Delaware Employment Law Blog

“Get Rid of the Performance Review!” That was the title of an article in Monday’s WSJ. I’m certain many employees read the headline and thought, “If only it were that easy.” In the article, author Samuel A. Culbert promotes nixing the tired annual performance review in favor of a “preview.”

His message is simple: instead of looking back, think about what’s going to happen next. The essence is that instead of reviewing what your employees did, consider what they are going to do and how they will achieve their goals in the future. It’s sensible and makes good business sense to have your employees think about what they are going to do better, not what already happened that can’t be fixed. Culbert rightly advocates that a boss should “guide, coach tutor, provide oversight and generally do whatever is required to assist a subordinate to perform successfully.”

But, because of the anxieties associated with a performance review, that goal is lost to things like concerns over pay raises and disruptions to teamwork. In Culbert’s alternative, a preview becomes an exercise in problem-solving and promotes discussions among teammates who are going to work together more effectively and efficiently than in the past. A preview focuses on the future, and, according to Culbert, “promotes straight-talk relationships for people who are up to it.” Although a preview may not be for the fainthearted, it can be a useful mechanism to re-tool your old performance review checklist in favor of a more dynamic activity aimed at promoting employee and business development.

As layoffs continue to occur, the WARN Act will become increasingly meaningful to employers, particularly those who are considering bankruptcy protection.

The WARN Act requires employers to give advance notice to employees who will be affected by a plant closing. Generally, 60 days’ written notice is required before closing a plant or implementing a mass layoff. Failure to comply with the Act can result in serious liability, including back pay and benefits for each affected employee for every day that the notice was not provided, for up to 60 days. This number can quickly add up to millions of dollars, which, for a company considering bankruptcy protection, can become an important factor in managing a bankruptcy estate.

On October 10, 2008, Delaware’s Bankruptcy Court issued a memorandum opinion which held, in a question of first impression for the Third Circuit, that an employee’s WARN Act claim is a general unsecured claim, rather than an administrative expense claim–a favorable opinion for debtor-employers.[1]

Powermate Holding Corp. and certain of its affiliates filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code on March 17, 2008. Prior to the filing, Powermate operated in three states. On March 10, 2008, it sold all of its assets in Springfield, Minnesota and terminated the employment of all workers at that location. Next, on March 17, 2008, prior to their bankruptcy filings, Powermate discharged all of its remaining employees in all of its locations without prior notice. Approximately 260 employees lost their jobs.

Gregg Henderson, a former employee, sued Powermate on behalf of himself and other discharged employees, alleging that Powermate violated their rights under the WARN Act. Henderson further alleged that he and other similarly situated employees were entitled to recover their wages, ERISA, and other benefits for sixty days pursuant to the WARN Act, and that their claims were entitled to administrative priority. If Henderson were correct, the administrative liability would have been significant for Powermate’s bankruptcy estates.

The Bankruptcy Code structures claims against debtors in a particular order to achieve the goal of equitably distributing the estate among all creditors. For example, the Bankruptcy Code prioritizes secured claims (i.e., claims for which there is some associated collateral) above unsecured claims. Generally high priority claims are paid in full, whereas holders of lower priority claims (e.g., general unsecured claims) are infrequently paid in full. Administrative expenses, which are typically costs associated with preserving the bankruptcy estate or facilitating with the estate’s wind-down, are highly ranked and are usually paid in full. The import here is that, if an employee’s WARN Act claim were given administrative priority, it should be paid and full, which is a burden many employer-debtors could not bear.

Although the Bankruptcy Court has not yet determined whether Powermate has any liability under the WARN Act, it nonetheless considered Henderson’s claim ripe for adjudication because the issue was purely legal and required the interpretation of one of the 2005 amendments to the Bankruptcy Code. The Court also emphasized, “Without a determination of the priority status of the Plaintiff’s claims, [Powermate] will be frustrated in their efforts to proceed any further in their bankruptcy, to formulate a plan as well as to negotiate with creditors. Depending on the outcome of this issue, the claims of Plaintiff could be of sufficient magnitude and priority that there may be nothing left for distribution to other, lower priority creditors.”[2] Thus, the parties sought the Court’s determination that if there were WARN Act violations, would any damages be considered an administrative expense? The Court answered in the negative; in this case any damages would be considered unsecured claims (under Bankruptcy Code Section 507(a)(4)-(5)).

This finding is important for debtor-employers because, as the Court noted, without a determination of the priority status, Powermate’s bankruptcy proceedings would be stalled until any WARN Act liability was reduced to a liquidated amount, which would not occur until after a trial.

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[1] Henderson v. Powermate Holding Corp. (In re Powermate Holding Corp.), Adv Pro. No. 08-50559 (KG) (Del. Bankr. Oct. 10, 2008).

[2] Slip. Op. at 6.

The Americans With Disabilities Act (ADA), is about to undergo a major change.  The changes are thanks to the Congress' passage of the ADA Amendments Act of 2008 (ADAAA) (S. 3406, H.R. 3195) (originally the ADA Restoration Act of 2007). The new law, which will likely take effect January 1, 2009 will broaden the definition of “disability” so that more physical and mental impairments are covered.

The Americans with Disabilities Act of 1990 (signed into law by President George H. W. Bush) was intended to “provide a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities.” Just as other civil rights laws prohibit entities from basing decisions on characteristics like race or sex, the ADA prevents employers from making decisions based on disability. Recent U.S. Supreme Court decisions (e.g., Sutton v. United Airlines) narrowed the definition of disability such that people with conditions such as epilepsy, muscular dystrophy, cancer, diabetes, and cerebral palsy have been determined to not meet the definition of disability under the ADA.

Election 2008 and the ADAAA

Senators Obama, Biden, and McCain are all co-sponsors of the ADAAA, (click each candidate's name to read their individual platforms on the ADA).  For employers, the ADAAA does not bring good news.  The law will result in increased litigation, and the focus of any future dispute will shift from whether an employee has a qualifying disability to whether the employer engaged in a discriminatory act.

The debate about equal pay is bound to continue in light of pending legislation like the Fair Pay Act and the Paycheck Fairness Act, which was passed by the House on July 21, 2008. Here are the nuts and bolts every employer should know about these important new developments.

The Fair Pay Act

The Fair Pay Act seeks to end wage discrimination against those who work in female-dominated or minority-dominated jobs by establishing equal pay for equivalent work. Under the Fair Pay Act, employers could not pay jobs that are held predominately by women less than jobs held predominately by men if those jobs are equivalent in value to the employer. The bill also protects workers on the basis of race or national origin. The Fair Pay Act makes exceptions for different wage rates based on seniority, merit, or quantity or quality of work.

The Paycheck Fairness Act

The Paycheck Fairness Act seeks to strengthen the Equal Pay Act of 1963.  The bill expands damages under the Equal Pay Act and amends its very broad fourth affirmative defense. In addition, the Paycheck Fairness Act calls for a study of data collected by the EEOC and proposes voluntary guidelines to show employers how to evaluate jobs with the goal of eliminating unfair disparities.

Ledbetter Fair Pay Act / Fair Pay Restoration Act

Another interesting piece of pay-related legislation to watch is the Lilly Ledbetter Fair Pay Act / Fair Pay Restoration Act, which seeks to amend the Civil Rights Act of 1964 and other anti-discrimination laws to clarify at which points in time discriminatory actions qualify as an “unlawful employment practice.”  The Fair Pay Restoration Act seeks to change the results of Ledbetter v. Goodyear Tire & Rubber.  (For more information about the Ledbetter decision, see Equal Pay: Fair Pay Restoration Act Voted Down in Senate). 

Under the Fair Pay Restoration Act, an unlawful discriminatory act is committed when a discretionary compensation decision is adopted, when an employee becomes subject to the decision, or when an individual is affected by the application of a decision, including each time compensation is paid.   This is inapposite to Ledbetter, where the U.S. Supreme Court held that employees cannot challenge ongoing pay discrimination if the employer’s original discrimination decision occurred more than 180 days before the most recent discrimination, even when an employee continues to receive paychecks that have been discriminatorily reduced for some time. The law further states that individuals may receive back pay as compensation for discrimination that occurred up to two years preceding the filing of a charge.

The extent to which an employer may access an employee's personal e-mail account is an unsettled issue.   Many employers have policies in place that either prohibit or significantly limit an employee from accessing personal e-mail during work hours.  Most employers have (or, if not, should have) a right-to-monitor policy, which notifies employees that the employer may actually monitor access to personal e-mail accounts if the employee is using company equipment.  A recent decision from a federal court in Florida supports the employer's position that it can compel an  employee to turn over e-mail from a personal account.    

In

(pdf), a breach of employment agreement and misappropriation of trade secrets case, an employer moved to compel production from the employee's personal Yahoo! e-mail account.  Although the employee claimed he could not produce any e-mails because he presumed they had been destroyed by Yahoo!, the only support for his position was a generic letter from Yahoo! which indicated the account at issue had been deactivated. 

Not surprisingly, the court found the employee's explanation dubious--even more so after the court learned that the employee untimely identified his personal account because, in his opinion, production of e-mails would be "impossible."  According to the employer, the employee used this specific personal account to engage in the activities upon which the entire lawsuit was based. 

Thus, given the potentially high evidentiary value of the e-mails, the court sanctioned the employee (although any potential fine is dependent upon how successful the employee is in his court-ordered attempt to obtain the e-mail from Yahoo!).  The court further cautioned that if it turns out the employee's failure to identify his personal e-mail account and obtain messages from his account results in the spoliation of evidence, the court will consider serious penalties. 

You’ve recruited top-notch Millennials and are actively managing them in your organization. Now you must retain and develop your Millennial talent. In the final post in this series, we list four tips for retaining your Millennial talent, some of which demystify the Millennial mystique.

1. Millennials have a solid work ethic.

Because Millennials are more peer-oriented and seek instant gratification, their work ethic can be self-centered. They ask, “what is my job?” and figure out the most efficient way to accomplish it. The result is that Millennials respond well to organizations that offer paid time off, as opposed to a year-end bonus, in their reward structure. This also plays into the Millennials’ need for work-life balance. The more your organization can offer mechanisms to achieve a balance between work and personal life, the more likely Millennials will be to stay with you.

2. Have a plan for Millennial advancement.

Although Millennials tend to think shorter-term than their Baby Boomer or Gen X counterparts, that’s not to say that they don’t need a plan. They just need a shorter plan. Millennials will not stay with an organization that has long advancement tracks, and Millennials loose interest in organizations that promise quick advancement opportunities and fail to follow through on such promises. Consider offering small rewards along the way, stringing the accomplishments together, and laying the groundwork for a Millennial to develop seniority.

3. Millennials don’t value “face time.”

Recently Millennials have garnered a poor reputation because they don’t put in the face time like their predecessors, which may not be a bad thing. Employees are indeed more satisfied if they feel valued, which for employers can mean acknowledging that your employees have a life outside of work. A difference between Millennials and their predecessors is that they want to accomplish a task as efficiently as possible (which usually means implementing their significant ability to multi-task) and build their reputation on substantive accomplishments rather than long work hours. For employers, this means that your reward structure needs to match the Millennials’ expectation that if they perform well, they will advance, regardless of how long it took them to finish a project.

4. Provide challenges and opportunities quickly.

Now that you’ve painted your organization as a challenging, satisfying place to work, you need to make sure your Millennial talent does not loose interest quickly. Instead, find ways for your Millennial talent to have a meaningful role in their projects and with their team and encourage Millennials to contribute new ideas. The notion that Millennials are valued for their contributions fits well with their perspective that each Millennial is special and unique. Foster an environment that allows new hires to take on increasing responsibilities as their performance improves.

Retention that works.

The key to retaining Millennial talent is to understand how Millennials view the world and their role in your organization. If you’ve done your homework recruiting Millennials, then you should have a good understanding of what Millennials want from their employers. Millennials often leave their jobs because it is not challenging, rewarding, or both. Millennials will, however, stay with organizations that value their professional growth and provide personal satisfaction.

Prior Posts in this Series, What HR Needs to Know About Your Company's Millennial Assets; include Recruiting Gen Y; and Managing Gen Y.

Okay, you’ve recruited talented Millennials.  Now you actually have to manage them!  Knowing that Millennials’ values and goals are different from those held by Baby Boomers or Gen Xers means that managing and mentoring Millennials is also different.

Here are some tips for managing your Millennial talent:

 

1. Provide a structured, supportive work environment.

Because Millennials are team oriented, they work well in a hierarchy. This is a significant upside, because Millennials are also easily “teachable;” they like to know how the team works and who’s in charge. Keep in mind, however, that this needs to be balanced with their need for instant gratification. A Millennial will quickly loose job satisfaction if they are a part of a team which fails to acknowledge each member’s contributions. Similarly, Millennials will loose interest if there is no payoff for accomplishing mundane tasks.

2. Create interactive relationships.

This is not your old mentoring relationship. When your organization selects mentors for Millennials, you need mentors who are willing to actually mentor – they must be willing to take the time to teach, advise, and contribute to a Millennial’s work experience. Lunching with your Millennial just before an annual review is not enough.

3. Be prepared for high demands and high expectations.

The tables have turned a little bit here. Whereas Baby Boomers and Gen Xers were willing to put in their time and ask few questions about their future, Millennials are likely to ask about how they can advance in your organization sooner rather than later. This means that your organization needs to be prepared to answer such questions, or risk loosing your Millennial talent. This does not mean, however, that you need to promote Millennials before they are ready. Instead, be prepare to reasonably manage Millennials’ expectations so that they have answers to their questions regarding rewards and promotions. One of the keys to managing Millennial talent is to develop and communicate multiple career paths.

Managing your Millennial talent is imperative to your organization’s success. With respect to Millennials, management means more than making sure your new hires are showing up for work and meeting deadlines. Much like your recruiting practices, your organization will need to commit to creative and strategic ways to manage your Millennial talent. Don’t spend time wishing that the Millennials fit into the same management mold as your Baby Boomer or Gen X employees. Instead, remember that flexibility and change can bring new successes to your workforce.

Other posts in this series:

Recruiting Millennials

Why Millennials Should Matter

Recruiting has never been easy. It's not getting easier. Organizations across the country are facing a double dose of hiring difficulty. The workforce is facing a brain drain as Baby Boomers near retirement. And, as one generation prepares for its exit, another is preparing its entrance. The challenges that this generation brings are novel. Smart recruiters are using creative solutions to manage these new challenges.

1. Get to Know Them. Recruiting to Millennials means you have to get to know who they are, what they like, and what they are looking for in a career. Before you recruit Millennials, go out and meet some Millennials. Find out what they want from an employer, how they think they would get it, and what makes an organization appealing to them. Remember, Millennials are not motivated by the same things as either Baby Boomers or Gen-X-ers, so before you set out to recruit some Millennials you need to know what your organization has or does to make it attractive to the best Millennial talent.

2. Think Digital. There is no doubt that Millennials are wired into all things digital. In order to reach the best candidates, you need to adapt your recruiting practices to their digital world. That's not to say that you need to launch text-messaging recruiting; however, you do need to seriously consider the best way to attract Millennials to your organization. You also need to promote how tech savvy your organization is, otherwise, Millennials will not consider your organization at all.

3. They are Team-Oriented. Millennials are peer-oriented and are accustomed to working in teams. Instead of trying to recruit a Millennial to your whole organization, consider recruiting Millennials to more discreet areas of your business which already work as a team. Also, make sure when you promote your organization's atmosphere, you emphasize group dynamics rather than individual performance. Millennials don't necessarily like to "go it alone."

4. They are Civic-Minded. Millennials are likely to grow up like their civic-minded Baby Boomer elders, which means that recruiting Millennials is a great way to boost your company's community profile. If your business is already involved with charitable organizations, make sure you highlight those efforts when you recruit a Millennial. If your organization is not involved with charitable efforts, consider allowing employees to create opportunities for your organization to do so. The result may be that your new hires are quickly folded into your organization's culture and they have an immediate attachment with their peers and their new boss. Plus, your organization gets the PR benefit.

5. They are the Future. Finally, your organization's leadership must understand how important Millennials are to your business's future. Despite the bad rap Millennials seem to be collecting (i.e., the new MBA who won't travel without advance notice or the new hire who won't look at his Blackberry on the weekends), they are unavoidable. Employee recruiting, management, and retention will absolutely change as a result of the infusion of Millennials into the workforce. HR experts predict that more employees will seek out companies that allow flexible schedules, reward creativity (rather than long hours), and provide meaningful challenges (rather than merely putting in time to climb the corporate ladder). The consequence is employers may need to re-vamp their culture and commit to some of the changes Millennials demand. In short, your organization's leadership needs to buy into the idea that in order to recruit the most talented new hires, you may need to emphasize different aspects of your organization's culture and reward structure.

The bottom line is Millennials remain a largely untapped asset and your organization will benefit from their talent. As long as you remain creative and strategic, your company has the opportunity to recruit the most talented Millennials.

Recruiting, Managing, and Retaining Millennials

The HR world has been abuzz with discussion about the generational dynamic between the aging baby boomers and the Web 2.0 world of Millennials. This five-part series is designed to give the rest of us some perspective.

A "Millennial," demographically speaking, is a person born after 1980. They are the youngest members of today's workforce. Experts estimate that by 2010, Millennials will outnumber both Baby Boomers and Gen Xers. Millennials (a/k/a "Gen Y") are our society's "digital residents," which means that they have enjoyed the luxuries of digital technology their entire lives, including the massive world of video games. Their digital residence has given their generation characteristics employers never seen before.

Some sociologists believe that as a result of their residence in the digital world (think instant messaging, Facebook, and MySpace), Millennials are significantly peer-oriented and constantly seek instant gratification. The bottom line: Millennials don't necessarily buy into the idea that in order to succeed at work, you need to get in early, stay late, and consistently work hard.

These characteristics can make it difficult for employers to adapt how and who they recruit, and how they manage and retain their new human resource. In short, Millennials are changing the way employers do the business of, well, employment. The next three installments provide tips on how your organization can tap into Millennial talent.

For more insight on Millennials and how they fit into your organization, consider the text "Millennials Incorporated" by Lisa Orrell. Ms. Orrell hosts the blog "Lisa's Generation Relations Blog." And, on May 20, 2008, HRHero.com will host Dr. Diane Gayeski, contributor to the Wall Street Journal and consultant to some of America's top employers, in an audio conference titled "Are you ready for the Millennials? What HR Needs to Know to Recruit and Manage the IPod Workers."

The focus of the next post in this series is Recruiting Strategies for the Next Generation.

The Third Circuit, which governs Delaware, New Jersey, and Pennsylvania, applied a strict interpretation of Rule 23(f) and affirmed dismissal of a class action against Johnson & Johnson. The case, Gutierrez v. Johnson & Johnson, was filed by African-American and Hispanic former J&J employees alleging race discrimination--8,600 employees in all.

The federal District Court in New Jersey declined to certify the group as a class. Notably, the court found that the group had failed to identify any J&J policy that was discriminatory. The court also cited the diversity and size of the group as factors weighing against class certification.

Now, hang in there, this is where it starts to get complicated.

The potential class could have filed an appeal with the Third Circuit after the District Court issued its decision denying certification. But, instead, they wanted to file a motion for reconsideration. J&J agreed to an extension of time for the employee to file their motion. The court granted the requested extension but eventually denied the motion for reconsideration, upholding its denial of class status.

The employee-petitioners sought permission tofile an interlocutory appeal with the Third Circuit. The petition was filed within ten days of the District Court’s denial of their motion for reconsideration but 125 days after the original decision denying class certification.

A petition to appeal must be filed within 10 days. When a motion for reconsideration is timely filed, though, the 10 day-clock stops running until the motion is decided. Here, the employee-petitioners filed their motion within the deadline set by the District Court's scheduling order. That was not enough for the Third Circuit. Instead, the court found that the 10-day requirement was mandatory--within 10 days of the decision denying class certification, the party has 10, and only 10, days within which to file an appeal.

The fact that the motion for reconsideration was timely for purposes of the District Court’s scheduling order did not matter. According to the Third Circuit, much to Johnson & Johnson's relief, Rule 23(f) of the Federal Rules of Civil Procedure is strict and mandatory.