EMPLOYMENT LAW QUARTERLY | Winter 2008, Volume X, Issue i

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• NLRB Has Legendary September To Remember
• Supreme Court Bars Common Law Claim For Age Discrimination
• EPLI UPDATE: Timely Notify Your Carrier Of A Potential Claim
• HOTMAIL – NLRB Limits Employees Use Of Company Email To Further Union Activity
• UPDATE: Changes To The Ohio And Federal Minimum Wage
• Z&R Shorts

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NLRB Has Legendary September To Remember

By George S. Crisci*

The National Labor Relations Board (“NLRB”), which regulates and enforces the National Labor Relations Act (“NLRA”), has been criticized in recent years for its tremendous backlog of undecided cases. At times, hundreds of cases were pending before the NLRB for a final decision, some of which languished for years. Several of those cases involved major issues that have a significant impact upon the process of unionization and collective bargaining in private sector employment.

In September 2007, the NLRB made a sizeable dent in its backlog issuing decisions in dozens of these cases. The five-member NLRB (three of whose terms expired at the end of 2007) put its stamp on federal labor law by issuing six major decisions during a three-day period. Given that the three-person majority of the NLRB consisted of Republicans appointed by President Bush, all of these decisions favored employers and/or disfavored unions.

These decisions were each decided along a party-line 3-2 vote and impact a broad range of issues covering the spectrum of federal labor law.  Here is a brief summary of those rulings and the issues they decided:

• “Permanent” Employment Status of Replacement Workers:  Striking employees traditionally are not entitled to reinstatement to their old jobs once a labor dispute ends if they were “permanently” replaced during the strike. They are entitled to reinstatement only when the employment of the permanent replacement ends.  In Jones Plastic & Engineering Co., 351 NLRB No. 011 (Sept. 27, 2007), the NLRB overruled a ten year precedent and held that persons hired as “at-will” employees to replace striking employees (who are usually not “at-will” employees) can be considered “permanent replacements.” Consequently, striking employees who are replaced by “at will” employees are not entitled to immediate reinstatement.
  
  
• Refusal to Hire a Union “Salt”:  A “salt” is a person who is sent by a union to a non-unionized workplace to obtain employment and attempt to unionize the employees.  More than ten years ago, the U.S. Supreme Court held that a “salt” can be included as an “employee” who is entitled to protection under the NLRA. In Toering Electric Co., 351 NLRB No. 018 (Sept. 29, 2007), the NLRB held that a “salt” who is refused employment is not protected under the NLRA unless it can be proven that the person is “genuinely interested in seeking to establish an employment relationship with the employer.” The NLRB explained that it was attempting to address certain “abusive tactics” by labor unions, such as having persons who were not interested in obtaining employment submit applications and then engage in conduct that was designed to motivate an employer not to hire them so that they could file unfair labor practice charges. 

In May of 2007, the NLRB changed the traditional remedy for salts who were unlawfully refused employment. Previously, the remedy for an unlawful discharge or refusal to hire included the employer’s payment of backpay to the employee for the period from the unlawful act until the employer made a valid offer of employment. In Oil Capitol Sheet Metal, Inc., 349 NLRB No. 118 (May 31, 2007), the NLRB held that a full backpay remedy is unavailable unless the union proves that it would have allowed the salt to continue working indefinitely for the employer and would not have moved the salt to a different employer.  In addition, the salt would not be entitled to employment if the salt would have left the job before the NLRB issued a decision that the refusal to hire was unlawful.

• Challenges to Voluntary Recognition of a Union: For decades, unions have obtained “voluntary recognition” as a collective bargaining representative without a secret-ballot election by presenting the employer with union authorization cards from a majority of the employees to be represented and asking the employer to recognize the union (called a “card-check majority”). When voluntary recognition occurred, a union’s status as bargaining representative could not be challenged by the employees for a “reasonable period of time,” which often provided the union with sufficient time to negotiate a labor contract (which then generally bars challenges for up to three more years). In Dana Corporation, 351 NLRB No. 028 (Sept. 29, 2007), the NLRB held that the voluntary recognition of a union can be challenged by a secret-ballot election. Employees who opposed unionization could file with the NLRB a petition supported by 30 percent of the employees to be represented within 45 days after receiving notice of both the voluntary recognition and the employees’ right to seek an election challenging the recognition.  Absent such notice, any voluntary recognition – even if a labor contract subsequently is negotiated – can be invalidated by a timely-filed petition for a secret-ballot election. 

This is the second decision in 2007 that weakened a union’s ability to maintain its status as a bargaining representative. In Truserv Corporation, 349 NLRB No. 23 (Jan. 31, 2007), the NLRB overturned a ten year precedent regarding the disposition of a decertification petition filed when unfair labor practice charges against an employer are pending but those charges subsequently are settled. The NLRB previously required that any petition challenging the union’s majority status that is filed after the employer’s allegedly unlawful conduct, and before the settlement, must be dismissed. Now, a decertification petition filed after the occurrence of alleged unfair labor practices by the employer, and prior to settlement of those charges, should not be dismissed where there has been no finding or admission that the employer actually engaged in the alleged wrongful conduct.

• Employer Lawsuits Against Unions: For many years, an employer committed an unfair labor practice if it unsuccessfully sued a union in retaliation for the union engaging in statutorily protected activities regardless of whether the employer had an objectively reasonable basis for suing the union. In BE & K Construction Co., 351 NLRB No. 029 (Sept. 29, 2007), the NLRB held that an employer’s reasonably based, but unsuccessful, lawsuit against a union is not an unfair labor practice, even if the employer had a retaliatory motive for doing so.  Consequently, it will be easier for employers to sue a union in response to the union’s activities without running the risk of committing an unfair labor practice.
  
  
• Limiting “Make-Whole” Remedies Based Upon Improperly Obtained Evidence of Employee Misconduct:  Employees who suffer an adverse employment action (such as a discharge) because of an employer’s unfair labor practices traditionally are entitled to a “make-whole” remedy, such as reinstatement with backpay.  In Anheuser-Busch, Inc., 351 NLRB No. 040 (Sept. 29, 2007), the NLRB established an important exception by overruling cases decided more than ten years ago. The NLRB held that the employer had committed an unfair labor practice when it installed and used hidden surveillance cameras without first negotiating with the union, and it ordered the employer to cease and desist from using the hidden surveillance cameras. However, the NLRB refused to provide a make-whole remedy to 16 employees who were discharged or disciplined for misconduct that had been detected through the use of the hidden cameras. Rather, the NLRB held that these employees were disciplined “for cause,” so they were prohibited under the NLRA from receiving reinstatement and/or backpay. It did not matter that the evidence had been improperly obtained through the employer’s unlawfully implemented hidden cameras.
  
  
• Proof of Mitigation of Damages:  An employer traditionally has been permitted to challenge a backpay award to an employee who was unlawfully discharged or suspended by contending that the employee failed to mitigate damages. In the past, the employer had the burden of showing both that there were substantially equivalent jobs available to the employee and that the employee unreasonably failed to apply for those jobs. In St. George Warehouse, 351 NLRB No. 042 (Sept. 29, 2007), the NLRB shifted to the employee the burden of showing that he or she took reasonable steps to seek substantially equivalent jobs that were available.  This decision potentially makes it easier for employers to reduce the size of a backpay award and more difficult for employees to obtain a full backpay award unless they have taken reasonable steps to find another job when such employment opportunities were available.

With the start of 2008, the terms of three Board members (two Republicans and one Democrat) expired, leaving the NLRB with only two members. Until those vacancies are filled, few decisions will be issued, and none will be of the significance summarized above.

The lasting impact of these major decisions is uncertain. The Democratic majority in Congress has already introduced legislation to overturn many of these decisions.  While a Presidential veto of any such legislation by President Bush is a virtual certainty, there is no telling who will hold that power after the 2008 election.

For the present, however, employers should enjoy the improvements to the labor front that have been brought about by these decisions and consult with experienced labor counsel to determine how best to take advantage of them.

*George S. Crisci is an OSBA Certified Specialist in Labor and Employment Law.  George represents employers in all facets of employment law, and both public and private sector management in actions before the NLRB.  For more information concerning any labor or employment issue, please contact George at 216.696.4441 or gsc@zrlaw.com.

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Supreme Court Bars Common Law Claim For Age Discrimination

By Jason Rossiter*

Finding that the Ohio Civil Rights Act (“OCRA”) provides a “full range of remedies” for plaintiffs alleging discrimination due to their age, the Ohio Supreme Court recently upheld dismissal of a lawsuit brought outside of the statute, pursuant to the common law under a theory of violating public policy.

In Leininger v. Pioneer Natl. Latex, 2007-Ohio-4921, the Ohio Supreme Court closed a loophole previously available to plaintiffs that fail to timely file age discrimination lawsuits. The OCRA, R.C. 4112.01, et seq., provides a statutory framework for the prosecution of age discrimination lawsuits including a 180-day limitations period. Compared to the four-year limitations period applicable to a common law public policy claim, the shorter statutory requirement favors employer defendants.

Marlene Leininger, age 60, claimed she was wrongfully discharged by her employer, Pioneer National Latex (Pioneer), in 2001. Leininger felt many of her responsibilities as a human resources administrator were ultimately given to a 21 year old co-worker. Leininger filed her lawsuit more than 180-days after her termination. The Ashland County Court of Common Pleas granted Pioneer’s motion for summary judgment finding that Leininger missed the deadline for filing a statutory claim and that Ohio law did not provide her with an alternative common law cause of action.

The Fifth District Court of Appeals, relying on a 1997 Supreme Court of Ohio decision, Livingston v. Hillside Rehabilitation Hospital, 1997-Ohio-155, reversed the trial court’s decision and vacated the order granting summary judgment. Livingston, decided without an opinion, reversed an appellate decision that refused to allow an age-based common law claim for wrongful discharge.

The Leninger Court reversed and reinstated summary judgment for the employer. The Court found that the statute had been amended since Livingston to expand the range of remedies available to victims of age discrimination. Consequently, there are no longer “gaps” or limitations in the statute necessitating the recognition of a separate common law right of action. The Court noted that the statue allows a plaintiff to obtain a variety of remedies including a cease and desist order barring further discriminatory acts; reinstatement with backpay; restored seniority and fringe benefit credit; and all damages, including punitives and attorneys fees. While limited to claims of age discrimination, the Court’s rationale suggests that its prohibition on public policy claims would also apply to other protected classifications under the Ohio Civil Rights Acts including sex, national origin, religion, and disability.

Although Leininger is a favorable decision for Ohio employers, it does not absolve employers of potential liability for age discrimination. Quite the opposite, Leininger recognizes that remedies are available to employees pursuant to the statute, including punitive damages and attorneys fees. The Leininger decision, however, is useful when defending a claim brought in an Ohio court outside of the 180-day limitations period.

*Jason Rossiter has extensive experience representing employers in litigating and arbitrating workplace disputes in Ohio, California and throughout the country. For more information about age discrimination or any other employment-related tort, please contact Zashin & Rich at 216.696.4441.

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EPLI UPDATE: Timely Notify Your Carrier Of A Potential Claim

By Stephen S. Zashin*

Employers routinely maintain insurance coverage for the defense of claims brought against them by their employees. This type of insurance is commonly known as Employment Practices Liability Insurance (“EPLI”) and often includes the defense of employment discrimination claims. Generally, EPLI policies include a “timely notice” provision requiring the insured employer to notify the carrier of a potential claim “as soon as practicable,” or similar language to that effect. As one employer recently discovered, the failure to give an insurance carrier the notice required under an EPLI policy could result in a loss of coverage for the claim.

In American Ctr. for Int’l Labor Solidarity v. Federal Ins. Co., 518 F. Supp. 2d 163 (D.C. 2007), a federal district court held that an employer who failed to provide its carrier with notice of a potential claim for 17 months violated a condition precedent of the insurance contract and was not entitled to coverage under the policy. The dispute between the insurance company and its insured involved the definition of a “claim” requiring notice.

In August 2002, the employer received notice that a former employee had filed a charge of discrimination against it with the Equal Employment Opportunity Commission (“EEOC”). The initial notice indicated that no action was required of the employer at that time. Later, in November 2002, the employer received a second, more detailed notice of the charge, requesting that the employer either agree to participate in mediation or submit a position statement. The employer declined the request for mediation and, through its outside counsel, submitted a position statement on December 19, 2002 setting forth its analysis of the facts of the charge.

Following its investigation, the EEOC dismissed the charge of discrimination and issued a Right-to-Sue letter to the employee. On December 12, 2003, the employee filed a race discrimination lawsuit against the employer in federal court.

On January 20, 2004, the employer notified its carrier of the claim and requested that its outside counsel be assigned to defend the lawsuit. In March 2004, the insurer denied coverage because the employer had failed to give timely notice (defined in the policy as “as soon as practicable”) of the claim. According to the policy, a “claim” included a “formal administrative or regulatory proceeding.”

The employer then sued the insurer for coverage, arguing that the charge of discrimination before the EEOC was not a “formal” administrative proceeding because the EEOC could not adjudicate liability and used informal methods to resolve charges of discrimination. The court disagreed and concluded that administrative proceedings before the EEOC are “formal” because nearly all aspects are prescribed by statute or regulation; the EEOC’s investigation can produce significant consequences for the parties; and the EEOC is empowered to take testimony, receive evidence, subpoena witnesses, and compel witness attendance through initiation of enforcement proceedings.

While the court noted that the determination of the EEOC does not control the outcome of the lawsuit, it reasoned that the proceedings do have consequences to resulting litigation. By failing to give the insurer the notice required under the policy and unilaterally electing to waive mediation, the court found that the employer prejudiced the insurer’s right to investigate and potentially resolve the claim.

The effect of this decision on employer’s EPLI policies depends on whether the policy contains language defining a federal or state administrative hearing as a “claim” requiring notice to the insurance carrier. This court’s decision should serve as a reminder to employers to review the terms of their EPLI policies and provide notice to their insurance carriers immediately so as to avoid a loss in coverage over a claim.

Zashin & Rich Co., L.P.A. is approved to defend claims covered by insurance policies carried by most EPLI carriers. For more information about these carriers, please contact Stephen Zashin.

*Stephen Zashin, an OSBA Certified Specialist in Labor and Employment Law, has extensive experience defending employers involved in employment litigation, as well as administrative hearings before the Equal Employment Opportunity Commission and various state administrative civil rights agencies. For more information about the defense of an administrative hearing, lawsuit, or EPLI, please contact Stephen at 216.696.4441 or ssz@zrlaw.com.

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HOTMAIL – NLRB Limits Employees Use Of Company Email To Further Union Activity

By Jon M. Dileno*

On December 16, 2007, the National Labor Relations Board (“NLRB”) rendered a much anticipated decision in The Guard Publishing Company d/b/a/ The Register-Guard, 351 NLRM No. 70. In a 3-2 split, the NLRB held that “employees have no statutory right to use [an employer’s] email system for Section 7 purposes.” The majority characterized the ruling as a natural extension of the well-established precedent that an employee has “‘no statutory right…to use an employer’s equipment or media,’ as long as the restrictions are nondiscriminatory.” Under the decision, an employer can lawfully craft a policy restricting the use of the employer’s email system for non-work-related messages, including those related to union activity.

The NLRB based its decision on the premise that employers have a “basic property right” to “regulate and restrict employee use of company property.” Email and computer equipment qualify as company property and, therefore, an employer has a legitimate business interest in maintaining the efficient operation of its email system. The NLRB viewed Register-Guard’s Communications Systems Policy (“CSP”) as a codification of this legitimate business interest in company property. The CSP stated in relevant part:

Company communication systems and the equipment used to operate the communication system are owned and provided by the Company to assist in conducting the business of The Register-Guard. Communications systems are not to be used to solicit or proselytize for commercial ventures, religious or political causes, outside organizations, or other non-job-related solicitations.

In 2000, Register-Guard disciplined Suzi Prozanski (“Prozanski”), a company employee and the union president, for violating the CSP. Prozanski repeatedly used Register-Guard’s email system to distribute union-related messages to employees. She received written warnings for three specific violations. Two of the emails solicited employees to support the union’s collective bargaining efforts and to participate in union activities. The other email clarified facts related to a union rally and was otherwise not a solicitation.

In 2002, an administrative law judge (“ALJ”) ruled that Register-Guard discriminatorily enforced the CSP, according to the NLRB standard endorsed in Fleming Co., 336 NLRB 192 (2001), enf., denied 349 F.3d 968 (7th Cir. 2003). Under the Fleming framework, “[i]f an employer allows employees to use its communications equipment for non-work related purposes, it may not validly prohibit employee use of communications equipment for Section 7 purposes.” The ALJ found that Register-Guard permitted its employees to use email for various personal messages, including baby announcements, jokes, party invitations, and the occasional offer of sports tickets or request for services such as dog walking. Consequently, the ALJ determined that the company had committed an unlawful discriminatory practice consistent with Fleming.

The NLRB reversed the ALJ’s decision and applied a narrower, more employer friendly standard for determining whether an employer’s conduct discriminates against Section 7 activities. Now, unlawful discrimination must involve “disparate treatment of activities or communications of a similar character because of their union or other Section 7-protected status.” Under this new framework, the NLRB must determine the nature of each individual union-related communication to effectively compare it to “similar” non-union communications. For example, in Register-Guard the NLRB held that the company could legally prohibit Section 7 communications that are solicitous because there was no evidence that the company permitted employees to use company email to solicit support for any group or organization. The Board found email to be more similar to employer owned equipment like telephones and bulletin boards, which may be restricted during nonworking hours, than to face-to-face solicitation, which cannot be restricted during nonworking hours.

The NLRB’s decision in Register-Guard increases the employer’s ability to restrict certain non-work communications, while allowing others. Under this new framework, the employer may draw a line between charitable solicitations and non-charitable solicitations, between solicitations of a personal nature (e.g., car for sale) and solicitation for the commercial sale of a product (e.g., Avon products), between invitations for an organization and invitations of a personal nature, between solicitations and mere talk, and between business-related use and non-business related use. It is important that employers review their current policies and procedures relative to the use of company email and enforce them uniformly.

*Jon M. Dileno represents employers in the full spectrum of labor and employment matters in both the public and private sector. Jon’s experience in collective bargaining matters extends beyond negotiating labor contracts and covers the full gamut of collective bargaining proceedings. For more information concerning organized labor protected activity or any other labor issue, please contact Jon at 216.696.4441 or jmd@zrlaw.com.

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UPDATE: Changes To The Ohio And Federal Minimum Wage

By Michele L. Jakubs*

On May 25, 2007, President Bush signed into law the Fair Minimum Wage Act of 2007 (the “Act”). The Act amended the Fair Labor Standards Act (“FLSA”) of 1938 and increased the federal minimum wage to $5.85 an hour on July 24, 2007, and will further increase the federal minimum wage to $6.55 an hour on July 24, 2008, and to $7.25 an hour on July 24, 2009. The FLSA provides additional regulations that apply to all employees that include child labor, recordkeeping, and enforcement provisions in addition to rules relative to overtime compensation and the minimum wage.

The July 24, 2008 increase to the federal minimum wage will have no immediate impact on most employers in states, such as Ohio, that have a higher state minimum wage. In November 2006, Ohio voters approved Statewide Issue 2. Issue 2, an Amendment to Ohio’s Constitution, raised Ohio’s minimum wage effective January 1, 2007. Under the Ohio Amendment, Ohio’s minimum wage adjusts annually to reflect inflation as tracked by changes to the consumer price index. On January 1, 2008, the Ohio minimum wage increased to $7.00 an hour. The Ohio Amendment also requires employers to maintain certain payroll information and provide it, free of charge, to their employees upon request. Moreover, employers must furnish new employees with certain information – including the employer’s name, address, telephone number, email address, website, fax number, and the name and address of the employer’s statutory agent. Employers must keep this information current and provide updates to current employees within 60 days of a change.

Allegations of wage and hour violations comprise one of the largest areas of potential liability for employers. Wage and hour litigation has increased 300% over the past decade and lawsuits based on FLSA violations are one of the fastest growing sources of employment-based class/collective action litigation. Wage and hour violations that commonly result in litigation include: misclassifying employees as “exempt” and failing to pay them overtime; failing to pay non-exempt employees overtime, including overtime not approved in advance; failing to pay for time worked “off the clock,” including allowing employees to arrive early to prepare for work or stay late to “close up;” and granting compensatory or “comp time” in lieu of overtime pay.

Employers should regularly conduct an audit of their wage and hour practices to minimize the risk associated with wage and hour violations. These audits include a thorough review of employee classification and payroll records and analysis of employment policies to ensure compliance with the FLSA. Taking proactive steps will help decrease an employer’s exposure to wage and hour liability, deter administrative agency investigation, and minimize exposure to litigation.

*Michele L. Jakubs practices in all areas of employment litigation and wage and hour compliance and administration. For more information concerning changes to the minimum wage or any other aspect of the FLSA, please contact Michele at 216.696.4441 or mlj@zrlaw.com.

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Z&R Shorts

Zashin & Rich Welcomes Pat Hoban to Its Employment and Labor Group
Patrick J. Hoban represents public and private sector employers in labor relations and employment issues. Pat, previously an attorney with Littler Mendelson’s Cleveland office (formerly known as Duvin, Cahn & Hutton), represents municipal clients in collective bargaining, labor arbitrations, unfair labor practice proceedings and provides day-to-day counsel to public employers on matters including contract administration, work rules, compliance with state and federal employment regulations and civil service issues. Pat has also represented and advised large national and local private sector employers on a variety of issues arising under labor contracts and the National Labor Relations Act. Additionally, he has successfully represented clients before the Ohio State Employment Relations Board, the National Labor Relations Board and in Federal Court.
Please join us in welcoming Pat to Z&R!


George Crisci Designated a 2008 Ohio Super Lawyer
Zashin & Rich Co., L.P.A. is pleased to announce that George S. Crisci has been named as a 2008 Ohio Super Lawyer in the field of labor and employment law. Only five percent of Ohio attorneys receive this honor each year. Super Lawyers is a list of outstanding lawyers from more than 60 practice areas who have attained a high degree of peer recognition and professional achievement. The exclusive list of Ohio Super Lawyers is published annually in the January issue of Cincinnati Magazine, Northern Ohio Live and Ohio Super Lawyers Magazine.
Congratulations, George!


Upcoming Speaking Engagements

On January 24, 2008, Stephen Zashin moderated a panel discussion on the topic of “Claims Management: Fostering an Integrated Relationship between Insurers and Defense Counsel to Ensure Timely Resolution” at the Employment Practices Liability Insurance Conference presented by the American Conference Institute in New York, NY. The discussion included tips for streamlining the claims process; key reasons why claims are denied; top ways defense counsel can stay out of trouble with carriers and ensure that they will be used again; establishing a mutual understanding of expectations from the defense counsel and carrier perspectives; understanding various perspectives when weighing the factors to settle or try a case; controlling defense costs; who has the final say in whether to settle or try a case; and notice provisions: untangling the uncertainties.

George Crisci will speak at the State and Local Government Bargaining & Employment Law Committee of the Section of Labor and Employment Law of the American Bar Association’s Midwinter Meeting in Puerto Vallarta, Mexico on February 1, 2008. George will present “Mandatory Bargaining Subjects” to the committee.

On April 16, 2008, Steven Dlott will speak at the Second Annual Advanced Workers’ Compensation seminar being held in Cleveland. Steve will present “Claims Management Best Practices to Minimize Costs and Maximize Efficiency” and “Employer Pitfalls and Protections.” The event will be held at the Hilton Garden Inn, 1100 Carnegie Avenue, Cleveland, Ohio with registration at 8:00 a.m. Please contact Sterling Education Services, Inc. at (715) 621-00855-0498 or go to www.sterlingeducation.com for more information.

George Crisci will present a private client training in January on the topic of “Proper Performance Document Techniques.” Stephen S. Zashin will present two private trainings in January and February to clients on various topics associated with the FMLA.


Legal Brief The IRS recently issued the 2008 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business. Beginning January 1, 2008, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be 50.5 cents per mile for business miles driven, compared to 48.5 cents per mile for 2007.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile conducted by Runzheimer International, independently contracted by the IRS.

Supreme Court Strictly Limits Public Policy Wrongful Discharge Claims

*By Stephen S. Zashin

In a 5-2 decision issued yesterday, the Ohio Supreme Court held that an at-will employee who is terminated from employment while receiving workers’ compensation benefits may not pursue a common law tort action against the employee’s employer for wrongful discharge based on public policy. In Bickers v. W. & S. Life Ins. Co., 2007-Ohio-6751, the Court held that recovery pursuant to the anti-retaliation provision of Ohio’s workers’ compensation statute, R.C. 4123.90, is the exclusive remedy for plaintiffs who allege wrongful termination while receiving workers’ compensation benefits.

The decision distinguishes the court’s previous ruling in Coolidge v. Riversdale Local School Dist., 100 Ohio St. 3d 141, 2003-Ohio-5357. In Coolidge, the Court held that a teacher who was terminated while receiving workers’ compensation benefits could sue her employer based on a violation of public policy. As a public school teacher, Coolidge was not an at-will employee and could be terminated only with “good and just cause” pursuant to R.C. 3319.16.

The Bickers decision limits the application of Coolidge to public policy claims brought by public school teachers, and others similarly situated. As noted by the Court, “the Coolidge court decided a very limited issue. Specifically, the Coolidge court held that judicial inquiry is warranted into whether an employer acted contrary to public policy when it discharged an employee when R.C. 3319.16 is implicated. *** Coolidge does not create a cause of action for an at-will employee who is terminated for nonretaliatory reasons while receiving workers’ compensation.”

Plaintiffs, seeking to evade the limitations period and more limited remedies contained in the workers’ compensation statute, have relied on Coolidge to allege a common law claim of wrongful discharge against employers who terminate employees while they receive workers’ compensation benefits. The Bickers decision eliminates this cause of action with respect to at-will employees and allows only claims brought by public school teachers and presumably others with statutory employment protection.

While Bickers is a favorable decision for Ohio employers, employers are cautioned to continue to comply with the nonretaliation provision contained in Ohio’s workers compensation statute.

*Stephen S. Zashin is an OSBA Certified Specialist in Labor and Employment Law and has extensive experience in all aspects of workplace law, including wrongful discharge litigation. For more information about defending allegations of public policy discrimination, please contact Stephen at 216.696.4441 or ssz@zrlaw.com.

DHS Issues Revised Form I-9

*By Patrick O. Peters

For the first time in 17 years, the U.S. Citizenship and Immigration Services department, a division of the Department of Homeland Security (“DHS”), has revised the Employment Eligibility Verification Form (“Form I-9”). The new form is valid as of November 7, 2007. DHS is in the process of posting a Notice in the Federal Register that will allow employers 30 days to transition to the new form.

All employers are required to complete a Form I-9 for each new employee hired in the United States. Form I-9 does not have to be filed with any government agency. However, employers must retain each employee’s Form I-9 for a period of three years from the date of hire or one year past termination, whichever is longer.

The revised Form I-9 seeks to achieve full compliance with the document reduction requirements of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996, which reduced the number of documents employers may accept from newly hired employees during the employment eligibility verification process.

The revised Form I-9 removes five documents from the list of approved documents to verify employment and identity. These documents include: Certificate of U.S. Citizenship (Form N-560 or N-570); Certificate of Naturalization (Form N-550 or N-570); Alien Registration Receipt Card (Form I-151); the unexpired Reentry Permit (Form I-327); and the unexpired Refugee Travel Document (Form I-571). According to DHS, the forms were removed because they lack sufficient features to help deter counterfeiting, tampering, and fraud.

The most recent version of the Employment Authorization Document (Form I-766) was added to List A of the List of Acceptable Documents on the revised form. The revised list now includes: a U.S. passport (unexpired or expired); a Permanent Resident Card (Form I-551); an unexpired foreign passport with a temporary I-551 stamp; an unexpired Employment Authorization Document that contains a photograph (Form I-766, I-688, I-688A, or I-688B); and an unexpired foreign passport with an unexpired Arrival-Departure Record (Form I-94) for nonimmigrant aliens authorized to work for a specific employer.

There is no requirement that current employees complete the revised Form. Employers are advised to begin using the revised form immediately, however, for all newly hired employees.

UPDATE: Commission Approves Changes to Maternity Leave

*By Jason Rossiter

In a 4-1 vote on Thursday, the Ohio Civil Rights Commission (“OCRC”) approved regulatory changes to the Ohio Administrative Code concerning pregnancy leave. If enacted, Ohio would join 18 other states and the District of Columbia in requiring private employers to offer more generous maternity benefits than required under federal law.

If the new regulations are enacted, Ohio employers would be required to grant pregnant employees at least 12 weeks of unpaid leave. Additionally, employers would be required to offer light-duty positions to pregnant employees if those positions are offered to workers temporarily disabled as a result of an on-the-job injury. Finally, employers would be required to reinstate employees to their original job, or to a position of like status and pay, upon their return from pregnancy leave.

Unlike the FMLA, the Ohio regulations would apply to virtually all Ohio employers and employees. While the FMLA applies to employers with 50 or more employees and contains minimum service requirements, the Ohio rules would apply to employers with more than four employees and would take effect on the first day of employment. There is an exception in the rule for employers who are able to demonstrate a business necessity for not following this requirement.

If enacted, the revised regulations present an additional consideration for Ohio employers. Employees covered by the FMLA who have previously exhausted their FMLA leave due to an unrelated health condition would be entitled to pregnancy leave under Ohio law. Thus, in certain instances, it is possible that a pregnant employee could take 24 weeks of unpaid leave in a single year.

Possibly as early as November or December, the OCRC will file the revised regulations with the Joint Committee on Agency Rule Review (“JCARR”). JCARR may then decide whether the commission acted within its administrative authority when it approved the regulatory changes. With congressional approval, JCARR can invalidate all or part of the new regulations. In the alternative, the committee can approve the changes without a vote of the Ohio House and Senate. If approved, the changes would take effect in 30 days. If JCARR decides to take no action, the new rules take effect 41 days after they are filed.

Employer-friendly lobbying groups, such as the Ohio Chamber of Commerce, have indicated their opposition to the revised regulations. According to published media reports, the Chamber intends to argue that the OCRC exceeded its authority by approving the revised regulations. It remains to be seen what action JCARR, comprised of legislators of both major political parties, will take.

Employers should be aware of the potential changes to the Ohio Administrative Code and the increased protections afforded to pregnant workers. Zashin & Rich will continue to monitor this important development and provide our clients with updated information as it becomes available.

*Jason Rossiter has extensive experience representing employers in litigating and arbitrating workplace disputes in Ohio, California and throughout the country. For more information about pregnancy discrimination or any other employment-related tort, please contact Zashin & Rich at 216.696.4441.

EMPLOYMENT LAW QUARTERLY | Fall 2007, Volume IX, Issue iii

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• SOMETHING WICKED THIS WAY COMES: How to Spot and Get Ahead of a Class or Collective Action Forming in Your Workplace
• AWOL: States Enacting Family Military Leave Acts
• KNOCKED-UP: Proposed Changes Would Result in Added Protections for Pregnant Workers
• RESTORATION CONSTERNATION: Is Light Duty "Leave" Under the FMLA?
• URINE TROUBLE: Most Illicit Drug Users and Heavy Alcohol Users Are in the Workplace and May Pose Special Problem
• Z&R Shorts

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SOMETHING WICKED THIS WAY COMES: How to Spot and Get Ahead of a Class or Collective Action Forming in Your Workplace

By Stephen S. Zashin* and Christina M. Janice

Hardly a day goes by without news that another employer has negotiated a settlement to a high profile class or collective action. Recent settlements such as the $55 million FedEx race discrimination case with its $15 million attorney fee award remind us that employment law cases are the fastest growing category of class and collective actions nationwide. In fact, employment cases now constitute over 10% of all class and collective filings in federal and state courts in arguably the most plaintiff-friendly state in the nation, California.

The settlements achieved in unlawful employment practices claims brought as class actions (in which an individual has the right to opt out), collective actions (in which an individual must opt in to participate), or a hybrid of both with federal and/or state law claims, can and do skyrocket into the hundreds of millions of dollars. These spoils are shared not only by “similarly situated” current or former employees who constitute the alleged “class,” but also the specialized trial attorneys, experts, consultants and vendors who make lucrative livings from investing their resources into the cottage industry of these complex employment claims.

Experienced plaintiffs’ lawyers know that most class and collective actions are settled before trial, to reduce a company’s risk of a high jury verdict, punitive and liquidated damages, interest, spiraling attorney fees, costs, injunctive orders imposing on a company invasive and expensive programmatic relief, and a public and investor relations nightmare. This potential for big rewards with very little risk of ever going to trial has made the vehicle of class and collective litigation attractive to plaintiffs not only at the nationwide level, but locally with much smaller employers.

Because it only takes one disgruntled employee to file a class or collective action, virtually every employer bears a very real risk of the substantial disruption and expense of defending this kind of case and, in many instances, the governmental investigation that may come with it. A prudent employer will take proactive steps to recognize and protect against this highly invasive and costly form of litigation. The following general guidelines may prove useful:

1. Know Your Risks.
   Many federal and state claims for unlawful employment practices can be brought as class or collective actions, including but not limited to claims under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act (“ADEA”), the Employee Retirement Income Security Act (“ERISA”), the Equal Pay Act (“EPA”), and the Fair Labor Standards Act (“FLSA”). In fact, the fastest growing and one of the most challenging areas of employment litigation to defend is a company’s wage and hour practices, including classification of employees and methods for calculating and paying overtime.
   
   
2. Know the Players.
   Class action attorneys frequently join together in loose regional or nationwide consortiums to investigate and finance claims brought as class or collective actions. They often will form joint ventures with governmental agencies such as the EEOC to take advantage of the investigatory powers such agencies have, and the particular types of litigation they can bring. The governmental agency benefits by the partnership through the opportunity to use the pending claims to impose extensive programmatic relief on a company. This programmatic relief may require a complete overhauling of the offending company’s policies, procedures and practices, ongoing monitoring and reporting for anywhere from one to seven years, and the hiring of compliance personnel. Pay attention to the public profiles of attorneys who represent your employees in their claims of unlawful workplace practice, and the agency personnel assigned to any complaints, charges or investigations.
   
   
3. The Numbers Game.
   Class and collective actions for unlawful discrimination are not just brought for obvious cases of intentional misconduct. While an employee or group of employees may not appear to have strong individual claims, they may be able to bring a “pattern and practice” claim that can be proven through their use of economists, industrial psychologists or other statisticians. These experts are retained to scrutinize your company’s hiring, pay, promotions, discipline, and other historical data and personnel records. Their task is to calculate any statistically significant disparities they observe in terms or conditions of employment that favor one population of employees over another. Where any such disparity, real or imagined, is calculated “on paper,” the employer then faces the daunting task of digging beneath the data to justify the numbers based on legitimate, non-discriminatory reasons. That a company does not set out to discriminate does not protect it from a claim that the effects of discrimination can be found in its statistics. To protect itself, your company must monitor its own data to anticipate and remedy any statistically significant disparities in terms and conditions of employment among its workforce.
   
   
4. Launch Other Protective Countermeasures.
   There are many countermeasures that can aid a company in preventing or defending a class or collective action brought by employees, plaintiffs’ counsel and governmental agencies. Some of these are listed here. To afford your company the greatest protection:
   
   
   • Develop and retain thorough written employment policies and monitor federal and state law changes that impact your policies.
     
     
   • Develop consistent discrimination, harassment and other EEO training modules and implement them at all levels of your company.
     
     
   • Develop and enforce an employee evaluation protocol and promotional posting process that utilizes objective criteria to the greatest extent possible while reducing the risks of subjectivism, playing favorites, or vesting too much control in one member or a few members of management.
     
     
   • Develop and publicize one or more vehicles for employees to bring and have investigated confidential complaints, and consistently train your personnel assigned to handle them.
     
     
   • Maintain complete and well-organized personnel records and workforce data in such a format that your defense team can access and review it on short notice.
     
     
   • Implement and adhere to a strict document and electronic record retention policy.
     
     
   • Carefully craft and implement an alternate dispute resolution program culminating in arbitration as a contractual substitute to the forum of a courtroom.
     
     
   • Assign someone in your company to monitor the implementation and efficacy of your countermeasures with the authority to triage your management to grow and enhance these countermeasures as required.
     
     
   • Conduct annual compliance audits across all regulated aspects of your employment practices.
     
     
   • Make sure your company carries sufficient insurance to withstand a class or collective action.
     
   
   Your investment in these and other countermeasures will give you valuable intelligence on your employment practices and any “problem areas” while potentially saving you tens of millions of dollars.
   
   
5. Keep a Watchful Eye on the Horizon.
   Even the most proactive company may sense something brewing on the horizon. Rarely does a class or collective action come without warning. Monitor your EEOC or state civil rights agency charges. Look for clusters of employees or patterns of complaints and investigate them thoroughly. Know how your company is perceived among your employees, in the marketplace and on the Internet. Coordinate and communicate your company’s mission, culture, diversity and sensitivity. Take immediate and effective steps to remedy complaints brewing among groups of employees. Enable and empower your human resources personnel to get ahead of the ball by anticipating where clustered complaints may spread. Take decisive steps to stop an infectious practice that could be toxic to your company.

Protecting your company against the threat of class or collective litigation for unlawful employment practices is both a business and cultural necessity in today’s litigious environment. Your company’s vigilance can help prevent it from becoming another headline.

*Stephen S. Zashin defends employers in class and collective action litigation, pattern and practice statistical cases, compliance partnerships, and all aspects of employment related torts and violations of state and federal employment law. For more information on class and collective actions and corporate measures to protect against them, please contact Stephen at 216.696.4441 or ssz@zrlaw.com.

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AWOL: States Enacting Family Military Leave Acts

By Patrick O. Peters

While each state law varies, generally the acts allow family members of active duty military personnel to take unpaid leave prior to, immediately following, and during their family members’ deployment. While Ohio has not passed a Family Military Leave Act, Illinois, Indiana, Maine, Minnesota, Nebraska and New York have enacted some form of Family Military Leave law.

Under the Illinois Act, employers who have between 15 and 50 employees must provide up to 15 days of unpaid leave to employees who are either the spouse or parent of soldiers called into active duty. Employers with more than 50 employees must provide such employees with up to 30 days of leave. The Illinois Act contains eligibility and notice requirements and employees are entitled to restoration in the same or an equivalent position held prior to the leave. Additionally, employees, at their own expense, may continue all employment benefits. Finally, under the Illinois Act, an employer may require an employee to exhaust all accrued vacation leave, personal leave, compensatory leave and any other leave (excepting sick and disability leave) before granting an employee leave.

Under the Indiana Military Family Leave Law, which went into effect on July 1 of this year, eligible employees are entitled to 10 days of unpaid leave but may only take the leave during the 30 days before or after active duty or while the active duty soldier is on leave. Under the Maine Family Military Leave Law, effective September 20, 2007, employers with 15 or more employees must grant eligible employees leave during active deployment while the soldier is on leave and during the 15 days prior to and following deployment.

The New York Family Military Leave Law, which has been in effect since 2006, contains no notice and few eligibility requirements. In New York, the spouse of a – who works at least 20 hours per week – may take up to 10 days unpaid leave while the person in the military is on leave from active duty.

In Minnesota, employers must grant the family member of a person killed or injured while on active duty in the military up to 10 days of unpaid leave. An eligible employee need only provide the employer with as much notice as possible prior to taking leave. While there is no requirement that an employer grant leave to family members during periods of active duty deployment – either before, immediately after, or while the soldier is on leave – employers are required to provide up to one (1) day’s leave for family members to attend send-off or homecoming ceremonies.

Like Illinois, Nebraska employers with 15 to 50 employees must provide up to 15 days of unpaid leave when a member of the military is called to active duty for 180 days or longer. Employers with more than 50 employees must provide 30 days unpaid leave. The Nebraska’s law contains eligibility and notice requirements and employees are entitled to restoration in the same or an equivalent position held prior to the leave. While on leave, employees can continue to receive employment benefits at their own expense.

Clearly, it is important for employers who operate in these states to be familiar with these Family Military Leave laws.

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KNOCKED-UP: Proposed Changes Would Result in Added Protections for Pregnant Workers

By Jason Rossiter*

The Ohio Civil Rights Commission (“OCRC”) recently held hearings relative to proposed regulatory changes to the Ohio Administrative Code concerning pregnancy discrimination. If the proposed changes take effect, pregnant employees – even those not eligible for FMLA leave – would be entitled to 12 weeks of maternity leave as soon as they are hired. If adopted, Ohio would join 18 other states that require employers to offer maternity leaves that exceed those mandated by the FMLA.

While the FMLA applies only to “covered” employers – those with 50 or more workers – and “eligible” employees – those who have worked at least one (1) year and 1,250 hours during the preceding 12 months – if enacted, the Ohio regulations would contain a less stringent standard. The Ohio regulations would apply to virtually all employers and employees.

If the new regulations are enacted, Ohio employers would be required to grant pregnant employees at least 12 weeks of unpaid leave, regardless of the size of employer or length of service of the employee. An exception, however, includes employers who are able to demonstrate a business necessity for not following this requirement.

While this change codifies a 12 week leave requirement for most Ohio employers, Ohio courts have previously interpreted the administrative code to provide for a leave of absence for a reasonable period of time on account of childbearing. This requirement applies regardless of whether an employer has a maternity or leave of absence policy. According to the Ohio courts that have examined this provision, a “reasonable period of time” may exceed 12 weeks depending on the circumstances.

The proposed regulations also bring about other significant changes. Perhaps most importantly, employers would be required to offer light-duty positions to pregnant employees if those positions are offered to workers temporarily disabled as a result of an on-the-job injury. This requirement represents a substantial increase in the protections afforded pregnant women under the current law. Employers who have a light duty program would have to make that program available to employees “affected by pregnancy, childbirth, or a related medical condition.”

Finally, under the proposed regulations, employers would be required to reinstate employees to their original job, or to a position of like status and pay, upon her return from pregnancy leave.

Testimony from the hearing held before the Civil Rights Commission has been compiled and presented to the Commissioners for review. According to published media reports, the OCRC has indicated that it is revising its proposal after business groups said the rules would hurt small businesses and Ohio’s economy. The Commission’s chair further stated that the Commission may be willing to negotiate on the number of weeks of guaranteed leave in light of opposition from the Ohio Chamber of Commerce and others. It remains to be seen what modifications, if any, will be made to the proposed regulatory changes.

Employers should be aware of the potential changes to the Ohio Administrative Code and the increased protections afforded to pregnant workers. Any changes or modifications to an employer’s policies should be reviewed to ensure that they comply with Ohio and federal law.

*Jason Rossiter has extensive experience representing employers in litigating and arbitrating workplace disputes in Ohio, California and throughout the country. For more information about pregnancy discrimination or any other employment-related tort, please contact Zashin & Rich at 216.696.4441.

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RESTORATION CONSTERNATION: Is Light Duty “Leave” Under the FMLA?

By Patrick M. Watts

A light duty assignment may qualify as “leave” under the FMLA, even if an employee is not absent from work. While no court has directly addressed this question, Department of Labor regulations provide some guidance.

***the employee’s right to restoration to the same or an equivalent position is available until 12 weeks have passed within the 12-month period, including all FMLA leave taken and the period of ‘light duty.’

See 29 C.F.R. § 825.220(d).

The regulations provide that an employee may not waive his right to protection under the FMLA, but may voluntarily accept an employer’s offer of “light duty” while recovering from a “serious health condition.”

The Seventh Circuit Court of Appeals recently addressed the issue of whether an employee is entitled to his regular rate of pay while on light duty. In Hendricks v. Compass Group, USA, Inc., 2007 U.S. App LEXIS 18606, the plaintiff employee worked as a utility van driver for the defendant employer and made $12.23 an hour. Hendricks injured her rotator cuff while at work, applied for, and received workers’ compensation benefits. One week later, she returned to work to a light duty assignment at a rate of $9.00 per hour. Eventually, she exhausted her 12 week FMLA leave and did not return to her previous position.

Hendricks sued her employer seeking $3.23 for each hour she worked on light duty – the difference between her regular rate of pay and what she was paid for the light duty work. She contended that she was on “FMLA light duty” and that her employer was required to compensate her at her normal utility driver rate. The court disagreed.

The Hendricks court concluded that there is “no such thing as ‘FMLA light duty.’” The court observed that the statute and regulations do not address the rate of pay an employee must receive while on light duty because that matter is addressed by workers’ compensation. Moreover, the Court noted that the FMLA requires employers to restore employees to the same or an equivalent position, but the requirement only applies if the employee is physically able. Hendricks was not physically able to return to her former position or to an equivalent position. As such, the court found that her employer was not required to pay Hendricks her normal rate while on a light duty assignment.

The Hendricks court, however, failed to address a significant issue – whether an employee is entitled to FMLA protection while receiving workers’ compensation benefits and working light duty. Though the court noted that the regulations “contemplate” light duty when an employee receives workers’ compensation and FMLA leave concurrently, it failed to address whether an employee participating in a workers’ compensation light duty program is also entitled to restoration to the employee’s position pursuant to the FMLA.

Employers should evaluate their leave policies to ensure that they are in compliance with the FMLA and with their state’s workers’ compensation statutes. The result in Hendricks leaves open the possibility that employees receiving workers’ compensation benefits who are working a light duty assignment may be entitled to the restorative benefits of the FMLA.

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URINE TROUBLE: Most Illicit Drug Users and Heavy Alcohol Users Are in the Workplace and May Pose Special Problems

By Steven P. Dlott

The Substance Abuse and Mental Health Service Administration (“SAMHSA”), a division of the Department of Health and Human Services, recently released a study finding that approximately 16.4 million current illegal drug users and approximately 15 million heavy alcohol users hold full-time jobs. The study was based on data collected between 2002 and 2004 from a sample of 128,000 persons aged 18 to 64.

The study found the highest rates of current illegal drug use were among food service (17.4 percent) and construction workers (15.1 percent). Highest rates of current heavy alcohol use were found among construction, mining, excavation and drilling workers (17.8 percent), and installation, maintenance, and repair workers (14.7 percent).

According to the study, illegal drug use and heavy alcohol use are associated with higher levels of absenteeism and frequent job changes. For example, nearly twice as many current illegal drug users skipped one or more days of work in the past month compared with workers who did not abuse drugs. Drug users were also far more likely to report missing two or more work days in the past month due to illness or injury compared with workers who did not abuse drugs.

The study also found that:

1. Among full-time workers who reported current illicit drug use, 12.3 percent said they had worked for three or more employers in the past year compared with 5.1 percent of non-abusing workers;
   
2. Nearly a third of current illicit drug users said they would be less likely to work for employers who conducted random drug testing;
   
3. Approximately 30 percent of the full-time work force reported that random drug testing took place in their current employment setting with workers in transportation and material moving (62.9 percent) and protective services (61.8 percent) most likely to be subject to random testing; and
   
4. Of the professions least likely to be subject to random testing, workers in legal occupations and arts, design, entertainment, sports, and medical, only ten percent reported working for an employer who tested for illegal drug or alcohol use on a random basis.
   

While unemployed persons had higher percentages of current illegal drug and heavy alcohol use, because full-time workers constitute approximately two-thirds of the adult population, the actual number of those using illegal drugs was higher among full-time workers.

Employers should be aware of the risks of their employees’ illegal drug and heavy alcohol use and consider implementing a random drug testing policy to avoid the loss of productivity and severe injuries associated with worker drug and alcohol abuse.

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Z&R Shorts

Zashin & Rich welcomes Jason Rossiter to its Employment and Labor Group
Zashin & Rich recently welcomed Jason Rossiter to the firm and to its expanding Employment and Labor Group. Jason defends employers in a wide variety of labor and employment matters, including harassment, discrimination, and federal and state civil rights. Jason is licensed to practice law in Ohio and California and has defended employers in employment based disputes in Ohio, California and throughout the country. He has extensive experience in class and collective action litigation. Law and Politics and Cincinnati magazines named Jason an “Ohio Super Lawyer Rising Star” in Labor and Employment Law in 2006 and 2007.
Please join us in welcoming Jason to Z&R!

Upcoming Seminar

On October 24 and 25, 2007, Stephen Zashin and George Crisci will speak at the Midwest Labor and Employment Law Conference in Columbus, Ohio presented by the Ohio State Bar Association. George will address public records requests and public sector obligations concerning records requests. George will also speak on the topic of defending and handling mandamus actions if records are not produced appropriately.

Stephen will present “The Latest in Leave Law.” This presentation will cover the latest trends in leave law with emphasis on FMLA, pregnancy, ADA and workers’ compensation as they relate to employee leave. The latest FMLA-related case law trends will be addressed as well as how pregnancy-related leave is treated under FMLA and non-FMLA scenarios and insight as to how workers’ compensation-related leaves should be treated.

Supreme Court Reverses Itself and Holds Negligent Worker Entitled to Workers' Compensation Benefits

*By Steven P. Dlott

On Thursday, September 27, 2007, the Ohio Supreme Court reversed and reconsidered its earlier ruling that denied temporary total disability (TTD) benefits to an injured Columbus, Ohio fast food worker. Previously, in December 2006, the Court held that by knowingly violating a workplace safety rule – for which he had previously been warned could result in his immediate termination – the worker “voluntarily abandoned” his employment upon his firing and lost his eligibility to receive workers’ compensation benefits, including TTD. In its latest opinion, the Court affirmed the lower court’s award of TTD and held that “if an employee’s departure from the workplace ‘is causally related to his injury,’ it is not voluntary and should not preclude the employee’s eligibility for TTD compensation.”

In State ex rel. Gross v. Industrial Commission, a 16-year-old high school student working at a KFC restaurant, and several of his co-workers, were severely burned when he opened the lid of a pressure cooker containing boiling water. Gross, the employee, filed a workers’ compensation claim, which was allowed, and began receiving TTD benefits. KFC investigated the accident, and three months later, fired Gross for failing to follow safety instructions and procedures regarding the proper use and operation of the pressure cooker. Those safety instructions and procedures consisted of a safety warning in the employee handbook advising employees to never boil water in the pressure cooker to clean it, and notice to the employee in that handbook that violation of any safety guideline causing an injury was a dischargeable offense. In addition to those safety measures, a warning label affixed to the top of the pressure cooker reminded employees not to close the lid with water or cleaning agents in the pot. KFC’s investigation further revealed that other employees had advised Gross that putting water in the pressure cooker could cause serious injuries. Gross nevertheless ignored those warnings and injured himself as a result. Following its investigation, KFC sought to terminate Gross’s TTD, arguing that Gross’s misconduct constituted a “voluntary abandonment” of employment.

Reversing its prior decision, the Court noted that Ohio’s workers’ compensation statute is based on a “no-fault” system of compensation and that “voluntary abandonment” has never been applied to preinjury conduct or conduct contemporaneous with the injury. The Court further reasoned that, “[i]t is the role of the legislature, not the judiciary, to carve out exceptions to a claimant’s eligibility for TTD compensation.” Thus, the court held that, “[a]lthough KFC appears justified in firing Gross for violating workplace rules, the termination letter established that his discharge was related to his industrial injury” and was, therefore, involuntary.

Employers should view this case as an opportunity to examine their own safety procedures in light of those KFC employed here. First, employers should review their employee manuals to ensure that potentially dangerous work procedures are clearly identified and prohibited. Violations of these prohibitions should constitute a dischargeable offense. Second, front line supervisors should enforce strict compliance with the safety rules. Had Gross, a repeated violator of KFC’s safety rules, been discharged prior to the events that lead to his injury, both the injury and KFC’s resulting liability might have been avoided. A thoroughly written employment manual is meaningless without vigilant enforcement of its contents.

EMPLOYMENT LAW QUARTERLY | Summer 2007, Volume IX, Issue ii

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• BREAKS AND REST PERIODS: What are employers required to pay for under the FLSA?
• U.S. Supreme Court Strikes Down Title VII Pay Discrimination Claim Where Unlawful Action Occurred Outside of Charging Period
• MOVIN' ON UP: Congress Passes a New Minimum Wage
• PUBLIC SECTOR UPDATE: Supreme Court Limits Unions' Rights to Use Non-Member Fees for Political Purposes
• TO PAY OR NOT TO PAY: Summer Interns under the Fair Labor Standards Act
• Z&R SHORTS

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BREAKS AND REST PERIODS: What are employers required to pay for under the FLSA?

By Christina M. Janice

Under federal law, employers are not required to provide employees with a lunch break or a rest period. However, when employers do provide breaks, the Fair Labor Standards Act (“FLSA”) sets forth criteria that determine whether an employer must pay for that break. The Department of Labor (“DOL”) and the courts generally recognize two categories of breaks: rest and meal periods.

1. Rest Periods

DOL Regulations provide that rest periods of a short duration, running from 5 minutes to “about 20 minutes,” must be included as “hours worked” by an employee. However, break time does not qualify as hours worked when the break exceeds 20 minutes, the time is sufficient for the employee to use it for his own purposes, and the employer completely relieves the employee from duty.
Employers are not required to include unauthorized extensions of work breaks as hours worked when the employer has expressly and unambiguously communicated that: (1) the authorized break is for a specific length of time; (2) an extension of the break is against company rules; and, (3) the employee will receive discipline for an extension of the authorized break.

2. Meal Periods

DOL Regulations provide that bona fide meal periods do not count as hours worked. Generally, the meal period must last 30 minutes or longer, but may be shorter under certain circumstances. DOL Regulations require that during a meal period the employer must completely relieve the employee from duty for the purpose of eating a regular meal. While some courts strictly require that the employer completely relieve the employee from duty, others utilize the “predominant benefit” test to determine whether a meal period qualifies as hours worked.

Under the predominant benefit test, a meal period will qualify as hours worked if the predominant benefits serve the employer rather than the employee. In court, an employer has the burden to demonstrate that the employee received the predominant benefit of the meal period. Courts consider factors such as (1) the limitations and restrictions placed on the employees during the meal period, (2) the extent to which those restrictions benefit the employer, (3) the duties the employer holds the employee responsible for during the meal period, (4) and the frequency by which employer interrupts the meal periods.

As the restrictions and duties become greater during the meal period, the employer likely receives the predominant benefits. When analyzing whether meal periods should be included as hours worked, employers should thoroughly review restrictions on meal periods, the duties employees must perform during those periods, and the frequency that the employer interrupts the employee’s meal period.

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U.S. Supreme Court Strikes Down Title VII Pay Discrimination Claim Where Unlawful Action Occurred Outside of Charging Period

By George S. Crisci, Esq.*

According to the latest Census Bureau estimates, full-time year-round female workers make 77 cents for every dollar a male earns. This statistic has not gone unnoticed by advocacy groups who believe that this situation is caused by discriminatory employment practices and by plaintiffs’ attorneys who are all too willing to take up the cause by filing pay discrimination lawsuits. A decision issued by the U.S. Supreme Court will make it more difficult to bring certain types of pay discrimination claims because they will be untimely. The decision, however, does not affect all pay discrimination claims. As explained below, therefore, the much better practice is for employers to avoid becoming vulnerable to such claims by engaging in a “self-audit” of their pay practices.

A discrimination claim under Title VII of the Civil Rights Act of 1964 (“Title VII”) is not timely unless a charge of discrimination is filed with the Equal Employment Opportunity Commission (EEOC) within 180 days (or 300 days in states, such as Ohio, that have a comparable state agency) after the alleged discriminatory act or decision occurs (known as the “charging period”). Courts repeatedly have had to decide whether a discrimination claim is based upon conduct that occurred during the charging period or simply involves the continuing effects of prior conduct that occurred outside the charging period. In the latter instance, the claim is untimely. This issue arises frequently in pay discrimination cases, where the employee’s claim is based upon a decision that occurred long ago, but the effects of that action are felt every time the employee receives a paycheck. The U.S. Supreme Court recently addressed this issue. The Court held that many of these pay discrimination claims are untimely unless the employee’s compensation is based upon a decision that occurred during the charging period.

In Ledbetter v. Goodyear Tire & Rubber Co., pay raises for salaried employees were based upon performance evaluations conducted by the employees’ supervisors. Plaintiff Lilly Ledbetter, who worked for Goodyear from 1979 to 1998, claimed that one of her supervisors had retaliated against her when she rejected his sexual advances during the early 1980’s by giving her negative performance evaluations and did so again during the mid-1990’s when he allegedly falsified deficiency reports about her work. This alleged retaliation impacted the amount of her pay increases. She also claimed that this retaliatory treatment had a continuing impact upon how much she was paid. However, she waited until 1998 (shortly before she retired) before complaining to the EEOC about her pay. By the time the case went to trial, the supervisor had died. She claimed primarily that “her pay was not increased as much as it would have been had she been evaluated fairly, and that these past pay decisions continued to affect the amount of her pay throughout her employment.” A jury agreed with Ledbetter and awarded her damages, but the appellate court reversed because her claims were untimely.

Ledbetter argued that her pay discrimination claims were timely for two reasons. First, she contended that each paycheck issued to her during the charging period that contained an amount that was based upon prior unlawful action was a separate act of discrimination (known as the “paycheck accrual rule”). Second, she focused upon a decision denying her a pay raise that occurred during the charging period that she claimed was unlawful because it “carried forward intentionally discriminatory disparities from prior years.”

The Supreme Court rejected both arguments because neither one was based upon an alleged intentional discriminatory act that occurred during the charging period. The Court explained that “[a] disparate treatment claim comprises two elements: an employment practice and discriminatory intent,” and both have to occur during the charging period for the discrimination claim to be timely. Thus, “[t]he EEOC charging period is triggered when a discrete unlawful practice takes place. A new violation does not occur, and a new charging period does not commence, upon the occurrence of subsequent non-discriminatory acts that entail adverse effects resulting from past discrimination.” The Court added, however, that “if an employer engages in a series of acts each of which is intentionally discriminatory, then a fresh violation takes place when each act is committed.” Ledbetter’s claim was untimely because she “makes no claim that intentionally discriminatory conduct occurred during the charging period or that discriminatory decisions that occurred prior to that period were not communicated to her. Instead, she argues simply that Goodyear’s conduct during the charging period gave present effect to discriminatory conduct outside of that period. But current effects alone cannot breathe life into prior, uncharged discrimination . . . .” The Court suggested that Ledbetter “should have filed an EEOC charge within 180 days after each allegedly discriminatory pay decision was made and communicated to her.”

The Supreme Court also noted that there are important exceptions to this rule. The most prominent is a claim that is based upon a “facially discriminatory pay structure that puts some employees on a lower scale because of” some unlawful classification such as race or gender. In distinguishing between the two, the Court explained that “an employer violates Title VII and triggers a new EEOC charging period whenever the employer issues paychecks using a discriminatory pay structure. But a new Title VII violation does not occur and a new charging period is not triggered when an employer issues paychecks pursuant to a system that is ‘facially nondiscriminatory and neutrally applied.’ The fact that pre-charging period discrimination adversely affects the calculation of a neutral factor (like seniority) that is used in determining future pay does not mean that each new paycheck constitutes a new violation and restarts the EEOC charging period.”

Another important exception involves claims under the Equal Pay Act (EPA). The Court noted that such claims do not require the filing of a charge nor do they require proof of discriminatory intent. Although Ledbetter originally had filed an EPA claim, the trial court dismissed that claim and Ledbetter did not pursue it on appeal.

The timeliness requirements established in Ledbetter are very helpful to employers. Previously, employers were forced to defend against pay discrimination claims that were based upon conduct that occurred many years in the past. This can prove especially difficult when the evidence tending to prove or disprove such a claim has become stale or non-existent. Employers, however, must be cautious in applying these timeliness requirements because there are some noteworthy exceptions, such as a separate claim under the federal Equal Pay Act or a claim based upon a facially discriminatory pay policy.

Employers in Ohio also should remember that the Ledbetter decision applies only to claims under federal law. Ohio courts have not yet adopted the decision and its underlying reasoning for similar claims of pay discrimination under Ohio’s discrimination statute – Chapter 4112 of the Ohio Revised Code – and there is no guarantee that the Ohio Supreme Court will do so. Moreover, the limitations period for commencing a discrimination claim under Ohio law (which does not require a charge filing before commencing a lawsuit) is much longer: six years in most cases versus 300 days under federal law. Likewise, other states also may not adopt the Ledbetter reasoning.

Employers are strongly encouraged to seek legal counsel in determining whether the favorable timeliness requirements under Ledbetter apply to a pay discrimination claim or a pay structure issue.

Finally, although the result in Ledbetter is welcome news for employers, preventative action is essential to successfully defend pay discrimination claims that are timely filed. Employers are encouraged to conduct an “employer pay equity self-audit” which is designed to assist employers in analyzing their own wage-setting policies and establishing consistent pay practices for all.

*George S. Crisci is an OSBA Certified Specialist in Labor and Employment Law. George practices in all areas of employment and labor law. For more advice on both other employment law inquiries and traditional labor law issues, please contact George at (216) 696-4441 or gsc@zrlaw.com.

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MOVIN' ON UP: Congress Passes a New Minimum Wage

By Patrick O. Peters

On May 25, 2007, President Bush signed into law the Fair Minimum Wage Act of 2007 (the “Act”). The Act serves to amend the Fair Labor Standards Act (“FLSA”) of 1938 and increases the federal minimum wage from $5.15 an hour to $5.85 an hour on July 24, 2007, to $6.55 an hour on July 24, 2008, and to $7.25 an hour on July 24, 2009. The FLSA provides rigorous regulations that apply to all employees that include child labor, recordkeeping, and enforcement provisions in addition to rules relative to overtime compensation and the minimum wage.

The new federal minimum wage will have no immediate impact on most employers in states, such as Ohio, that have a higher state minimum wage. In November 2006, Ohio voters approved Statewide Issue 2. Issue 2 is an Amendment to Ohio’s Constitution that raised the minimum wage from $5.15 an hour to $6.85 an hour and became effective January 1, 2007. Under the Ohio Amendment, Ohio’s minimum wage will adjust annually, beginning January 1, 2008, to reflect inflation as tracked by changes to the consumer price index.

Allegations of wage and hour violations comprise one of the largest areas of potential liability for employers. Wage and hour litigation has increased 300% over the past decade and lawsuits based on FLSA violations are one of the fastest growing sources of employment-based class/collective action litigation. Wage and hour violations that commonly result in litigation include: misclassifying employees as “exempt” and failing to pay them overtime; failing to pay non-exempt employees overtime, including overtime not approved in advance; failing to pay for time worked “off the clock,” including allowing employees to arrive early to prepare for work or stay late to “close up;” and granting compensatory or “comp time” in lieu of overtime pay.

Employers should regularly conduct an audit of their wage and hour practices to minimize the risk associated with wage and hour violations. These audits include a thorough review of employee classification and payroll records and analysis of employment policies to ensure compliance with the FLSA. Taking proactive steps will help decrease an employer’s exposure to wage and hour liability, deter administrative agency investigation, and minimize exposure to litigation.

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PUBLIC SECTOR UPDATE: Supreme Court Limits Unions' Rights to Use Non-Member Fees for Political Purposes

By Jon M. Dileno, Esq.*

On June 14, 2007, the United States Supreme Court rejected a challenge to a Washington law that bars public-sector unions from spending non-members’ fees on political activity without first receiving their permission. In Davenport v. Washington Ed. Assn., the Court held that a state may require its public-sector unions to receive affirmative authorization before spending fees on political activities. Id. at syllabus.

While most states allow public-sector unions to levy fees on non-member employees in exchange for collective bargaining representation, the Court previously ruled that those fees may not be used for “ideological purposes not germane to the union’s collective bargaining duties.” Davenport, supra., citing Abood v. Detroit Bd. of Ed., 431 U.S. 209, 235-236 (1977). These ideological purposes include unions’ political activity.

Under the Washington state law, the non-members had to grant the union permission in order for the union to use non-member fees for a purpose other than collective bargaining.

The Supreme Court held that “courts have an obligation to interfere with a union’s statutory entitlement no more than is necessary to vindicate the rights of non-members does not imply that legislatures (or voters) themselves cannot limit the scope of that entitlement.” Id. (emphasis in original). The ruling paves the way for further restrictions on public-sector unions relative to the collective bargaining fees they generate from non-members.

*Jon M. Dileno represents employers in the full spectrum of labor and employment matters in both the public and private sector. Jon’s experience in collective bargaining matters extends beyond negotiating labor contracts and covers the full gamut of collective bargaining proceedings. For more information concerning public sector collective bargaining or any other labor issue, please contact Jon at (216) 696-4441 or jmd@zrlaw.com.

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TO PAY OR NOT TO PAY: Summer Interns under the Fair Labor Standards Act

By Patrick M. Watts

Generally, summer interns are employees covered by the Fair Labor Standards Act (“FLSA”) and are entitled to minimum wage and overtime protection. However, if interns qualify as “trainees,” rather than employees, the wage and hour requirements of the FLSA do not apply.

The U.S. Supreme Court has established a six factor test to determine trainee status. If the relationship between the employer and the intern meets all six criteria, the employer can treat the intern as a trainee. An intern is a trainee if: (1) the training is similar to training that would be offered at a vocational school (even though it includes actual operation of the facilities of the employer); (2) the training is for the intern’s benefit; (3) the intern does not displace regular employees (but may work under close supervision); (4) the employer receives no immediate advantage from the intern’s activities; (5) the intern is not necessarily entitled to a job at the completion of the training; and, (6) the employer and the intern understand that the intern is not entitled to wages for the training.

In addressing the substance of the training, courts and the Department of Labor (“DOL”) compare the curricula from community colleges and other similar institutions to determine if the employer’s training is similar. They next consider whether the skills learned are useful to the individual and transferable to other employers. For instance, one court determined that employees received general and non-transferable training when the employees assisted truck drivers by riding in trucks, moving boxes, learning general vending machine maintenance, and completing general paperwork. Equally important in the analysis is whether the intern has filled a position normally held by an employee.

The most important consideration relative to an intern’s status is the benefit of the intern’s work. In order for an intern to qualify as a “trainee,” an employer must provide training and cannot receive productive work from the intern. One court held that an employer received an immediate advantage when an intern performed productive work and the only cost to the employer was for supervision. Other courts have held that when an intern’s duties consist of simply assisting other employees, the employer receives an immediate advantage.

Courts have, however, held that employers are permitted to receive the immediate advantage of a well-trained applicant pool as a result of their training programs. While entitlement to a future position with an employer is prohibited, if an employer decides to hire a trainee, the employer does not have to compensate him until the training program has ended.

Finally, both the employer and the intern must understand that the trainee will not receive compensation for the training. While a written agreement is not required, a prudent employer attempting to meet each of the above factors should obtain written confirmation of this understanding.

Situations that satisfy each of the above requirements are limited. Generally, summer interns hold jobs that fall within the protections of the FLSA and are not “trainees”. Under most circumstances, employers must adhere to wage and hour requirements relative to summer interns as employees.

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Z&R SHORTS

Zashin & Rich welcomes two attorneys to its Employment and Labor Group
Zashin & Rich recently welcomed two attorneys to the firm and to its expanding Employment and Labor Group. Jon Dileno represents employers in the full spectrum of labor and employment matters in both the public and private sector. Jon serves as chief negotiator for some of the most high profile labor negotiations in Ohio. Jon has also successfully defended both private employers and public entities in numerous cases involving discrimination, retaliation, wrongful discharge, intentional tort, and defamation.

Jon received his undergraduate degree, cum laude, from Baldwin Wallace College and his law degree from Tulane University, cum laude, where he received the Outstanding Labor Law Student Award. Jon is admitted to practice law in the State of Ohio, the United States District Court for the Northern and Southern Districts of Ohio, and the Sixth Circuit Court of Appeals.

Patrick Peters also recently joined Zashin & Rich. Pat's practice areas include labor relations, equal employment opportunity, employment discrimination, and all other employment related torts. Pat earned his B.B.A. from the University of Notre Dame and went on to earn his law degree, cum laude, from Case Western Reserve University School of Law. Pat is admitted to practice law in the State of Ohio and the United States District Court for the Northern District of Ohio.

Please join us in welcoming Jon and Pat to Z&R!

Upcoming Seminars On June 28, 2007, Stephen Zashin and Steven Dlott will present “Interplay: Solving the FMLA, ADA and Workers’ Compensation Leave of Absence Puzzle” to the Greater Cleveland Safety Council. The event will be held at the Holiday Inn South, 6001 Rockside Road, Independence, Ohio with registration at 11:15a.m. and a luncheon meeting to follow at 11:30.am. Cost, including lunch, is $22 for members of the Council and $27 for non-members. Please contact the Greater Cleveland Safety Council at (216) 621-0059 or gcsafety@ameritech.net for more information.

On August 7, 2007, Stephen Zashin and George Crisci will speak to the Council on Education in Management’s Ohio FMLA Update 2007 seminar. Stephen will present “The Tangled Web of the FMLA, ADA, Workers' Comp, and Other Leave Laws: Pulling the Threads Apart.” George will present “Weeding-Out Fraudulent Claims and Avoiding Intermittent Leave Abuse: Effectively Using Recertification, Second and Third Opinions, and Fitness-for-Duty Examinations.” The seminar will be held in Cuyahoga Falls. To register or for more information visit www.counciloned.com or contact the Council on Education and Management at (800) 942-4494 or registration@counciloned.com.