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ALERT: Issue 2 Passes Raising Ohio’s Minimum Wage, Increasing Employer Obligations
By Lois A. Gruhin
On November 7, 2006, Ohio voters passed Issue 2 approving the
adoption of an amendment to Ohio’s Constitution that will have
significant ramifications for Ohio employers. Beyond simply raising
Ohio’s minimum wage, the amendment imposes recordkeeping and disclosure
requirements on employers and exposes them to liability for violations.
The amendment’s key provisions include the following:
Minimum Wage Increase
- Effective January 1, 2007, Ohio’s minimum hourly wage is $6.85.
- The minimum wage will increase annually, based on the rate
of inflation, every September 30 starting in 2007, with the increased
wage taking effect January 1 of the following year (e.g., the first
increase to occur Sept. 30, 2007, effective Jan. 1, 2008).
- Exceptions to the increased minimum wage include: employees
under the age of 16 and employees of businesses with annual gross
receipts of $250,000 or less for the preceding calendar year (who must
receive the federal minimum wage); and employees of solely family-owned
and operated businesses who are family members of an owner. Other
provisions apply for tipped employees and mentally or physically
disabled individuals.
Recordkeeping and Disclosure Requirements
- At the time of hire, an employer must provide an employee
with the employer’s name, address, telephone number, and other contact
information and update this information when necessary.
- During an employee’s employment and for 3 years following
his or her last day of employment, an employer must maintain a record of
an employee’s name, address, occupation, pay rate, daily hours worked,
and earnings. An employer must provide this information to an employee
or the employee’s representative upon request and without charge.
Enforcement
- An employer may not discharge, discriminate or retaliate
against any employee who exercises his or her rights under these
provisions, or against any person who provides the employee with
assistance or information regarding the exercise of his or her rights.
- An employee or other interested party may file a complaint
with the state for violations of these requirements. The state may
initiate its own investigation of an employer’s compliance with these
provisions.
- An employee or the Attorney General may bring an independent
legal action against an employer for violations of these provisions
within the later of the following time periods: (a) within 3 years of
the violation or of cessation of the violation, if ongoing; or (b)
within 1 year of notification to the employee of the state’s disposition
of a complaint for the same violation.
Damages for Violation
- If a court or the state determines that an employer violated
these provisions, the employer must pay the employee back wages,
damages, and the employee’s costs and attorney’s fees. The employer
must pay the employee within 30 days of a finding of a violation.
- Damages are calculated at twice the amount of the employee’s
back wages. In the case of a violation of the anti-retaliation
provision, the court or the state sets the amount of damages “sufficient
to compensate the employee and deter future violations,” but at a
minimum of $150.00 for each day that the violation continued.
These changes create many uncertainties, such as who may act
“on behalf of an employee” for record inspection purposes; who
constitutes an “interested party” for purposes of filing a complaint;
whether employers must disclose all employee records to a requesting
employee or just the requesting employee’s records; and if an employer
must disclose all employee records to a requesting employee, what rights
a coworker may have, if any, to prevent disclosure of his or her own
records to the requesting employee. Pending further clarification of
these issues by legislation or a court decision, employers are urged to
consult with legal counsel before responding to a disclosure request.
(PARTIAL) BONUS TIME:Prorating Production Bonuses Under the FMLA
By Stephen S. Zashin*
Most employers are well-informed about Family and Medical Leave Act
(“FMLA”) basics, including returning an employee to his or her former
position or its equivalent after a period of qualified leave. Things
get a little more complicated, however, when employers have to determine
whether a restored employee is entitled to other benefits after a leave
of absence. For example, where do bonuses fit in? Is an employee who
takes twelve weeks of leave entitled to the same bonus as his or her
co-worker who takes no leave? Can an employer prorate the bonus amount
of the employee who takes leave, or would taking such an action
interfere with that employee’s FMLA rights? As with so many other
questions in this area of the law, the answer is—it
depends.
The U.S. Court of Appeals for the Third Circuit (which covers
Pennsylvania, New Jersey, Delaware, and the Virgin Islands) recently
reviewed such questions in
Sommer v. The Vanguard Group. The employer in
Sommer implemented
a bonus plan to reward its employees’ “contributions to [the company’s]
growth and success in a tangible way.” The amount that the company
distributed annually under the plan depended on a number of factors,
including the company’s operating performance. To qualify for the
bonus, an employee had to be employed on the last calendar day of the
year, on the date of the distribution, and on all days in between. The
amount an employee received under the plan depended on job level, length
of service, and “hours of service.”
The plan defined “hours of service” as actual hours for which
the employee was paid or entitled to payment for performance of duties,
vacation, holidays, sick time, or certain leaves of absence (e.g.,
bereavement, jury duty, military)—but not disability leave. An employee
had to meet an annual goal of 1,950 hours worked to receive his or her
entire bonus. If an employee did not meet the annual goal, the company
prorated the payment by the amount of hours that the employee was
deficient.
In this case, the employee took a short-term disability leave
under the FMLA for eight weeks, from December 2000 through February
2001. Because of his absence, the company prorated his bonus payment
for 2001. The employee sued, alleging that the employer interfered with
his FMLA rights by prorating his bonus payment for the time he spent on
FMLA leave. The district court granted summary judgment to the
employer, holding that the bonus was a “production bonus” for which
prorating is allowed.
On appeal, the court described the case as the first “in
which an appellate court had to distinguish between the two
classifications of company bonus programs for purposes of an FMLA
interference action.” The “two classifications” of bonus programs that
the court distinguished were “production” bonuses and “absence of
occurrence” bonuses. The difference determines whether prorating is
permissible:
- a production bonus requires some positive effort on the employee’s part (e.g., a monthly production bonus).
- an absence of occurrence bonus rewards an
employee for compliance with rules (e.g., bonuses for perfect
attendance and safety); it does not require the employee’s
performance but instead contemplates something not happening, like an absence.
Under the FMLA, an employer cannot reduce an “absence of
occurrence” bonus to an employee who takes FMLA leave if the employee
was otherwise qualified for it, but for the taking of the leave. However, the employer may prorate a “production” bonus to an FMLA leave
taker by the amount of any lost production, in hours or otherwise, that
the FMLA leave causes.
The court held that the employer’s bonus plan was more akin to a bonus program that rewards employee production:
Here, [the employer’s] focus throughout its policy appears
to be on incentivizing employees to contribute to [the employer’s]
performance and production by meeting a predetermined hours goal—1,950
hours a year….[The employer] then communicates this production goal to
the employees throughout the policy—especially by indicating that
qualifying employees’ bonus amounts are based on hours worked and will
be prorated for every hour that they are under the annual goal.
Accordingly, the court held that the employer’s hours-based
bonus plan was a bonus program designed to reward employee production,
which may be prorated to account for the hours not worked by employees
who take FMLA leave.
As this case illustrates, it is a good idea for employers to
have a clear purpose with respect to their bonus programs. In other
words, what are you rewarding? Is the plan to reward employees in sync
with your obligations under the FMLA and other laws? Answering these
questions will go a long way to resolve potentially complex FMLA issues.
*Stephen Zashin
is an OSBA Certified Specialist in Labor and Employment Law and has
extensive experience in both defending FMLA-based litigation and
assisting employers with FMLA compliance. For more information about
the FMLA, please contact Stephen at (216) 696-4441 or ssz@zrlaw.com.
ENFORCING SAFETY PROCEDURES: How One Employer Tamed the Intentional Tort
By Steve P. Dlott
A tort is simply a civil wrong or injury for which the law allows a remedy. An
intentional
tort is a “wrong perpetrated by one who intends to do that which the
law has declared wrong.” (Black’s Law Dictionary, 5th Ed.) In the
employment context, an intentional tort claim arises when an employee
basically alleges that the employer
intended to injure the employee on the job.
These actions typically arise when an injury occurs after an
employer “knowingly” allows an employee to work on a machine that is
missing a safety guard or when an employer forces an employee to use a
piece of equipment after the employee has previously requested repairs.
These are the extreme cases. There are many companies, however,
operating under the belief that they are doing everything possible to
protect their employees from injury and themselves from liability — who
still get nipped by an intentional tort action.
One company recently beat the rap in
Eilerman v. Cargill Inc. The employer had strict safety policies in place. Specifically, the
employer instituted an elaborate six-step “lockout/tagout” procedure
that required employees to do the following before performing
maintenance work: 1) inform affected employees of the equipment’s shut
down; 2) turn off the equipment; 3) disable the equipment’s circuit
breakers; 4) place a lock and tag on switches that could restart the
equipment; 5) eliminate any energy stored in the equipment; and finally
6) test the equipment’s controls to ensure that no power flowed to the
equipment.
To ensure compliance with its lockout/tagout procedure, the
employer trained all new hires on the procedure three separate times
within the first ninety days of their employment. The employer also
disciplined any employee who did not comply with its lockout/tagout
procedure.
One of the employer’s employees worked as an elevator and
meal load operator. The employee performed his duties from a control
room, where he programmed a computer to load rail cars with meal from
designated tanks. One day the computer signaled a problem with a tank’s
gate. The employee grabbed a wrench to attempt to open the tank
manually.
The employee knew the employer’s lockout/tagout procedures
from attending four training sessions, viewing a video, and receiving a
booklet about the procedure. The employee nonetheless ignored the
procedure. He climbed on top of the tank and attempted to open the
stuck tank’s gate with the wrench to manually rotate the motor operating
the gate. The motor’s guard, which prevented access to the motor, had
been removed long ago. The motor suddenly started to rotate while the
employee worked on it, causing his wrench to spin around and hit him in
the head.
The employee subsequently sued the employer alleging an
intentional tort. The employee blamed his injury on the employer’s
removal of the safety guard. The court rejected the employee’s argument
and reaffirmed a longstanding legal principle: an employer is not
liable for an intentional tort where an employee’s injury results from a
knowing failure to follow a safety procedure that could have prevented
the accident. By instituting such specific safety measures, the court
held that the employer could not have had the required intent under the
law to either harm the employee or expect that the employee might be
harmed under these circumstances.
Take two important lessons from this case. First, taking
extensive measures to train and enforce compliance with safety
procedures may seem cumbersome and time-consuming, but the effort will
pay off — with lower workers’ compensation premiums and a lock on
intentional tort claims. Unfortunately, many well-intentioned companies
have model safety measures “on the books”— but that is where they
remain. Front line supervisors must also ensure strict compliance with
safety procedures and hold employees accountable for failing to follow
them.
The second lesson this case illustrates is that strict safety
measures—that are strictly enforced — can also help defend against
claims involving employer oversights or unintentional safety
violations. Removal of safety guards, like the one in the
Cargill
case, is common in many factories and often used as evidence to
establish an intentional tort. Companies with iron-clad safety
procedures, however, can avoid liability even for seemingly obvious
safety violations.
HOURLY REQUIREMENTS FOR SALARIED EMPLOYEES: And Other Work Rules You Didn’t Know You Could Have
By Michele L. Jakubs*
Employers who pay their overtime-exempt employees on a salary
basis (generally speaking, the same pay every pay period regardless of
quality or quantity of work) sometimes run into an old problem…the one
where they have to pay those employees the same pay every pay period —
regardless of quality or quantity of work.
While nothing has changed in that regard, employers may not know that they can actually
require
their exempt employees to work a certain number of hours each week —
and require them to make up work time lost due to partial-day absences.
Earlier this year, the Department of Labor (“DOL”) issued an
Opinion letter in response to an employer inquiry concerning two new job
requirements under its consideration. First, the employer wanted to
require exempt employees to work a set number of hours per week. Second, the employer wanted to require exempt employees to make up work
time lost due to personal absences of less than a day. The employer did
not intend to dock employee salaries for failure to meet either
requirement but rather would discipline employees for consistent failure
to observe the requirements. The employer inquired as to whether it
could implement these requirements without losing the exempt status of
its employees.
The DOL opined that so long as the employer did not dock an
employee’s salary for a violation of either rule, the employer was free
to implement the rules without losing an employee’s exempt status. “The
number of hours worked by an employee who is exempt under…the FLSA is a
matter to be determined between the employer and the employee.” Likewise, the DOL explained that an employer may require an exempt
employee to make up work time lost due to personal absences of less than
a day without loss of the exemption.
The Opinion Letter cautioned, however, that failure to
comport with either of the two rules would not constitute a violation of
a “workplace conduct rule” for which an employer may impose a
disciplinary suspension for one or more full days.
Guidelines like these may be a good idea for your company,
especially if you are afflicted with “work when they wanna” exempt
employees or if productivity is simply too low. While employers cannot
dock an employee’s pay or impose disciplinary suspensions for
noncompliance with such rules, otherwise disciplining an employee for
consistent failure to observe such rules may have the required effect
and will not affect the employee’s exempt status.
*Michele Jakubs
practices in all areas of employment litigation and wage and hour
compliance and administration. For more information concerning exempt
status or any other aspect of the FLSA, please contact Michele at
(216)696-4441 or mlj@zrlaw.com.
WHAT EXACTLY IS A SUPERVISOR? NLRB Finally Gives Guidance As to the Definition of Supervisor for Purposes of the National Labor Relations Act
By Robert W. Hartman
After confounding labor unions, employers and, ultimately, the
U.S. Supreme Court for more than 60 years, the National Labor Relations
Board (“NLRB”) finally provided clear guidance as to what constitutes a
“supervisor” under the National Labor Relations Act (“the Act”). In a
troika of cases issued in September, the NLRB devised a new test to
determine whether a person meets the definition of supervisor in 29
U.S.C. § 152(11).
The Act specifically grants employees “the right to
self-organization, to form, join, or assist labor organizations, to
bargain collectively through representatives of their own choosing, and
to engage in other concerted activities for the purpose of collective
bargaining or other mutual aid or protection.”
See 29 U.S.C. § 157. These rights, however, exist only for “employees” as defined by Section 2(3) of the Act.
In response to a 1947 U.S. Supreme Court opinion, Congress
enacted Section 2(11) of the Act, which specifically excludes
“supervisors” from the definition of “employee.” Congress defined a
supervisor as an individual who possesses the authority to take certain
actions on behalf of the employer so long as the exercise of that
authority is not clerical in nature and requires the use of independent
judgment. The actions which indicate supervisory authority include the
power “to hire, transfer, suspend, lay off, recall, promote, discharge,
assign, reward, or discipline other employees, or responsibly to direct
them, or to adjust their grievances, or effectively to recommend such
action.”
The NLRB and the courts recognized that the phrases Congress
used to define a supervisor were vague and ambiguous. As a general
principle, however, the NLRB construed the term “supervisor” narrowly
because any employee deemed a supervisor under the Act lost his or her
rights to engage in protected activity. In 2001, the U.S. Supreme Court
held in
NLRB v. Kentucky River that the NLRB’s definition of supervisor was too narrow and inconsistent with the Act.
In September, the NLRB adopted definitions for the terms
“assign,” “responsibly to direct” and “independent judgment.” The NLRB
construed the term “assign” to refer to the act of designating an
employee to a place (such as a location, department or wing), appointing
an employee to a time (such as a shift or overtime period), or giving
significant overall duties, i.e., tasks, to an employee.” Significantly, “assign” refers to the putative supervisor’s designation
of significant duties to an employee, not ad hoc instructions to perform
a discrete task.
Next, the NLRB turned its attention to the problematic phrase
“responsibly to direct.” Since the NLRB had not attempted to define
this term with particularity in the past, a number of other federal
courts had, on their own, attempted to reach a consensus definition of
“responsibly to direct.” The NLRB adopted this consensus definition. Thus, the term “responsibly to direct” means that the person must direct
or perform oversight of other employees and also must be accountable
for the performance of the task by the employees over whom the
supervisor directs or oversees. In other words, it must be shown that
the employer delegated to the putative supervisor the authority to
direct work and the authority to take corrective action if necessary.
Further, the putative supervisor must face adverse consequences if he or
she does not take the above-listed steps.
Finally, the NLRB confronted the Supreme Court’s rebuke of
its definition of the term “independent judgment.” Prior to the Supreme
Court's 2001
Kentucky River decision, the NLRB interpreted the
term “independent judgment” to exclude the exercise of “ordinary
professional or technical judgment in directing less skilled employees
to deliver services.” The NLRB disavowed this definition, holding that
so long as an employee exercises independent judgment with respect to
one of the 12 enumerated supervisory functions, it is irrelevant that
the independent judgment is also a professional or technical judgment.
Left to define independent judgment, the NLRB held that the
putative supervisor’s actions must be free of control by others, must
involve a judgment by the individual and must involve a degree of
discretion that rises above the routine or clerical. Thus, judgment
will not be independent if dictated by detailed instructions set forth
in a company policy, the verbal instructions of a higher authority or
the terms of a collective bargaining agreement.
The NLRB’s expanded definition of supervisor will have
immediate effects on election petitions. As stated above, supervisors
do not have Section 7 rights to choose a representative for the purposes
of collective bargaining or to engage in another other activity
protected by the Act. Accordingly, these employees should be excluded
from any proposed bargaining unit for the purposes of an election. Moreover, an employee is permitted to instruct a supervisor to refrain
from engaging in activities on behalf of a labor union.
With the NLRB’s guidance, employers are now in a better
position to determine who is a supervisor for purposes of the Act and
ensure that those employees are not included in proposed bargaining
units. Employers should carefully consider the various job
classifications within any election proposal to determine whether the
positions are excluded.
Z&R SHORTS
November 2006
Zashin & Rich continues its brain•food•breakfast law series with
Volume III, a 2-part Seminar on Absenteeism presented by attorneys
Stephen Zashin and
Steve Dlott of Z&R’s Cleveland office and
Dr. Kevin Trangle.
Part One, “Preventing Common Workplace Injuries,” takes place on
November 16, 2006 from 8:30-10:00 a.m. at the Monarch Building, 5885
Landerbrook, Mayfield Heights, Ohio, 44124.
December 2006
Lois Gruhin of Z&R’s Columbus office
will moderate the Council on Education in Management (“COEM”) Ohio
Employment Law Update 2006 on December 4-5, 2006. Registration begins at
8:00 a.m. on Day 1. The seminar will take place at the Concourse
Hotel, 4300 International Gateway, Columbus, Ohio, 43219.
Lois will
also present two topics, “Update on New and Emerging Employment Law
Challenges in 2006” and “Steering Clear of Common Costly Mistakes Made
When Conducting Workplace Investigations.” Other speakers include:
- Stephen Zashin of Z&R’s Cleveland
office, who will speak on two topics, “Preventing Improper Denial
of the FMLA’s Intermittent and Reduced Schedule Leave, and other
Requirements” and “Curtailing Legal Challenges that Arise from
Protected Absenteeism When Untangling the FMLA, ADA, PDA, and Workers’
Comp Laws.”
- Michele Jakubs of Z&R’s Cleveland
office, who will speak on the topic “Avoiding Misclassifications
and Improper Salary Deductions for Exempt Employees Under the Revised
FLSA White-Collar Exemption Regulations.”
Stephen Zashin of Z&R's Cleveland
office will present "The Leave of Absence Puzzle" to the Greater
Cleveland Chapter of the American Payroll Association on December 14,
2006 at 1:00 p.m. The seminar will take place at the Sheraton Hotel,
5300 Rockside Road, Independence, Ohio, 44131.
January 2007
At Part Two of Zashin & Rich’s brain•food•breakfast law series, Volume III, attorneys
Stephen Zashin and
Steve Dlott of Z&R’s Cleveland office and
Dr. Kevin Trangle will
discuss “Managing the Existing Injury” on January 18, 2006 from
8:30-10:00 a.m. at the Monarch Building, 5885 Landerbrook, Mayfield
Heights, Ohio, 44124.
Stephen Zashin and
Steve Dlott
of Z&R’s Cleveland office will also speak at Lorman Education
Services' “Best Practices In ADA, FMLA and Workers’ Compensation”
seminar on January 31, 2007 at the Sheraton Hotel, 5300 Rockside Road,
Independence, Ohio, 44131. Registration begins at 8:30 a.m.
Stephen will present two topics, “Baby FMLA: the Basics” and “Mastering the Leave of Absence Puzzle.”
Steve
will also present two topics, “Winning Strategies at the Industrial
Commission” and “Using the Court System to Defeat Claims.”
February 2007
Lois Gruhin of Z&R’s Columbus office will
moderate and speak at the “COEM Discrimination, Harassment, and
Retaliation Update 2007: Critical Prevention and Response Strategies to
Reduce Liability Risks” seminar in Cuyahoga Falls, Ohio on February 20,
2007. Other speakers include
Stephen Zashin, Michele Jakubs, Christina Janice, and Robert Hartman of Z&R’s Cleveland office. Look for details in January 2007.
Stephen Zashin and
Steve Dlott
of Z&R's Cleveland office will provide an Employment Law Update on
February 28, 2007, sponsored by the Middleburg Heights Chamber of
Commerce and the Cleveland Southwest Safety Council. The seminar will
take place at the Middleburg Heights Chamber of Commerce, 16000 Bagley
Rd., Middleburg Heights, Ohio, 44130 from 8:30 a.m. to 10:00 a.m.
Look for more information about this seminar in coming months.
March 2007
Stephen Zashin will present "The Leave of
Absence Puzzle" at the National Business Institute's Labor and
Employment Law Update 2007 on March 2, 2007. The seminar will take
place at the Holiday Inn Independence, 6001 Rockside Road, Independence,
Ohio, 44131. Registration begins at 8:30 a.m. Look for more
information about this seminar in coming months.
