Employment Law Quarterly

Wednesday, July 12, 2006

EMPLOYMENT LAW QUARTERLY | Summer 2006, Volume VIII, Issue iii

RAIN ON YOUR COMPANY PARADE: Workers' Comp Liability Can Dampen Employer-Sponsored Social Events
SIXTH CIRCUIT CONFIRMS IT: Pregnancy Discrimination Act Does Not Demand Better Treatment for Pregnant Employees
TURNING A BLIND EYE: When Technology Policies At Work Aren't Put To Work
WRONGFUL DISCHARGE: It Is Just For At-Will Employees
GIVE ME AN S-S-N-V-S... Social Security Administration Implements New Online Verification System

RAIN ON YOUR COMPANY PARADE: Workers' Comp Liability Can Dampen Employer-Sponsored Social Events

By Steven P. Dlott

Summertime ranks a close second to the holiday season as the most popular time for employer-sponsored social events. Many of us fondly (or not so fondly) recall attending company picnics as kids. These days, events such as company-sponsored amusement park days are more common than company picnics. Regardless of the activity, every employer hosting a summer social event for its employees should be aware of its potential liability for employee injuries occurring during such an event.

Some employers mistakenly assume that an employee's voluntary participation in a company-sponsored recreational event eliminates any employer liability. While some states have adopted that concept, Ohio has not. The event also need not occur on the employer's premises to impose employer liability for an employee's injury.

The seminal case in Ohio, Kohlmayer v. Keller, involved an employee who injured himself during a company picnic and sued to participate in the workers' compensation fund. In finding the employer liable for the injury, the Ohio Supreme Court articulated the factors that indicated that the employee's attendance at the picnic was "logically related to his employment":

the employer sponsored the event;
the employer paid for the event;
the employer supervised the event; and
the employer's purpose was to provide employees with an outing to improve employee relations.

The Court reasoned that the "improved employee relationships" resulting from an employer-sponsored event benefited the employer and thus related to the person's employment:

[i]mproved employee relationships which can, and usually do, result from the association of employees in a recreational setting produce a more harmonious working atmosphere. Better service and greater interest in the job on the part of the employees are its outgrowths...Thus, business-related benefits...which may be expected to flow to the employer from sponsoring a purely social event for his employees, are sufficiently related to the performance of the required duties of the employee so that it is 'correct to say that the Legislature intended the enterprise to bear the risk of injuries incidental to the company event.'

As a result, the key to ascertaining workers' compensation liability for an employee injury at a company-sponsored event is the degree of employer involvement. Assuming the employer sponsored the event, the next question is whether the company paid for the event. Resolution of that issue becomes murky if the company paid for only a portion of the event (especially in the case of a company-sponsored amusement park day).

Courts will also consider the amount of employer supervision. The amusement-park-day example likely favors employers because employers rarely have any control or supervisory authority over the amusement park's site. However, the analysis might change if the company rented out an entire park or the particular site where an injury occurred (e.g., a picnic area). Finally, an analysis of whether the event produced "improved employee relationships" will almost always result in employer liability. An employer's very purpose in sponsoring such events is often to improve employee relations.

Perhaps the best advice for an employer planning a summertime social event for employees is – less is more. The less company involvement, the greater the likelihood that a court will not hold an employer liable for an employee injury sustained during a company-sponsored activity.

SIXTH CIRCUIT CONFIRMS IT: Pregnancy Discrimination Act Does Not Demand Better Treatment for Pregnant Employees

By Michele L. Jakubs*

How does an employer accommodate a pregnant employee when the employee's condition affects her ability to work? In Reeves v. Swift Transportation, the Sixth Circuit Court of Appeals recently confirmed that employers must treat pregnant employees the same as all other employees--no better, no worse.

The employee in this case worked as a truck driver beginning in August 2002. When she applied for the job, the company informed her that the job required bending, twisting, climbing, squatting, crouching, and balancing. The company also informed her that the job sometimes required strenuous physical activity, including pushing or pulling up to 200 pounds of freight with a dolly, pushing up to 100 pounds without mechanical aid, and lifting sixty pounds over her head. During the application process, the employee represented that she could bear the level of physical strain that the job required.

In November 2002, the employee learned that she was pregnant. She saw her doctor, who restricted her to light work pending her first appointment with an obstetrician. When the employee returned to work with her doctor's note, the employer told her it had no light work for her to do and sent her home.

The employer had a policy of providing light-duty work--but only to employees who had been injured on the job. Injured employees received light-duty assignments like office work.

The employee visited her obstetrician, who told the employee that she could continue working if she performed light work only and did not lift more than twenty pounds. The obstetrician gave the employee a letter setting forth these restrictions.

The employee told her employer that she could not perform regular truck driver duties but continued to request special light duty work assignments. The employer continued to inform her that it had no light duty work for her. The employee continued to contact her employer every day to request light duty work, which the employer continued to inform her it did not have for her. The employee was also not entitled to leave under the Family and Medical Leave Act because she had worked for the company for less than one year. The employer terminated the employee in late November 2002.
The employee filed suit in federal court, alleging violations of the Pregnancy Discrimination Act ("PDA"). The PDA provides, in part:

[w]omen affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employment-related purposes, including receipt of benefits under fringe benefit programs, as other persons not so affected but similar in their ability or inability to work...

The lower court found in favor of the employer, and the Sixth Circuit Court of Appeals affirmed. The employee attempted to argue that the employer's light-duty policy was direct evidence of discrimination. The Court disagreed because "the Act merely requires employers to 'ignore' employee pregnancies" and the employer's policy was "indisputably pregnancy-blind." It did not grant or deny light work on the basis of pregnancy, but on the non-pregnancy basis of whether there had been a work-related injury or condition. The court found, therefore, that the policy's express terms could not serve as direct evidence of discrimination.

The court then performed an indirect evidence analysis. The court found that the employee met her initial burden of establishing a prima facie case. The employer met its burden of establishing a nondiscriminatory reason for terminating the employee, i.e., she could not perform the heavy lifting required of truck drivers.

The employee could not establish that the employer's reason was pretext for discrimination. As a result, her claim failed. The court also noted that the employee failed to produce evidence tending to prove a discriminatory motive, nor did she even allege that the employer acted with discriminatory intent. Finally, the court accepted the reasoning of other courts that the PDA requires only equal treatment.

The employer had two things going for it: a clear policy and supervisors who understood its application. Employers should have policies that are "pregnancy-blind." In addition, employers should ensure that their supervisors apply their policies uniformly. Finally, keep in mind that any analysis of a situation like this should include an understanding of other state and federal law implications. When in doubt, consult your legal counsel.

*Michele Jakubs practices in all areas of employment litigation. For more information about light-duty work policies or pregnancy discrimination, please contact Michele at (216) 696-4441 or mlj@zrlaw.com.

TURNING A BLIND EYE: When Technology Policies At Work Aren't Put To Work

By Helena Oroz*

Employee email and internet monitoring are really nothing new. Most employers have had such policies and practices in place for years. An employer's right to monitor the use of its own equipment and communication systems is pretty solid if employees are on notice. So why does a New Jersey state case involving internet monitoring have everyone so excited? Instead of a case about employee privacy, the court was confronted with questions about an employer's duty and liability to third parties when it turns a blind eye to harmful computer use.

The case. In Doe v. XYC Corporation, an accountant used his work computer to not only access pornographic websites but also to store and transmit child pornography. Several individuals at his company knew of the employee's activities but failed to take further action. The court's decision describes at least six incidents of managers learning of the employee's activities but doing virtually nothing. Starting in 1998 or 1999, the employer's Internet Services Manager and Senior Network Administrator noticed that the employee's computer log reports showed visits to porn sites, told the employee to stop, but informed no one else.

The employer's conflicting company policies concerning internet and email monitoring apparently also contributed to the inertia. In early 2000, the employee's immediate supervisor told the Senior Network Administrator that the employee was visiting inappropriate websites. The Administrator reviewed only the employee's logs, which again showed visits to porn sites, and informed the employee's supervisor and the Director of Network and PC Services. The Director told the Administrator to never again access employee internet logs. Her concern was a 1999 policy communicated to certain management personnel forbidding any employee from monitoring any other employee's computer use "just for the sake of monitoring."

However, the employer also had an email and internet policy that stated that all email messages were the property of the employer and reserved the employer's right to review and access all email messages. The policy further stated that employees were permitted to access only business-related websites and provided that any employee aware of a violation of the policy was to notify personnel. Further, the policy warned that violators would be subject to discipline, up to and including termination.

The employee continued his activities through 2000 and 2001. In March 2001, after a co-worker complained about the employee, the employee's supervisor learned that the employee was again accessing porn sites – as well as at least one that mentioned children. The employee's supervisor told the employee to stop his inappropriate computer usage. In June 2001, although he noticed that the employee had reverted to his old behavior, the supervisor told no one and left on a business trip. By the time he returned, the employee had been arrested on child pornography charges. Days before the arrest, the employee had transmitted three photos of his stepdaughter from his work computer to a child porn site to gain access to it.

The child's mother, who had married the employee the year before, sued the company. The mother alleged that the Company knew or should have known that the employee was using its equipment to view and download child pornography and had a duty to report the conduct to the proper authorities, which it breached. The trial court granted summary judgment for the employer, finding that the company "acted as a reasonably prudent corporation" and had "no duty to investigate the private communications of its employees."

On appeal, the court first addressed the fact that the employer had the ability to monitor employee Internet use. Second, the court addressed the employer's right to monitor employee Internet use. The company had a technology policy in place, the employee was aware of it, his office had no doors, and his screen was visible to everyone. The court held that the employee "had no legitimate expectation of privacy that would prevent his employer from accessing his computer to determine if he was using it to view adult or child pornography." Next, the court determined that the employer was on notice of the employee's activities and that further investigation would have "readily uncovered the full scope of Employee's activities." Individuals at the Company were also aware that the employee resided with a young child.

Finally, the court had to determine the heart of the matter – did the employer have a duty to act on its knowledge? The court concluded that the duty exists, based on the strong public policy against child pornography reflected in state and federal laws, coupled with the public policy favoring exposure of crime. The court thus agreed with the plaintiff that the company had a duty to report the employee's activities to the proper authorities and to take effective internal action to stop the employee's activities, whether by termination or otherwise.

The court also rejected the trial court's analysis of the employer's duty to control the employee while he was acting outside the scope of his employment to prevent him from harming others. The court determined that the employer was "under a duty to exercise reasonable care to stop Employee's activities, specifically his viewing of child pornography, which by its very nature has been deemed by the state and federal lawmakers to constitute a threat to 'others;' those 'others' being the children who are forced to engage in or are unwittingly made the subject of pornographic activities." The court remanded the case for determination of proximate cause.

The analysis. Analyses of Doe have resulted in fearful employers wondering how far courts may eventually extend this duty to report employee activities to authorities. While the duty discussed in Doe may be new, the case reinforces "dos and don'ts" that already exist:

DO promulgate an effective technology policy and ensure that all employees are aware of it. While it is not necessary or desirable to have employees feel like "Big Brother" is constantly watching their every move, you do need to ensure that employees are on notice that their workplace communications are subject to monitoring.
DO enforce your technology policy. Determine in advance what the internal course of action will be if you discover an employee accessing inappropriate websites or the like.
DON'T have conflicting policies in place. You cannot issue or review your technology policy in a vacuum – ensure that your policies are in sync with each other to avoid confusion and misapplication.
DON'T assume that a verbal warning will end what could be compulsive, destructive, or even harmful behavior.
DON'T turn a blind eye to criminal behavior. This is really the baseline rule illustrated by the Doe case.

*Helena Oroz practices in all areas of employment law and compliance issues.

WRONGFUL DISCHARGE: It Is Just for At-Will Employees

By Robert W. Hartman

For a while, under Ohio law it was a foregone conclusion that only an at-will employee could bring a lawsuit alleging wrongful discharge in violation of public policy. The Ohio Supreme Court first recognized an exception to the employment-at-will doctrine – when an employee is discharged or disciplined for a reason that violates Ohio's public policy – in 1989 in Greeley v. Miami Valley Maintenance Contractors, Inc.

Then, in 2003, the Ohio Supreme Court issued its decision in Coolidge v. Riverdale Local School District, and no one was sure anymore. In Coolidge, the Ohio Supreme Court held that an employee receiving temporary total disability under the Workers' Compensation Act may not be discharged solely on the basis of absenteeism if the inability to work is directly related to the condition for which the employee is on disability. The employee in that case was a teacher who was subject to a collective bargaining agreement, so the question became: could unionized employees bring claims for wrongful discharge?

The employee in Urban v. Osborn Manufacturing, Inc. apparently thought this was the case--and brought her case for wrongful discharge in violation of public policy to court. The employee was a union member and subject to a collective bargaining agreement ("CBA"). Under the terms of the CBA, she could not be fired without just cause. The CBA also provided a comprehensive dispute resolution program for disputes concerning discipline or termination.

The employee initially worked as an operator, but the employer eliminated the position and transferred her to another department. The employee complained to management that her new work area was infested with pigeon droppings and asked the company to remove the droppings. The employee told her supervisor that she would contact the Occupational Safety and Health Administration (“OSHA”) if the company did not remove the droppings. The employee never filed a formal complaint with OSHA, but continued to complain to her employer. She next complained to the company president about the droppings.

At about the same time, the employee began receiving warnings about her work performance. About one month later, the employer terminated the employee for continued poor performance. The employee's union filed a grievance on her behalf but later withdrew it. The employee then filed suit in court alleging wrongful discharge in violation of public policy. The trial court granted summary judgment in the employer's favor.

On appeal, the employee argued that the trial court erred in dismissing her claim. The employee urged the court to ignore prior cases that declined to extend wrongful discharge to union employees. In 1995, in Haynes v. Zoological Society of Cincinnati, the Ohio Supreme Court held that a CBA specifically limited the power of the employer to terminate the employee, and thus took the employee outside the context of employment at-will, and outside the class of employees for whom the wrongful-discharge tort provides protection.

The employee nonetheless urged the court to expand the holding in Coolidge to find that members of a union who are subject to a CBA can assert a claim for wrongful discharge in violation of public policy. The court rejected this argument, stating that " Coolidge does not address a union employee of a private employer nor does it allow any other expansion of wrongful termination claims outside the at-will context." The court also noted that the employee's CBA provided her with a comprehensive grievance procedure, and that she "cannot now claim wrongful discharge merely because she was dissatisfied with the outcome of the grievance process." Moreover, even if she were an at-will employee, the court was not convinced that the employee alleged facts demonstrating that her employer's act of terminating her contravened a "clear public policy." There was no evidence that she was terminated for any reason other than poor performance.

The court concluded that the employee could not bring a claim for wrongful discharge because she was not an at-will employee, finally ending the mystery of Coolidge's meaning, at least to this court of appeals.

GIVE ME AN S-S-N-V-S... Social Security Administration Implements New Online Verification System

By Lois A. Gruhin

It doesn't spell anything, but it stands for Social Security Number Verification System, or SSNVS for short. The Social Security Administration recently implemented the new online system for easier employer verification of employee social security numbers.

The Immigration Reform and Control Act of 1986 (“The Act) requires employers to verify both the employment eligibility and identity of all new hires. The Immigration and Naturalization Service (now called the Citizenship and Immigration Service) designated the Form I-9 for this purpose.

The Act's implementing regulations provide for three lists of documents to accomplish verification. Acceptable "List A" documents establish both identity and employment eligibility. Acceptable "List B" documents establish identity only. Acceptable "List C" documents establish employment eligibility only. A "U.S. social security card issued by the Social Security Administration" is among the "List C" documents and is often used in conjunction with a "List B" document to establish new hire employment eligibility and identity.

SSNVS allows employers to verify those social security numbers quickly, via the internet, and in large numbers if desired. The new online system offers registered employers the ability to either:

receive instant verification of up to ten names and social security numbers per screen; or
receive results usually within one business day for uploaded batch files of up to 250,000 names and social security numbers.

The SSNVS may be used only to verify current or former employees and only for wage reporting purposes. Registration is required and may be completed at www.socialsecurity.gov/bso/bsowelcome.htm .

Friday, April 14, 2006

EMPLOYMENT LAW QUARTERLY | Spring 2006, Volume VIII, Issue ii

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STAND AT ATTENTION: New USERRA Rights and Obligations
Brain • Food • Breakfast • Law Series: Volume II
COMPENSATION INOCULATION: Vaccinating Your Workers’ Compensation Premium Against Rising Health Care Costs
CHECK YOURSELF: Gathering the Information Necessary to Require Employees to Submit to a Medical Examination
COBRA ADMINISTRATION: Clarity = Bliss.

STAND AT ATTENTION: New USERRA Rights and Obligations

By Ryan L. Long

The U.S. Department of Labor ("DOL") recently adopted final regulations implementing the Uniformed Services Employment and Reemployment Rights Act of 1994, or USERRA. USERRA protects the rights of persons who voluntarily or involuntarily leave employment positions to undertake military service. It applies to all U.S. public and private employers, regardless of size. USERRA's regulations provide guidance concerning both employer and employee rights and obligations under USERRA and became effective on January 18, 2006.

Since the regulations apply to all employers, employers should take the time to ensure full compliance. USERRA's regulations are divided into six subparts. Subpart A provides a general introduction, defining certain terms for purposes of USERRA. Subpart B describes prohibited employer conduct, including USERRA's anti-retaliation and anti-discrimination provisions, and defines the applicable legal framework for analyzing such claims. Subpart C states the procedural requirements for reemployment, including notice, coverage and time limits for service. Subpart D describes the manner in which employees accrue benefits they would otherwise be entitled to as an employee. Subpart E explains the reemployment rights of service members. Finally, Subpart F contains the compliance and assistance provisions.

Subpart A essentially restates the statutory definitions contained within USERRA, and also excludes federal employees from the ambit of the regulations. Subpart B prohibits employers from denying employment, re-employment, retention, promotion, or any benefit of employment to an individual on the basis of his or her membership or service in the uniformed services, and also prohibits retaliation against employees for exercise of USERRA rights. This subpart also describes the applicable burdens of proof for a USERRA claim.

In Subpart C, the regulations establish the general eligibility requirements for reemployment, then describe the applicable procedures for reinstatement of employees. Thus, an employee will be eligible for reemployment following uniformed service if: 1) the employer had advance notice of the employee's service; 2) the employee's cumulative service totals five years or less during his or her employment relationship with a particular employer; (3) the employee timely returns to work or applies for reemployment; and (4) the employee was not separated from service with a disqualifying discharge or under other than honorable conditions.

As stated in the regulations, USERRA protects any absence that service in the uniformed services necessitates. To invoke USERRA rights, an employee (or appropriate officer of the employee's uniformed service) must give his or her employer advance notice that the employee intends to leave his or her job to perform military service. USERRA does not establish a specific time period for notice nor does USERRA prescribe the manner in which an employee gives notice.

In general, an employee retains reemployment rights if his or her unformed service during the employment relationship totals no more than five years. At the end of his or her service period, the employee is required to either report to work or submit a timely application for reemployment to his or her pre-service employer, depending on the length of his or her service. There are only three circumstances in which an employer may be excused from its obligation to reemploy the employee: 1) where the employer's circumstances have changed so much that reinstatement of the employee is impossible or unreasonable; 2) where assisting the employee in becoming qualified for reemployment imposes an undue hardship on the employer; or 3) where the employee's position was for a brief, non-recurrent period with no reasonable expectation that the employment would continue indefinitely or for a significant period.

Subpart D reiterates that an employer must consider an employee who is on military leave as being on a leave of absence. Thus, the employee is entitled to all non-seniority rights and benefits that an employer generally provides to other employees with similar seniority, status, and pay that are on leave of absence, as well as all non-seniority rights and benefits that an employer provides to similarly-situated employees pursuant to company policy. The regulations also grant employees absent due to service obligations for more than 31 days COBRA-like continuation of health care benefits for up to 24 months.

Subpart E describes with particularity the reemployment rights of eligible employees. An employer must promptly, e.g. as soon as practicable, reemploy an eligible employee who returns from a period of service.Moreover, an employer must reemploy an employee in a position that reflects with reasonable certainty the pay, benefits, and seniority that he or she would have attained if not for the period of service. The employee also is entitled to the seniority rights and benefits that he or she would have been reasonably certain to attain if he or she had remained continuously employed.

USERRA also provides returning employees with protection from discharge. Thus, an employer cannot terminate a reemployed service member except for cause, for a period of time based on the length of service. USERRA defines "for cause" as reasons related to either the employee's conduct or other legitimate nondiscriminatory reasons.

As demonstrated above, employers will want to review their policies and procedures to reflect USERRA's new regulations.Such preventative policies will ensure compliance with USERRA, and avoid costly litigation.

Brain • Food • Breakfast Law Series: Volume II

Please join us for breakfast refreshments at the third session of our 3-part seminar series, Volume II on April 27, 2006:

April 27, 2006
Interplay: solving the FMLA-ADA-workers' comp leave of absence puzzle.
Even FMLA aficionados sometimes face confusion when other leave issues enter the mix. If an employee with a disability requests leave as a reasonable accommodation, what of the FMLA? What are an employee's rights and your obligations if an employee cannot return to work for an extended period of time due to a workplace injury? And what do you do with their health insurance in the meantime? It is imperative for employers to understand where the FMLA, ADA, and workers' compensation laws intersect in situations like these. This seminar will discuss that interplay and include a brief discussion of COBRA-related issues (and breakfast-related pastries). Look for more information about this important seminar in coming weeks. All brain · food · breakfast seminars:

take place at our offices. Call (216) 696-4441 for directions or more information.
begin with registration at 8:30 a.m. and conclude at 10:00 a.m.
are strictly limited to 20 attendees. You may register in advance by calling (216) 696-4441 (please ask for Nicale) or sending an email to nee@zrlaw.com.
cost $30.00 per attendee.
include breakfast refreshments.
are led by Zashin & Rich attorneys who practice only workplace law all day, every day.
include time for your questions.

Join us for the brain · food · breakfast law series. It's just good for you.

COMPENSATION INOCULATION: Vaccinating Your Workers’ Compensation Premium Against Rising Health Care Costs

By Steve P. Dlott

Between 2000 and 2005, the number of workers' compensation claims filed in Ohio has dropped by approximately 10 percent (from 208,301 in 2000 to 178,015 in 2005). Clearly, employers have made significant inroads in workplace safety.

Unfortunately, the news is not all good for employers. Even as the number of filed claims has fallen, the cost of those claims has increased dramatically. Between 2000 and 2005, medical costs for workers' compensation claims jumped by almost $300 million. This increase represents a nearly 30 percent increase in medical costs over five years. Indeed, the Bureau of Workers' Compensation ("BWC") altered its system for setting reserves to account for medical costs in response to this increase.

What accounts for this sharp rise in medical costs? Unquestionably, the number one culprit is the BWC's exceedingly generous reimbursement rates. It is a well-known secret that the BWC's reimbursement rate for medical services is much higher than that of private health insurers and other government-funded insurance programs. The Columbus Dispatch recently reported that from 1998 through 2004, the Bureau paid $543.6 million more for the medical treatment of injured workers than the actual cost of providing those services.

Relying on the BWC offers little hope of staunching these hemorrhaging medical costs. Relief by way of reduction of reimbursement rates for medical services is not very encouraging. State-funded employers are at the BWC's mercy when it comes to establishing those generous reimbursement rates.

Although the BWC offers little hope for relief, there is one important first step available to employers in this battle to control medical claims costs. Employers can contract with medical facilities, such as an urgent care facility, for the initial post-injury treatment. While this contract only applies to non-emergency type injuries, such injuries comprise the vast majority of soft-tissue injuries, such as back or neck strains, which often develop into more serious, and more costly, ailments.

Getting that initial diagnosis and, equally important, return-to-work recommendation from a physician of the employer's choice is essential to controlling overall claims costs. Presenting documentation from the employer's doctor releasing the claimant to work (even on light duty) is of critical importance at a hearing in challenging the claimant's certification disabling the claimant from employment for an extended period of time.

Unquestionably, the most common mistake employers make is taking a "wait and see" attitude before deciding to fight a workers' compensation claim. Often, by the time the employer discovers the claim's impact on its workers' compensation premiums, the damage has already occurred. A medical report from the employer's doctor returning the claimant to work immediately after the injury is the best prescription for fighting a medically suspect claim. Armed with such a report, the employer can stave off frivolous claims and limit the effect such claims exert on workers' compensation premiums.

CHECK YOURSELF: Gathering the Information Necessary to Require Employees to Submit to a Medical Examination

By Robert W. Hartman

The Americans with Disabilities Act ("ADA"), 42 U.S.C. § 12101, et seq. , severely restricts the manner in which employers obtain and use medical information from employees. Despite these restrictions, employers may require current employees to undergo medical examinations when job-related and consistent with business necessity. As demonstrated in Ward v. Merck & Co., Inc. , an employer can legitimately require an employee who poses a threat to his co-workers to undergo a medical examination, if the employer properly documents the situation.

The employee in Ward performed his position without incident for approximately six years. In 2002, supervisors observed that the employee became socially withdrawn and his work performance began to decline. The next year, local police had to be called to Merck's worksite because the employee "backed himself up against the food tables" in the cafeteria and "was screaming at people, telling them not to eat any of the vegetables."

Following this incident, the employee returned to work but maintained a "catatonic" demeanor. Indeed, co-workers complained that this employee's behavior was frightening, and co-workers were uncomfortable working around the employee. As a result, the employer requested that this employee submit to a medical examination to determine if he was capable of performing his job duties. The employee refused to submit to an examination and was subsequently fired. The employee then filed a lawsuit alleging that his former employer violated the ADA by requiring him to submit to a medical examination.

The Court held that the employer's request that the employee undergo a medical examination did not violate the ADA. In doing so, the Court stated the general rule that medical examinations are permitted only to the extent that they are job-related and consistent with business necessity. Citing to EEOC regulations, the Court stated that an examination is acceptable if the employer "has a reasonable belief based on objective evidence, that: (1) an employee's ability to perform essential job functions will be impaired by a medical condition; or (2) an employee will pose a direct threat due to a medical condition."

Applied to the facts at hand, the Court held that the employee's behavior posed a direct threat to himself and a direct threat to other employees. Specifically, the Court cited anecdotal evidence gathered by the employer which indicated that co-workers were frightened to work with this employee and were concerned for their safety. Moreover, co-workers and management expressed concerns about the employee's own safety. In addition, a significant decline in work performance accompanied the changes in the employee's behavior. As a result, the employer's decision to require a medical examination of this employee did not violate the ADA.

As demonstrated by Ward, employers must plan and document prior to requesting an existing employee to take a medical examination. In such cases, the ADA places the burden on the employer to establish that the medical examination is job-related and consistent with business necessity. To satisfy this burden, the employer should collect evidence demonstrating that either the employee 1) cannot perform the functions of his job or 2) presents a direct threat to himself or coworkers. With respect to performance, employers must instruct supervisors to review employee performance accurately. In the event that an employee potentially presents a direct threat to himself/herself or other employees, employers must document the incidents which lead to this belief, and make an attempt to corroborate this belief.

By possessing comprehensive documentation, an employer will be in a better position to convince a court that its requested medical examination was job-related and consistent with business necessity. In this manner, employers satisfy their obligations under the ADA while ensuring a safe and productive work environment.

COBRA ADMINISTRATION: Clarity = Bliss.

By Helena Oroz*

It is an unconfirmed theory, but it may be that many COBRA issues could be avoided if only one ingredient was added to the mix: clarity. If all the interested parties have the pertinent information, know their own obligations, and understand everyone else's obligations, how can they go wrong?

In Krippendorf v. Mitchell , the U.S. District Court for the Eastern District of Arkansas recently decided, quite simply, that the employer just got it wrong. The employee worked as a salesperson for the employer, an Arkansas company apparently subject to that state's "baby COBRA," or state version of the federal law that mandates continuation of health care coverage under certain circumstances. (This generally means that the employer is small enough to be exempt from COBRA). While this is not exactly a COBRA case, it is nonetheless instructive.

The employee received health insurance benefits under the employer's group health insurance policy. Under the plan, the employee paid a portion of the health insurance premium for himself and his family ($86.89), which the employer deducted from each of the employee's bimonthly paychecks. The employer paid the rest of the premium. The employee quit his job on Monday, April 18, 2005 without advance notice. His last paycheck covered half the month--April 1 through Friday, April 15, 2005--and as usual, the company deducted $86.89 for the employee's portion of the heath insurance premium. The company's benefits administrator gave the employee the forms required to continue his health insurance coverage--and that is apparently where everyone ceased being on the same page.

The employee returned the forms with a check for the first month's premium ($768.15) at the beginning of May. The company cashed the employee's check, but for some reason sent neither the employee's premium payment nor his continuation of coverage form to the insurance company. Instead, the company cancelled the employee's coverage retroactive to April 1, 2005. The employee, unaware that the company had cancelled his coverage, sent the company his second month's premium payment. The employee learned of the cancellation only when his wife sought medical treatment and was informed that her health insurance had lapsed.

The employer finally sent the employee's continuation of coverage form to the insurance company in early June 2005--but still did not pay his health insurance premium. The employee's attorney contacted the Company on June 13, 2005 to warn that he would file suit in federal court if the employee's health insurance benefits were not reinstated before June 16. The company actually did reinstate the employee's insurance on or about June 16, 2005, but did not notify the employee or his attorney of the reinstatement until June 27, 2005.

By this time, the employee, left in the dark about the status of his insurance, had filed suit in court alleging ERISA and state law claims. The employee alleged that the company breached its fiduciary obligation under ERISA to send the appropriate premiums to the insurance company each month. He sought the amount equal to the portion of the premium that the company should have paid for the time period of April 1 to 18, 2005, as well as attorneys' fees and costs.

The court found that, under the plan, the employee was supposed to receive the benefit of health insurance coverage for the time period of April 1 through April 15 at a cost of only $86.89 to himself, and that the company had actually deducted that amount from his last paycheck.

The court further found that when the company accepted the employee's first monthly premium check in early May 2005, it did not apply the money toward the employee's continuation coverage, which should have started after his employment ended on April 18, 2005. Instead, the employer applied the funds retroactive to April 1, a problem because:

the employee was still working on April 1. His last paycheck covered his last pay period (April 1 through April 15, 2005), and the employer had already withdrawn the regular $86.89 employee share from that paycheck to cover that period of time;
the employer should already have paid its share of the employee's premium for this time period as well;
and, essentially, because the employer did not prorate the employee's premium payment appropriately, the employee overpaid.

The court found that the employee overpaid by $384.08--half of his $768.15 premium payment for the whole month. The court ordered a refund of that amount so that the employee would receive the benefit of his April 1-15 health coverage at the proper price of $86.89. The court also awarded the employee legal fees and costs, noting that the company offered no convincing explanation as to why they refused to timely pay the insurance premium, and that the employee should not, in any event, be penalized for the company's failure to abide by the terms of the plan.

At least in this case, the employer was out of the loop. To avoid a similar situation, make sure that the "COBRA person" at your company sticks to the cardinal rule: abide by the plan. Ensure that COBRA notices and other paperwork are forwarded expeditiously to the proper parties and that premium payments are applied accurately. Finally, keep the lines of communication open, especially if the company has made a mistake. The employer in this case had a chance to work things out before heading to court and blew it. In most cases, all employees really want is health insurance, not a battle in court.

*Helena Oroz practices in all areas of employment law and compliance issues.

Friday, January 20, 2006

EMPLOYMENT LAW QUARTERLY | Winter 2006, Volume VIII, Issue i

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GOOD CENTS: Using a Workers' Comp Attorney Even if You Have a TPA
Brain • Food • Breakfast • Law Series: Volume II
SUFFICIENT NOTICE MEANS SOMETHING HERE: Sixth Circuit Finds for Employer in FMLA Notice Case
MORE IS MORE: EEOC Revises EEO-1 Report, Adds Stuff
ARE SALES ENGINEERS OVERTIME-EXEMPT? The Answer is not Just Academic

GOOD CENTS: Using a Workers' Comp Attorney Even if You Have a TPA

By Steve P. Dlott

Virtually every employer in Ohio utilizes a third party administrator, or "TPA" to manage their workers' compensation claims. The benefits of using a TPA are obvious to these employers: a small fee allows them to delegate the day-to-day management of any work-related claims to someone else. A TPA acts as a liaison of sorts between all the interested parties, deals with the paperwork, and generally sorts out the logistics of processing a claim.

Most TPAs do an excellent job with day-to-day claims management, but not all claims proceed quietly. When it comes to fighting claims at Industrial Commission ("IC") hearings, for example, TPAs and the employers they defend are at a distinct disadvantage because TPA representatives are not attorneys.

What can an attorney do for an employer at a hearing that a TPA representative cannot? An attorney can question and cross-examine witnesses. A TPA cannot do the same. A lone TPA at a hearing is an employee's dream come true -- because a TPA cannot challenge a single word that comes from the injured employee, no matter how false. While the employer's witnesses can respond to any false testimony from an employee, there is no substitute for aggressive cross-examination. An attorney impeaching an employee's credibility is likely more compelling and persuasive to a hearing officer than a witness on the employer's side simply claiming that the employee lied. In this way, an employer misses out on framing the facts in its favor.

A lawyer-less employer misses out on arguing the law in its favor, too. Again, an attorney can bring to the hearing officer's attention the statutes, rules, or case law that, combined with the facts, support the employer's position. TPAs cannot make arguments at these hearings. Imagine how detrimental that is, especially after a hearing officer just spent a good portion of the hearing listening to all the reasons for allowing a claim from the injured workers' attorney, and your representative must remain mute.

TPAs are sometimes lax in advising their clients of the benefits of attorney representation -- and conversely, the possible detriments of failing to secure attorney representation for a hearing. TPAs that market themselves as providers of comprehensive workers' compensation services sometimes assume that advising an employer to retain legal counsel will undermine that goal. Others fear incurring an employer's wrath if they recommend spending money on services the employer assumed (or was led to believe) were part of the TPAs job.

Some TPAs avoid the problem of these hearing restrictions by contracting with attorneys to represent the employer at hearings. While this is certainly an improvement, such an arrangement comes with its own set of potential disadvantages. For example, contract attorneys may receive case files just a few days before the hearing. Large caseloads and such little lead time may curtail adequate preparation -- and thus diminish any advantage gained from their ability to argue and cross-examine witnesses for the TPA.

It is true that hiring legal counsel can be expensive. It is also true that most Industrial Commission hearings do not require the presence of an attorney. In light of these considerations, regard the following as two instances in which having an attorney by your side could prove indispensable:

Cases that turn on the claimant's credibility. The most effective way for an employer to establish an injured worker's deceit is through cross-examination. If the employee is lying, a skillful litigator can demonstrate that point.
Cases that involve lost time, or temporary total disability. An IC award of temporary total disability ("TTD") to an injured worker is the ultimate penalty to an employer. A TTD award causes the Bureau of Workers' Compensation to set a "reserve" on the claim, which inevitably results in skyrocketing premiums for employers. Defeating lost time claims often requires vigorous cross-examination as to why the injured worker cannot return to work, even with restrictions, as well as convincing testimony from your own witnesses as to the employer's willingness and readiness to accommodate those restrictions. This is, quite simply, what lawyers do.

Hiring an attorney to represent you at Industrial Commission hearings is no guarantee of success, but it clearly levels the playing field if the claimant is represented. In most cases, it also significantly increases the employer's likelihood of success. You may decide that the risk of paying high legal fees outweighs the potential benefits of having a lawyer by your side. But ask yourself: in the long run, does that make good cents?

Brain • Food • Breakfast Law Series: Volume II

Happy 2006! Are you keeping your new year's resolutions? This year, Zashin & Rich Co., L.P.A. will assist human resource professionals, managers and business leaders who have resolved to both eat breakfast and feed their brains more often.

Join Zashin & Rich attorneys for breakfast refreshments as they discuss topics from and take your questions about the ever-evolving world of workplace law in Volume II of our 3-part seminar series:

February 16, 2006

March 23, 2006

April 27, 2006

All brain · food · breakfast seminars:

take place at our offices. Call (216) 696-4441 for directions or more information.
begin with registration at 8:30 a.m. and conclude at 10:00 a.m.
are strictly limited to 20 attendees. You may register in advance by calling (216) 696-4441 (please ask for Nicale) or sending an email to nee@zrlaw.com.
cost $30.00 per attendee, or $75.00 for advance registration for all 3 seminars.
include breakfast refreshments.
are led by Zashin & Rich attorneys who practice only workplace law all day, every day.
include time for your questions.

Join us for the brain · food · breakfast law series. It's just good for you.

SUFFICIENT NOTICE MEANS SOMETHING HERE: Sixth Circuit Finds for Employer in FMLA Notice Case

By Stephen S. Zashin*

If you are a company that lives by a clear, concise, well-communicated set of policies and procedures for requesting FMLA leave, you may, unfortunately, be familiar with the following scenario.

In Walton v. Ford Motor Co., the employer's internal procedures described how employees should request leave under the Family and Medical Leave Act ("FMLA"): by notifying the employer's labor relations department within two business days of an absence and completing the proper forms. The employer issued multiple notices to its employees about this procedure, posted the notices on bulletin boards, and attached a bulletin to employee paychecks about requesting FMLA leave. The bulletin specifically stated, "Do not request FMLA through security," referring to the employer's plant security office.

The employee injured himself at home on April 18, 2001. At work the next day, he told his supervisor that he had twisted his knee and planned to visit the employer's medical department. The nurse at the medical department diagnosed the employee with a knee sprain. The employee did not request leave or obtain any forms from the medical department, and he returned to work for the rest of the morning. At noon, the employee told his supervisor that he had a doctor's appointment that afternoon.

The employee's doctor instructed him not to work until a specialist could evaluate his injury. The next day, April 20, the employee called the plant security office and informed security that he had seen a doctor but could not return to work until he saw a specialist on April 24. Security logged the employee's call, indicated that he was absent because he was "sick," and recorded his expected date of return. The employee then saw a specialist who diagnosed him with a torn MCL, or superficial medial collateral ligament, and restricted him from work for four weeks. The following day, the employee again called the plant security office and informed security that he had seen a specialist and would return to work in four weeks. Security logged the employee's call, indicated that he was absent because he was "sick" and recorded his expected date of return. The employee never provided his supervisor or the employer's labor relations or medical departments with the reason for his absence or any medical documentation.

On April 27 the employer notified the employee via registered letter that he was to contact the labor relations department within five business days or face termination. The notice further provided: "If you are unable to work because of illness or injury, and so report to the Employment Office within the time stated above, you will be granted a sick leave of absence to cover the period of your disability upon presenting satisfactory evidence thereof." On May 4, the employer terminated the employee.

On May 9, the employee finally contacted the labor relations department and provided his union representative with medical documentation. Although the employee claimed that he did not receive the five-day notice until May 8, postal records confirmed that he received notice from the post office of the certified letter on April 30. The employee's union representative forwarded the medical documentation to the employer and provided the employee with FMLA paperwork. The employee submitted his paperwork to his employer on May 17. The employer nonetheless refused to reinstate the employee, who brought suit under the FMLA in federal court.

To prove that the employer interfered with his FMLA-qualifying leave, the employee had to establish that he gave his employer notice of his intention to take leave. An employer cannot deny FMLA leave because an employee failed to comply with internal procedures or failed to assert specific rights under the statute. However, an employee must give an employer enough information, verbally or otherwise, to impart his or her need for time off due to a serious health condition.

What does "sufficient notice" mean, then? It depends. Under these facts, the Sixth Circuit (covering federal courts in Michigan, Ohio, Kentucky, and Tennessee) held that the employee did not provide his employer with sufficient notice of his intent to take FMLA leave. Although the employee informed his supervisor that he had twisted his knee and planned to visit the plant's medical department, he returned to work immediately following that visit . Moreover, the employee never indicated to either the medical department or his supervisor that he would need time off for his knee, even after he initially visited his own doctor. Therefore, the Court found that the employee's supervisor did not have sufficient notice that the employee suffered a "serious health condition" requiring FMLA leave.

The Court likewise held that the employee's telephone calls to the security office were insufficient notice to his employer. Even if the employee's supervisor and labor relations department had received security's call-in log showing that the employee took a "sick day," that simply would not provide enough information. Moreover, the employer's five-day notice complied with FMLA regulations, which require that an employer sometimes "seek additional information concerning an absent employee's condition." The regulations do not "seek to punish the employer when the employee fails to respond to such an inquiry."

The Court paid attention to the employer's many efforts to communicate proper procedure to employees. The Court also noted that the employee "knowingly and repeatedly violated [the employer's] express prohibition against requesting FMLA leave through [its] security office." Finally, the Court noted that the plant's security guards were not employees, but independent contractors – another reason the employee never informed his actual employer of his need for leave.

This decision demonstrates that "sufficient notice" means something within the Sixth Circuit – although its exact parameters remain undefined. This case also demonstrates that employers can defend against FMLA claims with clear policies that are thoroughly disseminated to employees.

*Stephen Zashin is an OSBA Certified Specialist in Labor and Employment Law and has extensive experience in defending employers in FMLA litigation, as well as counseling employers on FMLA compliance. For more information about notice issues or other questions about the Family and Medical Leave Act, please contact Stephen at (216)696-4441 or ssz@zrlaw.com.

MORE IS MORE: EEOC Revises EEO-1 Report, Adds Stuff

By Lois A. Gruhin

If you are a large employer or federal contractor, filing an annual report with the Equal Employment Opportunity Commission ("EEOC") should be old hat. The report – Standard Form 100, Employer Information Report EEO-1, or "EEO-1" for short – has been around since 1966. Private employers must file an EEO-1 if they have 100 or more employees. Certain private employers that contract with the federal government also must file an EEO-1 if they have 50 or more employees. Reporting employers must file by September 30 each year.

The "Employment Data" section of an EEO-1 report breaks down an employer's workforce into gender, race/ethnicity, and job categories. The EEOC uses the data employers provide in EEO-1 reports to investigate charges of discrimination and to analyze trends in female and minority employment. The format has not changed much over the years, but in 2003 the Commission got an itch to make some revisions. Part of the impetus for the changes was a 1997 government-wide revision of standards for reporting race and ethnicity to reflect the increasing diversity of the Nation's population. The EEOC finally approved the EEO-1 modifications this past November.

Self-identification. The Commission reaffirmed its position that self-identification, as opposed to employer visual identification, is the preferred method for gathering ethnic/racial information from employees. Employers should offer employees the opportunity to self-identify but also provide a statement that identification is voluntary and solely for purposes of the employer's compliance with the law. Employers may use employment records or visual observation to gather racial/ethnic data only when employees decline to self-identify.

"Two Question Format." The old EEO-1 first broke down employees into gender and then into five racial/ethnic categories. The revised EE0-1 takes a different approach. It starts with two major ethnic categories: "Hispanic or Latino" and "Not Hispanic or Latino." These two major categories then each break down by gender. Only the “Not Hispanic or Latino” category further breaks down into six racial categories. The EEOC declined to further break down the "Hispanic or Latino" ethnic category into racial categories.

The Commission chose this approach because it has been shown to yield more accurate data about Hispanics/Latinos. The Commission calls this approach the "two-question format" because it foresees employers asking employees first to report their Hispanic/Latino status, and second to report their race(s).

Racial categories. The "Not Hispanic or Latino" ethnic category is broken down into six racial categories (italicized words indicate revisions):

White;
Black or African American ;
Native Hawaiian or other Pacific Islander;
Asian ;
American Indian or Alaska Native; and
Two or more races.

The "Native Hawaiian or other Pacific Islander" category used to be "Asian or Pacific Islander." "Asian" is now its own category, and employers in the State of Hawaii are no longer exempt from filing EEO-1 reports as they were before this EEO-1 change. The Commission also adopted the extra "two or more races" category, perhaps the most controversial EEO-1 change. Although the Commission believes such data will prove useful in analyzing national employment trends, some employers and employer groups believe that this category will yield inaccurate data.

Job Categories. The old EE0-1 included nine job categories, while the revised EE0-1 includes ten (italicized words indicate revisions):

Executive/Senior Level Officials and Managers;
First/Mid Level Officials and Managers;
Professionals;
Technicians;
Sales Workers;
Administrative Support Workers;
Craft Workers;
Operatives;
Laborers and Helpers; and
Service Workers.

The Commission divided the old category "Officials and Managers" into the "Executive/Senior Level" and "First/Mid Level" subcategories. The intention is for each subcategory of Officials and Managers to include individuals with equivalent influence and responsibility, even though their titles may be different at different organizations. The Commission also reassigned individuals in business and financial occupations from the old "Officials and Managers" category to the "Professionals" category. Finally, the Commission made some other minor revisions, such as changing "Office and Clerical" to "Administrative Support Workers" and "Laborers" to "Laborers and Helpers."

Will more EEO-1 categories yield more useful information to the EEOC? Only time will tell. Regardless, reporting employers must use the revised EEO-1 starting in the 2007 reporting cycle.

ARE SALES ENGINEERS OVERTIME-EXEMPT? The Answer is not Just Academic

By Michele L. Jakubs*

Time to put your thinking caps on: under the new Fair Labor Standards Act ("FLSA") regulations, would you pay an engineer who engages in sales activities as part of the job overtime pay? Anyone? Anyone? Bueller?

If you are unfamiliar with the reference to the 1986 pop-culture classic Ferris Bueller's Day Off , not a problem. If you have recently faced an FLSA question like the one posed above, you may nonetheless feel a certain kinship with the high school students in that movie when questioned by their economics teacher ("In 1930, the Republican-controlled House of Representatives, in an effort to alleviate the effects of the...Anyone? Anyone?...the Great Depression, passed the...Anyone? Anyone? The tariff bill? The Hawley-Smoot Tariff Act?...). Whether confused, drowsy or distracted, they didn't have any answers either.

The Department of Labor ("DOL") may have an answer for you. Last year, the DOL Wage and Hour Division published an opinion letter concerning the exempt status of "sales engineers" in light of the FLSA's "learned professional exemption."

Opinion letter? For the FLSA uninitiated, an opinion letter is an official interpretation of the DOL's Wage and Hour Division (so long as it is signed by the Administrator or other proper DOL official). They are issued in response to questions that employers or other interested individuals pose about real-world situations. Opinion letters provide employers with a potential good-faith reliance defense for FLSA violations. Note, however, that courts of law do not have to follow the DOL's guidance and may reach a result in direct contradiction to a DOL opinion letter.

The DOL issued such an interpretation in response to an employer question about whether the learned professional exemption applied to its sales engineers. The employer engages in the production and distribution of motors for automotive components, audio and visual products, and other equipment. It employs "sales engineers" who engage in a combination of sales and applications engineering activities. The sales engineer position requires at minimum a four-year degree in either mechanical or electrical engineering.

Learned Professional? Just about everyone knows the general rule that employers must pay overtime for any hours worked over forty in one week. What people sometimes do not know is why certain employees in certain jobs are exempt from overtime: because they meet certain tests relating to their salary and duties to fit within an exemption.

To qualify for the learned professional exemption, first the employer must compensate the employee on a salary basis at a rate of at least $455.00 per week. Second, an employee must meet the primary duty test. An employee's primary duty must require advanced knowledge, meaning that his or her work is "predominately intellectual in character and includes consistent exercise of discretion and judgment," as opposed to routine physical or mental work. An employee will not necessarily meet this test just because he or she earned a bachelor's degree in a specialized field. The outcome really depends on whether the particular job requires the employee to apply that advanced knowledge. In addition, the advanced knowledge that the employee's job requires must be in a field of science or learning, which must be customarily acquired by a prolonged course of specialized intellectual instruction.

And the answer is... The DOL concluded that the employer's sales engineers are exempt from the FLSA's overtime pay mandates. First, the position's job duties are predominately intellectual in character and include things like collecting data for development purposes, verifying industry and market standards or developments, and developing files of engineering specifications. The sales engineers also exercise discretion and judgment. They must work independently with customers to determine engineering specifications for specific product applications and to resolve engineering-related problems.

Second, the position required advanced knowledge in a field of science or learning--in this case, engineering. Finally, the sales engineer position requires advanced knowledge obtained through specialized academic training that is a standard prerequisite for entrance into the engineering profession. The employer requires the engineers to possess at least a bachelor's degree in electrical or mechanical engineering, which requires a prolonged course of specialized intellectual instruction.

But don't they sell stuff too? Although the position involves some sales responsibilities, the importance of the exempt engineering duties outweighs the importance of the sales activities. Sales naturally result only from sales engineers' ability to work with customers to provide engineering and technical support and to resolve engineering-related issues. In addition, the employees spend well in excess of fifty percent of their time performing engineering versus sales activities and generally do so without direct supervision. Finally, the DOL also considered the fact that sales engineers earn higher salaries as compared to sales assistants, who perform more routine sales activities. The DOL thus concluded that a sales engineer's primary duty is performing exempt engineering activities.

Why do I care about these questions? Your company many not employ a single sales engineer, but you may employ degreed individuals in specialized positions. Will you know whether or not those positions are exempt? Anyone?

*Michele Jakubs practices in all areas of employment litigation and wage and hour compliance and administration. For more information concerning FLSA exemptions or other compliance questions, please contact Michele at (216)696-4441 or mlj@zrlaw.com.

Saturday, October 29, 2005

EMPLOYMENT LAW QUARTERLY | Fall 2005, Volume VII, Issue iii

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Ohio courts consider compensability in cases of automobile injury and limb loss
Brain • Food • Breakfast • Law Series: Details on Seminars Nov. 10 and Dec. 8, 2005
PRISON LOVE : California Puts Sexual Favoritism in the Slammer
Last Chance Agreements ADA-Okay
USERRA UPDATE : Finalization of New Regs Just Around the Corner

Ohio Courts Consider Compensability in Cases of Automobile Injury and Limb Loss

By Steve P. Dlott

Two recent cases in Ohio courts considered two different aspects of workers' compensation law: when an injury is received "in the course of employment," and when the loss of limb can result in permanent total disability compensation.

In Cartwright v. Conrad, an employee traveling as a passenger in her co-worker's vehicle suffered injuries in a car accident. The injured employee had asked her co-worker, a store manager, for a ride to and from a one-day training seminar. After the seminar, the co-worker stopped to obtain payroll packets for her store and another store before driving the employee home. At this stop, the employee actually went inside and obtained the payroll packets. The employee and her co-worker then dropped off the first payroll packet. However, while driving to the second store to drop off the second payroll packet, the co-worker got into an accident.

The employee filed a workers' compensation claim for injuries she suffered as a passenger in the car accident. The Bureau of Workers' Compensation denied her claim, and the employee appealed. The Industrial Commission affirmed the Bureau's decision, and the employee appealed the Industrial Commission's decision to court. The court found in favor of the employer.

The employee appealed, arguing that factual questions existed concerning whether her injury occurred "in the course of" or "arising out of" her employment. By statute, only an employee with an injury "received in the course of, and arising out of, the injured employee's employment" may receive workers' compensation benefits for that injury. The language "in the course of" limits compensation to injuries an employee receives while performing duties that his or her employer requires, while "arising out of" requires a causal connection between the injury and the employment.

The appeals court held that the employee's injury was not received either "in the course" or "arising out of" her employment. First, the court reviewed the accident in light of the "coming-and-going rule":

As a general rule, an employee with a fixed place of employment, who is injured while traveling to or from his place of employment, is not entitled to participate in the Workers' Compensation Fund because the requisite causal connection between the injury and the employment does not exist.

The court held that the employee had a fixed place of employment, even though her employer required her to attend the one-day seminar at a different location. Based on the coming-and-going rule, therefore, the employee could not receive benefits for injuries received in the car accident while traveling home from work. The employee argued that an exception applied in her case because she was performing a special errand for her employer at the time of the accident. The court disagreed, explaining that the exception does not exist unless the special errand was a major factor in the travel that produced the injury, not just incidental to the travel. The court held that the co-worker's errand was merely incidental to the employee's journey home. Therefore, the employee's injury did not occur "in the course of" her employment.

The court also reviewed the facts and circumstances surrounding the accident in light of three factors that the Ohio Supreme Court established for finding a causal connection between an employee's employment and injury: proximity of the place of employment to the accident scene; the employer's degree of control over the accident scene; and the benefit to the employer of the employee's presence at the accident scene.

The court found no causal connection between the employee's injury and her employment. First, the accident scene was remote from the employee's place of employment, as well as the hotel where the seminar took place. Second, the employer had no direct control over the accident scene. Finally, and most significantly for the court, the employee's presence at the accident scene provided no real benefit to the employer. The court found that the employee did nothing significant during the trip from the hotel to her home that aided her co-worker's mission on the employer's behalf. Therefore, the court held that the employee's injury was not one "arising out of" her employment.

It was clear from the facts in this case that the three-factor analysis did not point to a causal connection between the employee's injury and her employment. Nevertheless, employers should understand that any off-site employee work activity increases the risk of workers' compensation exposure.

***

The Ohio Supreme Court recently concluded that the loss of a leg is a loss of two limbs – a leg and a foot – for purposes of Ohio's permanent total disability ("PTD") statute. Under Ohio law, an individual may receive an award of PTD for "the loss or loss of use of both hands or both arms, or both feet or both legs, or both eyes, or of any two thereof."

In International Paper v. Trucinski, an employee suffered serious injuries to his leg during a chemical explosion at work. As a result of the injury, the employee underwent an above-the-knee amputation. The employee eventually applied for and received PTD. The employer unsuccessfully challenged the PTD award to an appeals court, and then to the Ohio Supreme Court.

The Ohio Supreme Court, in affirming the appeals court, also affirmed its own previous decision in a similar case. The Court previously held that a hand and an arm are distinct body parts for purposes of the PTD statute. Therefore, an employee's loss of an entire single extremity can equate to the loss of two body parts and an award of PTD under the statute. Based on its reading of the PTD statute and its previous case law, the Supreme Court held that the employee's loss of his leg equated to the loss of two body parts – a leg and a foot – for purposes of a PTD award.

The Supreme Court's decision is somewhat surprising. While the loss of a foot does not necessarily involve the loss of a leg, the converse is always true. One need not have a medical degree to recognize that the loss of a foot cannot survive the loss of a leg. Allowing employees, who unfortunately suffered the loss of a leg, to collect benefits for both the leg and the foot suggests a double recovery. However, the Supreme Court's sympathy for such tragic injuries appears to trump elementary anatomy in lost limb compensation awards.

Brain • Food • Breakfast • Law Series

Breakfast might the most important meal of the day. Most people skip it.

Keeping pace with workplace law is important too, yet many human resource professionals, attorneys, managers and business leaders skip that, too.

Zashin & Rich Co., L.P.A. presents you with a valuable opportunity to get the nutrition you need for breakfast and your brain. The Ohio Supreme Court has also approved these seminars for attorney CLE credit. Join Zashin & Rich attorneys for breakfast refreshments as they discuss topics from and take your questions about the ever-evolving world of workplace law:

Zashin & Rich Co., L.P.A. presents
Overtime Over Your Head? Fair Labor Standards Act Update
This seminar will take place on November 10, 2005. Attorney Michele Jakubs will discuss a variety of useful FLSA topics, including:

how to determine whether an employee is exempt from overtime compensation (administrative, executive, professional, and others)
how to protect exempt status: dos and don'ts
how to understand what comprises working time, and what to do with waiting time, on-call time, break periods, training and the like
how to avoid overtime mishaps with hours, bonuses, and determining an employee's "regular rate"
what to do if your company makes a mistake

In addition, Attorney Christina Janice will discuss FLSA litigation and provide you with a useful understanding of:

collective actions, class actions, multidistrict litigation, and choice of remedy
which employers are subject to collective actions
current trends and recent decisions in class action FLSA litigation
defensive strategies for employers subject to collective actions

Details for the FLSA seminar:
Date: November 10, 2005
Time: 8:30 a.m.- 10:00 a.m.
How to register: call (216) 696-4441 and speak with Gwen Johnston

Because all seminars are strictly limited to 20 attendees, you must register for this seminar no later than November 8, 2005.

You may also register for our next breakfast seminar,
How Does Your Garden Grow? Cultivating a Union-Free Workplace
In this seminar, attorney Robert Hartman will discuss union organizing and union avoidance following recent developments involving the AFL-CIO. The information in this seminar will include:

current state of union organizing
exploring why employees unionize
proactive steps management can take to prevent union organizing
methods to win a union election campaign

Details for union organizing seminar:
Date: December 8, 2005
Time: 8:30 a.m.- 10:00 a.m.
How to register: call (216) 696-4441 and speak with Gwen Johnston

All brain · food · breakfast seminars:

take place at our offices. Call (216) 696-4441 for directions or more information.
begin with registration at 8:30 a.m. and conclude at 10:00 a.m.
are strictly limited to 20 attendees. You may register in advance by calling (216) 696-4441 (please ask for Gwen Johnston).
These courses have been approved by the Ohio Supreme Court Commission on Continuing Legal Education for 1.50 total CLE credit hours for each seminar (0.00 of ethics, 0.00 hour(s) of professionalism and 0.00 of substance abuse instruction).
cost $30.00 per session per attendee
include breakfast refreshments.
are led by Zashin & Rich attorneys who practice only workplace law all day, every day.
include time for your questions.

Join us for the brain · food · breakfast · law series. It's just good for you.

PRISON LOVE: California Puts Sexual Favoritism in the Slammer

By Lois A. Gruhin

The California Supreme Court recently expanded the grounds for employee harassment actions against employers. In Miller v. Department of Corrections, the court unanimously held that widespread sexual favoritism in the workplace may create an actionable hostile work environment under the state's anti-harassment law, the Fair Employment and Housing Act ("FEHA").

In Miller, two female former employees of a California prison ("the plaintiffs"), claimed that a supervisor accorded unwarranted favorable treatment to three female co-workers ("the paramours") with whom the supervisor had sexual affairs. The plaintiffs claimed that the supervisor's conduct constituted sexual discrimination and harassment in violation of FEHA. For example, one plaintiff served on an interview panel that evaluated applications for a promotion. Although the panel did not select one of the supervisor's paramours, who had applied for the promotion, the paramour nonetheless received the promotion, allegedly upon the supervisor's orders. When one of the plaintiffs competed for a promotion with a second paramour, the paramour again received the promotion, despite the plaintiff's higher rank, superior education, and greater experience.

The plaintiffs alleged a host of other conduct and unfair treatment they attributed to the supervisor's sexual relationships. The plaintiffs also alleged that their complaints were either ignored or dismissed. Both plaintiffs eventually resigned from their positions.

The lower courts awarded the employer summary judgment, finding, as have many other courts, that a supervisor's favoritism toward a workplace-lover does not constitute sexual harassment toward non-favored employees. The California Supreme Court reversed, however, finding that an employee may establish an actionable claim of sexual harassment under FEHA by demonstrating that widespread sexual favoritism was severe or pervasive enough to alter his or her working conditions and to create a hostile work environment.

The court relied heavily on a 1990 Equal Employment Opportunity Commission ("EEOC") policy statement concerning employer liability for sexual favoritism under the Civil Rights Act of 1964 ("Title VII"). In its policy statement, the EEOC observed that:

although isolated instances of sexual favoritism in the workplace do not violate Title VII, widespread sexual favoritism may create a hostile work environment in violation of Title VII by sending the demeaning message that managers view female employees as 'sexual playthings' or that 'the way for women to get ahead in the workplace is by engaging in sexual conduct.'

The court concluded that this was just such a situation. The evidence suggested to the court that the supervisor "viewed female employees as 'sexual playthings' and that his ensuing conduct conveyed this demeaning message in a manner that had an effect on the workforce as a whole." Moreover, the court found that the supervisor's sexual favoritism blocked plaintiffs' advancement and caused them to suffer harassment at the hands of one of the supervisor's paramours, who the supervisor failed to control. The court therefore concluded that the evidence created at least a triable issue of fact.

So what does this case mean for employers? How much can employers possibly do to control workplace romances? Generally speaking, all employers, not just those doing business in California, should determine how they want to manage workplace relationships. Some companies go so far as to prohibit workplace relationships altogether, while other employers prohibit romantic relationships between supervisors and subordinates. Still others require employees engaged in romantic relationships to report the relationship to management. Some companies require that upon such a report, one employee transfer to another location or even leave the company's employ. Some companies require the employees to sign a "love contract" acknowledging the consensual nature of their relationship.

There may be wisdom in each of these choices. Employers should consider the best method for their size, legal jurisdiction, and corporate culture. All employers must, however, ensure that employees work in a hostility-free work environment even when co-workers have consensual sexual relationships. Regardless of how your company manages workplace romances, all employers should be familiar with one very important word: discretion. For more information about sexual favoritism in the workplace, please contact Zashin & Rich Co., L.P.A.

Last Chance Agreements ADA-Okay

By Stephen S. Zashin*

Drugs and alcohol adversely affect the lives of so many people on a personal level that sometimes employers overlook the profound impact of substance abuse on the workplace. Employers must manage employee substance abuse while remaining cognizant of federal and state disability laws. Under the Americans with Disabilities Act ("ADA"), drug rehabilitation is considered a disability, although current, illegal use of drugs is not protected. An employer cannot, therefore, discriminate against an individual who no longer engages in drug use and who participates in or who has successfully completed a drug treatment program.

Many employers have utilized "last chance agreements" to work with recovering employees returning to work after treatment. "Last chance" or return-to-work agreements generally require an employee to abide by an employer's rules concerning drug or alcohol use, treatment, and testing in exchange for continued employment.

Although many federal courts have determined that such agreements are valid under the ADA, Ohio courts have not really considered the question. Recently the Cuyahoga County Court of Common Pleas decided that it agrees "with those federal courts that have found that last chance agreements or return to work agreements...do not violate the ADA."

In Partlow v. Blue Coral-Slick 50, the employee informed the employer's human resources department that he had a drinking problem. Pursuant to the employer's drug policy, the employer made its employee assistance program ("EAP") available to the employee. The employee saw a counselor through the EAP and divulged during a counseling session that he also had a cocaine addiction and depression. The employee began outpatient counseling and continued working with no incident – until three weeks later, when he relapsed. The employee then entered a treatment facility, and the employer placed him on medical leave.

When the employee received permission to return to work, the employer presented him with a "return to work agreement." The employer conditioned the employee's continued employment on successful participation and completion of a treatment plan and any aftercare counseling and treatment; periodic unannounced drug and alcohol testing; and no drug or alcohol use. The agreement also stated that any failure to abide by all of its terms would be cause for termination and ineligibility for rehire. The employee signed the agreement and returned to work without incident-until about two weeks later when he was arrested for cocaine possession.

After the employee returned to work, the employer contacted his drug treatment therapist, who confirmed that the employee had relapsed into drug use. The employer determined that the employee had violated the terms of his return to work agreement and terminated his employment. The employee sued under the ADA and Ohio state law, arguing that the return to work agreement unlawfully changed the terms and conditions of his employment solely because he sought treatment for his addiction.

The court reviewed federal case law interpreting the ADA and agreed that last chance agreements do not violate state or federal disability laws. The court reviewed a Pennsylvania federal case, for example, that held that an alcoholic's violation of a last chance agreement did not constitute a discharge based solely on disability, but rather a discharge based upon a breach of the agreement. The Pennsylvania court said that to attribute the firing to alcoholism was "defective reasoning that skips the key step of reality, i.e., the prior accommodation to alcoholism."

The employer in Partlow helped itself immensely by going by the book: abiding by its own drug policy and referring the employee to its EAP; using a clear and comprehensive last chance agreement that kept it in the loop concerning the employee's treatment; and confirming information regarding the employee's relapse with his drug counselor. Unfortunately, the employer still ended up in court. However, there is now clear guidance from an Ohio court that last chance agreements in this context are okay.

Keep in mind, however, that last chance agreements should be drafted clearly and carefully to avoid violation of other state or federal laws. For more information about last chance agreements or other ADA-compliance issues, please contact Stephen Zashin at (216)696-4441 or ssz@zrlaw.com.

*Stephen S. Zashin is an OSBA Certified Specialist in Labor and Employment Law and has extensive experience in defending ADA based litigation. For more information about the Americans with Disabilities Act or state disability laws, please contact Stephen at (216) 696-4441 or ssz@zrlaw.com.

USERRA UPDATE: Finalization of New Regs Just Around the Corner

By Helena J. Oroz*

You probably know that the Uniformed Services Employment and Reemployment Rights Act of 1994, or USERRA, is a federal law that affects employment, reemployment and retention in employment, when employees serve or have served in the uniformed services. But did you know that new regulations implementing USERRA will go into effect soon?

The regulations clarify employer and employee responsibilities under USERRA in a question-and-answer format that covers USERRA's various provisions. The new regulations are expected to become finalized and effective by the close of 2005. As always, Zashin & Rich will keep you posted concerning these regulations.

*Helena Oroz practices in all areas of employment law and compliance issues.

Friday, September 9, 2005

EMPLOYMENT LAW QUARTERLY | Summer 2005, Volume VII, Issue ii

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DON’T PUT THE CART IN FRONT OF THE HORSE: ADA Places Medical Exams Last
FIRM NEWS: Z&R’s Growth Spurt Continues
DISCRIMINATING TASTES: Sixth Circuit Finds no Pretext in Firing Based on Employee’s Derogatory Comment
AFL-CIO DEFECTORS SHAKE IT UP: Resurgence in Union Organizing Likely To Follow
PICK YOUR POISON: Your Employee Is Either Exempt or Non-Exempt: But NOT Both

DON'T PUT THE CART IN FRONT OF THE HORSE: ADA Places Medical Exams Last

By Christina M. Janice

The Americans with Disabilities Act ("ADA") bars employers from discriminating against individuals in their hiring and employment practices. The ADA also prescribes the sequence of events that employers must follow in the hiring process. The statute prohibits medical examinations and inquiries until after the employer has made a "real" job offer to an applicant.

In Leonel v. American Airlines, Inc., the employer recently learned what a "real" job offer is. In Leonel, three individuals applied for flight attendant positions. The application process included a telephone survey, written application, and an in-person interview at the employer's headquarters. The employer made employment offers contingent upon "successful completion of a drug test, a medical examination, and a satisfactory background check." The three applicants were all HIV positive. After completing the interview process, the employer extended the three individuals conditional offers of employment.

After making the offers, the employer directed the applicants to go immediately to the company's medical department for medical examinations. They completed a series of forms, including a drug testing notice that asked them to provide a urine specimen for drug testing and identify all medications they were taking. The employer also required the applicants to complete medical history forms. After completing the forms, they met with nurses to discuss their medical histories. None of the applicants disclosed their HIV-positive status or relevant medications at any point during the medical examination process, despite warnings about falsifications and omissions.

During the medical examinations, nurses drew blood samples. The employer ran a blood test to determine whether each applicant had "sufficient oxygen-carrying capacity to perform his duties in a high-altitude environment." The results showed that the three applicants had an elevated level of certain cells generally only associated with alcoholism, certain medication regimens, and certain blood disorders like sickle-cell disease. Because nothing in any of the applicants' medical histories indicated a cause, the employer requested explanations for the results. Not until this time did the applicants, acting through their personal physicians, disclose their HIV-positive status and medications. As a result, the employer rescinded the conditional offers of employment.

The applicants filed a lawsuit alleging that the employer's hiring practices violated the ADA and California law. Although the trial court granted the employer summary judgment, the Ninth Circuit Court of Appeals reversed. The court explained that the ADA requires that employers conduct medical examinations as a separate, second step of the selection process (i.e., after an individual has met all other job prerequisites).

To issue a "real" job offer, an employer must have completed all non-medical components of its application process prior to issuing an offer. The court explained that this two-step process allows applicants to isolate medical considerations and "to determine whether they were rejected because of a disability, or because of insufficient skills or experience or a bad report from a reference."

In the instant case, the court held that the employer's offer was not "real." The employer did not complete all non-medical components of its application process – namely, the background check, including employment verification and criminal history checks – before administering the medical components of the application process. The court held, therefore, that the medical examination process was premature, and that the employer could not penalize the applicants for failing to disclose their HIV-positive status.

Although this is a Ninth Circuit case (which includes California, Nevada, Arizona, Washington, Oregon, Idaho, Wyoming, and Alaska), it is a (surprisingly) clear interpretation of the ADA. Hiring procedures must strictly follow the sequence prescribed by the ADA. Don't put the cart before the horse – complete all non-medical portions of your hiring process before administering any medical examinations to applicants.

FIRM NEWS: Z&R's Growth Spurt Continues

Zashin & Rich Co., L.P.A. recently welcomed two new faces to its Employment and Labor Group and expanded its client services to include workers' compensation defense.

Attorney Christina M. Janice brings more than fourteen years of experience in trial advocacy and appellate practice in Ohio and federal courts. Christina practices in employment discrimination defense with an emphasis on multidistrict litigation ("MDL"), complex federal litigation and class actions. Christina has served in strategic leadership positions in nationwide cases, involving both litigation and litigation management. She defends employers in all actions involving alleged violations of state and federal discrimination laws and all other employment related torts. Christina is admitted to practice law in Ohio, the U.S. District courts for the Northern and Southern Districts of Ohio, and the U.S. District Court for the Eastern District of Texas.

Christina earned her Bachelor of Arts, cum laude , from John Carroll University and her law degree from the Cleveland-Marshall College of Law. She is a candidate for master's degrees at both Concordia University, St. Paul and Trinity Evangelical Divinity School. In addition to her legal practice, Christina serves on the ministry staff at Our Redeemer Lutheran Church in Solon, Ohio and works toward the revitalization of urban and suburban neighborhoods in Greater Cleveland. She is a published author, and her work includes contributions to The Encyclopedia of Cleveland History and various continuing legal education publications.

Attorney Steven P. Dlott has also joined Z&R's Employment and Labor Group, bringing with him extensive experience in litigating workers' compensation matters before the Industrial Commission and in the courtroom. Steve's expertise also includes advising employers on preventative claims administration and aggressive claims management, as well as defending employers before the Industrial Commission and at trial.

Steve's legal career includes eleven years as an Assistant Attorney General, five of which was spent defending the Ohio Bureau of Workers' Compensation, where he developed close working relationships with Bureau officials and department heads. For the past five years, Steve has defended employers at a prominent workers' compensation defense firm. During that time, Steve defended employers at all levels before the Industrial Commission and at trial and appellate courts throughout the State of Ohio. Steve has also successfully litigated cases before the Ohio Supreme Court.

Steve earned his Bachelor of Arts from New York University. He obtained his law degree at Case Western Reserve University, where he was a member of Case Western Reserve Law Review.

In addition to his legal practice, Steve serves on the Cleveland Bar Association's Unauthorized Practice of Law Committee and the Association's Workers' Compensation Subcommittee. Steve is also active in University Heights city government, serving as a member of the Citizens Advisory Lay Financial Committee.

Zashin & Rich extends a warm welcome to Christina and Steve.

DISCRIMINATING TASTES: Sixth Circuit Finds no Pretext in Firing Based on Employee’s Derogatory Comment

By Lois A. Gruhin

Sometimes things are exactly as they seem – no mystery, no mishap, no cover-up. That was essentially the Sixth Circuit Court of Appeals' determination in the case of Hagedorn v. Veritas Software Corp. The employer in that case fired an employee for making a racially derogatory comment about a customer. The employee tried to prove that the employer's reason for the termination was really pretext for firing him because of his age. The Sixth Circuit did not see it that way.

At his time of hire, the employee was sixty years old. The employer, a software company, hired the employee to work as a sales representative in a newly formed division. The company hired the employee in part based on the employee's previous work experience with one of its key customers. The key customer was the employee's only account during his employment.

About four months into his employment, the employee had a telephone conversation with his supervisor that was inadvertently recorded on the key customer's voice mail. During this telephone conversation, the employee made a racially offensive comment and his supervisor laughed in response.

The key customer later heard the comment on his voicemail, found it offensive and forwarded the voice mail to the key customer's Human Resources Director. The Human Resources Director, in turn, forwarded the voice mail to the employer's Chief Administrative Officer. The key customer wanted both the employee and his supervisor off of its account.

In response, the employer fired the employee for making the remark. The employer reassigned the account to another employee who was forty-four years old at the time. The employer issued the supervisor a written warning and temporarily removed him from the account.

The employee filed a Complaint in federal court in Ohio alleging that his employer fired him based on his age in violation of the Age Discrimination in Employment Act ("ADEA"). The trial court found in favor of the employer, finding that the employee failed to establish a prima facie case of age discrimination.

On appeal, the Sixth Circuit held that the employee met his initial prima facie burden by showing that he was over forty, was qualified for his job, was terminated, and was replaced by a substantially younger individual. The employee still had to overcome the employer's legitimate reason for termination-the offensive comment on the client's voice mail. The employee, caught on tape, obviously could not refute that he made the remark. Nonetheless, he attempted to prove that his termination was pretext for age discrimination in other ways.

First, he claimed that his termination had no factual basis. The employee argued that the employer terminated him because he failed to appreciate the gravity of the situation and failed to acknowledge that his conduct had been inappropriate and in violation of Company policy. The employee claimed that he did appreciate and acknowledge the gravity of his conduct and the violation because he offered to apologize. The court gave this argument short shrift. Regardless of the employee's remorse, he did not dispute making the comment – the legitimate, non-discriminatory reason for his termination.

Second, the employee claimed that his age motivated his termination because other employees at the company made derogatory comments. The court also rejected this argument. The employee presented no proof that the employees who allegedly made derogatory comments wielded any influence over the decision-makers who terminated the employee.

Finally, the employee argued that the derogatory comment was not a sufficient reason to terminate his employment because his supervisor was involved in the incident but not fired. The court rejected this argument because their positions were too different to be "similarly situated." Moreover, the employee and his supervisor did not engage in comparable conduct. The employee actually made the comment. His supervisor laughed in response. The court held, therefore, that the employee failed to show that his "discriminating taste" in commentary was not the real reason for his termination.

This case demonstrates a tough lesson – that virtually any employee termination can result in litigation. It also demonstrates, however, that an employer that can clearly establish a legitimate, non-discriminatory reason for an employee termination can defeat such a claim. The employer in this case prevailed by proving that it has discriminating taste, too – in employing people who do not offend its customers.

AFL-CIO DEFECTORS SHAKE IT UP: Resurgence In Union Organizing Likely To Follow

By Robert W. Hartman

The American Federation of Labor and Congress of Industrial Organizations ("AFL-CIO"), the largest federation of North American labor unions, saw quite a shake-up in membership recently.

Within a week's time, three large unions left the federation: the Service Employees International Union ("SEIU") and International Brotherhood of Teamsters ("Teamsters") defected on July 25, followed by the United Food and Commercial Workers ("UFCW") on July 29. Another major affiliate, UNITE HERE, boycotted the federation's convention this year and also may defect.

The SEIU, Teamsters, and UFCW (as well as UNITE HERE) are members of the Change to Win Coalition, which describes itself as a "growing coalition...focused on rebuilding the labor movement through a commitment to growth and organizing." Other Change to Win members include the Laborers' International Union of North America (LIUNA), United Brotherhood of Carpenters and Joiners of America, and the United Farm Workers.

The root of labor's current shakeup is a fundamental disagreement over how to strengthen union influence: politics versus membership. Union membership rates among private-sector workers have steadily fallen from 33% in the 1950s to less than 8% today. In contrast to the AFL-CIO, Change to Win vows to focus more on recruiting and less on politics activism.

Employers, for their part, can expect an increase in grassroots labor-organizing activities. Employers susceptible to unionizing may observe increased union campaigning in the near future, especially from Change to Win affiliates no longer paying dues to the AFL-CIO. Those unions are now free to budget that money for organizing activities aimed at increasing union membership.

Employers can manage union pressures with preparation and education. As a proactive measure, smart employers will have an understanding of what competing employers in their industry – both unionized and non-unionized – offer their employees. All employers should understand how they stack up against their competition. This sort of analysis can at least prepare and educate an employer as to the types of issues that they could face by virtue of a union organizing campaign.

For employers not currently facing an organizing campaign, it is imperative to develop a communication strategy to build employee loyalty and to counteract any potential unionizing efforts. To do so, employers should determine how to effectively convey the company's message to the entire organization.

Identifying the early signs of labor organizing efforts can affect how well an employer can manage an organizing campaign. It is imperative for employers to identify immediately that a union is attempting to organize their facility even before the union files an election petition with the National Labor Relations Board.

Finally, employers in the midst of a union campaign must train and monitor supervisors to ensure that they properly manage employees within the confines of the law.

PICK YOUR POISON: Your Employee is either Exempt or Non-Exempt: But NOT Both

By Michele L. Jakubs*

According to the Department of Labor ("DOL"), the Fair Labor Standards Act ("FLSA") bars employers from classifying one employee as both exempt and nonexempt.

Nonexempt employees are entitled to overtime pay. Hours that an employee works over 40 hours in a work week are generally considered overtime. Nonexempt employees are entitled to overtime pay at a rate of one and a half times their regular rate. On the other hand, exempt employees are not entitled to overtime pay; regardless of the number of hours they work.

In today's complex corporate world, employers are faced with the following enigma – can an employee work for the same employer in two separate jobs, one exempt and one nonexempt, and be classified as both exempt and nonexempt? In an opinion letter, the DOL answered the question with a resounding – No!

Under the FLSA, in order for a position to be exempt, the employee's primary duty must be exempt work. "Primary duty" means the "principle, main, major or most important duty that the employee performs." Factors to consider include the relative importance of the exempt duties as compared with other types of duties; the amount of time spent performing exempt work; the employee's relative freedom from direct supervision; and the relationship between the employee's salary and the wages paid to other employees for the kind of nonexempt work performed by the employee. The amount of time an employee spends doing exempt work is a useful guide, but not necessarily determinative of an employee's status. Employees who spend more than 50% of their time performing exempt work generally satisfy the "primary duty" requirement.

What is the impact to employers with an employee holding two positions? If an employee performs primarily exempt work, employers do not have to pay for overtime. If the employee performs primarily nonexempt work, employers must pay time and a half the regular rate for all overtime hours worked.

If an employer must pay overtime, an employer must determine the employee's overtime rate. If the two positions have the same rate, an employer must pay the employee one and a half times the regular hourly rate. If the employer pays two different rates for the positions, an employer must compute the overtime pay rate by using either of two methods.

The first method uses the weighted average of the two hourly rates. Here, the earnings from both rates are added together and divided by the total number of hours worked in both positions. The employer must pay the employee one and a half times this weighted average rate for overtime. The second method requires an employer to pay the employee one and a half times the rate of the work being performed during the overtime hours. The employer and employee must agree in advance to utilize the second method. Clearly, employers must ensure that they pay employees who occupy two different positions the appropriate rate as set forth by the DOL.

*Michele L. Jakubs practices in areas of employment litigation and wage and hour compliance and administration. For more information concerning FLSA or changes to the FLSA Regulations, please contact Michele at (216) 696-4441 or mlj@zrlaw.com.