Employment Law - Feb 06, 2014

by Manatt, Phelps & Phillips, LLP
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In This Issue:

  • The More Things Change: U.S. Supreme Court Rules on “Changing Clothes”
  • “Substantial Motivating Factor” Standard Required for California FEHA Public Policy Claim
  • Former Unpaid Interns Reach Record Settlement for $450,000 in Back Pay
  • Temporary Impairment May Constitute A Disability Under ADA, Says 4th Circuit
  • Employer’s Refusal to Reimburse Worker for Vehicle Costs Provides Basis for Constructive Discharge Claim
  • EEOC Continues Push to Enforce GINA with Class-Action Settlement

The More Things Change: U.S. Supreme Court Rules on “Changing Clothes”

Why it matters: In a unanimous decision – save for a single footnote – the U.S. Supreme Court held that the time spent donning and doffing protective gear, including items of clothing, was not compensable pursuant to a provision of the Fair Labor Standards Act (FLSA) allowing parties to collectively bargain over time spent “changing clothes.” Although workers can receive compensation for the time spent changing or “washing up” if the need to do so is an integral part of their principal activity, Section 203(o) of the FLSA established an exemption. Pursuant to the statute, whether or not employees can be paid for the time spent “changing clothes or washing at the beginning or end of each workday” can be negotiated away. Although the steelworkers in the case before the Supreme Court argued that protective gear did not constitute “clothes” and that simply putting the gear on over clothes did not amount to “changing,” the justices disagreed. The holding in Sandifer v. U.S. Steel affirms that employers and employees may agree to designate such time as noncompensable.

Detailed Discussion
A group of current and former steelworkers at United States Steel Corporation filed a collective action pursuant to the FLSA, seeking back pay for the time spent donning and doffing a total of 12 pieces of protective gear.

Because the roughly 800 workers at the Gary, Indiana, plant were required to wear all of the items – a flame-retardant jacket, pair of pants, and hood; a hard hat; a snood; wristlets; work gloves; leggings; metatarsal boots; safety glasses; earplugs; and a respirator – they contended they should be compensated for the time.

One problem: the collective-bargaining agreement negotiated by the steelworkers’ union included a provision that such time was not compensable, pursuant to 29 U.S.C. § 203(o), which states:

“In determining for the purposes of [the minimum-wage and maximum-hours sections] of this title the hours for which an employee is employed, there shall be excluded any time spent in changing clothes or washing at the beginning or end of each workday which was excluded from measured working time during the week involved by the express terms of or by custom or practice under a bona fide collective-bargaining agreement applicable to the particular employee.”

To evade the exemption, the workers distinguished their items as protective gear and not “clothes.” Further, they argued that most workers put the items on over their clothes, meaning that no “changing” occurred.

Writing for the Court, Justice Antonin Scalia sided with the employer.

Dictionaries from the time period § 203(o) was enacted defined “clothes” as “items that are both designed and used to cover the body and are commonly regarded as articles of dress.” Adopting this ordinary meaning of the term, the Court said this definition “does not exclude, either explicitly or implicitly, items with a protective function.”

Finding “no basis for the proposition that the unmodified term ‘clothes’ somehow omits protective clothing,” the Court explained the workers’ argument “runs the risk of reducing § 203(o) to near nothingness.”

The justices also rejected the workers’ definition of “changing.”

“Although it is true that the normal meaning of ‘changing clothes’ connotes substitution, the phrase is certainly able to have a different import,” the Court said. “We think that despite the usual meaning of ‘changing clothes,’ the broader statutory context makes it plain that ‘time spent in changing clothes’ includes time spent in altering dress.”

Applying the definitions to the steelworkers’ case, the Court said nine of the items at issue qualified as “changing clothes” within the meaning of § 203(o). The remaining three – the respirator, glasses, and earplugs – did not satisfy the Court’s standard of clothes, but the justices said time spent putting them on and taking them off was still not compensable.

Importantly, the justices declined to adopt a de minimis standard for the non-clothes items. “A de minimis doctrine does not fit comfortably within the statute at issue here, which, it can fairly be said, is all about trifles – the relatively insignificant periods of time in which employees wash up and put on various items of clothing needed for their jobs,” Justice Scalia wrote.

Declining to convert federal judges into time-study professionals, the Court instead held that courts should look at the big picture to characterize how the employee’s time was spent. “Just as one can speak of ‘spending the day skiing’ even when less-than-negligible portions of the day are spent having lunch or drinking hot toddies, so also one can speak of ‘time spent changing clothes and washing’ when the vast preponderance of the period in question is devoted to those activities,” the Court said.

“The question for courts is whether the period at issue can, on the whole, be fairly characterized as ‘time spent in changing clothes or washing.’ If an employee devotes the vast majority of the time in question to putting on and taking off equipment or other non-clothes items (perhaps a diver’s suit and tank), the entire period would not qualify as ‘time spent in changing clothes’ under § 203(o), even if some clothes items were donned and doffed as well,” the Court wrote. “But if the vast majority of the time is spent in donning and doffing ‘clothes’ as we have defined that term, the entire period qualifies, and the time spent putting on and taking off other items need not be subtracted.”

Noting that the federal court found the time spent putting on the required safety glasses and earplugs was minimal, a finding affirmed by the Seventh U.S. Circuit Court of Appeals (with respirators “beyond the scope” of § 203(o)), the Court concluded that the time was therefore not compensable.

All nine justices signed onto the opinion, with the exception of Justice Sonia Sotomayor, who dissented to a single footnote discussing how to construe exemptions under the FLSA.

To read the opinion in Sandifer v. U.S. Steel Corp., click here.

“Substantial Motivating Factor” Standard Required for California FEHA Public Policy Claim

Why it matters: Employers are seeing positive results from last year’s California Supreme Court decision in Harris v. Santa Monica, which established a heightened standard for plaintiffs alleging violations of the state’s Fair Employment and Housing Act (FEHA) to prove that discrimination was “a substantial motivating factor” rather than just “a motivating factor.” In a recent victory for employers, a California appellate court held that same heightened standard should be applied to plaintiffs claiming a public policy violation where the policy asserted was based on the FEHA, reversing a $238,328 jury verdict.

Detailed Discussion
Romeo Mendoza was employed by Western Medical Center for more than 20 years as a nurse, receiving positive reviews and commendations for his work. But in 2010 he reported that a supervisor was sexually harassing him. The allegations included physical contact, inappropriate comments, and lewd displays.

Western Medical conducted an investigation of Mendoza’s claims. The other employee said that Mendoza consented to the conduct and participated in other mutual interactions. The hospital fired both men for unprofessional conduct.

At trial on Mendoza’s suit for wrongful termination in violation of public policy, the jury found for the plaintiff and awarded a total of $238,328 in damages. However, the verdict form asked the jurors “Was Romeo Mendoza’s report of sexual harassment . . . a motivating reason for [the defendants’] decision to discharge Romeo Mendoza?”

Based on last February’s holding in Harris v. Santa Monica, the Court of Appeals found the language of the verdict form to be prejudicial error requiring reversal.

Harris involved a plaintiff who claimed her employer terminated her because she was pregnant. The California Supreme Court determined that the proper standard was whether the discrimination was a substantial motivating factor in the employer’s decision, not merely a motivating factor.

“Requiring the plaintiff to show that discrimination was a substantial motivating factor, rather than simply a motivating factor, more effectively ensures that liability will not be imposed based on evidence of mere thoughts or passing statements unrelated to the disputed employment decision,” the state’s highest court wrote. “At the same time…proof that discrimination was a substantial factor in an employment decision triggers the deterrent purpose of the FEHA and thus exposes the employer to liability, even if other factors would have led the employer to make the same decision at the time.”

Effective June 2013, California Civil Jury Instructions for Judges and Attorneys (CACI) No. 2430 was updated to read: “That [insert alleged violation of public policy…] was a substantial motivating reason for [name of plaintiff]’s discharge.” The Court noted that the corresponding special verdict form also inserted updated language.

“It would be nonsensical to provide a different standard of causation in FEHA cases and common law tort cases based on public policies encompassed by the FEHA,” the appellate panel concluded. “The court should have instructed the jury to determine whether Mendoza’s report of sexual harassment was a substantial motivating reason for Mendoza’s discharge.”

Particularly because the jury’s vote was extremely close (nine to three in favor of Mendoza), the appellate panel said the error was prejudicial, remanding the case for a new trial.

The Court also took the opportunity to remind employers to conduct thorough investigations when an employee reports sexual harassment. At trial, Mendoza’s expert witness pointed to several shortcomings in Western Medical’s investigation that provided support for his retaliation claims, the Court said, like interviewing the two men together rather than separately.

“[E]mployers should conduct a thorough investigation and make a good faith decision based on the results of the investigation,” the panel advised in a footnote. “Hopefully, this opinion will disabuse employers of the notion that liability (or a jury trial) can be avoided by simply firing every employee involved in the dispute.”

To read the decision in Mendoza v. Western Medical Center, click here.

Former Unpaid Interns Reach Record Settlement for $450,000 in Back Pay

Why it matters: Employers across the country are facing an onslaught of collective actions filed by former unpaid interns seeking minimum wage and overtime. Now, in what class counsel is touting as the largest-ever settlement in a collective action brought by unpaid interns, Elite Model Management has agreed to pay a total of $450,000 to a class of approximately 123 former interns. As courts determine that interns were really employees – like a New York federal court judge held in a high-profile suit against Fox Entertainment Group last year – could the Elite settlement serve as a model for other employers facing similar suits?

Detailed Discussion
Spending weeks updating modeling books and chaperoning models to bookings constituted real work that should be compensated, Dajia Davenport claimed in her February 2013 complaint against Elite Model Management.

Davenport, who worked as a Fashion Week intern in New York City in 2010, claimed the agency relied upon unpaid interns that it classified as exempt trainees instead of hiring and paying employees, in violation of both New York labor law and the Fair Labor Standards Act. Filed as a putative collection action, Davenport sought $50 million in damages for unpaid wages and overtime, as well as liquidated damages and interest.

The parties notified the Court in October that they had reached a deal.

Under the proposed agreement, the modeling agency promised to pay a total of $450,000. The estimated 123 members of the class would each receive a minimum of $700.64 based on a four-week internship at $175.16 per week, up to a maximum of $1,751.61 for a ten-week internship. One-third of the settlement payment will be considered wages subject to wage withholdings and deductions. Class counsel plans to request an award of $143,500, or 31.8 percent of the total settlement fund.

U.S. District Court Judge Alison J. Nathan granted preliminary approval to the deal, certifying two classes of interns – those who worked for Elite in New York from Feb. 15, 2007, until the approval date, and unpaid interns employed elsewhere in the United States after Feb. 15, 2010.

A final approval hearing is set for May 1, 2014.

To read the order granting preliminary approval of the settlement in Davenport v. Elite Model Management, click here.

Temporary Impairment May Constitute A Disability Under ADA, Says 4th Circuit

Why it matters: In the first decision from a federal appellate court interpreting the amendments to the Americans with Disabilities Act (ADA) expanding the definition of “disability,” the Fourth U.S. Circuit Court of Appeals held that “a sufficiently severe temporary impairment may constitute a disability.” Reversing dismissal of a plaintiff’s ADA suit, the Court took an extremely broad reading of the Americans with Disabilities Act Amendments Act (ADAAA) to find that an employee who couldn’t walk for at least seven months due to a serious leg injury was disabled under the Act. The Court declined to set a hard-and-fast rule about how severe and how long an impairment must last in order to trigger coverage under the statute, although it did cite regulations from the Equal Employment Opportunity Commission that severe impairments lasting less than six months could be considered substantially limiting. The implication for employers, even outside of the 4th Circuit: be prepared to respond to a request for accommodations from employees with temporary impairments.

Detailed Discussion
Just three months into his job as a senior analyst for Altarum Institute in Alexandria, Va., Carl Summers fell while exiting a commuter train on his way to work. Summers sustained serious injuries to both of his legs, necessitating multiple surgeries.

Treating doctors estimated that Summers would be unable to walk normally for at least seven months. Summers requested short-term disability benefits and accommodations to allow him to work from home while he recovered. Altarum did not engage in any interactive process with Summers and terminated him.

Summers filed a suit pursuant to the ADA alleging wrongful discharge on account of his disability. His impairment substantially limited his ability to walk, which qualified as a disability, he contended. A federal court judge dismissed the complaint, ruling that his “temporary condition” did not fall within the purview of the Act.

A three-judge panel of the 4th Circuit reversed.

Although noting it was the first appellate court to apply the ADAAA’s expanded definition of disability, the panel said it had “no difficulty” reaching its decision: “Summers has unquestionably alleged a ‘disability’ under the ADAAA.”

The 2008 ADAAA was a response to a series of U.S. Supreme Court decisions lawmakers felt improperly restricted the scope of the ADA, the Court explained – including a 2002 decision that suggested a temporary impairment could not qualify as a disability under the statute.

The Equal Employment Opportunity Commission promulgated regulations under the ADAAA expressly providing that “effects of an impairment lasting or expected to last fewer than six months can be substantially limiting” for purposes of proving an actual disability. 29 C.F.R. § 1630.2(j)(1)(ix). Impairments that last only a short period of time are typically not covered, the EEOC added in an appendix, but they may be covered if the injury is sufficiently severe.

“Although short-term impairments qualify as disabilities only if they are ‘sufficiently severe,’ it seems clear that the serious impairment alleged by Summers is severe enough to qualify,” the Court wrote. As the EEOC regulations offer an example of an employee who cannot lift more than 20 pounds for several months as sufficiently impaired to be considered disabled within the Act, “then surely a person whose broken legs and injured tendons render him completely immobile for more than seven months is also disabled.”

The panel declined to accept Altarum’s contention that the EEOC regulations should not be accorded deference, finding them reasonable and advancing the ADAAA’s goal to broaden the coverage of the ADA. The employer’s floodgates argument was similarly unavailing, as the Court said that “[t]emporary disabilities require only temporary accommodations.” And the expansive definition of impairment includes not just temporary impairments caused by permanent conditions but those caused by injuries, like Summers’, the Court said.

“Under the ADAAA and its implementing regulations, an impairment is not categorically excluded from being a disability simply because it is temporary,” the panel concluded. “The impairment alleged by Summers falls comfortably within the amended Act’s expanded definition of disability.”

To read the decision in Summers v. Altarum Institute, click here.

Employer’s Refusal to Reimburse Worker for Vehicle Costs Provides Basis for Constructive Discharge Claim

Why it matters: California employers, take note: the refusal to reimburse a low-wage employee for costs associated with using his vehicle on the job can support a constructive discharge claim. Jorge Vasquez was paid $10 per hour but alleged that when the cost of gas and maintenance for his car – which he said he drove at least 30 miles per day for work purposes – was factored in, he was paid less than minimum wage. Unable to afford the upkeep, he quit and sued his employer. A California Court of Appeal reversed dismissal of the suit, concluding that Vasquez’s claims were sufficient to support a claim for constructive discharge in violation of public policy.

Detailed Discussion
As a maintenance technician for Franklin Management Real Estate Fund, Jorge Vasquez claimed that he was instructed by his supervisors to drive his own truck for work-related errands, like going to the hardware store to buy items needed for the apartments owned or managed by his employer.

Vasquez estimated that he drove a minimum of 30 miles each day running such errands and repeatedly requested that he be reimbursed for gas and vehicle maintenance. The employer refused. At a rate of 55 cents per mile, Vasquez estimated that he should have been reimbursed $330 each month – a significant portion of his $1,600 monthly salary. When factored into his salary of $10 per hour, Vasquez claimed he had “no choice to resign,” as he was unable to afford the costs related to the job.

Franklin Management moved to dismiss Vasquez’s suit, arguing that the failure to reimburse for mileage was not sufficiently intolerable or aggravated to support a claim of constructive discharge.

But the court disagreed, reversing a demurrer for the employer. Although deprivations of salary or other economic benefits generally do not support a constructive discharge claim, the plaintiff was “in an untenable position,” the panel said.

Vasquez “alleged not only that [Franklin Management] violated the Labor Code by failing to reimburse for mileage, but that the duties [the employer] assigned required such extensive driving that the reimbursement to which he was entitled represented a significant percentage of his already low salary,” the court wrote. “Forced to divert so much of his salary to gasoline and vehicle maintenance, he was unable to pay basic living expenses.”

In a footnote, the court calculated that Vasquez earned $7.9375 per hour, less than the minimum wage of $8 per hour in force at the time of his employment ($80 per day, with vehicle expenses of $16.50 per day based on a rate of 55 cents per mile, leaving $63.50).

In addition to the daily costs, Vasquez “was wearing out the very vehicle he needed to maintain his livelihood, either by retaining his employment with [Franklin Management] or finding another job,” the court said. “Had he continued, he would soon have found himself with no job and no vehicle.”

California recognizes timely payment of employee wage claims to be an important part of public welfare, the panel added, and to the extent Vasquez’s claims were based on Franklin Management’s failure to pay him the minimum wage, sufficiently stated a claim for violation of public policy.

The opinion wasn’t a total victory for Vasquez, however, as the court affirmed the demurrer to his cause of action for intentional infliction of emotional distress.

To read the opinion in Vasquez v. Franklin Management Real Estate Fund, click here

EEOC Continues Push to Enforce GINA with Class-Action Settlement

Why it matters: Just one month into 2014, the Equal Employment Opportunity Commission settled its first systemic class-action suit claiming an employer violated the Genetic Information Nondiscrimination Act (GINA) by requiring applicants to undergo postoffer, preemployment medical exams that included questions about family medical history. The agency filed its first lawsuit alleging violations of GINA last year, which resulted in a settlement for $50,000 and injunctive relief. Employers should consider a review of the statute to avoid running afoul of its requirements, particularly as the EEOC included enforcement of GINA as one of the six priority items on its Strategic Enforcement Plan.

Detailed Discussion
Founders Pavilion, Inc., a nursing and rehabilitation center located in Corning, N.Y., requested that after accepting an offer of employment applicants undergo a medical exam. As part of the exam, applicants were asked to complete an “Occupational & Environmental Health Services Patient History Form,” which included questions about family medical history.

Over an almost two-year period, Founders also requested the information as part of return-to-work and annual staff medical exams as well, engaging “in a pattern or practice of employment practices made unlawful by GINA,” according to the EEOC’s complaint.

In addition, the agency alleged that Founders violated both the Americans with Disabilities Act as well as Title VII. Founders refused to hire, or fired, three women because they were pregnant, the EEOC said, and terminated two employees the company perceived to be disabled.

To settle the charges, Founders agreed to pay a total of $370,000 – $110,400 to the 138 individuals who were asked over an almost two-year period about their genetic history ($800 each) and $259,600 to the five people impacted by the ADA and Title VII violations.

Founders was purchased after the EEOC’s complaint was filed last May and ceased business operations. However, the consent decree mandates that if the facility resumes operations, it must post notices and provide information about the agency’s lawsuit and the settlement to employees. A new antidiscrimination policy must be adopted – featuring specific references to genetic information, disability, and pregnancy discrimination – and distributed to all employees, who are also required to receive antidiscrimination training.

The agreement will remain in effect for five years, during which time Founders said it would provide periodic reports to the EEOC about any internal discrimination complaints.

To read the complaint in EEOC v. Founders Pavilion, click here.

To read the consent decree, click here

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.