In This Issue

• Fair Labor Standards Act Violations
• Employer Must Have Knowledge of Pregnancy in Order to Prove Discrimination Claim
• FMLA Medical Certifications
• Questions from Ohio Employers
• Miscellaneous
• Attorneys in the News

Fair Labor Standards Act Violations

By Larry Feheley

A number of commentators have observed that the Fair Labor Standards Act, the federal law that governs wages and hours, may be the law that is most frequently and commonly violated by employers. As a result, many plaintiffs' attorneys have developed a growing practice of pursuing employee claims based on the FLSA.

Many times violations of the law are either inadvertent or innocent. However, the resulting liability can be significant, because there are often a number of employees involved and the period of exposure is at least two years.

Among the more common errors in FLSA overtime compliance are the following:

1. Even though an employee is paid a salary, he may still be owed overtime pay. In order to be exempt from the overtime requirements, an employee must meet all of the specific criteria for an exemption under the law.

2. An employee's overtime rate is calculated on the basis of his "regular rate of pay." If an employee is paid on the basis of two or more different wage rates during a week, like when different jobs are performed, special attention must be given to determining the regular rate for overtime pay. Likewise, if an employee receives a non-discretionary bonus or other in-kind compensation, it may result in a redetermination of his regular rate of pay for overtime purposes.

3. "Compensatory time," in the sense of allowing employees time off in a later week to balance out longer hours worked at an earlier time, is not permitted for private employers. Instead, the employee must be paid overtime during the week that he or she works in excess of forty hours.

4. Accurate records of hours of work must be maintained by employers. If the employer does not have accurate records, then the hours that the employee testifies that they worked will be considered to be presumptively true.

5. The FLSA requires that overtime be paid whenever an employer "suffers" or "permits" hours in excess of forty to be worked. Therefore, employees cannot be "encouraged" to work extra hours without reporting the time or receiving overtime pay, nor can employers avoid the overtime obligation if they are simply aware that the extra hours were worked (i.e., even if not specifically directed or required).

The U.S. Department of Labor enforces the FLSA. However, private lawsuits by employees areallowed under the law. In recent years, a wave of FLSA class actions have been filed. The theory behind the class action is that because the employer utilizes standardized pay practices and policies, one lawsuit, maintained by one representative employee, can seek recovery for all of the employees affected by the pay practice.

In one class action case, a $90 million jury verdict was entered against the Farmers Insurance Exchange. In April, 2002 Starbucks agreed to pay $18 million to settle two class action lawsuits that claimed that managers were routinely misclassified as exempt from overtime. On July 17, 2002 RadioShack Corporation agreed to pay almost $30 million to approximately 1,300 current and former store managers to settle a class action lawsuit alleging improper overtime exemptions. On the same day, a California state court certified a class consisting of all laborers, entitling them to pursue claims against two temporary agencies for unpaid wages for waiting time, travel time, and return time.

A recent California appeals court decision, however, has given some solace to employers. In Sav-On Drug Stores v. Superior Court, 118 Cal. Rptr. 2d 792 (2nd Dist. 2002), the appellate court ruled that a claim on behalf of over 1,400 employees of the retail stores could not be maintained as a class action. Although the company had standardized and commonly-followed policies, the appeals court ruled that the case involved too many individualized factual issues regarding each employee's eligibility for recovery.

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Employer Must Have Knowledge of Pregnancy in Order to Prove Discrimination Claim

By Tom Metzger

While the decision in this particular case was not ground-breaking, some of the facts and circumstances that gave rise to the decision serve as important reminders for employers.

An employee named Ms. Prebilich had worked with a radio station for several years, and her work performance generally was quite good. However, in the several months prior to her termination, Ms. Prebilich's job performance dropped off significantly. For example, her employer observed that she failed to appear at important meetings, missed deadlines, and took excessively long lunch breaks.

Ms. Prebilich's supervisors met with her to discuss the job performance problems. However, her performance did not improve. The company's records show that on November 20 the supervisors called the human resources department to begin the termination process due to "work quality" problems.

Just four days later, Ms. Prebilich told her supervisors that she was pregnant and that she would be needing some time off. (Ms. Prebilich had actually learned that she was pregnant approximately ten days earlier, and she had told some of her co-workers at that time). Two days after Ms. Prebilich told her supervisors about her pregnancy, she was informed of the decision to terminate her employment.

Ms. Prebilich sued her employer for pregnancy discrimination, claiming that the proximity in time between her disclosure of her pregnancy and her discharge was sufficient to prove discrimination. The court said, not so fast.

The court emphasized that a necessary element in any claim for pregnancy discrimination is the link between the employee's pregnancy and the decision to fire the employee. In other words, Ms. Prebilich was required to show that her employer knew of her pregnancy when the decision to discharge was made.

However, because the employer was able to prove that it made the decision to terminate Ms. Prebilich before it actually learned of her pregnancy, it was not enough for Ms. Prebilich to show that she was fired just two days after she told her supervisors about the pregnancy.

The employer here was fortunate that it carefully documented its meetings regarding the employee's job performance and the timing of its decision to discharge the employee. Had it failed to do so, the employer may not have been able to demonstrate that the decision to terminate the employee was actually made before she revealed her pregnancy — and the case could have been decided against the employer.

Prebilich v. Gaylord Entertainment Co., United States Court of Appeals, Sixth Circuit. Case No. 00-5946.

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FMLA Medical Certifications

By Larry Feheley

It's a common problem. An employee requests time off work for a reason that appears to fall within the FMLA. The employer grants the leave and conditionally approves it as FMLA leave. The employer then gives the employee a medical certification form to be completed by the employee's health care provider, which will confirm that the leave indeed qualifies for FMLA coverage. Everything is fine, except that the employee doesn't return the completed medical certification. When asked, the employee says that he delivered the form to his doctor but, despite his best efforts, the doctor has not completed or returned the form.

The FMLA regulations provide that the employer "may" (but is not required to) require an employee to submit the medical certification form. The employer must provide written notice to the employee that the certification is required, and the employer must advise the employee of the consequences of a failure to return the certification. 29 C.F.R. §825.305. The employee must be given at least 15 days to return the completed certification. The regulations state that if the employee does not return the completed certification, the employer may treat the leave as non-FMLA leave. However, the Regulations provide that the employee must return the completed certification within the time required by the employer "or as soon as reasonably possible under the particular facts and circumstances." 29 C.F.R. §825.311(b); 29 C.F.R. §825.305(b).

In light of this expansive language in the Regulations, discharging an employee who fails to timely return a medical certification can be very dangerous. A good example is a case that was recently decided here in Columbus. In Chenoweth v. Wal-Mart Stores, Inc., 159 F. Supp. 2d 1032 (S.D. Ohio 2001), the employee immediately took the medical certification form to the doctor. When she called to inquire, she learned that the doctor could not complete the form. She then took the form to the occupational therapist to complete. She was terminated before she was able to have the certification filled out. The district court held that the employee had acted diligently to provide the certification "as soon as reasonably possible" under the circumstances and, accordingly, refused to uphold the discharge.

The lesson is that employers should not act too quickly when a medical certification is not received when it is expected. The employee must be encouraged to submit the certification, in writing, and the consequences of a failure to submit it must be stated. In addition, the employer should take steps to find out what is causing the delay in submission of the certification. Only when it can objectively be shown that the employee has not acted with reasonable diligence should discharge be considered.

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Questions from Ohio Employers

By Tom Metzger

17. As a private employer, can we use lie detector tests for pre-employment screening?

1. In general, no. Under the Employee Polygraph Protection Act (otherwise known as the "EPPA"), most private employers are prohibited from using lie detector tests either for pre-employment screening or during the course of employment. In addition, private employers generally may not discharge, discipline, or discriminate against an employee or job applicant for refusing to take a test.

   Subject to some restrictions, the EPPA does permit polygraph tests to be given to certain job applicants of security-related companies (such as to an armored car operator, or a security guard), and of pharmaceutical manufacturers, distributors and dispensers. In addition, and again with certain restrictions, employers who reasonably suspect that an employee is involved in a workplace incident that resulted in economic loss or injury to the employer (such as a theft or embezzlement) may request polygraph tests. However, even in those limited circumstances when a polygraph test would be allowed, the test must be administered in accordance with strict standards, and the examiner must be licensed and bonded or have professional liability coverage. In addition, the EPPA contains strict limitations against the unauthorized disclosure of information gathered during a polygraph test. In the end, if you are considering using a polygraph test, consult with legal counsel before proceeding in order to ensure that you are satisfying all of the requirements.

17. Are we required to pay employees a premium for weekend or holiday work?

1. No. Employers are not required to issue premium pay to an employee simply because the employee works over the weekend or during a holiday. Of course, an employer may have agreed to pay such a premium through a contract or through collective bargaining. In addition, employers would be required to pay a premium for overtime if a non-exempt employee is working more than 40 hours in a particular week. But there is no independent requirement to pay an employee a weekend or holiday premium.

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Miscellaneous

By Tom Metzger

Emotional Distress Claim Can Proceed Based upon Comments Relating to Sexual Orientation

This case demonstrates that although Ohio law does not recognize a cause of action for sexual orientation discrimination, employers may still be liable for allowing such discrimination to occur. In this case an employee claimed that he had been repeatedly harassed for four years by co-workers and supervisors at the General Electric Company because of his sexual orientation, and that he had suffered from depression and emotional distress based upon the conduct. While the trial court had dismissed the employee's complaint, the Court of Appeals determined that the employee can proceed with his claim for intentional infliction of emotional distress. Consequently, the case has been sent back to the trial court for further deliberations. Employers should also keep in mind that many municipalities in Ohio have adopted ordinances that prohibit discrimination based on sexual orientation.

Tenney v. General Electric Co. et al., Ohio Court of Appeals, Trumbull County, Case No. 2001-T-0035. 2002-Ohio-2975.

Employee's Claim of Intentional Tort Can Proceed to Trial

This case demonstrates the importance of implementing a lockout/tagout system where appropriate. The court overturned summary judgment in favor of the employer and held that an employee could pursue claims for intentional tort and retaliatory discharge. The employee's claim for an intentional tort survives because the employee claimed to be at risk from electrocution, the employer did not have a lockout/tagout system, and the employee ultimately was injured. The court determined that the employee may have sufficient facts to demonstrate at trial that the employer knew with substantial certainty that the employee would be harmed. In addition, the court determined that the employee may be able to prove that his employer's reason for termination (poor job performance) was pretextual because the employee had not been warned that his job performance was poor, the employee had complained several times about the lack of safety procedures, and the company created the document that supported the employee's discharge after it discharged the employee.

McKinley v. Standby Screw Machine Products Co., Ohio Court of Appeals, Cuyahoga County. Case No. 80146. 2002-Ohio-3112.

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Attorneys in the News

Tom Metzger and Chris Weber were successful in obtaining the dismissal of all claims in an employment-related action in federal court on behalf of an employer. The complaint by the former employee against Kegler Brown's client included allegations of age discrimination, breach of implied contract, wrongful discharge in violation of public policy, and infliction of emotional distress. After completing discovery in the case, Tom and Chris submitted a motion for summary judgment on behalf of the employer. Before the matter went to trial, the federal court in Dayton granted summary judgment on all claims.

Tom Metzger was successful in having all claims in a failure-to-promote action in federal court dismissed on behalf of an employer. The complaint by the employee primarily concerned an allegation that she was denied a promotion based upon her gender. After discovery was completed, Tom submitted a motion for summary judgment to the federal court in Columbus on behalf of the employer. The court recently granted the summary judgment motion, and the employee's complaint was dismissed in its entirety prior to trial.

Tom Metzger has been awarded the AV rating in Martindale-Hubbell. An AV rating identifies a lawyer with very high to preeminent legal ability and is a reflection of expertise, experience, integrity and overall professional excellence.

John Lowe was quoted in the article "Dress code good strategy for desktop photo display" in Business First on August 26, 2002.

Tom Metzger was quoted in the article "Wireless phone policies might take sting out of litigation" in The Daily Reporter on July 7, 2002.

Larry Feheley was quoted in the article "Employee EEO training increases workplace cohesion, limits liability" in The Daily Reporter on June 14, 2002.

John Lowe wrote the article "Kow child labor specifics before adding summer staff" which appeared in Business First.

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