Most supervisors have dealt with an employee who believes his work performance is better than what it actually is. It’s a minority of employees who believe they are less than a “four-star” performer. But an employee who is so convinced of his personal value that he sues his employer for $75 million is a rarity, indeed. Yet, rare or not, that is precisely the case in Berry v. Kasowitz, Benson, Torres & Friedman, LLP.

According to Berry, he had a “distinguished” and “remarkable” career in the technology sector. Having “conquer[ed] Silicon Valley,” he decided to turn his talents to the legal profession, abandoning his technology endeavors to attend the prestigous University of Pennsylvania Law School. Upon graduation, he accepted a position with an equally prestigous law firm, Kasowitz, Benson, Torres & Friedman. Ready to conquer the world of private practice, according to Berry, he “immediately began doing superlative work,” and “repeatedly found ways to improve the efficiency of work, or even the outcome of cases.” Unfortunately, though, he feels his genius went unappreciated.

Berry claims that he was terminated after he sent an email to the firm’s partners requesting additional work. In the email, Berry stated that it had “become clear that I have as much experience and ability as an associate many years my senior, as much skill writing, and a superior legal mind to most I have met.” Interestingly, prior to sending the email, Berry had been expressly warned not to “be so arrogant.” Apparently, he did not heed that advice.

Upon termination, Berry was presented with an “unconscionable” Separation Agreement, which he signed only under “economic duress.” Under the agreement, Berry received two months’ salary in exchange for a complete waiver of claims. Notwithstanding having executed the waiver and release, Berry sued filed suit, alleging 14 causes of action.

The lesson for employers? Beware the employee who is, perhaps, a bit to aware of his own “superlative” work.

Workplace bulletin boards will be a bit more crowded this Fall, thanks to a new rule issued by the National Labor Relations Board (NLRB). The new rule, which becomes effective on November 14, 2011, will require most employers to post a notice detailing employee rights under the National Labor Relations Act.

The required notice will inform employees of their right to act together to improve wages and working conditions, to form, join and assist a union, to bargain collectively with their employer, and to refrain from any of these activities. It will also provide examples of unlawful employer and union conduct and instruct employees how to contact the NLRB with questions or complaints.

In addition to posting the notice on a bulletin board, employers who customarily post personnel rules or policies on an internet or intranet site will be required to post the Board’s notice on those sites.

Copies of the notice will be available for download from the NLRB website on November 1, 2011. Employers also can satisfy the rule by purchasing and posting a set of workplace posters from a commercial supplier.

The rule does not apply to public-sector employers or employers who are otherwise excluded from coverage of the National Labor Relations Act, such as railroads and airlines.

NLRB’s website: Final Rule for Notification of Employee Rights

Many Delaware residents experienced their first earthquake today. From Virginia to New York, floors were trembling and windows were shaking. The employees in my high-rise office building in Wilmington, Delaware reacted to the experience quite differently: some sat planted in our chairs stunned, later wandering into the hallways to see if anyone else felt the odd sensations, some immediately sought to flee the building, and others were convinced we were in mortal danger and upset the building was not evacuated. How, as an HR professional, do you advise your management to handle these crises-whether fleeting, or one that results in a more drastic impact?

Develop a communication and contingency plan

The key to handling crises, whether natural or man-made, is to have a Crisis Management and Disaster Preparedness Plan in place before the disaster strikes. Disorganization and a lack of well-thought-out emergency procedures pose almost as great a risk to employee safety in a time of crisis as the underlying catastrophic event itself. As a result, you should consider distributing to your employees a clearly articulated and easy-to-understand communication and contingency plan. At a minimum, your policy should explain what your employees should do and where they should go in the event of an emergency. For example, it should provide information about how they’re to exit the facility if there’s a fire or another type of disaster.

In addition, you should periodically practice evacuation drills and provide emergency contingency training to familiarize your employees with the proper procedures after an emergency occurs. You should also consider things like which equipment needs to be turned off when an emergency strikes, what your backup power sources are, where first-aid supplies will be kept, and how to communicate instructions to your employees or customers while an emergency is unfolding.

Every employer must keep a list of vital contacts. You should have complete contact information for your employees and corporate officers. A good contact list should also include local and federal emergency telephone numbers, including contact information for the Delaware Emergency Management Agency (whose phone number is (302) 659-DEMA).

On the business side, you should also keep telephone numbers and physical and e-mail addresses for major clients, suppliers, contractors, financial institutions, insurance agents, radio stations and newspapers, and any other individuals or businesses you might need to notify after a crisis occurs. Keep your contact list stored off-site so it’s available if your main facility is inaccessible.

In addition, consider setting up a place on your website where employees can log in to indicate they are safe. If internet access is unavailable, the old-fashioned “phone tree” that assigns your employees to contact teams can by put into place. Employees on each contact team will be responsible for communicating with other employees on the team after an emergency. That makes locating employees and confirming their safety a far easier task than having no system at all. Another alternative is designating an off-site location employees can call to get information after a disaster or to notify your company and their family and friends that they’re OK.

Include in your contingency plan a timeline of tasks to be accomplished. Your list should include things that must be accomplished before disaster strikes (if you have advance warning, like when a hurricane is predicted) and what must be done afterward.

Protect your records

Most of you can’t really imagine how much you depend on the documents, forms, employee records, customer and contact lists, and accounting information you’ve developed over the years you’ve been in business. To reduce your losses, you must have adequate backups of all your company’s important records, computer data, vendor and customer lists, and other information that is essential to your operations.

Make sure your backups are updated frequently and stored in an off-site location specially constructed for data and record storage. You can have all the backups in the world, but they won’t do you any good if they’re five years old or if they’re stored in your office building when it burns to the ground.

Identify emergency business facilities

In the case of emergencies that disable your facilities for a significant amount of time, you may want to consider alternate facilities you might use to operate if a disaster hits your business. Look for facilities that will rent office or warehouse space for short terms, or consider using your employees’ homes if your business can be conducted through telecommuting. Of course, you’ll have to have a communication plan in place before disaster strikes so your employees and customers will know you’re still operating.

Make provisions for employees’ wages, benefits

Employers aren’t required to pay hourly nonexempt employees for time away from work because of a workplace disaster. Nevertheless, those employees may be eligible for certain pay benefits, including unemployment compensation. You should be cognizant that under the Fair Labor Standards Act, salaried exempt employees must be paid their full salary for any workweek in which they perform any amount of work – regardless of how many days or hours they actually work. If they aren’t, you risk having them lose their exemption.

If you’re like most employers, some of the most important benefits you provide your employees are health, disability, and life insurance. If any of your employees or their beneficiaries are injured or killed during a disaster, those benefits may be their (and their families’) only lifeline of hope. Consequently, make sure you provide whatever help they or their families need to file their health insurance or workers’ compensation claims. Injured employees may also need help filing claims under your short-term or long-term disability policies.

Here are some helpful things you can do:
• Let your employees know about pertinent deadlines. Be sure to provide them with the correct forms promptly and help them fill out the paperwork if necessary.

• If an employee’s injuries prevent her from filing a claim, contact her spouse or another family member to advise her which benefits are available.

• If an employee is temporarily or permanently disabled, work with her to determine whether there’s a reasonable accommodation that will allow her to return to work.
Address employee leave

Keep in mind the proper application of your company’s leave policies – and the various laws that protect employees who are injured or whose family members are injured. Take care to apply your sick, personal, vacation, paid time off, and bereavement leave policies uniformly and with compassion.

Injuries sustained during a disaster may qualify someone to take leave under the Family and Medical Leave Act to care for himself or a family member. If an employee needs to take a leave of absence for nonmedical reasons, check your policies and let him know what his options are. Even if you don’t usually allow nonmedical leaves of absence, storm cleanup may be an extenuating circumstance that will allow you to grant leave now. Just remember to treat all employees fairly when doling out leave.
Prepare for emotional component

Finally, the stress of a disaster takes a tremendous toll on everyone, both physically and emotionally. If you’re prepared to target the fears and concerns of your workforce, you’ll be better prepared to recover from a disaster. Managers should have plans to address those concerns and understand that people respond differently during crises. You must accept the fact that performance and productivity will drop, and some employees may have increased absences and difficulty concentrating on their work.

Contact your employee assistance program (EAP) provider for counseling information for stressed workers and their families. Alert your provider that employees will be contacting it. Remind employees about the EAP, and provide them with its phone number.

Bottom line

It appears that the earthquake felt in Delaware did not harm anyone or significantly impact businesses, but it’s a good reminder of what you need in place in case it had. Planning for the unthinkable is the smart thing to do from a business standpoint. Because every business is unique, employers are well advised to consult with employment counsel to help develop a disaster-preparedness and crisis-management policy best suited to your needs.

LexisNexis has selected Delaware Employment Law Blog as a nominee for its Top 25 Labor and Employment Law Blogs. We’re very honored to have been selected and are in very good company, along with 58 or so other excellent employment law or Human Resources-related blogs that also were nominated. According to LexisNexis, readers are encouraged to leave a comment in support of their favorit blog–each comment is counted as one “vote” and can be submitted through September 12, when the top 25 are announced.

Honestly, the biggest reward that we could hope for is your continued readership. Ok, well, the kind words some of you send to us once in a while don’t hurt, either–I mean, who doesn’t appreciate a compliment now and then? So we won’t ask you to vote for us but certainly wouldn’t object if you were inclined to do so anyway. To vote, you must be registered, so there is a prerequisite. If that doesn’t stop you from wanting to support the Delaware Employment Law Blog, we thank you for your dedication. And, if not, thanks anyway! We’re glad to have you stop by the blog anytime, voting or no voting!

The cat’s-paw theory of liability in the context of an employment-discrimination claim was upheld by the Third Circuit last week in McKenna v. City of Philadelphia last week. The case has far-reaching consequences, though-about $9.1 million farther.

At trial, the jury awarded the three plaintiffs a total of $10 million dollars. The trial-court judge reduced the verdict to $300,000 each, for a total of $900,000, in accordance with the compensatory-damage cap prescribed by Title VII. The plaintiffs argued that the damages should not have been reduced because the applicable state law, the Pennsylvania Human Rights Act, does not provide for caps on damage awards. The judge disagreed and found that the time to amend the complaint was before the jury returned the damages award. The Third Circuit affirmed the decision and the plaintiffs’ significantly reduced damages remain in place.

Many employee-plaintiffs allege a claim under federal law, as well as under the applicable state law, when filing a complaint of discrimination against their current or former employer. But, if they don’t, there can be significant consequences-more than $9 million worth in this case.

In McKenna v. City of Philadelphia, No. 09-3567 (3d Cir. Aug.17, 2011), the Third Circuit affirmed a jury award in favor of a fired Caucasian Philadelphia police officer, who claimed he had been retaliated against for complaining to his supervisor about racially discriminatory treatment of minority officers. The City claimed that even if the supervisor’s conduct was retaliatory, the City was insulated from liability because the termination decision was made by an independent Police Board of Inquiry (“PBI”) after a hearing.

In affirming the verdict, the court cited the recent “cat’s-paw” decision, Staub v. Proctor Hospital, 131 S.Ct. 1186 (2011), in which the U.S. Supreme Court held that, if an action by a biased supervisor is the proximate cause of a worker’s termination, an employer can be held liable even if the supervisor did not make the ultimate decision. Since the supervisor in McKenna had testified at the PBI hearing, the Third Circuit concluded that the jury could reasonably have decided that the supervisor’s retaliatory animus bore a direct and substantial relation to the termination, and the PBI’s decision was not independent and was foreseeable.

The case has special significance for Delaware employers. Delaware recognizes the implied covenant of good faith and fair dealing, including a subcategory that is markedly similar to the cat’s paw theory. In Delaware, if an employee’s employment record is falsified or manipulated by a supervisor in order to bring about the employee’s termination, the employer can be held liable even if the employer is unaware of the supervisor’s animus.

Under the cat’s-paw theory, the supervisor’s animus is actionable only if related to one of the discrimination laws, as in McKenna, where the supervisor retaliated against complaints of race discrimination, in violation of Title VII. In Delaware, the basis of the supervisor’s animus is not so circumscribed. The action of the Delaware supervisor could arise from personal animosity unrelated to discrimination, but if the result is to create a false record in order to procure a termination, and the employer relies on the supervisor’s statements, the employer may be held liable under the implied covenant.

As more cases are decided under the cat’s paw theory, it seems likely that terminated Delaware employees will draw an analogy to the cat’s paw theory and it will become more difficult for employers to avoid liability under the implied covenant theory.

Can a prospective employer be held liable under the retaliation provision of the FLSA? Not according to the Fourth Circuit and its decision in Dellinger v. Science Applications International Corp..

The case arose when Ms. Dellinger applied for work with Science Applications. Science Applications made Ms. Dellinger a job offer, contingent upon her providing certain information-including a list of pending civil litigation in which she was a party. Shortly after revealing that she was involved in FLSA litigation against her former employer, Science Applications withdrew the job offer to Ms. Dellinger. Ms. Dellinger then filed suit against Science Applications, alleging that it violated the retaliation provisions of the FLSA. Science Applications moved to dismiss the suit on the grounds that the FLSA protects employees only, not prospective employees. The District Court dismissed the suit, and Ms. Dellinger appealed.

The Fourth Circuit affirmed the District Court decision. In its opinion, the Court emphasized that the FLSA’s anti-retaliation provision relates to circumstances in which an employee alleges a violation by the employer. Given that context, the Court found that the retaliation provision cannot be expanded to cover prospective employees who have made no allegation against the prospective employer.

The Court also distinguished the FLSA from other statutes, including the National Labor Relations Act and the Occupational Safety and Health Act, noting the definition of “employee” under those statutes and enabling regulations is broader than the definition under the FLSA.

The legal maxim, “bad cases make bad law” was applied in full in a recent decision by the Ninth Circuit. In Pitts v. Terrible Herbst, Inc., the plaintiff-employee, Gareth Pitts, filed a complaint in Nevada state court, alleging that his employer, Terrible Herbst, Inc., had failed to pay him and other similarly situated employees overtime and minimum wages in violation of the FLSA, state labor laws, and state breach-of-contract laws. The employee alleged a mere $88 in unpaid wages.

Procedural Background

The employer removed the case to federal court and the district court entered a scheduling order. The employee served a discovery request in which he sought a list of the names and addresses of all of Terrible’s employees “who work or have worked in [its] retail locations . . . on an hourly . . . basis.” Terrible refused to produce the information. The case law on this question-whether, in a collective FLSA action, an employer must produce the names and contact information of all employees in the putative class before a class has been certified-differs between jurisdictions. Some courts require that this information be produced, even when no class has been certified and others do not require it until there has been at least a conditionally certified class.

The employee filed a motion to compel Terrible to produce the requested information. The magistrate judge heard arguments on the motion but hadn’t yet ruled on it when the discovery period was scheduled to end. The employee moved to extend the discovery schedule, in light of the pending motion to compel. The motion to extend was granted and the motion to compel remained undecided.

In the meantime, Terrible made an offer of judgment pursuant to Rule 68 of the Federal Rules of Civil Procedure in the amount of $900. Keep in mind-the employee had alleged he was owed $88 in back wages. The offer of judgment was for more than ten times the amount of damages the employee claimed he was owed. The offer also provided for costs and reasonable attorney’s fees-both are necessary if the offer is to constitute an offer of full relief under the Federal Rules in an FLSA case. The employee, for reasons unexplained, did not accept the offer.

The District Court’s Decision

The employer filed a motion to dismiss, arguing that, because it had offered to fully compensate the employee for all damages that he sought, including reasonable fees and costs, the court lacked subject-matter jurisdiction to hear the case. In other words, there was no longer a live case or controversy that required a decision by the court-the employee’s refusal of the offer of judgment had rendered his claim moot. The district court denied the motion and held that a Rule 68 offer of judgment does not moot a putative class action, so long as the class representatives can still file a timely motion for class certification.

Nevertheless, the court went on to conclude that, despite there being no deadline for the employee to file a motion for class certification, the employee had “pushed beyond the limits of timeliness in waiting for certification” and that the employee’s “failure to move for class certification before the initial deadline for discovery demonstrates untimeliness on his part” and dismissed the entire action with prejudice for lack of subject-matter jurisdiction, entered judgment in the defendant’s favor, ordered the employer to pay $900 to the employee and $3,500 to the employee’s attorneys.

Huh? If you’re confused, you’re in good company. But wait, there’s more.

In the same order, the court dismissed the state-law wage claim on alternative grounds. The court concluded that a Rule 23 class action is inherently incompatible with an FLSA collective action and, when both actions are brought together, only the FLSA action may proceed. This conclusion was reached despite the fact that the employee had previously agreed to waive his FLSA claim, although he had not yet amended his complaint to reflect that waiver.

The 9th Circuit’s Decision

On appeal, the Court of Appeals for the Ninth Circuit had a fine time trying to straighten out the district court’s ruling. Unfortunately, the appellate court fared only mildly better than the trial court in ruling on the several issues raised on appeal. For the purposes of this post, though, I’ll limit the discussion to the mootness issue.

Specifically, the court was asked whether a putative class action becomes moot when the named plaintiff receives an offer of settlement that fully satisfies his individual claim before he files a motion for class certification. The court answered in three parts as follows:

(1) If a class has been certified, then the offer does not moot the claim;

(2) If class certification had been denied, then mooting the putative class representative’s claim does not necessarily moot the class action because he still has an interest in obtaining a final decision on certification; and

(3) If certification has not yet been addressed, then mooting the putative class representative’s claims does not necessarily moot the class action because it could be “so transitory a claim that the court may not have enough time to rule before the representative’s interest expires.”

In other words, the employer is, for all intents and purposes, totally out of luck. Despite having tendered an offer of judgment in an amount more than ten times the amount the employee alleged he was owed, it is going to be stuck in litigation of a collective action. There is, in other words, no way to remedy the employee’s harm and resolve the case.

Pitts v. Terrible Herbst, Inc., No. 10-15965 (9th Cir. Aug. 9, 2011).

The NLRB’s position on “Facebook Firings” (i.e., when an employee is terminated for comments posted on Facebook), remains a hot-button issue for union and non-union employers alike. The Board’s General Counsel recently issued three opinions in favor of employers who had been charged with violating the National Labor Relations Act (NLRA) when they terminated or disciplined an employee for social-media activity.

But that hasn’t calmed the many employers who worry about the consequences they could face if the NLRB takes a hard stance against a workplace social-media policy. So what is the worst-case scenario in the event the NLRB takes aim at your policy? A decision by Chairman Liebman and Members Becker and Pearce, issued on August 2, gives real insight into the answer.

In Bay Sys Technologies, LLC, Case 5-CA-36314, the employer initially filed an answer to the Charge, which was brought by former employee, Dontray Tull, but later withdrew it. When an employer withdraws its answer to an Unfair Labor Practice Charge, it is deemed to have defaulted and all of the allegations in the Charge are taken as true. According to the Charge (and, because the employer withdrew its answer, the Board’s Decision), the facts are as follows:

On August 6, 2010, Mr. Tull posted comments to other employees’ Facebook pages about the employer’s failure to issue employees’ paychecks on time. The messages were published a week later in a local newspaper. The same day, the company’s CEO sent an email to employees, in which he “expressed disappointment” that employees had elected to take their complaints to the media instead of using internal channels to resolve the issue. He also stated that, by going to the media, the employees had breached their non-disclosure agreements and threatened suit if the employees continued to publicly air their complaints. Finally, the CEO implied that employees who had gone to the press would receive less favorable performance reviews.

A week and a half later, the CEO and a Vice President called employees to the CEO’s office individually, where the employees were “interrogated” about their “protected concerted activities.” Employees also were told that, if they didn’t like their job, they could look for work elsewhere. Mr. Tull was terminated the following day.

So, assuming, as the Board was required to do, that all of these facts are true, what is the remedy? In other words, what’s the worst-case scenario for the employer if the NLRB determines that the employer violated the NLRA by terminating employees for engaging in protected concerted activity via their Facebook posts? This case holds the answer.

First, the employer was ordered to “cease and desist” from “expressing disappointment to employees” that they took their complaints to the media; telling employees that they violated their nondisclosure agreements for speaking with the media; threatening employees with legal action for engaging in protected activities; threatening employees with less favorable performance reviews; “interrogating” employees about their protected activities; telling employees that they should find a new job if they were dissatisfied; telling employees that they should have used internal channels to air their grievances; and terminating or otherwise discriminating against employees for their protected activities.

Second, the employer was ordered to take the following affirmative steps: (a) reinstate Mr. Tull; (b) pay Mr. Tull any lost earnings; (c) remove any negative references relating to the incident from Mr. Tull’s personnel file; (d)provide a variety of employee records to the NLRB for determination of other back pay due under the Order; (e) post a notice of rights; and (f) file a sworn affidavit of compliance.

So there you have it, employers. This is what could happen if you take an aggressive (very aggressive) stance against employees posting online about an internal issue as fundamental as they come (i.e., timely issuance of paychecks), and then elect not to defend the case. These are the remedies that the Board can, and likely will, award.

Delaware’s Workplace Fraud Act , passed in July 2009, currently prohibits employers in the construction services industry from misclassifying employees as independent contractors. An employer who misclassifies its employees-intentionally or unintentionally-may be subject to civil penalties of up to $5,000 per misclassified employee; restitution obligations; stop-work orders; debarment from public contracts; and civil suit by the aggrieve employee(s).

Two bills currently under consideration by the Delaware General Assembly would amend and expand the Workplace Fraud Act. House Bill 221 would significantly expand the scope of the Act to cover all employers in the State. It would also make individual business owners jointly and severally liable with the business entity for any violation of the Act. House Bill 222 would allow the Department of Labor to publish a list of employers who had been found to have violated the Act.

Both Bills are currently in committee, and have not yet been put to a vote. It is unclear whether the bills have sufficient support to be passed by the General Assembly. But one thing is clear-passage of the bills would greatly impact Delaware employers using independent contractors!

These proposed amendments may reflect new enforcement efforts by the U.S. Department of Labor, seeking to put an end to employer practices of misclassification of employees as independent contractors in violation of the Fair Labor Standards Act and federal tax law.

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