We’ve been waiting a while for a few U.S. Supreme Court cases to come down that have an impact on employment law.  And the court didn’t disappoint.  They are blockbuster cases when it comes to employment law.

In the first of two decisions this morning, the U.S. Supreme Court released Vance v. Ball State University, a harassment case that has important implications for the scope of sexual harassment cases.  (I previewed this case back in January.)

At issue in the case is was:

Whether the “supervisor” liability rule established by Faragher v. City of Boca Raton and Burlington Industries, Inc. v. Ellerth (i) applies to harassment by those whom the employer vests with authority to direct and oversee their victim’s daily work, or (ii) is limited to those harassers who have the power to “hire, fire, demote, promote, transfer, or discipline” their victim.

The Court this morning narrowed the definition further:

We hold that an employee is a “supervisor” for purposes of vicarious liability under Title VII if he or she is empow­ered by the employer to take tangible employment actions against the victim, and we therefore affirm the judgment of the Seventh Circuit.

In doing so, the court rejected a more expansive definition of supervisor that had been advanced by the EEOC.  Why is this significant? Because employers can be, in essence, strictly liable for the acts of the supervisor.  It does not mean that co-worker harassment cases are dead; only that the employee must show that the employer itself was negligent.

So what is a “tangible employment action”? According to the court, it is to effect a “significant change in employment status, such as hiring,firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a signifi­cant change in benefits.”

You can download the decision here.

The decision will have important implications for federal court cases in Connecticut which had been governed by the Second Circuit in the Mack v. Otis case from about a decade ago.  That case had followed the EEOC’s expansive interpretation.

In ruling inVance, the court said that a supervisor is more than just someone who has the ability to “direct another employee’s tasks”.  While that person can create a hostile work environment, it is not enough to establish vicarious liability to the employer.

The case was decided by a 5-4 majority, with the typical ideological fault lines becoming apparent.  In a stirring dissent, Justice Ginsburg found fault with the majority’s logic and she “would follow the EEOC’s Guid ance and hold that the authority to direct an employee’s daily activities establishes supervisory status under Title VII.”

Ultimately, after reflecting on the case for a bit, I’m not sure the case is going to have that big an impact. After all, if there is harassment in the workplace, the distinction is hardly going to save most employers from such claims.  But the decision is clearly an attempt by the court to set some clear parameters for the scope of coverage.  Because of that, we may see more cases decided at the summary judgment phase.

It’s been a crazy week here for reasons I hope to share in a future post.

But in the meantime, the world of employment law still continues. Here are some items worth reading that I had hoped to talk about further. This brief recap will have to do for now.

  • Want some tips on how to avoid liability for your holiday party? Washington Workplace Law has a post that’s a good place to start.
  • Workplace Privacy Counsel has a notable piece on the balance employers face in dealing with HIPAA and the ADA:  How much medical information is private? The Seventh Circuit recently rejected the EEOC’s view. 
  • The Second Circuit recently handed down a favorable decision for employers on non-compete agreements. The employee had tried to challenge it but the court rejected the argument that an employee’s loss of income represented “irreparable harm”.  Trading Secrets blog has the details here.
  • The SCOTUSBlog recapped the oral argument earlier this week in the U.S. Supreme Court about a case that could help define who a “supervisor” is for sex harassment case purposes.  A decision is expected early next year. 
  • The Workplace Class Action blog discussed whether an employer’s discovery request for Facebook postings of employees, who were part of a claim brought by the EEOC, was a proverbial “fishing expedition”.  A court rejected that argument. 

In prior posts, I’ve talked about the fluctuating work week and how it can be a useful tool for employers in limited circumstances. 

You might need a calculator

Yesterday, a federal court in Connecticut had a very interesting ruling that addressed whether an employer — when faced with a suit for overtime by a group of convenience store employees (“clerks”, say the plaintiffs; “managers”, say the employer) —  was allowed to use a fluctuating work week method if a jury found a violation of the FLSA. You can download the case, Hasan v. GPM Investments, LLC here.

For background, the court indicated that there were two questions that were typically presented in overtime cases like this (for those who like following the legal procedure, the court ruled on the issue in addressing a motion to preclude evidence from trial).

[First, s]ometimes employers classify employees as exempt, pay them salaries, and then later learn a particular role did not qualify as an exempt position and workers should have been paid an extra premium for overtime. Such employees, however, have never been paid an hourly wage, and courts are left to reconstruct what their ―regular rate of pay should have been.  Second, the [FLSA] allows employers to pay staff in any manner they wish – for example, by salary, piece rate, or commission. 29 C.F.R. § 778.109. Congress crafted this permissive rule in order to accommodate the ―almost infinite variety of employment situations in a free market economy…. But when employers and employees argue over pay, courts must find ways to convert a less common compensation scheme into a standard hourly rate.

To answer the first question, the employer argued that the employees were paid for a fluctuating work week and that they were paid a fixed salary no matter how much time they spent on the job.  It argued that this was merely an instance of converting an “unusual pay scheme into an hourly rate”.  The court explained the different consequences in simple and stark terms if a factfinder was allowed to use a fluctuating work week to calculate damages.

By way of example, suppose an employee makes a weekly salary of 1200 dollars. A court is faced with the task of putting her in the position she might have been in absent a violation. If court divides her salary by the legal limit of 40 hours, it gets a regular rate of 30 dollars per hour. In a week when the employee worked 60 hours, she would receive time and half, or 45 dollars per hour, for that additional 20 hours of overtime. Thus, her total compensation should have totaled 2100 dollars (1200 dollars in base salary plus 900 dollars in overtime).

But what if a court is faced with a fluctuating work week, not a standard overtime violation? In that same 60-hour week, the worker’s 1200 dollar salary only compensated her at a rate of 20 dollars an hour, not 30. And, for the additional 20 hours she only wins an overtime supplement of 10 dollars – she has already gotten the base rate of 20 dollars for every hour she worked, including the extra hours, and was only deprived of the slight bump of an unpaid half- time premium. For that week, then, she would only receive two-thirds of the standard calculation or 1400 dollars (1200 dollars in base salary plus 200 dollars in an unpaid overtime premium).

The court rejected the employer’s use of a “fluctuating work week” because “in a misclassification case, the parties never agreed to an essential term of a fluctuating work week arrangement — that overtime would be paid at different rates depending on the number of hours worked per week…  To assume otherwise, coverts every salaried position into a position compensated at a fluctuating rate.” 

The court noted that there were other deficiencies with the employer’s argument as well.  “For a fluctuating work week arrangement to make sense to both parties, employees should offset their relative loss from a grueling work week far above forty hours with the benefit of full pay for weeks that clock-in at less than forty hours.”  Here, the evidence was that the employees never had a short week; indeed the job description stated that store managers “were expected to work a minimum of 52 hours per week”. 

The case is another illustration of the perils of trying to rely on a fluctuating work week.  While it can provide some benefit for employers, it must be done properly and must not be raised after the fact.  Here, the court rejected an employer’s attempt to use it where it was seen as an after-the-fact justification for the failure to pay overtime.

There are three major “white-collar” exemptions to the federal overtime rules that are, to some employers, a bit confusing to say the least.  One of them — the “executive” exemption — is mistakenly understood to just include, well, senior executives of a company.

A new case out by the Second Circuit (Ramos v. Baldor Specialty Foods — download here) last week shows that the executive exemption may be a bit broader than is conventionally understood. 

The case turns on whether the employee is managing a “department or subdivision”.  A subdivision must have “permanent status and continuing function, as opposed to a mere collection of employees assigned from time to time to a specific job or series of jobs.” 

In this instance, the court was asked to consider whether 20 or so “warehouse captains” each of whom performs the same job duties as other captains where exectuives.   Their duties include:

overseeing the work of a “team” of three to six “pickers,” the employees who retrieve food products from the warehouse shelves and load them onto trucks to be delivered to Baldor’s customers. Each captain is “in charge of” his team. He is responsible for making sure that his pickers arrive at work on time for each shift, retrieve the correct products from the warehouse shelves, and load the products onto the correct trucks. He is also responsible for improving his team’s performance and efficiency over time. Each captain has the power to assign slow pickers “easier work” so that they do not fall behind or hurt the team’s performance, and the captain can “give certain orders to certain pickers if [he] trust[s]” a particular picker “to get the right product.” It is the captain’s job to ensure pickers “have done their job right.” Supervising his team is the “main part” of a captain’s job.

The plaintiffs in this case disputed that each captain manages “a customarily recognized department or subdivision” of the company. They insisted that the teams of pickers do not constitute customarily recognized departments or subdivisions as defined in the regulations, because each team performs the same tasks as other teams at the same time and in the same warehouse, and that the executive exemption therefore does not apply to captains.

That argument was rejected by the court.  As noted by the Wage & Hour Litigation Blog:

The Second Circuit disagreed, stressing that there was no requirement that a department or subdivision operate in different locations, shifts, or have varied functions. While those characteristics may help define a department, they are not mandatory. The Court also held that “the job of supervising a team of employees becomes no less managerial merely because the team operates alongside other teams performing the same work in the same building.” Accordingly, the Court held that the teams of pickers were valid subdivisions under the FLSA, and thus the warehouse captains who supervised them were properly exempted as executives.

For employers, the case is an important reminder that you ought to be reviewing the way that you classify your employees.  If they are not being paid overtime, ensure that the employees fall within one of the commonly-recognized exemptions. The above example should help you think outside the lines too.

Those individuals who you may not thought of as “executives”, may just fall within that exemption after all.

Alter egos are all the rage right now with The Avengers well on its way to becoming one of the most popular movies of all time.

Hearing about a new case out of the Second Circuit, it would be easy to conclude the Court was getting into the superhero business with the establishment of a new theory of liability in harassment cases entitled the “alter-ego” or “proxy” theory.

Superheroes beware?

And while the theory could give Tony Stark (the alter ego of Iron Man and, at times, President of the fictional Stark Industries) cause for concern, it has nothing to do about superheroes.

(The case,  Townsend v. Benjamin Enterprises, was first recapped by the Wait a Second blog here and here.)  

As most employers know, the Supreme Court has created an affirmative defense to sexual harassment claims which, to simplify things, allows an employer to escape liability if certain conditions are met.  This theory (known by their cases names as the Faragher/Ellerth affirmative defense) has limits though.

I discussed one of those limits in a post a few years ago.  The Townsend case, now sets out another limit: proxy, or alter ego, liability.

In Townsend, an employee claimed she was harassed by her supervisor, who was also vice president of the company and had decision-making authority.   The court ruled that this superivor was a “proxy” for the company, or its alter ego, and therefore the employer was not entitled to use the affirmative defense. 

So what’s the test for an alter ego? Is it someone who dresses up as a superhero? Not quite.

As stated by the court, “[T]he relevant question is not whether the employer approved of the actions of the supervisor but rather whether the supervisor occupied a sufficiently high position in the management hierarchy of the company for his actions to be imputed automatically to the employer.”

What may qualify? As other courts have said, they consider “supervisors to be of sufficiently high rank to qualify as an employer’s proxy or alter ego when the supervisor is a president, owner, proprietor, partner, corporate officer or otherwise highly-positioned in the management hierarchy.”

Here, the court found the vice president (who was also the spouse of the President) to occupy a high managerial rank and exercise signfiicant control of the company operations. 

Which goes back to the original question: Why should Tony Stark be worried about this case? If Tony Stark — as head of Stark Industries — engaged in sexual harassment (and query whether his actions towards his personal secretary, Pepper Potts, would fall in that category), his company could be liable because he is the “alter ego” of the company, notwithstanding any of the affirmative defense arguments present in Farragher/Ellerth.

Let’s just hope that Dr. Bruce Banner, alter ego of The Hulk, wasn’t upset by this decision.

The Second Circuit has long held that supervisors cannot be sued in their individual capacity under Title VII.  But can an employee do an end run around that by arguing that the supervisor is the “alter ego” of the company?

Well a few federal courts outside Connecticut have said that under the “alter ego” doctrine, a supervisor may be held liable as an employer when “the supervisor’s role is more than that of a mere supervisor but is actually identical to the employer.”

A case decided by a federal court in Connecticut recently rejected that notion in a pregnancy discrimination claim brought by a former attorney against her law firm and the firm’s principal and single shareholder.  While the court did not rule out the possibility of that doctrine being used, it suggested that it would be an unlikely event where the supervisor abused the corporate form.

Employing the alter ego doctrine to accomplish the same result would undermine the purpose of the doctrine and constitute an end run around the [Second Circuit’s] Tomka decision. Taking into account the fact that [the employer] has posted a bond for $130,000—an amount reasonably related to [the employee]’s alleged damages—and that [the employee] has offered no evidence that [the supervisor]  or previous partners abused [the employer]’s corporate form, there is no need to employ the alter ego doctrine to hold [the supervisor] personally liable for actions he took as [company] President.

The case is also notable in concluding that the plaintiff’s claims of pregnancy discrimination could proceed to trial.  The court concluded that the “facts” raised by the employee — including a claim that, as a new mother, she was referred to as “Pumper Girl”, were sufficient to send it to a jury. (As with all summary judgment motion decisions, readers are cautioned that the court has to read all factual inferences in the employee’s favor, and such a decision does not indicate that the employer is “guilty” of anything.)

For employers, it’s important to understand that even though the anti-discrimination laws can be broad, they do have limits.  Even so, while the employer may have defeated the “alter-ego” claim, it will still face a potential jury trial on allegations that the plaintiff was referred to as “Pumper Girl”.  They have have won a battle, but the real war is still on.

Consider this scenario.

An administrative assistant who’s been working solidly for the company for two years comes to you, as an HR manager, and says she’s been harassed by a manager over her looks. 

You need to talk with manager about the allegations.

What do you do? 

That’s the scenario posed in a recent article posted in HR Daily Advisor.  It’s a fascinating question, because too often, advice from attorneys in this situation is merely to "conduct an through investigation".  But how do you handle that awkward conversation with the manager?

The article suggests that the meeting with the supervisor be "direct, straight-forward, and non-judgmental", explaining that you’re obligated investigate any allegations of this type and that you have made no determination yet as to the merits. 

After explaining the situation, the article also suggests that you give the manager "an opportunity to describe his version of the events, and elicit any information that would rebut [the employee’s] version."

What else is suggested at the meeting? 

  • Explain the company policy, emphasizing the anti-retaliation provisions that your policy should have. 
  • If there is any inappropriate behavior that is acknowledged, the manager should be told to stop immediately.

In addition to the foregoing, I would add a few other tidbits:

  • Try not to make any promises regarding timing of the situation or the eventual outcome.
  • Tell the manager not to confront the employee directly about the allegations
  • Document everything.
  • If appropriate, have the supervisor confirm his position in writing.
  • Keep the process discreet.  Tell only those with a business need to know. 

Most of all, consider getting legal advice if you’ve never done this type of investigation before.  An hour’s worth of advice may save a year’s worth of litigation later on. 

Lately, I’ve been doing quite a few presentations on social media, including, most recently, one for a school district.

One of the trickiest questions that comes up: Is it "legal" to "friend" a subordinate in the workplace? Or for teachers, is it "legal" to "friend" a student? 

(I use the term "friend" to be the process of making an online connection on the social networking site, Facebook.)

The answer I provided at these sessions is a very qualified "Yes".  It is "legal" in the sense that there isn’t an explicit law prohibiting people from engaging in that activity.

But, and this is a very big "but", the real question to ask is whether it is a good idea to do so and whether it is appropriate to do so.  In some instances, doing so can lead to potential issues in the future. 

In the private workplace, friend requests from a supervisor can be misinterpreted and can put pressure on a subordinate.  And for a supervisor, it is really important to see a subordinate’s private pictures? 

In schools, Facebook relationships could be easily misinterpreted by students and, for teachers, there is a risk that their private information could get distributed by students who have less concern for privacy than others.

Of course, there is not a one-size fits all approach to social media.  It may work for some workplaces and some schools. Others may take a much more restrictive approach.

By raising this, I’m not suggesting that social media in workplaces or schools should be banned.  Teachers, for example, might find a lot of utility in setting "fan pages" for students in their classes and their parents.  Social media is a potent communications tool that isn’t inherently "good" or "bad." How you use it is up to you. 

But workplaces and schools cannot just hope their workers, teachers and students will do the "right thing" about it. Much like e-mail, parameters should be established through guidelines and policies. The time is right now.   It is a lot easier to implement BEFORE a lawsuit happens, than play catchup afterwards. 

On Friday, I’ll be speaking to a group of local high school and middle school teachers about some best practices on the use of technology in the workplace.  

Among the central messages of the presentation? No guideline can be a substitute for using good judgment and common sense.

With teachers, that message is more important than ever. Increasingly, the lines between private and professional lives are getting blurred; for teachers, though, it is of critical importance to maintain that boundary.  One-on-one chats with students have long been seen as an opportunity for trouble and social media and instant messaging create opportunities for that to happen.  

Indeed, even the "smart" teachers can get ensnared into the social media trap.  Witness the 2010 Teacher of the Year from a Texas elementary school who posted pictures of her students on a publicly-accessible blog.  

That’s not to say that social media should be off limits for all teachers. Far from it.  There are some who are using it quite effectively in the classroom.  The New York Times did an article last week that highlighted a few and offered lesson plans on their website.  

But it does mean that teachers need to think about their actions online.  Increasing privacy settings on Facebook and maintaining a professional image — even outside of work — are two areas that teachers can focus on and accomplish.

You’ve heard of the negligent hiring case.

Should we now get ready for "negligent exposure" cases?

A Connecticut Superior Court recently allowed a claim of negligence to proceed by a subordinate against a supervisor, on the grounds that the supervisor drew the subordinate into a dispute with another employee, exposing the subordinate to the costs of having to defend a discrimination claim. 

It is alleged that the supervisor directed the subordinate to join a conversation in which the supervisor allegedly made demeaning remarks to another employee. (The other employee has sued the subordinate and supervisor and others for damages arising out of an alleged assault.) 

The case, Wright v. Judge, 50 Conn. L. Rptr 357 (September 1, 2010) (download here), appears to be the first of its kind, at least in Connecticut.  (A quick search of Westlaw today showed nothing remotely similar. Heck, even Wikipedia is silent about it.)  The court’s opinion did not cite any cases in Connecticut (or elsewhere) that has allowed such a claim to proceed to discovery (or a trial). 

How did the judge get there? Three simple steps:

  1. First, the court found it foreseeable.  "An ordinary person in [the supervisor’s] position would know or should have known that by involving an unwitting subordinate employee in the physical and racial harassment of another employee, the subordinate employee could be subjected to liability by the harassed employee."
  2. Second, the court said that public policy justifies the imposition of a duty to aid or protect another. The court said this existed here because the subordinate alleged that the supervisor was in the "custody and control" of the subordinate at all times, thereby creating a "duty to protect him".
  3. Third, the court found that there was "proximate cause" because it was a substantial factor in the resulting harm.  "The court finds that the harm which allegedly occurred [costs and legal fees of defending a discrimination claim] … was of the same general nature as the foreseeable risk…"

Based on the court’s logic, however, it would seem to open the door other claims by co-workers as well.  It will be unclear for some time if this case will be an outlier or just a precursor to other claims. 

For employers, it is yet another reminder to stay vigilant in the area of employment law for the ever-changing landscape.