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Coffee, Water, Less Than 20 Minutes

Posted on: June 19th, 2018

SCOTUS KICKS THE CAN ON SHORT BREAKS COMPENSATION

By: John McAvoy

On June 11, 2018, the U.S. Supreme Court refused to entertain the appeal of a Pennsylvania employer that could have resolved the emerging split of authority between the federal appellate courts and the U.S. Department of Labor (DOL) as to the compensability of employees’ short rest breaks.

In American Future Systems, Inc. d/b/a Progressive Business Publications v. R. Alexander Acosta, Secretary, U.S. Department of Labor, the Secretary of Labor filed suit against Progressive Business Publications, a company that publishes and distributes business publications and sells them through its sales representatives, as well as the company’s owner, alleging they violated the Fair Labor Standards Act (FLSA) by paying their salespeople an hourly wage and bonuses based on their number of sales per hour while they were logged onto the computer at their workstations, and by not paying them if they were logged off for more than 90 seconds.

The U.S. District Court for the Eastern District of Pennsylvania previously found that the employer’s policy had violated the FLSA, relying on a DOL regulation which states that “[r]est periods of short duration, running from 5 minutes to about 20 minutes, are common in industry.  They promote the efficiency of the employee and are customarily paid for as working time.  They must be counted as hours worked.”  In so holding, the District Court found that the employer was liable for at least $1.75 million in back wages and damages.

On appeal to the Third Circuit Court of Appeals, the employer argued that that it provided “flex time” rather than “breaks,” which allowed workers to clock out whenever they wanted, for any reason.  In other words, that the employees were not “working” after they logged off of their computers since they could do anything they wanted, including leaving the office.  The appellate court rejected this argument, reasoning that to dock the pay of employees who can’t manage a bathroom sprint is “absolutely contrary to the FLSA,” and affirmed the lower court’s decision.

The Third Circuit’s reliance on DOL regulation was contrary to the holdings of some of the other circuit courts which opted to assess the circumstances of the break in lieu of interpreting the DOL regulation as a bright-line rule that fails to take into consideration the facts of a particular situation.

The employer asked the U.S. Supreme Court to clarify how compensability for breaks should be determined.  Citing the circuit split, the employer posited that the question of break pay should be determined by assessing the circumstances of the break, rather than adopting the DOL regulation as a bright-line rule.  In its reply brief, the DOL fervently defended its regulations and denied the existence of the alleged circuit split, arguing that “hours worked [are] not limited to the time an employee actually performs his or her job duties.”  Unfortunately, this remains an issue for another day as the Supreme Court refused to hear the case and/or resolve the alleged split.

Absent a decision from the Supreme Court to the contrary, employers in Pennsylvania, New Jersey, and Delaware are bound by the Third Circuit’s decision. As such, employers in these states must continue to comply with DOL regulations with respect to the compensability of short breaks.

Fortunately, the applicable DOL regulations are designed to protect employers’ rights. For starters, the regulations recognize that meal periods serve a different purpose than coffee or snack breaks and, as such, are not compensable.  Second, an employer need not count an employee’s unauthorized extensions of authorized work breaks as hours worked when the employer has expressly and unambiguously communicated to the employee that the authorized break may only last for a specific length of time, that any extension of the break is contrary to the employer’s rules, and any extension of the break will be punished.

Although an employer will have to compensate an employee who repeatedly takes unauthorized breaks lasting less than 20 minutes in order to comply with the Third Circuit’s ruling and the applicable DOL regulations, the employer is nevertheless free to discipline the employee for such indiscretions by whatever means the employer deems appropriate, including termination.

Prudent employers should prepare themselves to address such issues through smart planning and proper training of employees, including managers, supervisors and HR personnel to ensure the employer’s break, discipline, and termination policies and procedures comply with all applicable DOL regulations.

Want to know whether your company’s break, discipline, and termination policies and procedures comply with DOL regulations? Let me help. Please call or email me (215.789.4919; [email protected]).

Can You Fire An Employee While On Maternity Leave?

Posted on: June 19th, 2018

By: Jennifer Ward

An employee goes on leave and, during the leave, the employer discovers (for the first time) deficiencies in the employee’s work performance.  What can an employer do in response?

Well, the 6th Circuit Court of Appeals recently found that an employer did not violate the law when it terminated an employee on the day the employee returned from leave based upon the deficiencies it discovered while she was on leave.  Bailey v. Oakwood Healthcare, Inc., No. 17-2158 (April 23, 2018).

In essence, the 6th Circuit confirmed that an employee is not shielded from termination for poor performance and other unacceptable conduct simply because the conduct was discovered while the employee was on leave.

While this opinion is good news for employers who struggle with what to do when they discover misconduct (or simply poor performance) while an employee is on leave, employers should be very cautious in using this approach.  As employees likely will be ultra-sensitive to disciplinary actions shortly after they return from leave and courts will closely scrutinize such disciplinary actions, an employer should be fully prepared to identify (with supporting evidence) the business reason the employer relied upon to terminate the employee at that time.  Be mindful, however, that even with objective evidence – such as a falsified employment application in this case – the employer could still be liable for discrimination or retaliation if, for example, it knew of other employees who engaged in similar activity but terminated only the one who took leave.

If you have any questions or would like more information, please contact Jennifer Ward at 267.758.6012 or [email protected].

Something Rotten: Spoliation Claims Against a Plaintiff

Posted on: June 15th, 2018

By: Sean Ryan

The Georgia Supreme Court recently clarified that same duty and standard applies to a plaintiff as to a defendant in assessing potential spoliation claims. In Cooper Tire & Rubber Co. v. Koch, 303 Ga. 336 (2018), the Georgia Supreme Court stressed that the duty to preserve relevant evidence is “defined the same for plaintiffs and defendants” and “arises when the alleged spoliator actually or reasonably should have anticipated litigation.” While a plaintiff’s duty to preserve relevant evidence may more often revolve around the actual knowledge of litigation because a plaintiff largely controls when to bring a lawsuit, a plaintiff still “must act reasonably in anticipating whether litigation arising from an injury will occur.” In addressing reasonableness, a court should consider a non-exhaustive list of factors such as the type and extent of the injury, whether fault for the injury is clear, the level of sophistication of the party and familiarity with the likelihood of litigation is similar situations, and whether the party has hired an attorney, expert, or investigator.

In Koch, plaintiff’s husband died following a car accident where a tire tread, manufactured by Cooper Tire, separated from the left rear tire of the husband’s vehicle, allegedly causing the vehicle to strike a guardrail and overturn. The plaintiff allowed the vehicle and three tires without tread separation to be destroyed, saving only the allegedly defective tire. In the ensuing litigation, Cooper Tire moved to dismiss the lawsuit or impose sanctions against the plaintiff for spoliation of evidence.

Using the standard outlined above, the Supreme Court held the trial court did not err in finding the plaintiff did not actually contemplate litigation at the time the car was destroyed and should not reasonably have contemplated litigation. The Court cited the plaintiff’s lack of previous litigation experience, the belief by plaintiff and her husband that he would recover from his injuries, the plaintiff’s lack of investigation into the accident, and the plaintiff’s decision to retain counsel after the vehicle was destroyed. The Supreme Court also credited the fact that plaintiff’s counsel took steps to preserve evidence, albeit fruitless, once hired several weeks later.

What does this mean for defendants in tort cases moving forward? While the Court in Koch did not find the plaintiff’s conduct sanctionable, the case clarifies that a plaintiff must conform to the same standard as a defendant in preserving evidence relevant to their case and that this duty arises independent of the defendant’s duty. The case also sends a clear signal that a plaintiff will be expected to preserve evidence following consultation with an attorney or expert. Such consultation is a fair indicator that plaintiff anticipated or reasonably should have anticipated litigation. Armed with this case law, defendants are in a strong position to demand preservation of relevant evidence, including data from vehicles, cell phone data, and social media data.

If you have any questions or need more information, please contact Sean Ryan at sryan[email protected].

Google, The Supremes & Cy Pres

Posted on: June 14th, 2018

By: Samantha Skolnick

At the end of April, the U.S. Supreme Court accepted a certiorari petition in the case Frank v. Gaos, No. 17-961, 2018 WL 324121 (U.S. Apr. 30, 2018). The Supreme Court will determine if a class-action settlement involving Google met federal law requirements when $5.3 million of the $8.5 million settlement fund was given to outside groups. The question presented: “Whether, or in what circumstances, a cy pres award of class action proceeds that provides no direct relief to class members supports class certification and comports with the requirement that a settlement binding class member must be ‘fair, reasonable, and adequate.’”

Cy pres is a doctrine where the original objective of the settlor or testator becomes impracticable, impossible and in some instances illegal to perform. Cy pres allows the Court to alter terms of the charitable trust to get as close to the original intention of the testator or settlor as to allow the trust to remain and not flounder.

The core issue in this case is whether this settlement complied with Rule 23(e)(2) which sets the requirement that proposed class action settlements be “fair, reasonable and adequate.” In certain class action situations, funds can be unclaimed when the members claims are small or the process is difficult. To prevent the unclaimed amounts from entering the defendant’s pocket, the money can be directed to other causes, charities and foundations.

Here, the class action stems from allegations that web browsers disclosed Google searches to third-party websites. Three of the named plaintiffs received $15,000 incentive awards, and the rest of the class received nothing. The cy pres award was allegedly given to organizations who promised to use the money to protect internet privacy.  The cy pres recipients included:  World Privacy Forum; Carnegie Mellon University; the Center for Information, Society and Policy at Chicago-Kent College of Law; the Berkman Center for Internet and Society at Harvard University; the Stanford Center for Internet and Society; and AARP. According to the cert petition, class members that were absent received “no relief at all in exchange for their claims—no money, no alteration of the defendant’s allegedly injurious conduct, not even coupons.”

The implications of this decision and how settlement funds are distributed particularly in class actions can be huge. Class actions span from internet privacy to self-driving cars to the on-going tobacco litigation. For now, we wait and see.

If you have any questions or would like more information, please contact Samantha Skolnick at [email protected].