Wednesday, September 24, 2014

Lessons From the NFL: Thoughtful Planning To Avoid the Limelight

Another Sunday has come and gone and with it, somewhat predictably, another Vikings loss. What’s remarkable about this week, however, is that the team was without its star player, Adrian Peterson. Mr. Peterson has been barred from team activities pending the resolution of his criminal indictment for child abuse. Mr. Peterson has admitted to disciplining his 4-year-old son with a wooden switch and injuring the child in the process. The Vikings organization has been widely criticized for its initial response to Adrian Peterson’s indictment. The Vikings initially planned to let Mr. Peterson continue playing, but reversed its position after widespread public outrage to this initial plan.

If you follow football news at all, you know that the Peterson situation mirrors, in many respects, other football news. The NFL is currently under siege for mishandling its initial response to a domestic violence incident involving Ray Rice, a marquee player for the Baltimore Ravens. There are reports that the NFL knew of Mr. Rice’s conduct for quite some time before it took responsive action. In both situations, the football organizations have been accused of turning a blind eye to egregious conduct to keep their star players in the game. The public backlash and negative reaction from sponsors have prompted the NFL and its teams to take more serious action in their later responses to the Rice and Peterson incidents. 

Events like this are good times to reflect on how the rules work for employers and how to handle matters well to try to avoid the public limelight. As a general starting point, the rule in most states, including Minnesota, is “at-will employment.” An employer can take action against an employee for any reason, unless the reason is unlawful (i.e. because of an employee’s legally protected class status or in retaliation for protected activity, like union organizing or taking protected leave). But what about criminal activity?  On that front, employers need to exercise caution. It is generally unlawful to act based solely on an arrest rather than the conduct at issue. In addition, some states, such as Wisconsin, prohibit discrimination because of an employee’s conviction record as well, unless the conduct is sufficiently job-related. Likewise, it can violate federal law to take negative action against an employee for criminal conduct unless there is a tight nexus between the conduct at issue and the individual’s job duties that creates a genuine risk for an employer.

Losing fans and sponsors would likely meet these standards for the NFL. But, other employers should make sure they carefully consider the conduct at issue when determining what action should be taken in response to off-work conduct. And when it comes to matters of domestic violence, it is often the victim who is punished by employers. That’s a problem too. Minnesota law flat out prohibits discrimination based on marital status, including discrimination on the basis of the identity, situation, actions or beliefs of a spouse or former spouse. In addition, Minnesota law has recently been expanded to allow victims of domestic violence, sexual assault, and stalking to use paid leave to pursue protective measures and services. 

One key takeaway for all employers from the recent NFL drama: Think things through carefully, consider your business and legal risks, and try to get it right the first time around. 

Thursday, September 18, 2014

Worth The Work? Why it is Risky To Not Pay Your Interns

Unless you were unplugged, you probably saw all the high profile names that made legal headlines last week. Included in that list was David Letterman. In a quick whirlwind of activity, a CBS intern filed a wage and hour lawsuit against CBS News and Letterman’s production company, Worldwide Pants, only to drop the suit a short time later with a public apology. In the lawsuit, the CBS intern claimed that unpaid “Late Show” student interns were employees and that the failure to pay them wages violated wage and hour laws. The suit, had it proceeded, would have sought to recover back wages, interest, and attorneys’ fees for six years’ worth of unpaid CBS interns. Ultimately, though, the intern dropped the suit. Several media outlets reported that the intern issued a public apology for the suit, claiming her attorneys coerced her into the filing.

Many employers who use unpaid interns have not been as lucky as CBS News and Letterman. As predicted in one of our blog posts two years ago, unpaid internships have created a wave of wage and hour class action lawsuits, many of them against well-known companies. The entertainment and media industries have been heavily targeted in particular, with lawsuits against Fox Searchlight, NBCUniversal, Warner Music Group, Conde Nast, and Clear Channel.

However, all variety of for-profit businesses that use unpaid student interns are vulnerable to wage and hour suits if they don’t tread carefully. Internship programs are a great way for students to get real-life work experience and get a foot in the door of a company. Because of these benefits to interns, companies sometimes lose track of their potential wage and hour obligations to interns. The U.S. Department of Labor’s Wage and Hour Division has issued guidance on strict requirements that must be met for an internship to be unpaid. Under this guidance, for-profit companies always have to pay interns – even those getting academic credit for the internship – to remain legally compliant  because the company almost always derives an "immediate advantage" from an intern's work. For an internship to be unpaid, the work done must be for the benefit of the student, not free labor for the company.

Admittedly, the Wage and Hour Division itself has not initiated as many investigations against companies with unpaid intern programs as some had expected. Still, that doesn’t mean that you can breathe a sigh of relief. The Division focuses its investigation resources on a number of competing priorities, but remains watchful for violations, as noted in an online post last spring. In addition, as noted above, the wave of lawsuit continues.

If you are a for-profit employer using unpaid interns, it’s a good time to review your risks and compliance requirements. Review your company’s internship policies and practices, along with the Department of Labor guidance noted above. When in doubt, paying interns the applicable minimum wage is usually far more cost-effective than fighting a subsequent legal claim.

Monday, September 8, 2014

Falling Back (or Springing Ahead): The Correct Method to Pay Employees

I was sitting by a campfire last night and, although it was a beautiful night, I could not help but notice that there are signs of fall everywhere. The leaves are beginning to change, the evening air had a slight nip, and darkness arrived much earlier in the evening. These reminders of fall mean that, because of Minnesota’s participation in Daylight Savings Time, we need to think about the semi-annual ritual of the changing of the clocks. Each spring we “Spring Ahead” by moving the clocks forward one hour at 2:00 a.m. on a designated date. Each fall, when Daylight Savings Time ends, we “Fall Backward” by changing the clocks back one hour. This year Daylight Savings Time will end on November 2, 2014.

This semi-annual ritual of changing the clocks is often a concern for those employers who have non-exempt (hourly) employees working the late shift (at 2:00 a.m. when the clocks change). When the clocks are moved back those employees usually work an additional hour for the shift. When the clocks are moved ahead those employees usually work one less hour for the shift. 

Under the Fair Labor Standards Act (“FLSA”) employers must pay employees for all hours worked and overtime for any hours worked in excess of 40 hours per week. So how do these basic rules apply during the changes related to Daylight Savings Time? Here is a summary:

Fall Backward:  Employees usually work one more hour per shift. Employers must pay the employee for the total number of hours actually worked. So, if the shift is normally eight hours, the employee must be paid for nine hours. The extra hour of pay must also be included in the employee’s regular rate of pay for calculating overtime.

Spring Forward:  Employees usually work one less hour per shift. Employers may choose to pay the employee for the normal number of hours worked for the shift; however, employers are not required to pay employees for the hour that was not worked. If the employer does choose to pay the employee for this hour, the employer does not have to include the extra hour in the employee’s regular rate of pay for calculating overtime. The employer may not, however, use the extra hour of pay as a credit to overtime compensation that is owed the employee.

As you enjoy these final waning days of summer you may want to add a review of your pay policies during the changes in Daylight Savings Time to your fall to-do list.

Thursday, September 4, 2014

“Wage Theft” – New Name, Same Concern

“Wage theft” is becoming a popular phrase in the media. A New York Times article recently announced that “More Workers Are Claiming ‘Wage Theft.’” Other news outlets are using the phrase to describe lawsuits brought by workers of a wide mix of employers, ranging from Jimmy John's to NFL franchises. “Wage theft” even has its own website.

At its core, “wage theft” is simply a catchphrase designed to draw attention to violations of wage and hour laws. The use of the term “wage theft” appears to be a relatively recent phenomenon. There were more references to “wage theft” in U.S. newspapers during the last six months than there were in the entire span from 2000 to 2010. 

While the “wage theft” catchphrase is relatively new, the wage and hour laws it references are not. Most of these laws have been around for decades. The primary wage and hour law—the federal Fair Labor Standards Act (FLSA)—was enacted in the 1930s. In addition, most states have longstanding wage and hour laws that similar to or more protective of employees than the FLSA. 

A heightened focus on wage and hour issues is also not new, despite the new “wage theft” lingo. Employers have been facing an uptick in wage and hour litigation and a political and social movement to increase wages for years. Employers should recognize, however, that the loaded “wage theft” terminology and the increased publicity about so-called “wage theft” is a sign of the growing sophistication and coordination among plaintiffs’ attorneys, unions, and government regulators. These publicity efforts are designed to increase knowledge of workers’ rights and they appear to be working. 

In light of the current wage and hour climate, employers should be vigilant about wage and hour compliance. Catchphrase or not, efforts to publicize “wage theft” will likely increase employees’ awareness of their rights and increase the risk of lawsuits. Employers should proactively seek to avoid wage and hour issues by:

·      Training human resources and managers on wage and hour compliance;

·      Carefully evaluating exempt and non-exempt job classifications;

·      Having compliant and well-publicized policies in place for employees on wage and hour  issues, including policies that address how to raise concerns about any improper pay deductions, the employer’s work week, non-exempt employee breaks and work rules, and any remote work by non-exempt employees;

·      Paying at least minimum wage and overtime pay to non-exempt employees for all working time;

·      Paying employees who engage in unauthorized work, addressing this problem through discipline (up to and including termination) rather than pay processes;

·      Keeping accurate records and avoiding even the appearance of pressure to falsify timecards;

·      Avoiding an improper designation of workers as independent contractors;

·      Taking care to consider state and local laws, in addition to federal regulations;

·      Seeking counsel on complex determinations and issues that are bound to arise; and

·      Revisiting and reevaluating these issues periodically, particularly when workers’ roles and duties change.

Week in Review

Some popular online services made legal headlines this week. After years of litigation, a federal appeals court held that Yelp did not extort businesses by manipulating user reviews to coerce advertising purchases. While Yelp still faces other legal claims for false advertising and securities fraud, this case is significant given that Yelp's handling of user reviews has been widely criticized.

While Yelp was presumably busy celebrating good news, the ride-sharing service, Uber, received bad news on its efforts to expand its services overseas. A German court banned Uber's ride-hailing services until a hearing occurs later in the year to determine whether Uber unfairly competes with taxis. And, as summer unofficially comes to an end and children return to school, check out the links below on back to school technology gear available to protect your student's (or your own) technology gadgets.

Technology and the Workplace
Modern Authors Delve Into Digital and Visual Storytelling (Mashable)
The Open Source Tool That Lets You Send Encrypted Emails to Anyone (WIRED)
Building a Robot With Human Touch (NYTimes)
The Future Could Work, if We Let It (NYTimes)
Google Is Working on a Chip that Lets Machines Think Like Humans (Yahoo)

Technology and the Law
Home Depot investigating a 'massive' hack (CNN)
Security Never Sleeps, Especially on Three Day Weekends (Forbes)
German Court Bans Uber Service Nationwide (NYTimes)
Apple and the FBI Are Investigating the Mass Celebrity Nude Photo Hack (Yahoo)
Court Says Yelp Doesn't Extort Businesses (Forbes)

There's an App for That
Protect and Power Back-to-School Gear (NYTimes)
The Top 10 Reasons Apple Rejects Apps From the App Store (Mashable)
This AI-Powered Calendar is Designed to Give You Me-Time (WIRED)
Why It's So Hard to Design New Emoji (Mashable)
Ikea Lampoons Apple to Promote Its 'Bookbook' (Mashable)