Conservative Justices Rule in FLSA Case

 

By:  Claudia D. Orr

 

When I saw that the US Supreme Court had ruled that service advisors at automobile dealerships were exempt employees under the Fair Labor Standards Act (“FLSA”), I have to admit I was not very excited.  That would be a narrow ruling, and I don’t represent any car dealerships.

But, there is something important in the decision – the five conservative justices of the court (Justices Thomas, Roberts, Kennedy, Alito and Gorsuch) expressly rejected the idea that the FLSA exemptions are to be narrowly construed.  This is a big change from how the FLSA has been applied by the Department of Labor. The other four justices (Justices Ginsberg, Breyer, Sotomayor, and Kagan) sharply dissented.

An exempt employee is not entitled to overtime pay and, in a few limited professions, the employee is also exempt from minimum wage requirements. The case, Encino Motorcars, LLC v Navarro, ___ S. Ct. ___ (2018), will be helpful to employers when they defend the exempt status of an employee.  This case may also provide insight into the high court’s rulings in future employment cases.

However, employers located in Michigan, Ohio, Kentucky and Tennessee are also subject to the rulings of the federal Sixth Circuit Court of Appeals which requires employers to bear a “heightened” burden of proof, more than a preponderance (or a mere tipping of the scales of justice), when proving an employee is an exempt employee. So, while the exemption itself is no longer to be narrowly construed, the burden of proof still remains high for employers in the Sixth Circuit.

Position descriptions should be reviewed every few years because duties change and positions morph. For example, a manager who was previously classified as exempt under the executive exemption may now only manage one full time employee and is no longer eligible for the exemption.  Some positions are easily assigned the status of exempt or non-exempt, but some are more difficult.  Those positions should always be reviewed with experienced employment counsel, such as the author.

This article was written by Claudia D. Orr, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM).  She can be reached at corr@plunkettcooney.com or at (313) 983-4863. For further information go to: http://www.plunkettcooney.com/people-105.html.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. April 2018.

Sixth Circuit Rules Title VII Bars Transgender Discrimination

 

By: Karen L. Piper

 

The Sixth Circuit Court of Appeals ruled that discrimination based on transgender or transitioning status is covered by Title VII.  The case involved a Detroit-area funeral home which discharged a male employee shortly after he notified his employer that he was transitioning to female and intended to dress and present as a woman at work.  The funeral home’s owner held a sincere religious belief that “a person’s sex is an immutable God-given gift” and he would be “violating God’s commands” if he were to allow this employee to “deny [his] sex while acting as a representative of [the] organization.” EEOC v. RG & GR Harris Funeral Homes, Case No. 16-2424 (6th Cir. March 7, 2018).

The employee filed a charge of discrimination with the EEOC.  The EEOC determined the funeral home had discriminated against the employee based on sex and gender identity.  The EEOC filed suit on behalf of the employee in federal district court in Detroit.  The employer promptly sought dismissal of the lawsuit.  The court ruled Title VII does not cover claims based on an employee’s transgender or transitioning status but does cover claims based on an employee’s failure to conform to sex- or gender-based stereotypes.  The case proceeded on this theory.

Following completion of discovery, both sides moved for summary judgment.  The court ruled there was evidence the employer discriminated on the basis of gender nonconformity, but requiring the funeral home to allow the employee to present as a woman at work substantially burdened the funeral home owner’s exercise of his religious beliefs.  The court granted judgment in favor of the funeral home.  The EEOC appealed.

The Sixth Circuit Court of Appeals (covering Michigan, Ohio, Kentucky and Tennessee) affirmed the district court’s ruling that the employer had discriminated against the employee because he did not conform to gender stereotypes.  The employer had terminated the employee shortly after he notified the employer that he planned to dress and present as a woman, contrary to the stereotype that men should dress and present as men.

The Court reversed the district court’s initial ruling that transgender and transitioning status were not protected by Title VII.  The Court asked if the employee would have been fired if he were a woman seeking to comply with the female dress code.  “The answer quite obviously [was] no.”  That “in and of itself confirm[ed] that [the employee’s] sex impermissibly affected the employer’s decision.”  Thus, discrimination against a transgender or transitioning person is necessarily discrimination based on gender-nonconformity and covered by Title VII.

Having found the employer had engaged in unlawful discrimination, the Court reviewed the employer’s defenses.

The Court rejected a new defense that had been raised in briefs filed by some of the “friends of the court” – that the employee’s claims were barred by the “ministerial exception.”  This exception bars discrimination claims brought by employees who work in a ministerial role for a religious organization.  The defense did not apply here because the funeral home was not a religious organization.  It is not affiliated with any church; its articles of incorporation do not express a religious purpose; its employees are not required to hold any particular religious belief; and it employs and serves individuals of all religions.  The employee did not meet any of the tests for serving in a ministerial role: religious job title, religious training, serving as an ambassador of faith or in a leadership role in a religious community, or performing religious functions for the organization.

The Court ruled that allowing the employee to present as a woman at work did not substantially burden the funeral home owner’s religious exercise.  And, even if it did, the EEOC’s enforcement of Title VII was the least restrictive means of furthering the government’s compelling interest in eliminating workplace discrimination.  The Court rejected the district court’s suggested less restrictive means of furthering this interest, i.e., having the employer adopt a gender-neutral dress code.  The case involved much more than a dress code.  The employee planned to present as a woman, including dressing as a woman, using the women’s restroom, etc.  Having decided the employer’s defense did not excuse its discrimination, the Court granted summary judgment to the EEOC.

This issue of whether Title VII includes protection against discrimination on the basis of gender identity, per se, is a form of sex discrimination likely will have to be decided by the United States Supreme Court.  For now, because many courts have ruled Title VII protects against discrimination on the basis of gender nonconformity, employers faced with issues involving a transgender or transitioning employee should consult experienced employment counsel, such as the author, for guidance on how to address these issues.

This article was written by Karen L. Piper, who is Chair of the Legal Affairs Committee of Detroit SHRM, and a Member of Bodman PLC, which represents employers, only, in Workplace Law. Ms. Piper can be reached at Bodman’s Troy office at (248) 743-6025 or kpiper@bodmanlaw.com. For further information, go to: http://www.bodmanlaw.com/attorneys/karen-l-piper.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information are included in the re-post of the article. March 2018.

“PS” To February’s Wages and Fringe Benefits Act Article

By: Claudia D. Orr

In February I wrote an article entitled “Michigan Appellate Court Calls for a Conflict Panel to Decide Issue under Michigan Wages and Fringe Benefits Act (“WFBA”).  I was pretty excited that, in Ramos v Intercare Community Health Network, the Court of Appeals not only issued a published opinion concerning the WFBA, but had called for a special conflict panel to decide whether the prior holding in Reo v Lane Bryant, Inc, 211 Mich App 364 (1995), should be overturned.

In Reo, the Court of Appeals had examined whether an employee had the right to be free of retaliation/discrimination where the employee had exercised a right on the act on his own behalf. The Reo court held that the “employee must be exercising a right afforded by the act on behalf of another employee or other person.  Simply exercising a right on one’s own behalf would not bring an employee within the purview of [MCL 408.483].”  The majority in Ramos disagreed with that holding, but was bound to follow the precedent.

The Ramos court’s request for a special panel to revisit the holding in Reo was summarily denied by an order of the Court of Appeals on February 21, 2018.  I am now slightly less excited about the Ramos opinion, but it is still a treat to have a published opinion addressing a Michigan wage law.

This article was written by Claudia D. Orr, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM).  She can be reached at corr@plunkettcooney.com or at (313) 983-4863. For further information go to: http://www.plunkettcooney.com/people-105.html.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. March 2018.

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Finite Request to Telecommute was a Reasonable Accommodation

By: Karen L. Piper

The Sixth Circuit Court of Appeals affirmed a jury verdict in favor of an in-house attorney who claimed that she was unlawfully denied a reasonable accommodation during a 10-week period of modified bed rest ordered by her doctor following surgery. Mosby-Meachem v. Memphis Light, Gas & Water Div., Case No. 17-5483 (6th Cir. Feb. 21, 2018).

The employer’s legal department had an 8:30am-5:00pm attendance policy for its attorneys.  Although the employer did not have a formal written telecommuting policy, in practice, employees often telecommuted.

Following surgery and placement on modified bed rest, the attorney made an official accommodation request, supported by medical documentation, that she be permitted to work from a bed either within the hospital or within her home for ten weeks. The employer’s ADA Committee rejected the proposal based on its determination that physical presence in the office was an essential function of the attorney’s job, and that telecommuting created concerns about maintaining confidentiality. The attorney’s internal appeals were denied. The attorney used FMLA leave to cover the period.

Following her return to work, the attorney filed a lawsuit against her employer for failure to accommodate and retaliation under the Americans with Disabilities Act and for pregnancy discrimination under state law. In relevant part, the jury awarded her a verdict of $92,000 in compensatory damages on her claim of disability discrimination. The employer appealed.

The employer’s primary argument on appeal was that the attorney had not presented sufficient evidence that she was a qualified individual with a disability because physical attendance was an essential function of her job and she needed to work from home. There was some evidence to support the employer’s argument. The Court found that other evidence supported the jury’s finding that the attorney was able to perform the essential functions of her job remotely for ten weeks. Several coworkers and outside counsel testified that they felt she could perform all essential functions from home for a 10-week period. There was testimony that the attorney job description was based on a 20-year old questionnaire and did not reflect changes in the job which resulted from technological advances. There also was testimony that the job description included tasks, such as trying cases and deposing witnesses, which the attorney had never performed in her eight years of employment with the employer before her request to telecommute. The court ruled the attorney’s request was reasonable under the circumstances and affirmed the jury verdict in her favor.

All requests for accommodation should be examined on a case-by-case basis. Requests to telecommute seem to be especially challenging for employers. These requests should be discussed with experienced employment counsel, such as the author, and include consideration of the length of time the employee is asking to telecommute.

This article was written by Karen L. Piper, who is Chair of the Legal Affairs Committee of Detroit SHRM, and a Member of Bodman PLC, which represents employers, only, in Workplace Law. Ms. Piper can be reached at Bodman’s Troy office at (248) 743-6025 or kpiper@bodmanlaw.com. For further information, go to: http://www.bodmanlaw.com/attorneys/karen-l-piper.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information are included in the re-post of the article. March 2018.

Should Employers Participate in the DOL’s Soon to be Launched “PAID” Program?

By: Claudia D. Orr

The short answer is maybe not.  Let’s look at this new program and you can make your own informed decision.

PAID stands for Payroll Audit Independent Determination program.  Its stated objectives are “to resolve such [wage] claims expeditiously and without litigation, to improve employers’ compliance with overtime and minimum wage obligations, and to ensure that more employees receive the back wages they are owed – faster.”  The DOL will launch the program nationwide for a six month period and then review the effectiveness of the program and whether it should be modified, or possibly discontinued.

The program will be available to any employer covered under the Fair Labor Standards Act (“FLSA”), and most are.  But the program cannot be used if the DOL is already investigating the employer for wage violations or if a claim has already been asserted by an employee against the employer. The program covers a variety of violations including minimum wage, failure to pay overtime at time and a half or at the wrong regular wage rate, misclassification of employees as exempt, “off-the-clock” work, etc.

The primary benefit of the program for an employer is that it allows the employer to audit its practices and avoid the dreaded “liquidated damages” (twice the amount due) that are generally awarded under the FLSA.

To participate, an employer would be required to take specific actions including the review of compliance materials, auditing their practices (i.e., identify the violations, affected employees, timeframes of violations, calculate wages due to each employee, etc.), certifying that it is not currently defending the claims at issue, and agree to correct its practices going forward. The DOL would then evaluate the information provided by the employer and become involved in the process.

Significantly, employees are not required to give up their rights under the FLSA and they remain fully able to pursue civil litigation to enforce their rights (including the receipt of liquidated damages and attorneys’ fees).  The DOL also retains its right to conduct its own investigation into the employer’s practices in the future, and into the violations that were self-reported by the employer.

However, if an employee accepts the offer to settle, the employer will receive a release for that claim (only). The employer would be required to pay back all of the wages due to its employees the next payday after receiving the summary of unpaid wages from the DOL. For further information about this pilot program, go to https://www.dol.gov/whd/paid/#7.

Is it just me or does this sound like a risky move for employers? An employer is basically blowing the whistle on itself in the hopes that the DOL doesn’t discover any further violations (that the employer may be unaware of) or make it a target for future investigations, and the employee is free to take all of the information that has been disclosed by the employer and hire an attorney to pursue the case that has already been admitted and established, and collect all of the back wages due, along with liquidated damages and attorneys’ fees.

Call me crazy, but I hope that, if any of my clients are having even a fleeting thought about participating in PAID, they will call me first so we can discuss it and other strategies to correct any errors they may have made under the FLSA.  If you aren’t working with experienced employment counsel, such as the author, you should before signing up for PAID.

This article was written by Claudia D. Orr, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM).  She can be reached at corr@plunkettcooney.com or at (313) 983-4863. For further information go to: http://www.plunkettcooney.com/people-105.html.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. March 2018.

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Second Federal Appeals Court Rules Title VII Bans Sexual Orientation Discrimination

 

By: Karen L. Piper

 

On February 26, 2018 the Second Circuit Court of Appeals ruled that discrimination based on sexual orientation is prohibited by Title VII. Zarda v. Altitude Express, Inc., Case No. 15-3775. The Court ruled “sexual orientation discrimination constitutes a form of sex discrimination ‘because of … sex’ in violation of Title VII.”

The case was brought by Donald Zarda, a sky-diving instructor who was fired in 2010 after an incident with a female customer. Zarda claimed he was fired for telling the customer that he was gay. His employer said it fired Zarda because Zarda had touched the customer inappropriately during a tandem jump.

Zarda sued for sexual orientation discrimination and gender stereotype discrimination under Title VII and New York state law.  The district court dismissed his Title VII claim in 2014 because at that time the Second Circuit Court of Appeals, consistent with the consensus among the other federal appeals courts, and the position of the Equal Employment Opportunity Commission (“EEOC”), had ruled that Title VII did not prohibit discrimination on the basis of sexual orientation.

Zarda’s claim of sexual orientation discrimination under New York law was tried. The jury agreed with the employer. Zarda then appealed the court’s previous dismissal of his Title VII claim. A three-judge panel of the Second Circuit denied the appeal because it was bound by Second Circuit precedent. Zarda then asked the entire Second Circuit to review his case. The Second Circuit ruled 10-3 that sexual orientation discrimination should be treated as a subset of sex discrimination under Title VII because:

  • sex is necessarily a factor in sexual orientation discrimination which is based on the sex of the employee and the sex of the individuals to whom the employee is attracted;
  • being attracted to same-sex individuals is contrary to gender stereotypes (that employees should be attracted to opposite sex individuals); and
  • sexual orientation discrimination is a form of associational discrimination because it is based on the employee’s association with same-sex individuals. Associational discrimination has been applied in the context of race, often involving an employee’s marriage or other association with an individual of a different race. Associational discrimination is expressly prohibited by the Americans with Disabilities Act. The ADA prohibits discrimination against an employee because the employee has a family member with a disability.

Three judges dissented. These judges agreed that “individuals [should] not be subject to workplace discrimination on the basis of sexual orientation.” However, based on the “historical context” of 1964 when Title VII was passed, these judges could not conclude that Congress had prohibited sexual orientation discrimination when it passed Title VII. The majority opinion observed that the same was true of other forms of discrimination, such as sexual harassment and hostile work environment, both of which claims were initially rejected by the courts as not being prohibited by Title VII, but ultimately recognized by the United States Supreme Court as being prohibited by Title VII.

The Zarda opinion is binding in the Second Circuit (covering New York, Connecticut and Vermont). It is consistent with an April 2017 opinion from the Seventh Circuit Court of Appeals (covering Illinois, Indiana and Wisconsin) which also ruled that Title VII prohibits discrimination on the basis of sexual orientation. It is contrary to a March 2017 opinion by the Eleventh Circuit Court of Appeals (covering Alabama, Florida and Georgia) which decided Title VII does not prohibit sexual orientation discrimination. The plaintiff in the Eleventh Circuit case asked the U.S. Supreme Court to review that decision. The Court declined in December 2017.

Due to the divergence of opinions on this issue among the federal appeals courts and among various federal departments and agencies (the Department of Justice filed an amicus brief in support of the employer in Zarda; the EEOC filed an amicus brief in support of the employee; the Office of Federal Contract Compliance Programs mandates nondiscrimination on the basis of sexual orientation by federal contractors), it is widely expected that the U.S. Supreme Court will have to decide whether Title VII prohibits discrimination on the basis of sexual orientation.

This article was written by Karen L. Piper, who is Chair of the Legal Affairs Committee of Detroit SHRM, and a Member of Bodman PLC, which represents employers, only, in Workplace Law. Ms. Piper can be reached at Bodman’s Troy office at (248) 743-6025 or kpiper@bodmanlaw.com. For further information, go to: http://www.bodmanlaw.com/attorneys/karen-l-piper.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information are included in the re-post of the article. February 2018.

States Urge Congress to Ban Mandatory Arbitration of Sexual Harassment Claims

By: Karen L. Piper

On December 6, 2017, a bipartisan group of legislators and senators proposed legislation to prohibit employers from enforcing arbitration agreements for sexual harassment and gender discrimination claims (e.g., discriminatory pay or benefits, discharge, etc.).  “Ending Arbitration of Sexual Harassment Act.” HR. 4570; S. 2203.

On February 12, 2018, the attorneys general of all 50 states and the District of Columbia sent a two-page letter to Congress urging Congress to enact this legislation.  The letter of the states’ attorneys general said, “Ending mandatory arbitration of sexual harassment claims would help put a stop to the culture of silence that protects perpetrators at the cost of their victims.”

Such legislation, if passed, could have tremendous impact on mandatory arbitration agreements.  Any employment case that includes a sex discrimination claim would have to be filed in court rather than resolved through arbitration.  Several states, including California, New York and New Jersey, have proposed similar state legislation.

Employers seeking to protect mandatory arbitration agreements should consider notifying their legislators.  Better still, they should work with employment counsel, such as the author, to eradicate sex discrimination and harassment in their workplace.

This article was written by Karen L. Piper, who is Chair of the Legal Affairs Committee of Detroit SHRM, and a Member of Bodman PLC, which represents employers, only, in Workplace Law. Ms. Piper can be reached at Bodman’s Troy office at (248) 743-6025 or kpiper@bodmanlaw.com. For further information, go to: http://www.bodmanlaw.com/attorneys/karen-l-piper.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information are included in the re-post of the article. February 2018.

Michigan Appellate Court Calls for a Conflict Panel to Decide Issue Under Michigan Wages and Fringe Benefits Act

By: Claudia D. Orr

I know some might laugh, but these types of things get me really excited!  First, the Michigan Court of Appeals hardly ever publishes an employment law opinion and, second, it is requesting a conflict panel to revisit a prior ruling. This is exceptionally rare. Moreover, there are very few cases published under the Michigan Wages and Fringe Benefits Act (“WFBA”) and a conflict panel, if assembled, could significantly expand an employee’s right to be free from retaliation.  Let’s see what the issue is in Ramos v Intercare Community Health Network, a 2:1 divided opinion published on January 30, 2018.

Joel Ramos worked for Intercare Community Health Network (“Intercare”) for about two years when he was fired for allegedly submitting a false timesheet.  Ramos filed a complaint with the Wage and Hour Program of Michigan’s Department of Licensing and Regulatory Affairs. Ramos claimed that, by “accurately” filling out and submitting his timesheet he was exercising a right to receive his wage payment under the [WFBA] and he was discharged unlawfully for exercising that right under the act.  The Wage and Hour Program disagreed, finding that Ramos had not exercised rights under the act and the circuit court upheld its ruling.

The WFBA provides that:  An employer shall not discharge an employee or discriminate against an employee because the employee filed a complaint, instituted or caused to be instituted a proceeding under or regulated by this act, testified or is about to testify in a proceeding, or because of the exercise by the employee on behalf of an employee or others of a right afforded by this act.

MCL 408.483(1) (emphasis added).  The issue was whether an employee’s exercise of his own rights “is the exercise of rights on behalf of ‘an employee’ because he is ‘an employee.’”

Previously, in Reo v Lane Bryant, Inc, 211 Mich App 364 (1995), it was decided that the “employee must be exercising a right afforded by the act on behalf of another employee or other person.  Simply exercising a right on one’s own behalf would not bring an employee within the purview of [MCL 408.483].”  But now, the appellate court concluded that the Reo case was wrongly decided because the word another is not found in the statute. However, it also recognized that it was bound by precedent and therefore affirmed the circuit court’s decision, but called for a conflict panel to reevaluate the issue.

Judge Hoekstra, the dissent, agreed with the majority’s decision to affirm the lower court’s decision, but found no error in the precedent that bound the appellate court’s decision.  First, he noted that only the last clause (“…because of the exercise by the employee on behalf of an employee or others of a right afforded by this act”) was at issue since Ramos had not filed a complaint, testified (or was about to testify) or instituted (or caused a proceeding to be instituted) under the act.  Then, relying on Black’s Law Dictionary he found that the phrase “on the behalf of” means “in the name of, on the part of, as the agent or representative.” Thus, while the statute does not contain the word another, it is clear that there must be some sort of an agency whereby the employee is acting “on behalf of another employee or other person.”  Finding that Reo had been correctly decided and that it has been the rule of law for more than 20 years, Judge Hoekstra found no need to a assemble a conflict panel.

Thus, the rule remains for now that, to be protected from retaliation under the WFBA, an employee must be acting on behalf of another employee and cannot simply turn in his own time card (accurate or not).  There are some other quirks under the WFBA that can be used for the benefit of employers in their personnel policies.  If you aren’t sure how to apply this law favorably for your company, you should consult with an experienced employment attorney, such as the author.

This article was written by Claudia D. Orr, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM).  She can be reached at corr@plunkettcooney.com or at (313) 983-4863. For further information go to: http://www.plunkettcooney.com/people-105.html.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. February 2018.

 

Should You Sigh in Relief When the Employee Resigns and Signs a Release? Maybe Not…

By: Claudia D. Orr

I just read a decision by the Michigan Court of Appeals that involved a “constructive discharge” and a “waiver of rights” and thought it might be an interesting example of how things can go wrong.  Let’s see what happened in Bowen v Alpena Regional Medical Center, an unpublished decision issued on January 16, 2018.

Plaintiff, a union employee, had been employed by the medical center for about five years when his employment ended in November 2015.  On his last day, plaintiff was presented with a disciplinary action indicating his employment would be terminated for excessive absenteeism and failure to follow job duties or treat others with courtesy and respect.  Plaintiff was offered a choice: (1) he could be terminated, and retain the right to pursue a grievance under the collective bargaining agreement; or (2) he could resign.  If plaintiff resigned, the medical center would not challenge his claim for unemployment benefits or disclose the reasons for plaintiff’s discharge to potential future employers. Plaintiff chose the latter and signed the following statement:

My resignation from Alpena General Hospital is voluntary.  I am aware [sic] applicable Hospital policies and procedures, as well as what rights I may have under a union contract, and hereby waive any and all of those rights/processes I may have, including the right to contest or grieve this or any employment action in accordance with that union contract.

Three months later, plaintiff filed a lawsuit claiming his “termination” was “the culmination of years of harassment suffered at the hands of [p]laintiff’s supervisor and other employees following plaintiff’s reporting of another employee’s workplace misconduct in August 2012.”  Plaintiff claimed he was “coerced” into signing the document under threat of losing unemployment benefits and having his reputation disparaged to potential future employers. Plaintiff brought claims under the Whistleblowers’ Protection Act, the Elliott-Larsen Civil Rights Act and the Public Health Code and, in an amended complaint, alleged he had been constructively discharged.

The Alpena Circuit Court granted the medical center’s motion for summary disposition finding that plaintiff could not show he signed the agreement under duress and therefore was bound by a waiver of all claims, including the statutory claims brought in the lawsuit. The plaintiff appealed and the Michigan Court of Appeals reversed.

The scope of a release is a matter of contract that must be enforced as written if it is unambiguous.  Here, the agreement was limited to “those rights/processes [he] may have, including the right to contest or grieve this or any employment action in accordance with that union contract.” The court noted that the phrase “rights/processes” was a reference to the “Hospital policies and procedures” and those he “may have under the union contract.”  However, the release did not make any reference to statutory claims and therefore those claims were not included within the scope of the release agreement.

Next, the appellate court found that plaintiff may be able to prove he was constructively discharged.  Quoting prior court decisions, it explained that –

[T]he doctrine of constructive discharge is a legal fiction created to determine whether a plaintiff’s facially voluntary resignation was, in  actuality, a result of the defendant’s improper conduct such that the court will consider the resignation to be a de facto involuntary termination of the plaintiff’s employment.  Constructive discharge is not a cause of action in-and-of-itself; rather constructive discharge is “a defense that a plaintiff interposes to preclude the defendant from claiming that the plaintiff voluntarily left employment.” A constructive discharge depends upon the facts of each case and occurs when a reasonable person in the plaintiff’s position “would have felt compelled to resign” as a result of the employer’s improper conduct.

(Citations omitted). The appellate court further explained that a constructive discharge can be established without showing duress, but the mere fact that a plaintiff was given the choice of resigning or being fired is insufficient unless the plaintiff can also show that the employer lacked “good cause to believe that there were grounds for the termination.”

The “very nature of constructive discharge is that a seemingly voluntary resignation was, in fact, an involuntary discharge in the face of intolerable conditions.”  However, intolerable conditions years, or even months before the resignation are likely not relevant; there should be some temporal proximity between the events/resignation to establish a causal connection. Where the plaintiff cannot establish a constructive discharge, a statutory retaliation or discrimination claim will fail because it lacks the requisite adverse employment action. Here, discovery had not yet closed when the case was dismissed and there remained a question of fact whether plaintiff was constructively discharged or voluntarily resigned.

So, what is the take-away from this case?  First, make sure the release agreement is written broadly enough to include statutory claims.  Also, allow the employee to take the agreement with them and think about it for a few days especially if the employee makes this request. Most of my clients involve me in termination decisions and in drafting their release agreements.  Even an unsigned release agreement can be enforced where the employee accepted the consideration tendered in the agreement.  The key is to always consult with experienced employment counsel, such as the author, before the employee is terminated.

This article was written by Claudia D. Orr, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM).  She can be reached at corr@plunkettcooney.com or at (313) 983-4863. For further information go to: http://www.plunkettcooney.com/people-105.html.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. January 2018.

DOL Issues New Guidance on Unpaid Intern Programs

By: Karen L. Piper

On January 5, 2018, the Department of Labor (“DOL”) rescinded its 2010 six-factor test for determining whether a worker is an unpaid intern or an employee entitled to be paid.  Under the rescinded guidance, an intern was considered an employee unless the employer met all six factors.  Unpaid intern programs often failed because the employer could not show it derived “no immediate advantage from the activities of the intern.”

The DOL concurrently issued new guidance for determining whether an intern should be classified as an employee.  The new guidance adopted the “primary beneficiary” test established by the Second Circuit Court of Appeals in Glatt v Fox Searchlight Pictures, Inc. (2015).  Three other federal appellate courts, including the Sixth (covering Michigan, Ohio, Kentucky and Tennessee), the Ninth and the Eleventh Circuits, also have used the primary beneficiary test.

Under the new test, the pertinent question is whether the intern or the employer is the primary beneficiary of the relationship.  The new test has seven factors:

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation.  Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

The primary beneficiary test requires weighing and balancing all of the circumstances with no one factor being dispositive.  The list of factors is not exhaustive; courts may consider other relevant factors.  And, not all factors have to point in the same direction.  The “touchstone” of the “analysis is the ‘economic reality’ of the relationship” – the test that is used to determine whether a worker is an independent contractor or an employee.

The new primary beneficiary test is more flexible and should make it easier for employers to provide unpaid intern programs, as long as the program is designed to benefit primarily the intern.  An employer considering establishing an intern program should carefully review the above factors and consult experienced employment counsel, such as the author, to ensure the program satisfies the primary beneficiary test.

This article was written by Karen L. Piper, who is Chair of the Legal Affairs Committee of Detroit SHRM, and a Member of Bodman PLC, which represents employers, only, in Workplace Law. Ms. Piper can be reached at Bodman’s Troy office at (248) 743-6025 or kpiper@bodmanlaw.com. For further information, go to: http://www.bodmanlaw.com/attorneys/karen-l-piper.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information are included in the re-post of the article. January 2018.