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Tuesday, April 29, 2014

3d Cir. Recognizes FLSA Successor-in-Interest Liability

Earlier this month, the Third Circuit issued a precedential opinion in Thompson v. Real Estate Mortgage Network.

The facts of this case are a little murky - but the gist of the matter is that Plaintiff worked for one company, Security Atlantic. HUD launches an investigation into Security Atlantic, and all of a sudden Plaintiff and her colleagues have to fill out applications for a new company, REMN. Now, she and her colleagues work for REMN. And, Security Atlantic is "defunct."

The issue is whether Plaintiff can impose FLSA liability from her time at Security Atlantic onto its successor, REMN. The Court adopted the federal common law standard for analyzing successor liability, using the following factors:
(1) continuity in operations and work force of the successor and predecessor employers; (2) notice to the successor-employer of its predecessor’s legal obligation; and (3) ability of the predecessor to provide adequate relief directly. Brzozowski v. Corr. Physician Servs., Inc., 360 F.3d 173, 178 (3d Cir. 2004).
Frankly, the Court didn't engage in much analysis. Instead, they relied heavily on the economic genius of Richard Posner (somewhere my Mason Law profs are popping champagne at the sight of Posner and economic analysis in a precedential Third Circuit opinion, while discussing how much better the opinion could have been if only the Court had used the Coase theorem and counter-economic analysis from Judge Easterbrook . . . sorry, a little inside-Mason Law humor):
[T]he imposition of successor liability will often be necessary to achieve the statutory goals because the workers will often be unable to head off a corporate sale by their employer aimed at extinguishing the employer's liability to them. This logic extends to suits to enforce the Fair Labor Standards Act. “The FLSA was passed to protect workers' standards of living through the regulation of working conditions. 29 U.S.C. § 202. That fundamental purpose is as fully deserving of protection as the labor peace, anti-discrimination, and worker security policies underlying the NLRA, Title VII, 42 U.S.C. § 1981, ERISA, and MPPAA.” Steinbach v. Hubbard, 51 F.3d 843, 845 (9th Cir. 1995). In the absence of successor liability, a violator of the Act could escape liability, or at least make relief much more difficult to obtain, by selling its assets without an assumption of liabilities by the buyer (for such an assumption would reduce the purchase price by imposing a cost on the buyer) and then dissolving. And although it can be argued that imposing successor liability in such a case impedes the operation of the market in companies by increasing the cost to the buyer of a company that may have violated the FLSA, it's not a strong argument. The successor will have been compensated for bearing the liabilities by paying less for the assets it's buying; it will have paid less because the net value of the assets will have been diminished by the associated liabilities. 
Teed v. Thomas & Betts Power Solutions, 711 F.3d 763, 765–77 (7th Cir. 2013).
Read the full opinion for even more Posner-tastic analysis.

Bottom line: The allegations in this case were sufficient to survive a motion to dismiss. Moving forward, it's buyer beware because a successor in interest just might be liable for FLSA claims of the predecessor.

Monday, April 28, 2014

Another NFL Cheerleader Lawsuit - Buffalo Bills

You may recall the recent wage and hour lawsuit filed by the Oakland Raiders cheerleaders. If any other NFL cheerleaders have a lawsuit, they better bring it. What's that you say? Oh, it's already been brought'n (<- worst movie reference in Lawffice Space history? Probably. Here's the clip.).

The Buffalo Bills cheerleaders filed this Complaint, alleging assorted wage and hour types of claims. The gist of the lawsuit is similar to the Raiders suit - the cheerleaders do a ton of work and incur costs, and they don't get adequately paid. I'm sure the headline-grabber will be the allegation about the "Jiggle Test" though:
[T]he Jills were subjected to weekly "physique evaluations" during which defendants' representatives tested the Jills' bodies for "Jiggling." During the "Jiggle Test" defendants scrutinized the women's stomach, arms, legs, hips, and butt while she does jumping jacks. The physique evaluations largely determine whether or not any particular Jill would be allowed to perform at the Bills' next home game. Jills that failed to meet defendants' physical standards received warnings, and in some cases were penalized suspended or dismissed.
On the one hand, that sounds pretty demeaning. On the other hand, that's kind of the gig, right?

CNN has some video coverage. Meanwhile, the Bills cheerleading squad has reportedly suspended operations for the season. That's okay though - it's the Bills, so there probably won't be much cheering to lead anyway (ouch, was that necessary? I feel bad about myself already).

Image: Bills logo used in commentary on Bills. Not official use.

Friday, April 25, 2014

Exotic Dancers - Employees or Independent Contractors?

This issue pops up from time to time. Are "exotic dancers" (i.e. the kind that get naked and gyrate on brass poles) employees or independent contractors?

In many cases, the dancers are paid less than minimum wage, or not paid at all . . . in fact, in some cases the dancers must "pay for the pole" (essentially renting time in a strip club to be on-stage or on a pole). In exchange, they get to keep the dollar bills that come their way by various and often creative means. They get the tips, the club gets the cover.

In my home federal district, the Middle District of PA, dancers filed a wage-related lawsuit that is now before Judge Jones (who I currently have at least one case with). The club claims the dancers are "freelance artists" and not employees. The club has some other defenses as well:
For starters, Mr. G's contends that Watson hasn't worked at the club in more than three years and that she never performed there for more than 40 hours in any given week. Carter, Blackwell-Young and Harr might have worked at the club, but Mr. G's officials claim they "do not recognize their legal given names." "Artists who perform at Mr. G's generally only provide a stage name."
Now, I've never specifically heard this as a factor in the independent contractor analysis - but I've gotta think that "we don't even know her name" has to count for something. Am I right?

Unfortunately, independent contractor vs. employee is one of those "totality of the circumstances" multi-factored tests that seldom produces bright lines. Ultimately, the courts generally look at the level of control the employer/contractor exerts over the employees/independent contractors. In some circumstances, the dancers will be contractors and in others they'll be employees.

Friday, April 18, 2014

Sixth Circuit Goes Hard on EEOC Background Check Litigation

Remember when a district court rejected the EEOC's use of "race raters" in a disparate impact claim against Kaplan? And discovery revealed that the EEOC itself used the same background checks that it based its lawsuit on? Here's a refresher.

For some reason, the EEOC decided to appeal to the Sixth Circuit - you can now read the Sixth Circuit's opinion here. Let's just say it did not go well. You can read the whole thing for yourself, but I think you can get the flavor from my masterful selection of excerpts along with my commentary:
In this case the EEOC sued the defendants for using the same type of background check that the EEOC itself uses. 
[That's the first sentence!? Oh well, it can only get better for the EEOC from here, right?] . . . . 
The EEOC’s case goes downhill from there. 
[How is that possible?] . . . . 
We need not belabor the issue further. The EEOC brought this case on the basis of a homemade methodology, crafted by a witness with no particular expertise to craft it, administered by persons with no particular expertise to administer it, tested by no one, and accepted only by the witness himself. 
[oh.] 
The district court’s judgment is affirmed. 
[Ya don't say.]
The EEOC has targeted criminal and credit background checks as having a disparate impact on racial minorities. It didn't go very well in this case.

Thursday, April 17, 2014

What conduct prompts a $2 million same-sex harassment settlement?

What in the world does an employer have to do to find itself in a position where signing a $2 million settlement is its best option!? Well, according to this EEOC press release:
The EEOC charged a former lot manager, James Gallegos, under the direction of Charles Ratliff, Jr., then general manager, with subjecting a class of men to egregious forms of sexual harassment, including shocking sexual comments, frequent solicitations for oral sex, and regular touching, grabbing, and biting of male workers on their buttocks and genitals.
Wow. Sorry I asked.

I'm guessing almost all employers know not to bite their employees' genitals. But this case serves as a good reminder that same-sex harassment happens, and it can create enormous liability.

Image: EEOC seal used in commentary on EEOC. Not official use.

Wednesday, April 16, 2014

VeepGeek and Tech Issues

A lot of you probably read the title and thought, "what's VeepGeek?" That's @VeepGeek - aka the Twitter handle for Angie Singer Keating, CEO of Reclamere - Data Security Experts in Tyrone, PA (Lawffice Space fun fact: my father grew up in Tyrone). Angie sent me two interesting IT-related articles that I wanted to pass along.

First, a warning from a panel of judges to lawyers to Catch Up with Tech or Lose Your Career. The panel included Judge Shira Scheindlin (of Zubulake fame), and this great line from Judge James Francis: "E-discovery is pervasive. It's like understanding civil procedure." That's an interesting way to look at it. I don't know that e-discovery is as pervasive as the rules of civil procedure quite yet - but it's a point well-taken.

The second article is Does Fourth Amendment protect computer data? Scalia says it’s a really good question. What does the 4th Amendment (search and seizure) have to do with employment law? Glad you asked! First. public employers may face Fourth Amendment claims. And second, privacy expectations often bleed across criminal procedure into invasion of privacy torts.

If you want a good example of tech data searches hitting the workplace and resulting in litigation, then check out the SCOTUS case Quon v. City of Ontario from a few years back. The Court stayed out of some of the thornier issues presented by mobile technology - but did address some overall privacy concerns. Scalia's comments give us some hope that the Supreme Court may be ready to take on some data search issues.

Northwestern's Appeal to NLRB on Football Union

Last week, Northwestern sought review of the NLRB Regional Director's decision that the Northwestern football team could vote on unionization. A few of you have asked me about the brief, so here it is - a fifty-pager!

Northwestern really came out swinging in some of the introductory paragraphs:
In this unprecedented decision, the Regional Director set out to alter the underlying premise upon which collegiate varsity sports is based. By finding that NorthwesternUniversity’s football program is a commercial enterprise and that its football scholarship student-athletes are “employees” within the meaning of the National Labor Relations Act(“Act”), the Regional Director ignored the evidence of Northwestern’s primary commitment to the education of all of its student-athletes, evidence that fully supports that its student-athletes are primarily students, and not employees. Based on the testimony of a single player who admitted that he aspires to play professional football, the Regional Director described Northwestern’s football program in a way that is unrecognizable from the evidence actually produced at the hearing. Northwestern’s football program stands alone as the most successful FBS program for educating athletes to graduation. Whatever one thinks of athletics at other institutions, Northwestern presented overwhelming evidence establishing that its athletic program is fully integrated with its academic mission, and that it treats its athletes as students first. That CAPA’s sole fact witness, Mr. Colter, chose to prioritize his professional athletic aspirations cannot and should not form the basis of any finding about the football program in general and its role in the education of Northwestern’s student-athletes. 
Instead of objectively setting forth the relevant facts, the Regional Director’s decision reads like a brief submitted by an advocate, with the facts he chooses to stress set out in the text of the decision and those which are equally important but which do not support his pre-determined outcome relegated to footnotes or completely ignored. In short, the Regional Director not only ignored much of the record, he also misconstrued, disregarded and misapplied Board precedent and failed to consider, contrary to the dictates of the Act and Supreme Court precedent, the public policy ramifications and practical consequences of his decision to extend the definition of an employee under the Act to collegiate student-athletes at Northwestern.
Tell us how you really feel about the decision!

Tuesday, April 15, 2014

Fired for What!? - Topless McDonald's Rampage

Have you ever seen a woman wearing nothing but a thong trash a McDonald's? Probably not . . . until now. Feel free to check out the video (censored for your protection) here. Wanna guess who got fired? Yup, the McDonald's employees who leaked the surveillance footage with the commentary of everybody cracking up while it goes down.

The link also has bonus footage of a different person assaulting a McDonald's through the drive-through window, if you enjoy McDonald's mayhem.

HT: My colleague Dave Weixel, who heard about a naked McDonald's rampage and thought of me.

Wednesday, April 9, 2014

Tuesday, April 8, 2014

Coming Today: Obama "Equal Pay" Executive Orders

President Obama is expected to sign two executive orders designed to combat wage inequality today. Based on reports (Washington Post,  U.S. News, Huffington Post, and more), the two executive orders will generally provide that:

  • Federal contractors can not retaliate against employees for sharing salary/wage information; and
  • Federal contractors must report wage-related data to the government (based on Department of Labor regulations to be promulgated under the order).
I should note that the NLRA is generally perceived as covering the issue of employees sharing wage and salary data for private, non-management employees (see general agreement between employee-side Donna Ballman and employer-side Eric Meyer). 

White House executive orders are posted here (as of publication, the orders described above are not up yet).

Monday, April 7, 2014

Fired for What!? - Dumping a Body in a Dumpster

A housing complex clerk took a smoke break and noticed a mannequin lying outside. He assumed it was some kind of April Fools' Day prank and went back inside. Later, he enlisted the help of the paperboy and his mom to take the mannequin and throw it in the dumpster.

There's just one problem . . . it was not a mannequin:
It wasn’t until around 8 a.m. that an apartment maintenance worker looked into the dumpster realized that it was actually the body of a depressed 96-year-old resident who had jumped 16 stories to her death in the night.
The police believe the clerk and no charges are expected. However, he was reportedly fired in one of the stranger (and more morbid) Fired for What's!?

Thursday, April 3, 2014

3d Cir. Provides "Temporal Proximity" Retaliation Analysis

The Third Circuit recently released a non-precedential Title VII (and PHRA and 1981) retaliation opinion in Blakney v. City of Philadelphia. The Court provided a succinct rundown of temporal proximity precedent involving two major issues.

First, how close in time is "close enough" to suggest retaliation:
We have found that a temporal proximity of two days is unusually suggestive of causation, see Jalil v. Avdel Corp., 873 F.2d 701, 708 (3d Cir.1989) (reversing summary judgment for the defendant when plaintiff was fired two days after his employer received notice of his EEOC complaint), but have held that a temporal proximity greater than ten days requires supplementary evidence of retaliatory motive, see Farrell v. Planters Lifesavers Co., 206 F.3d 271, 280 (3d Cir.2000) (finding that “where the temporal proximity is not so close as to be unduly suggestive,” the appropriate test is “timing plus other evidence”); see also Williams v. Phila. Hous. Auth. Police Dep't, 380 F.3d 751, 760 (3d Cir.2004) (two months is not unusually suggestive); LeBoon v. Lancaster Jewish Cmty. Ctr. Ass'n, 503 F.3d 217, 233 (3d Cir.2007) (three months is not unusually suggestive).
Second, how should the Court calculate the timing:
We measure temporal proximity from the date on which the litigant first files a complaint. See Jalil, 873 F.2d at 703. Here, Blakney filed an EEOC complaint in 2008 and sued in federal court in 2010. He voluntarily resigned in January 2011 and first sought reinstatement in September 2011—four days after summary judgment was entered against him in the Prior Action. He sought reinstatement a second time in December 2011. Thus, the period between the filing of the EEOC complaint and the City's failure to reinstate Blakney spans three years, which falls well short of the “unduly suggestive” mark. See Cardenas v. Massey, 269 F.3d 251, 264 (3d Cir.2001) (finding that protected activity that extended “over a substantial period of time” is “insufficient to establish causation”).
Frankly, I find the latter issue a little problematic. Let's say a guy files a lawsuit on Monday and gets fired on Tuesday - there's nothing "unduly suggestive" about that timing if he has had an EEOC/PHRC charge pending for a couple of years? That's tough to swallow.

In any event, Blakney is nothing new, but it does include a nice short summary of where we are with temporal proximity analysis in the Third Circuit.

Wednesday, April 2, 2014

April Fool's Day Prank Gone Bad

The Internet was filled with April Fool's Day jokes yesterday. Like this one from Onward State: The headline is Pitt Graduate Finds Employment, Success in Life . . . the article is two words: "Just kidding." Zing! I'm glad the Penn State-Pitt rivalry is alive and well even if the football teams no longer play.

Some pranks were a little over the top though. Ya know what's probably a bad idea? Texting your family from the college where you work stating that you heard gunshots and are hiding in the bathroom. Yup, it happened.

Police swarmed the campus, and the texter was charged with "creating a disturbance." No word yet on employment disciplinary action. File this "lesson learned" away for next April 1: don't make false claims about shootings at your workplace (goes double if you work at a school).