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.”

Statute of limitations — or, in plain English, the deadline to file a lawsuit — are sometimes able to be used by employers when employees and their counsel file their employment law claims late.

But a recent federal court decision in Connecticut had to look at a fairly novel issue: Did the CHRO mislead the employee’s attorney regarding the deadline to file a lawsuit that would excuse the deadline?

Ultimately, the court concluded that even if there was some ambiguity in what the state agency said,  it did not justify a tolling of the statute of limitations.

The case, Hannah v. Wal-Mart  Stores, can be downloaded here.

In the case, the CHRO issued a release of jurisdiction of the state law discrimination claims on April 10, 2012, which would obligate the employee to bring her claim to court by July 12, 2012.  (Here she did not file the state law claims until September 21, 2012, shortly after finally receiving a Right to Sue letter from the EEOC releasing the federal claims).

The court was asked whether misleading information from a third-party, such as the CHRO, could justify tolling of those state law claims.

The court said, however, that it was far from clear that there was even misleading information.

On May 25, 2012, the plaintiffs’ counsel wrote to the CHRO and stated “I have not gotten the right to sue back from the EEOC yet … Is it really necessary to get a release from them before filing, given that I never filed with them?”. The CHRO responded: “Yes, you need to get a Right to Sue from the EEOC”.

The court said that this CHRO response did not state that plaintiff could not bring the state law claims until hearing from the EEOC but only seemed a reference to the requirements to bring a federal claim.  The state law claims are separate from the federal claims.

And yet, the court said that the e-mail could be viewed as ambiguous because it did not clarify that the plaintiff did not need to file the state and federal law claims at the same time.

Is that enough?

No, says the court, because “the fact remains that plaintiffs were represented by experienced counsel who should have been aware of the requirements for filing CFEPA claims.”   Had this been a direct communication with the employee directly, that might have changed the court’s analysis.

But here, the statement from the CHRO to the employee’s counsel was not “sufficiently exceptional” to justify equitable tolling.

For employers, the case is a reminder that statute of limitations remain a powerful tool in the courts to limit claims of discrimination and that courts are willing to enforce those hard deadlines.

The employer in this case will still have to deal with the federal claims, but given the caps on some damages and the burden of proof requirements attached to the federal claims, the employer is no doubt pleased with the small victory.

Employees generally are eligible for overtime if they work more than 40 hours of work, unless one of the limited exceptions applies.

Employers typically rely on one of the three white-collar exemptions — administrative, executive or learned professional — when making arguments as to why an employee is not eligible for overtime.

A new federal district court case out of Connecticut illustrates the danger in assuming that one of the exemptions will apply, without a searching factual examination.

In Arasimowicz v. All Panel Systems, LLC et al (download here), the court was asked to review whether a CAD detailing and drawing position was exempt from overtime rules. The court, after a searching examination of the record, concluded it was not.

The court’s opinion is worth a read because the judge thoroughly addresses some typical arguments made by an employer — that the position involved specialized knowledge, or that the position involved direct support of management policies — and disposes of them fairly easily.

Notably, there haven’t been many cases in Connecticut to address this type of position, but employers in Connecticut who have CAD draftsmen ought to do a detailed review of the position to ensure their compliance with state and federal wage laws.

For remaining employers, the case is worth a review because it demonstrates that positions aren’t always what they seem.  Many employers have had exempt employees for so long that they have stopped worrying about whether their employees are actually exempt. This case ought to serve as a wake up call that if don’t audit yourself, you run the risk that a court will do it for you.

 

At 47 pages, U.S. District Court Judge Hall’s decision last week in Costello v. Home Depot USA (download here) denying an employer’s motion for summary judgment in an overtime case, isn’t exactly a light read. 

More Saving, More Doing? Not so with litigation

She is, of course, not to blame. The case is complicated and has a “somewhat convoluted procedural history” because it was first filed in 2004 (!) and certified (and then decertified) as a collective action that alleged that Home Depot misclassified mechandising assistant store managers as exempt.

But after nine years of litigation, the Court was finally asked to decide whether Home Depot properly classified these two of these assistant store managers as exempt from overtime pay. 

The position of “assistant store managers” has been the source of lots of litigation over the last decade.  So it’s worth taking a look at what the court did.

Procedurally, it denied the motion for summary judgment saying that there were issues of material fact that precluded the granting of the motion. In other words, the case has to be decided by a fact-finder and jury, and not by the court itself on the papers.

Substantively, the crux of the case centers on whether the employee’s “primary duty” was “management of the enterprise”. 

As to one employee, the emplioyer argued that the employee:

(1) ensured his departments were properly staffed; (2) planned the work to be done in each department; (3) delegated work to his subordinates and followed up to make sure it was done in a timely and correct manner; (4) ensured his subordinates were trained, both for their current position and so they would be ready to advance to the next level; (5) ensured proper merchandise was ordered; (6) inspected his departments for safety violations; (7) resolved employee and customer complaints; (8) made recommendations regarding annual raises for his employees; (9) counseled associates on disciplinary issues; (10) recognized his subordinates for exceptional performance; and (11) devised strategies to improved department sales.

Sounds like it should be enough to win the case, right? The employee countered by saying that “while he performed many of these tasks, in many instances — particularly related to hiring, firing, and scheduling decisions — ultimate decision-making power and discretion lay elsewhere.”  The Court actually says that these facts do indeed lean in favor of the employer, not the employee.  

So why did the court still reject the employer’s motion?

Because taking other factors like whether the employee spent a substantial amount of time performing non-exempt work, and whether the exempt duties the employee performed were of relative importance to the job, led the court to the conclusion that there were genuine disputes as to what actually occurred.

No doubt the decision is frustrating to the employer (and other employers) who laid out a number of facts that even the court — at times — found persuasive.

But ultimately, the case is an important one for all employers to understand exactly what factors a court will look at in determining whether assistant store managers are exempt, and how important it is for employers to have its rationale locked in with supporting documents and affidavits.

These types of inquiries are very fact-specific. But even here, where the employer seemed to spell out lots of details to support its argument, sometimes, a lot of evidence isn’t good enough.

Costello v. Home Depot

A federal court judge this week rejected claims by the Connecticut Department of Labor that a company’s failure to pay a performance based bonus constituted a failure to pay wages.  In doing so, the Court appears to be in line with recent Connecticut Supreme Court precedents rejecting such claims as well.

In State of Connecticut Commissioner of Labor v. Chubb Group of Insurance Companies (download here), the CTDOL alleged that Chubb failed to pay an employee performance-based incentive wages for 2008 pursuant to the company’s Annual Incentive Compensation Plan. Under the Plan, the Organization and Compensation Committee of Chubb‟s Board of Directors “may reduce or eliminate any Award under the plan, . . . .”

As I’ve addressed in previous posts, a key factor in whether a bonus should constitute wages is whether the bonus is discretionary in nature.  The District Court adopted that logic in rejecting the CTDOL’s claims rather easily.

The Plan explicitly provided that the committee may reduce or eliminate any award under the Plan. This language makes the bonus discretionary, both as to whether it should be awarded and, if so, the amount to be awarded.

The Court also rejected claims by the CTDOL that it had the authority to bring the claim by a separate state statute. The problem with such a claim, the court said, is that the authority is still limited to claim to collect unpaid wages. Because the bonus is not a “wage”, there is still no authority for the CTDOL.

For employers, this case should again reinforce the fact that any bonus plans that you have should be reviewed by legal counsel.  Importantly, if the employer wants to provide some discretion in the payment of bonuses, it can reserve that right — but it has to be done carefully and explicitly.

 

This morning, Jon Hyman over at the Ohio Employer’s Law Blog, reported on a 6th Circuit decision that suggested that an employment discrimination claim could survive even in the absence of a jury finding an “adverse employment action.”

Yesterday, a District Court decision in Connecticut said exactly the opposite.  Indeed, the court granted an employer’s motion for summary judgment because, it found, there was no evidence to suggest that the employee was ever subject to an “adverse employment action.”

You can download the case, Holland v. State of Connecticut, here.

So what IS an “adverse employment action”?  As the Court recounts, it must be “a materially significant disadvantage with respect to the terms of [a plaintiff’s] employment.” 

What types of things are we talking about? “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.”

In the Holland case, the plaintiff alleged that he had been accused of slashing a fellow employee’s tires and that there had been an investigation where he was informed he could be terminated as an outcome. Even though the investigation revealed no involvement by him, the plaintiff alleged that his inability to work with his co-worker hindered his advancement opportunities.   

The federal court disagreed.  “An employee does not suffer a materially adverse change in the terms and conditions of employment where the employer merely enforces its preexisting disciplinary policies in a reasonable manner.”  In other  words, merely being called “into a meeting and told of an investigation and its possible consequences” isn’t an adverse employment action. 

As for his advancement opportunities, the court also disagreed with the plaintiff’s assertions.  “Nothing in the record suggests that [plaintiff] has been hindered from advancement… in any way, either because of his race or [his co-worker’s alleged] animus.

The case continues a trend in Connecticut of the courts dismissing cases for lack of an adverse employment action and shows the importance, for employers, of following policies.  When done so properly, courts (at least in Connecticut) tend not to challenge that approach.

Suppose you’re an employer who has been served with a wage & hour claim.  Rather than fight the claim, you decide to give in.

You file an Offer of Judgment (under Rule 68 of the Federal Rules of Civil Procedure, if you’re keeping track at home) and offer to provide the employee with more than the maximum relief to which she might be entitled including unpaid wages, liquidated damages, interest, attorney’s fees and costs.

What happens if the employee rejects that offer?

The federal court in Connecticut decided that question on Friday: The employee’s claims must be dismissed as “moot”.  Employer wins.

The case of Allard v. Post Road Entertainment (download here) involved a group of bartenders at the popular Black Bear Saloon pub.  The court found it relatively easy to dispose of the employee’s collective action claims noting that the application of Rule 68 should lead to a dismissal here.

For employers, it is easy to fight and fight without realizing that sometimes there is a benefit to raising the white flag early.  In Allard, the employer not only got the case knocked out, but it didn’t even have to pay the employee who rejected the offer in the first place.

Continuing my occasional series of revisiting posts I’ve done over the last (nearly) five years, I look back to one I did during the first month of blogging.

In a post on September 14, 2007, I looked at an online resource often overlooked — the chambers practices of federal judges which is found on the District of Connecticut court website.

I noted that each described the way they handled certain things and that two of the judges went further by describing how they approached an employment discrimination case.  “For employment law practitioners, two of the judge’s chambers practices refer to the judge’s views on discrimination cases and the use or overuse of dispositive motions on such claims.”

As I reviewed those practices again in 2012, another item jumped out at  me this week.  In an era where civil discourse is a seeming lost art, U.S. District Court Judge Stefan Underhill made a specific reference to the importance of civility in his courtroom.  At the very end, the practices state:

At the end of the day, Judge Underhill steps down from the bench and shakes hands with counsel. He finds that this practice promotes civility in the courtroom.

Why should employers care what happens in the courtroom? Because, as much as clients want their lawyers to be bulldogs, the ethical rules and professionalism demand something differently.   I talked about that in a January 2008 post as well.   Indeed, the uncivil attorney risks being viewed as outcast by judges who, like Judge Underhill, expect the attorneys to behave.

If a handshake can promote greater civility, its time to put your hand out and respect the judicial system.

Employers in Connecticut (and other states) have a whole host of notices that must go up in a common meeting area for employees to see.

But what happens when an employer forgets to do the postings, or, worse, purposely avoids putting those posters up? 

Federal Court "Linsanity"

A recent federal case in Connecticut addresses that question with important ramifications for the employer in a wage & hour case.

(Why, you may be asking, is there a “Lin” pun in an article about wage & hour law? Well, New York Knicks sensation Jeremy Lin isn’t the only one with the last name; the relevant case is Lin v. Brennan, which you can download here.)

In Lin, several restaurant workers sued the owners of the now-defunct Mianus River Tavern claiming back overtime wages. The defendants raised an affirmative defense that some of the wage claims older than three years were barred by the applicable statute of limitations.

The court rejected that argument saying that defense could be waived by a theory called “equitable tolling.”  In other words, Defendants don’t get to avail themselves of that defense because of something they did.

Here, that “something” was that they failed to comply with the posting requirements of the wage & hour laws.  Therefore, the court said defendants could not use that defense as a shield against the claims. 

[T]hat statute of limitations is subject to equitable tolling because Defendants never posted any notice explaining the FSLA to their employees. Asp v. Milardo Photography, Inc., 573 F. Supp. 2d 677, 695-96 (D. Conn. 2008). Such a failure is sufficient to warrant tolling, especially when the employees have difficulty speaking English. See Yu G. Ke v. Saigon Grill, 595 F. Supp. 2d 240, 259 (S.D.N.Y. 2008).

Why is this important to employers? Because complying with the posting requirements is cheap compared to a wage & hour claim.   State and federal agencies allow employers to download the notices for free (or order them from the agency.) A number of reputable companies also offer all-in-one compliance posters for less than $100.

As the case shows, it’s “Linsane” for employers to ignore these posting obligations, particularly when the consequences can be severe.  For more “Linformation”, check out the various government websites or consult with your attorney. 

And if these puns aren’t enough for you, check out David Letterman’s Top Ten List from last night.

Ever since the U.S. Supreme Court ruled in Garcetti v. Ceballos that an employee’s speech pursuant to the employee’s official job duties was not protected by the First Amendment, employers have attempted to use that case as a shield against free speech lawsuits by employees.

But a decision by a federal court in Connecticut late last month in a case titled Ricciuti v. Gyzenis (download here) shows the limits of that decision.  It’s a lengthy decision — worth reading if you’re a practitioner in the area — that lays out some important theories for employers to understand.

The court notes that the facts of the case are in dispute (already meaning that the employer’s motion for summary judgment is suspect):

To read the parties’ statements of facts in this case is already to suspect that summary judgment is not to be. As the Plaintiff would have it, this case is about an experienced officer who was disgusted by the misuse of public funds at the Madison [Connecticut] Police Department (“MPD”), and who decided to speak up as a town resident and taxpayer. According to the Defendants, this ase was brought by a complaining, often insubordinate probationary officer who thought she knew better than her superiors how to run the Department.  [Plaintiff] maintains that she was retaliated against for speaking out as a citizen on a matter of public concern; the Defendants counter that her speech, which violated the MPD’s Code of Conduct, was intended only to improve [her] own employment conditions.

The employer raised several arguments to say that the case should not proceed to trial and that “summary judgment” should be granted. The federal court rejected all of them.

Most notably, the employer argued that speech was not protected under the First Amendment. But the court found that under a variety of factors the speech was protected.  

The employer then argued that the employee’s speech was “indisputably more disruptive than valuable.” But the court said that it could not conclude that either at this stage and that such an argument was ill-suited for use at summary judgment.

What’s the takeaway for employers?

  • The U.S. Supreme Court’s decision in Garcetti may not bump every First Amendment workplace speech case. Courts still have some latitude to consider the parameters of the decision. 
  • Recall too that Connecticut state law applies those First Amendment rights to the private workplace in many instances. The Connecticut Supreme Court is currently considering the limits of that statute so stay tuned.