Welcome to Legal Briefs for HR!  This update on issues that matter to employers is provided to HR professionals, in-house counsel, business owners and others who can benefit from receiving a monthly update on new laws, recent court cases, helpful websites and pending legislation.  Anyone is welcome to join the group and receive this FREE newsletter, which is sent to over 3300 subscribers all over the U.S. (and even a few overseas)!  Just email me to be added to the group (or removed) and you can find previous editions posted on the Munck Carter, LLP law firm website at www.munckcarter.com under E-Newsletter.

Here’s my valentine to you:

Overtime Onus Continues – Several big bucks settlements between employers and the Wage and Hour Division (“WHD”) of the U.S. Department of Labor are not-so-subtle reminders that there are many ways to make a mistake when it comes to paying overtime.  The new year is an ideal time to double-check your classifications, policies and methods, to  avoid these mistakes:

• The largest settlement in WHD history ($33 million) arose from Wal-Mart’s self-reported concern over its record-keeping and compensation practices.  The five specific mistakes were [i] paid overtime to salaried nonexempts only after they worked more than the 45 to 48 hour “fixed” workweek; [ii] premium based on geographic location not included in the regular rate; [iii] nondiscretionary bonuses not included in the regular rate; [iv] failure to include paid time off in calculating bonuses that are subject to overtime; and [v] computing regular rates based on biweekly pay periods instead of the work week.  The records review uncovered overpayment of about 215,000 current and former workers, but Wal-Mart agreed it would not seek to recover those amounts.  Wal-Mart has set up a website (www.dol.settlement.wal-mart.com) and a toll-free number (888.262.1559) to field questions and has agreed to include affected workers going back five years, rather than the normal two-year limitations period, for workers in all 50 states.  Chao v. Wal-Mart Stores Inc. (W.D. Ark. 125-07).  California’s DOL filed a lawsuit the same day, making similar allegations that are specific to workers in that state. 
• A $12.8 million settlement will be divvied up among a class of Wells Fargo technical workers who claimed they were mistakenly treated as exempt from the FLSA’s overtime requirement, denied meal mandatory meal breaks, and the failure to properly credit all hours worked to a cash balance plan violated ERISA.  The class of 4500 workers in 39 states were called “business analyst” and “business consultant” but their duties involved producing and updating automated versions of documents and routine support, such as updating user profiles.  Gerlach v. Wells Fargo & Co. (N.D. Cal. 1-19-07)

Troubling Trend – Employers already know (or should know) that the U.S. Supreme Court issued a new standard  last summer for Title VII retaliation claims, allowing conduct that falls short of an ultimate employment action (e.g. firing, pay cut) to support a claim.  See Legal Briefs for HR #6-2006.  States are also jumping on the bandwagon, as demonstrated by a case where a former employee is proceeding on a claim of retaliatory discharge in violation of public policy, claiming he was fired for reporting an incident of workplace violence.  The incident?  Per plaintiff’s complaint, a subordinate employee “angrily disagreed with Plaintiff, raised his voice to a loud tone, and stood over the Plaintiff in a threatening manner” during a workplace meeting.  What public policy?  The court observed that the state constitution provides for the “health, safety and welfare of the people” and recently enacted statutes require health care employers to have a plan for reporting workplace violence and employers must provide job-protected leave for victims of violence.  The message?  Involve HR and/or legal counsel in termination decisions and be sure to check the state statutes and common law, which may provide additional recourse to an unhappy former employee.  Daoust v. Abbott Labs (N.D. Ill. 1-11-07)

The World is Not Your Oyster – A company president, facility manager and the HR manager pled guilty to conspiracy to hire undocumented aliens and each faces up to six months in prison and a $3000 fine per illegal alien.  This, in addition to the company being on probation for five years and paying a $500,000 fine.  The seafood processing company was found to have violated multiple federal immigration laws by, among other things, fraudulently obtaining H2-B visas and failing to properly react to SSA “no match” letters on nearly 900 employees.  Exhibit A? A binder labeled “Bad SS#s” . . .   ouch.  United States v. Hillman Shrimp & Oyster Co. (S.D. Tex. 1-16-07).

Speaking of the World – Effective January 23, 2007, air travelers who are citizens of Canada, Mexico and Bermuda, as well as U.S. citizens who are returning to the U.S., must show their passport to enter the U.S. The same requirement will apply to entrants who come via vehicle, cruise ship or on foot, next year.  Take note, both business and pleasure travelers and get or renew those passports!

Simply the Best – The January 22 issue of Fortune magazine is a great read, including its annual “100 Best Companies to Work For.”  Our ten-gallon hats are off to Texas-based employers (and LB4HR subscribers) who are being recognized, including:

#4 – Container Store (Coppell)

#5 – Whole Foods Market (Austin)

#9 – Methodist Hospital System (Houston)

#12 – David Weekly Homes (Houston)

#22 – Valero Energy (San Antonio)

#65 – Alcon Laboratories (Fort Worth)

#79 – TDIndustries (Dallas)

#83 – EOG Resources (Houston)

#86 – National Instruments (Austin)

#87 – Texas Instruments (Dallas)

#90 – Mens Wearhouse (Houston)

On the Bubble? – Some small employers successfully avoid Title VII and ADA claims by arguing they have less than the requisite 15 employees (in a 20-week period during the current or prior calendar year).  In 2003, the U.S. Supreme Court set out a 6-factor test, to determine if a shareholder-director of a professional corporation should be included in the headcount, for determination of employer status.  Now, the 1^st Circuit has determined the same test should be applied to closely held corporations.  DeJesus v. LTT Card Services Inc. (1^st Cir. 1-19-07).  If you’re on the bubble, consider [1] whether the entity can hire/fire or set the individual’s work; [2] to what extent the individual’s work is supervised; [3] whether the individual reports up to another person; [4] to what extent the person influences the entity; [5] parties’ intent as expressed in written agreements; and [6] whether the individual has the opportunity for profit/loss and shares in liabilities of the entity.

Thinking Green – Per the 2-2-07 Dallas Morning News, Bank of America is extending the geographic scope of a $3000 reimbursement (for buying a new hybrid car) to employees in Texas.  The benefit was offered last year to workers in Boston and Los Angeles and will now encompass 185,000 employees across the country.  Per the Fortune magazine article, Google offers its employees $5000 per hybrid car purchase.

Define “Relevance” - HR has long encouraged hiring managers to focus on job-related attributes while interviewing and making selections.  The City of Lansing, MI has taken it a step further, by prohibiting employment discrimination that is based on “irrelevant characteristics” effective 12-20-06.  Per the ordinance, those characteristics include but are not limited to the person’s actual or perceived race, religion, ancestry, national origin, color, sex, age, height, weight, student status, marital status, familial status, housing status, veteran status, political affiliation or belief, sexual orientation, gender identity or expression, mental or physical limitation, and source of income.   Violators will be fined $150 for a first offense, up to $250 for second offense and up to $500 for a third offense.  Lansing’s City Council passed a similar ordinance in March 1996, but it was eliminated via a voter referendum the following November.  Opponents of the 2006 measure say they will try to overturn the measure by getting it on the ballot again, in 2007.

Bye Bye, Baby UI – The U.S. DOL published a final rule on 1-16-07, limiting all states’ payment of unemployment compensation to individuals who are able and available (“A&A”) for work.  The rule becomes effective 2-15-07.  The A&A requirement has been implied and acquiesced to, but not expressly included in either federal law or the Code of Regulations, until now.  The omission became a source of controversy during the creation and ensuing rescission of the Birth and Adoption unemployment compensation regulation (aka Baby UI), with both sides citing to the omission to make their case.  Baby UI temporarily allowed states to amend their laws and offer UI to parents of newborn children who chose to stay at home.  The new reg can be found at 20 CFR Part 604.

Smoke Signals – Smoking in the workplace is increasingly regulated as a matter of state law and/or local ordinance.  Texas employers can tap into an ordinance database, provided by the Texas Dep’t of State Health Services, at http://www.utmb.edu/shsordinances/createReports.aspx.  Also, add RI to NM and MD, as states that mandate inclusion of payment for smoking cessation in certain individual and group health plans.  The RI requirement is triggered by having a plan that provides for coverage of physician’s services and major medical or other comprehensive coverage.  The MD requirement is triggered by the inclusion of prescription drug coverage in the plan. Oddly, the NM requirement is triggered by a plan that offers maternity care. 

Tick Tock – If you were thinking about commenting on pending revisions to the FMLA regs, it’s not too late!  U.S. DOL extended the deadline to 5 p.m. on 2-16-07. You can tell them how it really works by writing to Richard M. Brennan, Wage and Hour Division, ESA, U.S. Dep’t of Labor, Room S-3502, 200 Constitution Ave. NW, Washington DC  20210.  You can also vent via email at whdcomments@dol.gov or send up to 20 pages via fax to 202.693.14332.

Until next time,

Audrey E. Mross

Labor & Employment Attorney

Munck Carter, LLP

600 Banner Place Tower

12770 Coit Road

Dallas, TX 75251

972.628.3661 (direct)

972.628.3616 (fax)

214.868.3033 (cell)

amross@munckcarter.com

www.munckcarter.com