing number of FCRA lawsuits is that they expose employers to damages for each FCRA violation, as well as punitive damages, costs, and significant attorney’s fees.

Thus, unless employers review their hiring practices and ensure FCRA complaint, they could be exposed to costly lawsuits, as Dan and others warned back then.

Their warnings were prescient, as demonstrated by two recent settlements in FCRA cases.

In the first case, the employer accepted online job applications–just like almost all employers. The applicants alleged that the employer’s online application system did not comply with the FCRA’s procedural provisions addressing authorizations for a background check, or provide FCRA mandated disclosures to the applicants.

These procedural violations could have been enough to expose the employer to liability under the FCRA.

According to the applicants, however, the employer also was taking adverse employment actions based on information in the background checks without providing them a copy of the report or the required opportunity to correct or explain any discrepancies.

Although the employer denied any wrongdoing, it ultimately agreed to a $5.053 million settlement that recently was approved by a district court judge.

The only ones getting rich as a result of this settlement, though, were the plaintiffs’ lawyers, who received about $1.52 million in attorneys’ fees in comparison to the $50 payment to each of the eligible class members.

Plaintiffs’ attorneys were just as pleased with a district court’s preliminary approval of an FCRA settlement in a case pending in Virginia. Just like the prior case, the claims in this case stemmed from allegations that the employer violated the procedural protections of the FCRA, and then also failed to give job applications the ability to respond to adverse information in the background check.

Under the judge’s recent order, the plaintiffs’ attorneys would get 25 % of the $4,000,000 proposed settlement, and each potential class member would receive statutory damages of $53.

The numerous procedural and substantive provisions of the FCRA can be difficult to decipher, and as the above examples demonstrate small compliance mistakes can lead to costly and time consuming lawsuits.

Although we may sound like a broken record, employers should therefore consult with trusted counsel when necessary to ensure that their job application process can survive a FCRA challenge, and that their authorization forms and disclosure notices comply with FCRA’s requirements.

It’s not as easy as it first appears.

Late Friday, you might have (ok, I’m sure you did) missed a press release from the United States Department of Justice announcing a settlement with a staffing agency in California.

The charge? That a staffing company “discriminated against work-authorized non-U.S. citizens in violation of the Immigration and Nationality Act (INA).”

Now, I’m sure you all know (ok, I’m sure a few of you don’t know), that after an offer of employment is made, employers must require the to-be-hired individuals to present documentation to verify their eligibility to work in the United States.

But the DOJ charged that the “company’s staff required non-U.S. citizens, but not similarly-situated U.S. citizens, to present specific documents during the employment eligibility verification process to establish their work authority. The INA’s anti-discrimination provision prohibits employers from placing additional documentary burdens on work-authorized employees during the employment eligibility verification process based on their citizenship status or national origin.”

I’ve previously discussed the I-9 form in some prior posts.  But in essence, employers need to use consistent practices at the start of employment.

The staffing agency is learning this issue the hard way:  Under the settlement agreement, the company “will pay $230,000 in civil penalties to the United States, create a $35,000 back pay fund to compensate individuals who may have lost wages due to the company’s practices and undergo training on the anti-discrimination provision of the INA.”  Oh, and the agency will be subject to government monitoring and reporting requirements for three years.

Employers have a lot to worry about when hiring new employees.  Add consistent treatment of new hires to the list.


Your former employee files suit against your company in federal court in Connecticut claiming that she is entitled to overtime under the Fair Labor Standards Act.   You go to a settlement conference before a magistrate judge. After a few hours of back and forth negotiation, you reach a settlement with the ex-employee.

Is judicial approval of the settlement necessary?

It’s clear that in discrimination cases, the answer is no. Parties settle such claims all the time without judicial intervention.

But, federal judges in Connecticut are noting that there is a developing split of authority on whether judicial approval is needed to settle FLSA claims.

On the one side, there are cases like Socias v. Vornado Realty L.P. (E.D.N.Y. 2014), from earlier this year, which requir a fairness hearing prior to voluntary dismissal of a FLSA action.

On the other, there are cases like Picerni v. Bilingual Seit & Preschool Inc. (E.D.N.Y. 2013) which hold that no judicial approval is required prior to settlement of FLSA lawsuit.

Who’s right? That issue will eventually have to be decided by the Second Circuit and perhaps even the U.S. Supreme Court if a circuit split develops.

In the meantime, companies and their lawyers should be prepared for courts to bring this issue up on their own (the latin phrase is sua sponte).  If so, there are a number of factors that the court may look too, as outlined in one case, Lliguichuzhca v. Cinema 60, LLC (S.D.N.Y. 2013).

As the court noted, in “scrutiniz[ing] the settlement agreement to determine [whether] the settlement is fair and reasonable[,]” the court must look at the following factors: whether there was “overreaching” by the defendant-employer, whether plaintiff was represented by “competent” counsel; whether there were “legitimate concerns about the collectability of any judgment against defendant[]”; and whether the “proposed settlement [was] . . . the product of negotiation between represented parties following extensive litigation[,]” especially because “[a]rm’s length bargaining between represented parties weighs in favor of finding a settlement reasonable.”

This “fair and reasonable” standard may not be terribly difficult to satisfy, but for parties who believe that the settlement they reached on their own should be enough, it can still be a bit nervewracking.

For employers, be mindful of your settlements of FLSA claims.  As the saying by Yogi Berra (and the song by Lenny Kravitz) goes, “It ain’t over ’til it’s over.”

Last year, the General Assembly considered changes to the Commission on Human Rights and Opportunities. That bill did not receive a final vote. This year, it’s back but recently died in the Judiciary Committee, according to the CBIA.  Will it get attached to another bill? Will it be tweaked further this fall in preparation for next year’s term? My colleague, Christopher Parkin, chimes in with the details and why employers need to keep an eye on any proposed changes.

The ink is still drying on the most recent round of changes at the CHRO, the massive amendments known as PA 11-237 (in fact, the CHRO website still points to old versions of the General Statutes), but the legislature has been grappling with proposed changes to the statutes that govern the CHRO in the last few months.

These amendments, Senate Bill 385, represent a considerable effort to clean up antiquated language and recodify the statutes to make them more accessible to the public.    

Among the hundreds of technical amendments built into the bill are plenty of new substantive changes that employers and their counsel will need to become familiar with.  Recently the CBIA has noted that this particular effort has seemed to die in committee; however, the bill is likely to reappear at one point or another. Here are the details and the impact on employers when this is considered again.  

Investigator and mediator will no longer be the same person

The CHRO has long been criticized for its practice of combining the mediation and investigation process by assigning a single investigator to handle both duties, a process the Commission has insisted is a function of insufficient funding.  Until recently, mediations and fact findings were very frequently held consecutively in one marathon day. 

Nobody is best served when these processes are combined.  Neither employers nor employees can fully trust the confidentiality of the mediation process when the mediator will be tasked with soliciting testimony a few hours later if the case doesn’t settle. 

It’s also not fair to the investigators to expect that they can fully partition their brain between mediation and investigation to conduct both appropriately.

Continue Reading A New “CAR” And Other Proposed Changes to CHRO – Can They Get It Right?