Posts Tagged: employees

Independent Contractor v. Employee: Law of Economic Realities

In cases under the Fair Labor Standards Act, a question sometimes arises as to whether a worker is an independent contractor or an employee. The answer can be important, as an employee may have rights to minimum wage and overtime compensation that an independent contractor performing the same basic job tasks does not.  

To determine whether a worker is an employee under the FLSA, courts in the Fourth Circuit look to the “economic realities” of the relationship between the worker and the putative employer.

McFeeley v. Jackson St. Entm’t, LLC, 825 F.3d 235, 241 (4th Cir. 2016) (quoting Schultz v. Capital Int’l Sec., Inc., 466 F.3d 298, 304 (4th Cir. 2006)). The touchstone of the “economic realities” test is whether the worker is “economically dependent on the business to which he renders service or is, as a matter of economic [reality], in business for himself.” Id. If the practical economic reality is that the worker is “economically dependent” on the putative employer and not “in business for himself[,]” the worker will generally be considered an employee qualified for FLSA rights. Id

Economic Realities Test

In making this determination, courts applying the economic realities test consider six factors:

(1) [T]he degree of control that the putative employer has over the manner in which the work is performed;

(2) the worker’s opportunities for profit or loss dependent on his managerial skill;

(3) the worker’s investment in equipment or material, or his employment of other workers; 

(4) the degree of skill required for the work; 

(5) the permanence of the working relationship; and 

(6) the degree to which the services rendered are an integral part of the putative employer’s business. 

McFeeley, 825 F.3d at 241. These factors are often called the “Silk factors” in reference to United States v. Silk, 331 U.S. 704 (1947), the Supreme Court case from which they derive. See Schultz at 305.

Generally speaking, the greater the degree of control the putative employer has over the manner in which the work is performed, the greater the permanence of the working relationship, and the greater the degree to which the worker’s services are an integral part of the putative employer’s business, the more likely the worker is an “employee” under the economic realities test. Similarly, the fewer opportunities the worker has for profit or loss dependent on his managerial skill, the less the worker invests in equipment, material, or employment of other workers, and the lower degree of skill required for the work, the more likely the worker is an “employee” under the economic realities test. 

Application

For example, in Schultz, the plaintiff security workers worked jointly for a Saudi prince and a security firm. The Fourth Circuit found the prince and security firm exercised nearly complete control over how the workers did their jobs. Further, the workers had no opportunity for profit or loss dependent on their managerial skills, as they were paid a set rate per shift. Additionally, the firm and prince supplied the workers with all the necessary equipment, including cell phones, cars, firearms, and cameras. With respect to the fourth factor, although some security duties required special skills, others did not. As to the permanence of the relationship, the prince employed some workers for several years and preferred to hire workers who would stay with him over the long term. And the services rendered by the workers were integral to the security firm’s business, as the firm’s only function was to provide security for the prince, and workers were hired specifically to perform that task. Considering these facts under the economic realities test, the Fourth Circuit concluded the security workers “were not in business for themselves” and “thus were thus employees, not independent contractors.” Schultz, 466 F.3d at 309.

Similarly, in McFeeley, the plaintiff exotic dancers worked for dance clubs. The Fourth Circuit found that the clubs exercised significant control over how the dancers performed their work. That control included dictating dancers’ schedules, imposing written guidelines that all dancers had to obey during working hours, setting fees the dancers were supposed to charge patrons for private dances, and dictating how tips and fees were handled. Further, the dancers’ opportunities for profit or loss depended far more on the clubs’ management and decision-making than their own; the club owners’ investment in the clubs’ operation far exceeded the dancers’ investment; the job duty of dancing at the clubs required a relatively minimum degree of skill; and the dance clubs could not function without exotic dancers. Therefore, the dancers were employees of dance clubs under the FLSA, rather than independent contractors. McFeeley, 825 F.3d 235, 242-244.

And in Salinas v. Commercial Interiors, Inc., 848 F.3d 125 (4th Cir. 2017), the plaintiff drywall installers worked for a subcontractor of a larger company that offered general contracting and interior finishing services, including drywall installation, carpentry, framing, and hardware installation. The workers were economically dependent on the subcontractor alone, making them necessarily economically dependent on the contractor and subcontractor jointly. Due to the contractor’s daily supervision of these workers, it exercised greater control over their work than the subcontractor exercised alone. Further, the contractor provided all of the materials, supplies, tools, and equipment that workers used for their work. On these facts, the Fourth Circuit determined the drywall installers were employees covered by FLSA, rather than independent contractors, based on their entire employment for both the framing and drywall installation subcontractor and general contractor. Id. at 150-151.

Summary

In summary, Fourth Circuit courts determine whether a worker is an employee or an independent contractor by looking to the “economic realities” of the relationship between the worker and the putative employer. The outcome is important because an employee may have rights to minimum wage and overtime compensation under the FLSA that an independent contractor performing the same basic job tasks does not. The “economic realities” test turns on whether the worker is economically dependent on the business to which he renders service or is, as a matter of economic reality, in business for himself. If the practical economic reality is that the worker is economically dependent on the putative employer and not in business for himself, the worker will generally be considered an employee qualified for FLSA rights. 

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1-434-218-3133 or send an email to info@coffieldlaw.com.

This blog was also published to TimCoffieldAttorney.net.

ADA Job Restructuring Law

Can federal employment laws require an employer to change an employee’s job duties, as an accommodation for a disability? The answer is sometimes, depending on the circumstances. The analysis often turns on whether the duties at issue are “essential functions” of the employee’s job, and whether co-workers are available to take on the duties (in exchange for the disabled employee taking on some of their duties). 

Both Title I of Americans with Disabilities Act and Section 504(a) of Rehabilitation Act of 1973 (for employers receiving federal funds) require employers to “mak[e] reasonable accommodations to the known physical or mental limitations of an otherwise qualified individual with a disability.” 42 U.S.C. § 12112(b)(5)(A); Hooven-Lewis v. Caldera, 249 F.3d 259, 268 (4th Cir. 2001) (holding that discrimination under Rehabilitation Act includes failure to accommodate and applying same standard as that used for ADA failure-to-accommodate claims).

Reasonable Accommodation Defined 

A reasonable accommodation is one that “enables [a qualified] individual with a disability … to perform the essential functions of [a] position.” 29 C.F.R. § 1630.2(o)(1)(ii). The ADA expressly contemplates that a reasonable accommodation may require “job restructuring.” 42 U.S.C. § 12111(9)(B). The Fourth Circuit holds that job restructuring to shift a marginal, nonessential task to other employees can be a reasonable accommodation, especially where replacement tasks are shifted back to the disabled employee to avoid increasing the overall workload of other employees. Jacobs v. N.C. Admin. Office of the Courts, 780 F.3d 562, 580-81 (4th Cir. 2015) (“Jacobs’s proposed accommodation was to work fewer days at the counter and more days microfilming or performing other deputy clerk tasks. This proposed accommodation did not require the AOC to increase the workload of Jacobs’s coworkers; Jacobs merely asked that her employer change which deputy clerk was assigned to which task … A reasonable jury could therefore conclude that Jacobs’s requested accommodation was reasonable.”)

To prevail on a failure to accommodate claim, an employee must show: “(1) that [he] was an individual who had a disability within the meaning of the statute; (2) that the employer had notice of [his] disability; (3) that with reasonable accommodation [he] could perform the essential functions of the position; and (4) that the employer refused to make such accommodations.” Jacobs, 780 F.3d at 579 (quoting Wilson v. Dollar Gen. Corp., 717 F.3d 337, 345 (4th Cir. 2013).)

The Essential Functions Questions

Job-restructuring implicates the third element, which asks whether the proposed restructuring accommodation would allow the employee to perform the “essential functions” of the position. Employers sometimes believe that if a duty is included in an employee’s job description, it is an “essential” function of the job, and therefore the ADA cannot require the employer to shift that duty to other employees. This is not necessarily true. While job descriptions may be relevant evidence in determining the essential functions of a job, they are not dispositive. As the Fourth Circuit holds:

Not all job requirements or functions are essential. A job function is essential when “the reason the position exists is to perform that function,” when there aren’t enough employees available to perform the function, or when the function is so specialized that someone is hired specifically because of his or her expertise in performing that function.

Jacobs, 780 F.3d at 579 (quoting 29 C.F.R. § 1630.2(n)(2)). “[I]f an employer has prepared a written description before advertising or interviewing applicants for the job, this description shall be considered evidence of the essential functions of the job.” Id. (quoting 42 U.S.C. § 12111(8) (emphasis added)). “Other relevant evidence can include ‘the employer’s judgment as to which functions are essential,’ ‘the amount of time spent on the job performing the function,’ ‘the consequences of not requiring the incumbent to perform the function,’ and the work experience of people who hold the same or similar job.” Id. (quoting 29 C.F.R. § 1630.2(n)(3)).

Jacobs involved a court clerk with social anxiety who sought to have her job restructured so she did not have to work at the counter in the clerk’s office, and would perform additional clerk’s duties instead. Jacobs at 580. The Fourth Circuit held that even though the clerk’s job description named “customer service” as a function, working at the counter was not necessarily an “essential function” of the clerk position because, inter alia, “many employees were available to perform that function.” Jacobs, 780 F.3d at 580.

Job-Restructuring Accommodations

If applying these factors indicate the job duty at issue is not an essential function, the employer may have an obligation to shift that duty to other employees as a disability accommodation, with the disabled employee taking on some replacement duties so her co-workers do not have to do more work overall. Federal appellate courts applying the ADA consistently hold that job restructuring to shift non-essential functions can be a reasonable accommodation. In addition to Jacobs, see Rorrer v. City of Stow, 743 F.3d 1025, 1044 (6th Cir. 2014) (“Shifting marginal duties to other employees who can easily perform them is a reasonable accommodation.”); Henschel v. Clare County Road Com’n, 737 F.3d 1017, 1023–24 (6th Cir. 2013) (The “ADA requires job restructuring of non-essential duties as a reasonable accommodation in appropriate circumstances”; hauling the excavator not necessarily an essential function of the excavator operator position, as there were a number of other employees who could perform this task); Benson v. Northwest Airlines, 62 F.3d 1108, 1112 (8th Cir. 1995) (stating that reasonable accommodation may “involv[e] reallocating the marginal functions of a job”); U.S. EEOC v. AIC Sec. Investigations, Ltd., 55 F.3d 1276, 1284 (7th Cir. 1995) (“The ADA defines ‘reasonable accommodation’ to include restructuring a job, such as by removing non-essential functions from the job.”) (citing 42 U.S.C. § 12111(9)(B) and 29 C.F.R. § 1630.2(o)); Davidson v. Am. Online, Inc., 337 F.3d 1179, 1192 (10th Cir. 2003) (“a restructuring of the non-essential requirements” of a job could be a reasonable accommodation); Hill v. Assocs. for Renewal in Educ., Inc., 897 F.3d 232, 240 (D.C. Cir. 2018), cert. denied, 139 S.Ct. 1201 (2019) (“an employer may be required to accommodate an employee’s disability by ‘reallocating or redistributing nonessential, marginal job functions,’ or by providing an aide to enable the employee to perform an essential function without replacing the employee in performing that function.” (quoting 29 C.F.R. Pt. 1630, App.) (emphasis in original)).

To recap, under the ADA or Rehab Act, a reasonable disability accommodation could therefore entail shifting certain “non-essential” tasks to other employees and shifting from those employees to the disabled employee additional work that she can perform independently. See Jacobs at 580-81. Because this kind of accommodation would shift additional tasks back to the disabled employee and therefore not increase the overall workload of other employees, cases like Crabill v. Charlotte Mecklenburg Bd. of Educ., 423 Fed.Appx. 314, 323 (4th Cir. 2011) (noting that “an accommodation that would require other employees to work harder is unreasonable”) would not apply.

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call (434) 218-3133 or send an email to info@coffieldlaw.com.

This blog was also featured on TimCoffieldAttorney.net.

Law of Joint Employment

Law of Joint Employment

A worker’s joint employers are jointly and severally liable for any violations of the Fair Labor Standards Act. Salinas v. Commercial Interiors, Inc., 848 F.3d 125, 134 (4th Cir. 2017). This means that for purposes of the FLSA’s requirements that an employer pay minimum wages and overtime wages to non-exempt employees, a worker may have more “employers” than just the company who issues her paychecks. In short, if more than one entity has the ability to help determine the conditions of a workers’ employment, more than one entity may be liable if the worker is not paid the minimum wages or overtime compensation required by federal law.

DOL Joint Employment Regulations

The Department of Labor regulation implementing the FLSA distinguishes “separate and distinct employment” from “joint employment.” 29 C.F.R. § 791.2(a). “Separate employment” exists when “all the relevant facts establish that two or more employers are acting entirely independently of each other and are completely disassociated with respect to the” individual’s employment. Id. By contrast, “joint employment” exists when “employment by one employer is not completely disassociated from employment by the other employer(s).” Id. When two or more entities are found to jointly employ a particular worker, “all of the employee’s work for all of the joint employers during the workweek is considered as one employment for purposes of the [FLSA].” Id. (emphasis added). Thus, for example, all hours worked by the employee on behalf of each joint employer are counted together to determine whether the employee is entitled to overtime pay under the FLSA. Id; Hall v. DIRECTV, LLC, 846 F.3d 757, 766 (4th Cir. 2017).

Fourth Circuit Factors

In Salinas, the Fourth Circuit observed that the joint employment regulations speak to “one fundamental question: whether two or more persons or entities are ‘not completely disassociated’ with respect to a worker such that the persons or entities share, agree to allocate responsibility for, or otherwise codetermine — formally or informally, directly or indirectly — the essential terms and conditions of the worker’s employment.” 848 F.3d at 141 (quoting 29 C.F.R. § 791.2(a) and citing In re Enter. Rent-A-Car Wage & Hour Employment Practices Litig., 683 F.3d 462, 468 (3d Cir. 2012) (“[W]here two or more employers … share or co-determine those matters governing essential terms and conditions of employment — they constitute ‘joint employers’ under the FLSA.” (internal quotation marks omitted)).

With these principles in mind, courts in the Fourth Circuit consider six factors in determining whether entities constitute joint employers:

(1) whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to direct, control, or supervise the worker, whether by direct or indirect means;

(2) whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to, directly or indirectly, hire or fire the worker or modify the terms or conditions of the worker’s employment;

(3) the degree of permanency and duration of the relationship between the putative joint employers;

(4) whether, through shared management or a direct or indirect ownership interest, one putative joint employer controls, is controlled by, or is under common control with the other putative joint employer;

(5) whether the work is performed on a premises owned or controlled by one or more of the putative joint employers, independently or in connection with one another; and

(6) whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate responsibility over functions ordinarily carried out by an employer, such as handling payroll, providing workers’ compensation insurance, paying payroll taxes, or providing the facilities, equipment, tools, or materials necessary to complete the work. Id. at 141.

Salinas at 141.

The Fourth Circuit in Salinas observed that these six factors may not constitute an exhaustive list of all potentially relevant considerations. Id. at 142. “To the extent that facts not captured by these factors speak to the fundamental threshold question that must be resolved in every joint employment case — whether a purported joint employer shares or codetermines the essential terms and conditions of a worker’s employment — courts must consider those facts as well.” Id.

As these factors illustrate, the Fourth Circuit’s joint employer test turns on whether the entities in question codetermine the essential conditions of a worker’s employment. Salinas at 143. Thus, the existence of a general contractor-subcontractor relationship “has no bearing on whether entities … constitute joint employers for purposes of the FLSA.” Id. 143–44.

Application of Salinas Factors

For example, in Salinas, the Fourth Circuit held that a drywall installation subcontractor and general contractor were joint employers under the FLSA because, inter alia, the subcontractor provided staffing for the contractor based on the contractor’s needs; the employees performed the work for the contractor’s benefit; the contractor supervised the employees’ progress daily and provided feedback; and the employees wore uniforms bearing the contractor’s logo. 848 F.3d at 146.

For another Fourth Circuit case on the joint employer issue, see Hall v. DIRECTV, LLC, 846 F.3d 757, 762 (4th Cir. 2017). In that case, the plaintiff technicians sufficiently alleged DIRECTV as a joint employer, even though the technicians were nominally employed by a subcontractor. The court held that DIRECTV could be liable as a joint employer along with the subcontractor because, inter alia, the technicians were required to “obtain their work schedules and job assignments through DIRECTV’s centralized system,” to check in with DIRECTV after completing assigned jobs, and to “wear DIRECTV uniforms…when performing work for the company.” Similarly, in Young v. Act Fast Delivery of W. Virginia, Inc., 2018 WL 279996, *8 (S.D. W.Va. Jan. 3, 2018), the court held that under Salinas, a pharmaceutical delivery company was a joint employer of the plaintiff couriers, even though the couriers were nominally employed by a third party subcontractor.

As the Fourth Circuit emphasized in Salinas, “Separate employment exists when … ‘two or more employers are acting entirely independently of each other and are completely disassociated with respect to’ the individual’s employment.” 848 F.3d at 133-34 (emphasis in original) (quoting 29 C.F.R. § 791.2(a)). “By contrast, joint employment exists when ‘the facts establish … that employment by one employer is not completely disassociated from employment by the other employer.’” Salinas at 134 (emphasis in original).

Summary

Therefore, under the Fourth Circuit’s framework, the “fundamental question” guiding the joint employment analysis is “whether two or more persons or entities are ‘not completely disassociated’ with respect to a worker such that the persons or entities share, agree to allocate responsibility for, or otherwise codetermine — formally or informally, directly or indirectly — the essential terms and conditions of the worker’s employment.” Id. at 140. If the facts show that two related companies were not “completely disassociated” or “acting entirely independently” with respect to a worker’s employment, they may be joint employers. If the entities shared control over the conditions of employment, they may both be potentially jointly and severally liable for FLSA violations as joint employers.

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1-434-218-3133 or send an email to info@coffieldlaw.com.

McKennon v. Nashville Banner: Law of After-Acquired Evidence

McKennon v. Nashville Banner: Law of After-Acquired Evidence

What happens when an employer, having wrongfully terminated an employee (in violation of federal employment law), discovers in litigation that the employee did something that would have legitimately and lawfully lead to termination, had the employer known about it before wrongfully firing the employee? Does the employer still have to pay lost wages for the wrongful termination, or does this “after-acquired evidence” excuse the violation?

The Supreme Court addressed these questions in McKennon v. Nashville Banner Pub. Co., 513 U.S. 352 (1995). The Court rejected the argument that a legitimate reason for termination, discovered after an unlawful discharge, excuses the unlawful action or bars the employee from recovery. However, the Court also indicated that such after-acquired evidence may limit the employee’s ability to obtain reinstatement or recover all lost wages associated with the termination.

Facts

McKennon worked thirty years for Nashville Banner Publishing Company until she was terminated at age sixty-two. McKennon filed suit, alleging that her discharge violated the Age Discrimination in Employment Act of 1967 (ADEA). McKennon’s suit sought a variety of legal and equitable remedies available under the ADEA, including backpay. In her deposition, McKennon admitted that during her final year of employment she had copied and taken home several of the Banner’s confidential financial documents. 513 U.S. 354-56.

For the purposes of summary judgment, the Banner conceded that it had discriminated against McKennon because of her age. Id. The District Court, however, granted summary judgment for the company, holding that McKennon’s misconduct in taking the confidential documents was grounds for termination and that neither back pay nor any other remedy was available to her under the ADEA. The Court of Appeals affirmed on the same reasoning. McKennon appealed. Id. at 355-56.

The Court’s Decision

The Court reversed. It held that an employee who is fired in violation of federal employment law is not barred from all relief when, after her discharge, her employer discovers evidence of wrongdoing that would have led to her termination on lawful and legitimate grounds had the employer known of it. 513 U.S. 356-360.

After-Acquired Evidence Not a Complete Bar

First, the Court held that this kind of “after-acquired evidence” is not a complete bar to recovery. The Court reasoned that even if the employee engaged in misconduct that would have prompted a termination, the employer’s discrimination that actually prompted the discharge cannot be disregarded. The Court assessed the purposes of the ADEA’s remedial provisions, 29 U.S.C. § 626(b) and 29 U.S.C. § 216(b), which (like the remedial provisions of other employment laws) were designed both to compensate employees for injuries caused by unlawful discrimination and to deter employers from discriminating in the first place. The Court concluded that allowing after-acquired evidence to bar all relief would frustrate both of these important objectives. Therefore, the Court held that after-acquired evidence did not bar all relief for unlawful discrimination. Id. at 358-360.

Relevance to Crafting an Appropriate Remedy

Second, however, the Court observed that trial courts should take into account after-acquired evidence of an employee’s wrongdoing in determining the specific remedy for the employer’s discrimination. To hold otherwise, and bar any consideration of employee misbehavior in the relief analysis, would be to ignore the employer’s legitimate concerns about employee misconduct. The ADEA, like other employment laws, just prohibits discrimination. It does not limit employers from having legitimate rules and exercising appropriate lawful discretion in hiring, promoting, and firing employees. Therefore, the Court noted, employee wrongdoing is relevant in taking due account of such lawful prerogatives and the employer’s corresponding equities arising from the wrongdoing. Id. at 360-61.

General Rule: No Reinstatement or Front Pay

Third, the Court discussed how trial courts might balance these competing concerns — on one hand, the prohibition against unlawful discrimination, and on the other, the employer’s right to address legitimate employee misconduct in an appropriate manner. The Court decided that remedial relief in such cases should be addressed on a case-by-case basis. However, the Court stated that as a general rule, if the employer proves the employee engaged in misconduct that would have prompted a lawful termination had the employer known about it, neither reinstatement nor front pay is an appropriate remedy. Id. at 362. This is because “it would be both inequitable and pointless to order the reinstatement of someone the employer would have terminated, and will terminate, in any event and upon lawful grounds.” Id.

Possible Limitations on Back Pay

The Court indicated that the more difficult issue, in after-acquired evidence cases, is the proper measure of back pay. This is because even a guilty employer cannot be required to ignore information it learns about employee wrongdoing that would lead to a legitimate discharge, even if it is acquired during the course of a discrimination lawsuit and might have gone undiscovered in the absence of the discrimination that led to the lawsuit. Id. at 362. The Court stated that the “beginning point in formulating a remedy should therefore be calculation of backpay from the date of the unlawful discharge to the date the new information was discovered.” Id. In determining the appropriate relief, the court can consider extraordinary equitable circumstances that affect the legitimate interests of either party. But an “absolute rule barring any recovery of backpay, however, would undermine the [federal employment law’s] objective of forcing employers to consider and examine their motivations, and of penalizing them for employment decisions that spring from … discrimination.” Id. Thus, as a general rule, after-acquired evidence does not bar back pay, but it might limit the amount of back pay an employee can recover.

No Bar to General Compensatory, Punitive, or Liquidated Damages

It is also worth noting that McKennon did not state or suggest that compensatory damages for past or future emotional harm should be time-limited. The decision only addressed possible limitations on lost wages and reinstatement. Allowing full emotional distress damages even if the defendant prevails on an after-acquired evidence defense makes good sense in light of McKennon’s reasoning. This is because no legitimate business prerogative would be served by allowing a proven discriminator to avoid paying the full cost of the emotional damage caused by the discrimination. The same reasoning supports the conclusion that after-acquired evidence does not bar punitive damages or liquidated damages, in cases where the usual standards for awarding punitive or liquidated damages are met. Here is a link to EEOC’s guidance on this issue.

Employer’s Burden of Proof

Finally, the Court discussed the employer’s burden in attempting to prove an “after-acquired evidence” defense. When an employer seeks to use this defense, it must first establish that the wrongdoing was of “such severity that the employee in fact would have been terminated on those grounds alone had the employer known of it at the time of the discharge.” Id. at 362-63. The Court also expressed concern that, due to the possibility of uncovering after-acquired evidence, employers might routinely undertake extensive discovery into an employee’s background or job performance to resist employment discrimination claims. Id. at 363. However, the Court concluded the trial courts’ authority to award attorney’s fees under §§ 216(b) and 626(b) and to invoke the appropriate provisions of the Federal Rules of Civil Procedure would likely deter most abuses of the discovery rules. Id.

Analysis

The Court in McKennon rejected the notion that a legitimate reason for termination, discovered after an unlawful discharge, excuses the unlawful action or bars the employee from recovery. However, such after-acquired evidence may limit the employee’s ability to obtain reinstatement or recover all lost wages associated with the termination. To use this defense, an employer must prove that the employee engaged in misconduct of such severity that the employee would have been terminated on those grounds alone had the employer learned of it during her employment. As a general rule, if the employer meets this burden, reinstatement is not an appropriate remedy and back pay may be limited.

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1-434-218-3133 or send an email to info@coffieldlaw.com.

Corning Glass Works v. Brennan: EPA Law Requires Equal Pay for Equal Work

In Corning Glass Works v. Brennan, 417 U.S. 188 (1974), the Supreme Court addressed the allocation of proof in pay discrimination claims under the Equal Pay Act of 1963. This was the first Supreme Court decision applying the Equal Pay Act. The Court held that to prevail on an EPA claim, the plaintiff must prove that the employer pays an employee of the one sex more than it pays an employee of the other sex for substantially equal work. The opinion addressed what it meant for two employees to perform “substantially equal work” for the purposes of the Equal Pay Act, including what it means for work to be performed under “similar working conditions.” 

Facts

Corning was a glassworks company. It employed night shift inspectors and day shift inspectors at its plants. For many years, Corning allowed only men to work the night shift, and it paid night shift inspectors more than it paid the day shift inspectors, who were women. In June 1966, three years after the passage of the Equal Pay Act, Corning began opening the night shift jobs to women, allowing female employees to apply for the higher-paid night inspection jobs on an equal seniority basis with men.  

In January 1969, Corning implemented a new “job evaluation” system for setting wage rates. Under that pay system, all subsequently-hired inspectors were to receive the same base wage (which was higher than the previous night shift rate) regardless of sex or shift. With respect to employees hired before the new pay system went into effect, however, the pay plan provided that those employees who worked the night shift would continue to receive a higher (“red circle”) rate. Because of this “red circle” rate, the new pay system perpetuated the previous difference in base pay between day and night inspectors, thereby also perpetuating the previous disparity in pay between female (day) inspectors and male (night) inspectors. 

The Equal Pay Act prohibits an employer from paying different wages to employees of opposite sexes “for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions,” except where the difference in payment is made pursuant to a seniority or merit system or one measuring earnings by quantity or quality of production, or where the differential is “based on any other factor other than sex.” 29 U.S.C. § 206(d)

The Secretary of Labor brought suit, asserting that Corning’s pay practices violated the EPA by paying male and female inspectors differently for equal work. 

The Court’s Decision

The Court addressed the question of whether Corning’s pay practices violated the EPA by paying different wages to employees of opposite sexes for “equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions[.]” The Court found that they did. 

First, the Court held that Corning’s pay practices from the passage of the EPA in 1963 to June 1966 violated the EPA, because during that period the night shift inspectors (all male) were paid more than the day shift inspectors (female) and the night shift and day shift inspectors performed equal work “under similar working conditions.” 29 U.S.C. § 206(d). Corning argued the difference between working at night and working at day meant the different positions did not entail similar working conditions. The Court rejected this argument, holding that the EPA’s legislative history established that the statutory term “working conditions,” as used in the EPA, encompasses only physical surroundings and hazards, and not the time of day worked. 417 U.S. 197-204.

Corning also argued that the pre-1966 pay disparity was lawful because the higher pay to (male) night inspectors was intended as additional compensation for the inconvenience of night work, and thus the pay disparity was based on a “factor other than sex[.]” 29 U.S.C. § 206(d). The Court rejected this argument, holding the evidence showed the pay disparity in fact arose because men would not work for the low rates paid to women inspectors. The pay disparity therefore “reflected a job market in which Corning could pay women less than men for the same work.” 417 U.S. 204-05.

Second, the Court held that Corning did not remedy its violation of the EPA in June 1966 simply by permitting women to work as night shift inspectors, because the violation could only be cured by increasing the base wages of female day inspectors to meet the higher rates paid to night inspectors. Corning’s action in allowing women to work the night shift did not accomplish this, as “Corning’s action still left the inspectors on the day shift — virtually all women — earning a lower base wage than the night shift inspectors because of a differential initially based on sex and still not justified by any other consideration[.]” 417 U.S. 207-08. In effect, “Corning was still taking advantage of the availability of female labor to fill its day shift at a differentially low wage rate not justified by any factor other than sex.” Id. Thus, Corning’s allowing women to work the night shift, without increasing base pay to the female day shift workers, did not remedy the EPA violation. 

Finally, the Court held the Corning did not remedy its violation of the EPA in January 1969 with its pay plan equalizing day and night inspector rates, because the plan’s higher “red circle” rate paid to employees who previously worked the night shift only perpetuated the previous unlawful pay disparity. This was because the previously-hired male night shift workers would receive the higher red circle rate based on their pre-1969 pay — before day and night wage rates were equalized. Thus, the pay plan had the unlawful effect of continuing the pay disparity between men and women for equal work. As the Court observed, “the company’s continued discrimination in base wages between night and day workers, though phrased in terms of a neutral factor other than sex, nevertheless operated to perpetuate the effects of the company’s prior illegal practice of paying women less than men for equal work.” 417 U.S. 209-10.

Analysis

This case was important because it marked the first time the Supreme Court addressed the requirements of the Equal Pay Act. The Court held that to prevail on an EPA claim, the plaintiff must prove that the employer pays an employee of one sex more than it pays an employee of the other sex for substantially equal work. The opinion addressed what it meant for two employees to perform “substantially equal work” for the purposes of the EPA, and held that the requirement for work to be performed under “similar working conditions” referred to physical surroundings and hazards, and not the time of day worked. If a male employee and a female employee perform equal work at different times of the day, they should therefore be given equal pay — unless the pay disparity is based on a seniority or merit system or one measuring earnings by quantity or quality of production, or where the differential is “based on any other factor other than sex.” 29 U.S.C. § 206(d). If an employer’s pay practices violate the EPA, the only way to cure the violation is to equalize wages between men and women — simply offering women the same job titles is not sufficient. And pay systems that have the effect of perpetuating prior discrimination may still violate the EPA — even if the pay system is neutrally-worded and made without intent to discriminate. 

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1-434-218-3133 or send an email to info@coffieldlaw.com.

The National Labor Relations Act: Protections for Employee Concerted Activity

The National Labor Relations Act (NLRA) gives employees the right, among others, to unionize, to join together to advance their interests as employees, and to refrain from such activity. 29 U.S.C. § 151–169. The NLRA makes it unlawful for an employer to interfere with, restrain, or coerce employees in the exercise of their rights under the law, including their right to engage in concerted activity to advance their interests as workers. For example, employers may not respond to a union organizing drive by threatening, interrogating, or spying on pro-union employees, or by promising employees benefits for not participating in the union. But even when no union is involved, employers may not punish employees for banding together and speaking up in an effort to improve their working conditions.

Background

Congress enacted the NLRA in 1935 to protect the rights of employees and employers, to encourage collective bargaining, and to curtail certain private sector labor and management practices, which can harm the general welfare of workers, businesses and the U.S. economy. Among other things, Congress expressed an intent for the NLRA to address the “inequality of bargaining power between employees who do not possess full freedom of association or actual liberty of contract and employers who are organized in the corporate … form[].” Congress found that this inequality of bargaining power between employees and their employers “substantially burdens and affects the flow of commerce, and tends to aggravate recurrent business depressions, by depressing wage rates and the purchasing power of wage earners in industry and by preventing the stabilization of competitive wage rates and working conditions within and between industries.” 29 U.S.C § 151. Congress further determined that enacting legal protections for employees to “organize and bargain collectively” would have the effects of “encouraging practices fundamental to the friendly adjustment of industrial disputes arising out of differences as to wages, hours, or other working conditions, and…restoring equality of bargaining power between employers and employees.” Id.

Section 7: The Right to Self-Organize and Engage in Concerted Activity

Section 7 of the NLRA guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,” as well as the right “to refrain from any or all such activities.” 29 U.S.C. § 157.

In general, the NLRA, therefore, gives employees the right to engage in both union and certain non-union activities aimed at improving working conditions. With respect to employee union rights, these include the right to attempt to form a union where none currently exists, or to decertify a union that the employees no longer support. Examples of employee rights relating to unions include: being fairly represented by a union; forming, or attempting to form, a union in the workplace; joining a union, regardless of whether the union is recognized by the employer; assisting a union in organizing fellow employees; and refusing to do any of these things.

Regardless of whether a union is involved, employees still have rights to band together and speak up about their working conditions. Section 7 of the NLRA guarantees this right to “engage in other concerted activities for the … mutual aid or protection” of fellow workers. 29 U.S.C. § 157. This right does not require a union. The NLRA therefore protects the rights of employees to engage in “concerted activity,” and this happens when two or more employees take action for their mutual aid or protection regarding the terms and conditions of their employment. It is also possible for a single employee to engage in protected “concerted activity” if she is acting on the authority of other employees, bringing group complaints to the employer’s attention, trying to induce group action, or seeking to prepare for group action. Id. Examples of protected concerted activities include: two or more employees addressing their employer about improving their pay; two or more employees discussing work-related issues beyond pay, such as safety concerns, with each other; or one employee speaking to an employer on behalf of one or more co-workers about improving workplace conditions. Id.

For more information about non-union concerted activities, the National Labor Relations Board (NLRB) publishes a protected concerted activity page, which includes descriptions of real-life concerted activity cases.

Section 8: Protections Against Interference with Concerted Activity

Section 8(a)(1) of the NLRA, among other things, prohibits employers from interfering with employees’ rights to engage in concerted activity. In short, this section makes it an unfair labor practice for an employer “to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Section 7” of the NLRA, including the right of employees to engage in concerted activities for their mutual aid or protection. 29 U.S.C. § 158. An employer therefore cannot terminate an employee for engaging in concerted activity protected by Section 7.

Concerted Activity and Social Media

The range of activity that constitutes concerted activity protected from employer interference can include employee interactions on social media. For example, in Three D, LLC d/b/a Triple Play Sports Bar and Grille v. N.L.R.B., 629 F. App’x 33 (2d Cir. 2015), an employee posted a Facebook status update protesting an employer’s purported failure to properly calculate tax withholding: “Maybe someone should do the owners of Triple Play a favor and buy it from them. They can’t even do the tax paperwork correctly!!! Now I OWE money . . . WTF!!!!” Another employee commented: “I owe too. Such an asshole.” Another employee “liked” the post. Based on these comments, the employer, Triple Play, terminated two of the employees. Id. at 36-37.

The NLRB determined that the employees’ comments were protected concerted activity, and therefore the terminations violated the NLRA. The Court of Appeals for the Second Circuit affirmed. The appeals court agreed with the NLRB that the employees’ Facebook comments were “protected concerted activity” because: (1) the comments were “concerted activity” because they were exchanged among current Triple Play employees; and (2) the comments were “protected” because they “concerned workplace complaints about tax liabilities, [Triple Play’s] tax withholding calculations, and [and emloyee’s]  assertion that she was owed back wages.” Id. at 36

Significantly, as explained in detail in this ABA article, the court’s finding of “protected concerted activity” alone did not mean the employer violated the NLRA by terminating the employees. Rather, the Court held, an employee’s right to engage in concerted activity “must be balanced against an employer’s interest in preventing disparagement of his or her products or services and protecting the reputation of his or her business.” Three D, LLC v. N.L.R.B., 629 F. App’x at 35. Therefore, an employee’s otherwise protected public comments may lose their Section 7 protection if they are “sufficiently disloyal or defamatory.” Id. (cites omitted). “These communications may be sufficiently disloyal to lose the protection of the [NLRA] if they amount to criticisms disconnected from any ongoing labor dispute.” Id. (cites omitted).

The court found the Triple Play employees’ comments were not “disloyal or defamatory” because they did not mention Triple Play’s products or services. Further, their Facebook comments were not “disconnected” from an ongoing labor dispute: they were directly connected to the employees’ dispute with Triple Play about the employer’s tax withholding calculations. The fact that the post at issue contained profanity did not alter this analysis, even though customers conceivably could have seen the profanity, as the court decided that disqualifying concerted activity from protection based on social media profanity would have an “undesirable result of chilling virtually all employee speech online.” Id. at 37.

The NLRB has published detailed guidance regarding the implications of social media activity on employee rights (and employer obligations) under the NLRA.

Process for Reporting Possible Violations of the NLRA

The National Labor Relations Board investigates possible violations of the NLRA, including the concerted activity provisions. For information about how to report a possible violation to the NLRB, and the NLRB investigation process, try this link.

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1-434-218-3133 or send an email to info@coffieldlaw.com.