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Supreme Court Revisits “Trial by Formula” Approach in FLSA Collective Action

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In 2011, the U. S. Supreme Court issued a landmark decision regarding certification of employment discrimination class actions. The opinion, Wal-Mart v. Dukes, rejected the “trial by formula” approach of allowing a random sample of the class members’ claims to be tried, with the results of those trials to be applied to the entire class. Among other problems, the Court found that this shortcut approach deprived defendants of the ability to litigate statutory defenses to individualized claims. Dukes, however, did not reach the narrower issue of whether “representative,” “sample” or “anecdotal” evidence” is ever appropriate in a class-action employment case.

Since Dukes, there has been plenty of disagreement on the true meaning of the Court’s prohibition of a “trial by formula.”  Employers argue that the Dukes opinion means representative evidence is prohibited in class actions.  So, class actions are not appropriate unless class-wide liability and damages can be established with common evidence. Employees, in contrast, argue that Dukes was limited to the facts of that case and the Employers’ argument is contrary to the efficiency purposes underlying class-action lawsuits.

Last month, the Supreme Court issued its opinion in the Fair Labor Standards Act (FLSA) collective action case of Tyson Foods v. Bouaphakeo.  The Tyson decision was highly anticipated because it was expected to provide guidance on the prohibition of a “trial by formula”, and it was the first class-action decision in the employment context following the death of Justice Antonin Scalia, the author of the Dukes decision.  Employers hoped that the Court would extend Dukes and issue a per se rule that “representative” or “sample” evidence may not be used in the class action context. But, the Court declined to do so.  Whether this case is limited to the FLSA or has broader ramifications is yet to be seen and surely will be litigated.

At issue in Tyson was whether a class of employees had not received statutorily mandated overtime pay for time spent putting on and taking off (“donning and doffing”) protective equipment.  The time spent donning and doffing (and unpaid wages for the same) varied depending on the tasks performed by the individual workers.  So, common evidence could not be used to establish class-wide damages.  Further, Tyson did not track this time, making it impossible to determine the exact time each individual was allegedly shortchanged wages.  This, of course, is an all-too-common scenario under the FLSA.

Since the claims related only to overtime, each employee had to show he or she worked more than 40 hours a week, inclusive of donning and doffing time. Tyson argued that the variance in donning and doffing time demonstrated that the employees’ claims were not sufficiently similar to be resolved on a class-wide basis.  The lower court allowed the employees to use “representative” evidence to make their case to the jury.  So, for example, the employees used a statistical expert who conducted representative time studies to determine the average number of minutes that the employees spent on donning and doffing equipment.  The end result of this analysis was that employees in one department averaged 18 minutes per day donning and doffing while in another department they averaged 21 minutes per day. This study, in conjunction with time records, was used by a second expert to determine which employees were entitled to overtime based on adding in the donning and doffing time.

Despite the employer’s arguments, the Supreme Court rejected a categorical exclusive of representative or sample evidence in class actions.   Rather, the Court explained that the propriety of using representative or statistical evidence depends on the degree to which the evidence is reliable in proving or disproving the elements of the case. Thus, if the sample could have been used to establish hours worked in each individual’s action, that sample is likewise a permissible means of establishing the employee’s hours worked in the class action.  Because Tyson did not maintain records, representative evidence was the only way for the employees to demonstrate the hours worked donning and doffing.  In distinguishing Dukes, the Court explained that unlike the Tyson case had the Dukes case been individually litigated there would have been little or no role for representative evidence.

Some have suggested that the Court’s acceptance of representative evidence in Tyson is limited to the instances where the employer breaches its obligation to keep records of employees’ compensable work under the FLSA. It remains to be seen, however, whether this limited reading is they way lower courts interpret the case.  Further, as the dissent noted, even this limited application still leaves employers with a difficult choice: either track any time that might be the subject of an innovative lawsuit, or defend class actions against representative evidence that unfairly homogenizes an individual issue.  So, even a limited reading of this case leaves employers in a difficult position under the FLSA going forward.  This important issue bares watching, and we will of course report on future decisions.

May 2, 2016   No Comments

Does Title VII Protect Against Sexual Orientation Discrimination? The Answer May Be Changing

Recent laws in North Carolina and Mississippi and the subsequent backlash are all over the news.  The U.S. Supreme Court’s decision in Ogberfell v. Hodges making gay marriage legal across the country is not even a year old.  The Fourth Circuit Court of Appeals very recently rule in favor of the right of transgender high school students to use bathrooms for the gender with which they associate.  LGBTQ rights are at the forefront like never before.  Employment discrimination is no exception.  The Equal Employment Opportunity Commission (“EEOC”) has recently filed two separate suits in Pennsylvania and Maryland district courts challenging the long-held belief that Title VII does not protect against discrimination based on sexual orientation.

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For many years courts held that because sexual orientation was not explicitly mentioned in the text of Title VII, the statute afforded no protection to employees based on their physical and emotional attraction.  Cases in numerous federal courts of appeal held that Congress had to explicitly protect this class of employees to allow for claims of sexual-orientation discrimination.

However, much like the American public, courts have slowly begun to change their minds.  More than ten years ago a federal court in Oregon found sexual orientation discrimination to be rooted in discrimination “because of sex.”  The court found that a jury could find a harasser would have acted differently if the homosexual female plaintiff had been a male dating a woman.  The court took this “but for gender” idea from the 1978 Supreme Court decision in Los Angeles Dep’t of Water & Power v. Manhart where the court said a practice is unlawful if the evidence shows the treatment of a person would have been different but for that person’s sex.

Other courts have taken the approach that discrimination based on sexual orientation is discrimination based on gender stereotypes.  The U.S. Supreme Court held in Price Waterhouse v. Hopkins (also in 1978) that such discrimination is illegal under Title VII.  Massachusetts, Ohio and Oregon federal courts have expanded on this ruling to address sexual-orientation discrimination.

Another approach to including protections based on sexual orientation is labeling it as discrimination “by association.”  In applying Title VII’s prohibition of race discrimination, courts have consistently held the statute prevents discrimination based on an employee’s association with a person of another race.  The reasoning is that discrimination based on an employee’s relationship with a person of another race requires an employer to consider race.  When you couple this argument with language in the Price Waterhouse decision that states Title VII treats race, sex, religion, color, and national origin equally, it creates what many consider a strong argument for protecting employees based on their sexual orientation:  if you discriminate against someone for their sexual orientation based on their relationship with someone of the same sex, you have to consider their sex, which is unlawful.

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The EEOC validated all three of these arguments an administrative appeal decision last summer, which as now been cited by a New York federal court in upholding a jury finding of sexual-orientation discrimination, including an award of punitive damages.  The EEOC already considers this the legal framework for including sexual-orientation discrimination under Title VII, and so last month it filed its first two sex discrimination lawsuits based on sexual orientation.  While Congress has not changed Title VII’s language, its interpretation by the EEOC and more and more courts is effectively including sexual orientation.  Wise employers will take note and review their policies, their training for managers and HR officials, and carefully consider all employment decisions where an employee’s sexual orientation might be at issue.

April 25, 2016   No Comments

What is an Overnight Stay for Inpatient Care Under the FMLA?

Employers with more than 50 employees are usually aware that the Family Medical Leave Act (FMLA) may apply to their business and their workers. That law, which provides for protected leave for employees in certain situations and various amounts (most often up to 12 weeks of leave), can sound simple but is very complex in its details.

For example, take the issue of what is an “overnight stay” by an employee at a hospital or similar facility.  The definition of “overnight stay” matters, because an overnight stay is the type of event that constitutes inpatient care and can trigger an employee’s right to FMLA leave, possibly protecting the employee from discipline or termination due to that absence from work.

Hospital BedIn the case decided by a federal appellate court, the employee began experiencing chest pain, dizziness and shortness of breath at work late in the afternoon of November 14.  He claims he got permission from his managers to leave work early, and late that evening he went to a hospital, being formally admitted for treatment after 12 a.m. on Nov. 15.  (Note that time for later.  It is important.)  He underwent tests and was released later in the evening on Nov. 15.

When he came back to work he was terminated for walking off the job on Nov. 14.  Apparently, there was a dispute about whether he really had the permission of his managers to leave work early that day (and clearly there was some doubt by his employer of whether his claim of being ill was real or not).  The employee ultimately filed suit, claiming his termination violated the FMLA because his absence from work was inpatient care at a hospital protected by the FMLA.  So his FMLA claim hinged on whether his care at the hospital counted as an “overnight stay.”

The appeals court ruled that it did not.  It decided that to be an “overnight stay” the care at the hospital must span over two calendar days.  This employee’s treatment at the hospital, while significant, all occurred on Nov. 15.  The court also suggested (without ruling) that a minimum stay of at least 8 hours over those two calendar days was also likely necessary for it to be an overnight stay, but it did not need to reach that conclusion in this case, since this employee’s time at the hospital was all within one calendar day.

So now we know (at least according to one federal appellate court) what an overnight stay really is under the FMLA — a hospitalization that starts at or before 11:59 p.m. on one day and lasts well into the next day.  Good to know.  Did you ever think such a small detail as when an employee checked into a hospital would determine the outcome of an employment lawsuit?  It just goes to show that in employment law, and especially with the FMLA, small details can have a very big impact.

 

April 19, 2016   No Comments

New York and California Lead the Way in Minimum Wage Increases and Paid Leave

fist_of_cashIn recent days, New York and California took the first steps in addressing new demands for a “living wage,” with both states raising the minimum wage to $15 per hour. New York City and San Francisco also enacted monumental legislation regarding paid family leave.

On April 4, 2016, California enacted a law which mandates an incremental increase of the minimum wage over the next five to six years. For employers with 26 or more employees, the minimum wage will increase to $10.50 per hour starting on January 1, 2017, $.50 per hour on the next year, and then will increase by $1 an hour each year until the minimum wage is $15 by 2022.  Employers with 25 or less employees have an extra year to comply with the minimum wage increase, with the same increases starting on January 1, 2018 through 2023.  Notably, this law also affects exempt employees as California requires their salaries to be at least two times the State’s minimum wage.  Currently, the minimum exempt salary is $41,600, but it will ultimately rise to $62,400.

On the same day, New York passed its 2016-17 state budget which also provides for the state minimum wage to be incrementally increased to $15 per hour.  The timing for the increase is dependent on both employer location and number of employees.  New York City employers with 11 or more employees must pay $11 per hour by the end of this year, with a $2 increase each year, until the minimum wage is $15 by the end of 2018.  For New York City employers with 10 or less employees, the minimum wage will increase to $10.50 by the end of this year, with a $1.50 per hour increase each year, until the minimum wage is $15 by the end of 2019.  Employers elsewhere have a more gradual increase, with some counties having until 2021 to reach $15 per hour.

Through its budget, New York also enacted landmark paid family leave, providing employees with up to 12 weeks of paid family leave.  Employees who have worked at least six months for the employer will now be eligible for 12 weeks of partially paid leave to care for an infant, a family member with a serious health condition, or to ease family pressures when a family member is called to active military service.  This change will be enacted gradually, beginning in 2018 at 50% of an employee’s average weekly wage (and capped at 50% of the statewide average weekly wage) and rising through 2021, when eligible employees may receive 67% of their average weekly wage (capped at 67% of the statewide average weekly wage).  These new benefits will be funded by an employee payroll deduction, not directly by employers.

Also this week, San Francisco approved legislation requiring employers to provide employees with 6 weeks of fully paid parental leave.  This applies to both mothers and fathers and for both births and adoptions.  Currently, California’s state disability program provides employees with up to 55% of their wages for 6 weeks of family leave.  This new legislation requires employers with 20 or more employees to provide the remaining 45% of the employee’s wages. Employees must work eight or more hours a week to be eligible.

These are big changes to wages and pay for time off for employers with employees in California and New York, and especially in New York City and San Francisco.  If you have people working there, now is the time to learn all about these changes and prepare for them, as their effective dates will be here before you know it.

April 13, 2016   No Comments

Background Screening Summary – February 2016

Below is an overview of recent Background Screening articles, from Troutman Sanders’ Consumer Financial Services Law Monitor Blog. New background screening related articles are posted each month that provide timely updates on this area of the law. [Read more →]

March 3, 2016   No Comments

HR’s Work Is Never Done: New California FEHA Regulations Require Revision of Anti-Harassment Policies

On April 1, 2016, new regulations from California’s Fair Employment and Housing Council will go in effect. These new regulations state that “[e]mployers have an affirmative duty to create a workplace environment that is free from employment practices prohibited by the Act,” and require changes in employment policies. As a result, employers should carefully review their existing policies to ensure compliance with these new standards and act quickly to make any needed changes before April 1. [Read more →]

February 24, 2016   No Comments

Join us on February 24, 2016 for Troutman Sanders’ Second HR Steps to Success Breakfast Program

For our second program in this series, we will take a closer look at the Risks and Rewards of Using Independent Contractors.  Many companies think that independent contractors are the solution to their staffing problems, providing flexibility and keeping labor costs down without increasing headcount.  However, there are risks involved in using independent contractors – primarily the risk that the IRS or the Department of Labor will find that they should properly be classified as employees! [Read more →]

February 19, 2016   No Comments

Orange County Lawyer Wendy Sugg Offers Comment on recent Supreme Court arbitration decision

The Supreme Court recently ruled 6-3 that a state appeals court erroneously upheld a lower court order refusing to enforce an arbitration agreement that included a class waiver. This decision reaffirmed the supremacy of the Federal Arbitration Act. Wendy Sugg, in Troutman Sanders’ Orange County office, spoke with Employment Law Daily to discuss the significance of the decision, particularly for California. Read the article here.

December 21, 2015   No Comments

Attention Landlords! 25 Years Later: How the ADA Affects YOU (and Not Just Your Tenants)

This year, we recognize 25 years of the coverage of the Americans with Disabilities Act (ADA) on workplaces and commercial establishments.  While you may be most familiar with how employment policies and practices have been subject to the ADA and its regulations for the past 25 years, that is not the only significant impact of the ADA.  Public entities and transportation providers have had obligations under the ADA too.  In fact, a large part of the ADA specifically applies to places of public accommodations and commercial facilities.  So, anyone who opens their doors for retail, service, office, or warehouse purposes is required to ensure full and equal enjoyment of all goods, services, facilities, and accommodations to those with disabilities. [Read more →]

December 14, 2015   No Comments

November 2015 Background Screening Blog Summary

The HR Law Matters blog is happy to provide you with an overview of recent Background Screening articles, from the firm’s Consumer Financial Services Law Monitor Blog. We know that as HR professionals issues related to Background Screening of employees is important to you, and we think this information will be of  great interest.

[Read more →]

December 3, 2015   No Comments