Archive for the ‘Overzealous Government Regulators’ Category

As I previously blogged, the Massachusetts Sick Leave Law goes into effect on July 1, 2015.  The law is potentially bad news for employers with respect to productivity, expenses, and legal exposure.  See previous blog.

Recognizing at least some of these issues, the Attorney General issued Safe Harbor provisions for employers who currently provide (by a policy in existence on May 1) at least 30 hours of paid time off/sick leave for 2015, if certain conditions are met.  But don’t just assume that the Safe Harbor applies to your business or that you don’t need to do anything if it does apply.  Among other things, you will have to make provisions for part-time employees and other employees who do not currently earn paid time off.

Have your employment lawyer evaluate your current policies and practices.  For many employers, you will need to make changes before July 1st.  Also, you might as well start getting ready for 2016 even if the Safe Harbor applies to you.  You will also have to post notice of the new law.  The Attorney General has provided a sample poster.

Keep in mind that the new law impacts all employers, even if you have only one employee.  Violating the law, even inadvertently, could get you sued by your employee and/or fined by the Attorney General.

As always, the above is general information, not legal advice.

By Adam P. Whitney, Esq.

As most sports fan know by now, the NFL has suspended the Saints’ coaches. The NFL suspended the head coach, Sean Payton, for a year; Gregg Williams, indefinitely. The NFL has alleged that Williams instituted a scheme whereby players were paid a bounty for making big hits and hurting opposing players. The NFL has alleged that Payton failed to make sure that this was not occurring, after being instructed by the NFL to do so, and that Payton covered up the scheme.

Additionally, the NFL fined the Saints $500,000, and took away their second round draft picks for this year and next year. The actions of these coaches has dealt a great blow to an otherwise successful organization. Loss of leadership. Significant cash. Loss of future talent. Three things near and dear to NFL franchises.

You may think that the lessons do not apply to your business. If you are an accounting firm, for example, your C.P.A.’s are probably not spear-tackling a rival C.P.A. who is in the middle of a compliance audit (if they are, call me; you have other issues).

But I bet that your industry has rules. And although your business probably does not belong to a professional sports league with its own rule, I bet that your business has government watchdogs waiting for you to screw up (this is true for any employer regarding employee issues). The more successful you are, the more the government would love to make an example of you. One rogue employee can get your company in a lot of trouble. I’ve seen it happen time and again to good businesses. You are usually responsible for the actions of your employees, so it’s your job to make sure that they are playing by the rules. Don’t turn a blind eye just because you are getting a small competitive advantage.

And when you find out that your rogue employee is not playing by the rules, don’t cover it up as Peyton allegedly did. As I’ve said before on this blog, cover-ups are almost always worse than the crime. If you have the intestinal fortitude to self-report the wrongdoing of an employee, discipline the employee, and fix the situation, the government zealots will come down a lot less hard on you (this must be done carefully, with legal advice). If you cover up the wrongdoing, they will come down twice as hard, and they will not believe any of your explanations.

$363,570. That’s the cost to one Massachusetts employer for not participating in the MCAD hearing against it, and being found liable for discrimination based on gender and age. The full decision is set forth in the attached case report from the Massachusetts Commission Against Discrimination.

MCAD v. BG New England

The employee alleged that the company hired a less qualified, 30-year old male instead of her. She was 48 at the time. The employee suffered emotional distress because the company did not value her as an employee, even though she had worked for the employer’s predecessor, and had a long history at the job site and in the industry.

We don’t know the employer’s defense, because the employer took the position that, because it filed for bankruptcy, the automatic stay required the MCAD to postpone its procedures. The MCAD did not agree with that contention, and adjudicated the case without the employer’s involvement.

The MCAD awarded the employee lost wages of $167,380 and emotional distress damages of $75,000. Interest at 12% per annum adds about 50% to the judgment, for a total damages award of about $363,570 by my calculations. The MCAD issued the award against the respondent employer, as well as its successors.

Whether the employee will ultimately collect on the judgment remains to be seen. But the lesson for employers is clear. Ignore the MCAD (or EEOC) at your peril. There are many reported cases of employers ignoring an MCAD complaint, which they have only 21 days to which to respond, and being defaulted. The MCAD will then only hear one side of the story, the employee’s side, and act accordingly.

If you get a complaint, letter or demand from the MCAD, call me at 617.338.7000 to discuss your immediate obligations.

By Adam P. Whitney

The Salem Franchisee of the Upper Crust Pizza Chain was recently ordered to pay $80,000 for violating federal overtime and record keeping logs, according to the attached Boston Globe report. This follows $341,000 in payments ordered against the corporate office in 2009 (a separate legal entity from the franchisee).

State and federal regulators are deadly serious about enforcing overtime and other wage regulations. There are also public interest groups and private attorneys who are actively looking for businesses who flout the laws. Keep in mind that the statutes at issue are strict liability statutes, so it is not going to matter if you are willfully blind to the wage laws, or are making an honest mistake.

Wage and hour laws can be very complex, and a complete discussion is beyond the scope of this article. One basic issue that employers should know is that they cannot simply make an employee a salaried employee by putting the employee on salary. There are very specific requirements regarding who can be considered salaried and “exempt” from overtime requirements.

Also, the employer is obligated to keep track of an employee’s hours of work. If the employer does not keep good time records, the employer will not only face fines, but will find itself handcuffed in a suit by the employee because the employee may be able to “estimate” the amount of hours worked, but the employer may not be able to even provide rebuttal testimony.

By: Adam Whitney 617.338.7000.

If you are a for-profit business, you generally cannot have volunteer workers who work for no pay, whether you call them interns, clerks, angels or unicorns. In most cases, they are really employees, in spite of what you call them. Companies make this mistake all of the time. Surprisingly, even law firms make this mistake. They think that they can get away with having a student or new graduate work for free for the summer or for some other time period. And sometimes they might get away with it, but if your “intern” decides to sue, you could be liable for at least minimum wage for all hours worked, time and half for any overtime, and possibly triple damages and attorneys’ fees under Massachusetts law and other damages, such as benefits not provided. Your quest for cheap labor could backfire. In spades.

A genuine internship for a for-profit might actually exist, but so might Bigfoot. Both are, at best, rare, elusive, and hard to prove. The U.S. Dept. of Labor has put out a bulletin with specific factors, which can be found here:

As provided by the DOL, “[t]he following six criteria must be applied when making this determination:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

2. The internship experience is for the benefit of the intern;

3. The intern does not displace regular employees, but works under close supervision of existing staff;

4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

5. The intern is not necessarily entitled to a job at the conclusion of the internship; and

6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.”

Any company being honest with itself will find these standards extremely hard to meet. The factors describe something that is burdensome to the company, not a benefit. Which begs the question, why the company would want to do this in the first place. Sure, some large corporations may have some legitimate intern programs. But your smaller or mid-size employer or law firm, not so much. And don’t think that paying a “stipend” will make things okay, unless the stipend happens to be at least minimum wage and paid weekly or biweekly.

It’s all fun and games until someone files a lawsuit. That’s surely what one Massachusetts employer thought. In that recent case, decided before the Department of Industrial Accidents, the employee reportedly asked her boss, Mr. Grillo, for health insurance. She alleges that he agreed to provide health insurance if the employee would agree to wear a chicken head costume. The chicken head in question was apparently part of a running joke in the office. The employee refused, and was allegedly given other absurd options, such as e-mailing all of her friends that Mr. Grillo is god, or to come to work with red lipstick and to kiss another employee’s bald head. The case is reported at the DIA as In Re: Cappello, (DIA) (Board Nos. 026109-07 and 022705-07) (March 23, 2011).
In this case, the DIA granted the employee worker’s compensation benefits for emotional injury suffered at work. The claim could even be doubled if the DIA determines that the employee committed serious and willful misconduct.
The employee’s psychiatrist concluded that Mr. Grillo’s alleged harassment was the predominant contributing cause of the employee’s adjustment disorder and her major depressive disorder.
Although this case was brought under worker’s compensation, it has serious implications for other employment laws. For example, asking a female employee to wear red lipstick could easily be construed to be sexual harassment. Additionally, the employee almost certainly, at some point, became protected under the Americans with Disabilities Act and its Massachusetts counterpart, G.L. c. 151B. The employer could have created exposure to itself under these and other theories by harassing the employee and failing to accommodate the employee.
It’s difficult to not allow employees to have a sense of humor. Everyone needs a good laugh now and then, even in the workplace. But employers cannot assume that all employees will appreciate being the butt of jokes. Some employees will be more sensitive than others. Employers better be aware of this and either cease all horseplay, or make certain that every employee involved is a willing participant. Will we see horseplay contracts? This is in reference to “love contracts” which some employers require employees to sign when they are dating one another. I doubt that we will, but you never know.

By Adam P. Whitney, 617.338.7000.

As a recent decision from the Massachusetts Commission Against Discrimination (“MCAD”) shows, allowing an unwelcome sexualized atmosphere at the workplace can be very costly. And firing an employee who complains of sexual harassment is downright foolhardy, as shown in MCAD, et al. v. Sleek, Inc., et al. (Docket No. 06-BEM-01275) (March 15, 2011). A copy of the decision is attached.

In this case, the Complainant, a male, went to work at the all female Sleek Medspa in Burlington. He was soon exposed (no pun intended) to sexualized comments and joking about clients’ genitals and other body parts (the spa did a lot of body waxing), and an incident of a female superior flashing her breasts or bra to the owner of the company over an internet camera (the Complainant saw only her back). The sexualized comments and joking are really not that surprising, and was likely how the aestheticians blew off steam. It really doesn’t sound that bad, but the Complainant found it unprofessional and was very sensitive to it.

If that were all there was to the story, it would hardly be notable, and may not have resulted in litigation. When the Complainant complained about the behavior, he was promptly fired. This was a big no-no. The Company took a marginal sexual harassment complaint that could have and should have been addressed by cleaning up the atmosphere, and turned it into a significant loss for the Company.

How significant? The MCAD awarded the Complainant $150,000 for emotional distress alone. The emotional distress was not so much from the original incidents, but from the termination and everything that went along with that. The Complainant had been (correctly) advised by an attorney that complaining of a sexually hostile work environment was protected, and that he could not be fired. The company stupidly fired him the next day for a reason that was clearly pretextual. He was devastated by the termination and the resultant loss of income.

The Complainant also recovered over $41,000 in lost wages. And the MCAD fined the Company owner $50,000 because he and/or his companies were repeat offenders of employment discrimination laws. That’s over $241,000, without including interest and costs. Interest on the $191,000 owed to the Complainant is significant, at 12% per annum from the date of filing in 2006. By my math, it adds almost 60%, or roughly $110,000. We’re up to $341,000.

And don’t forget that the company paid its own attorneys, which surely added tens of thousands more to the loss. Let’s conservatively call it a $350,000 loss for a dumb termination that any good lawyer would have vigorously counseled against had they been called. (The company was lucky that the MCAD provided counsel for the Complainant; had he hired private counsel, the Company would have been on the hook for tens of thousands for the Complainant’s legal fees).

Don’t make a $350,000 mistake like this company did. If you have any questions about sexual harassment, a hostile work environment, or terminating an employee, call me at 617.338.7000. By Adam P. Whitney.

Many employers may think that they have the right to charge employees for things such as broken products, lost uniforms, fines for safety violations, loans, lost money, alleged theft, etc. In Massachusetts at least, an employer will face exposure for deducting such amounts from wages. Massachusetts General Law Chapter 149, Section 148 requires full and prompt payments of wages due to employees. Employers cannot contract their way out of this requirement.

There is a provision of the statute that appears to allow a “valid set-off.” A valid set-off is a little like sasquatch. Such a creature may exist, but no one can prove it. The Attorney General of Massachusetts has taken a very strict reading of what could constitute a valid set-off. And the Courts have followed the Attorney General’s lead.

The Supreme Judicial Court recently endorsed this line of thinking in the case of Camara v. Attorney General, 458 Mass. 756 (2011). In this case, a disposal service company enacted a policy whereby an employee found at fault for an accident involving a company truck could either to discipline or a fine deducted from wages earned. The policy had the laudable goal of reducing accidents. The company’s statistics showed that the policy worked.

The company argued that the fines were a valid set-off, but the Attorney General and the Supreme Judicial Court disagreed. The Court ruled that there must at least be some form of due process through the court system for such a set-off. However, the company cannot play judge, jury and executioner, as it did in this case. As fair as the company may have intended to be, there is obviously the potential for abuse by unscrupulous employers.

As a result of the ruling, the company had to reimburse the employees for the monies deducted. Additionally, it had to pay fines of $9,410. The result could have been worse. The employees could have sued for automatic triple damages and recovery of their attorneys’ fees and costs of litigation.

This is one of many examples of how employers should be very careful to not violate laws regarding wages paid to employers. There are lawyers whose entire practice area involves finding employers who have committed technical violations of wage statutes and then suing them for triple damages and attorneys fees. These claims often are brought as class actions to maximize the damages recoverable against the employer. The Attorney General also has independent enforcement power, which she uses in certain cases, such as the Camara case. If you are any employer who has any questions about any wages, salary, overtime, vacation time, independent contractor misclassification, etc., call me at 617.338.7000.

By Adam P. Whitney.