Friday, May 27, 2011

Courts Finds Account Manager for Media Buyer Meets FLSA Administrative Exemption

The administrative exemption from the FLSA overtime requirements presents a challenge for many employers, so much so that some employer don't try to use it.  It is much less clear and therefore more difficult to apply than the professional or executive exemptions (and contrary to the latter's name, the exemption applies to supervisors who have some meaningful input into hiring or firing).  A decision issued today (Verkuilen v. MediaBank) from the federal court of appeals in Chicago helps to better define the rather vague DOL regulation that governs the administrative exemption.

In general terms (from a DOL fact sheet on the subject) the administrative exemption requires that:
  • The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;
  • The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
  • The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
The court of appeals sitting in Chicago dealt with the "primary duty" questions.  The employer was in the business of selling a software package to advertising firms that would help them place advertising in media outlets.  The software was complex, the court explained, "because it integrates so many functions, and it must be customized to the needs of each client, which vary. The complexity and variance are where the account manager comes in. The manager of a customer’s account has to learn about the customer’s business and help MediaBank’s software engineers determine how its software can be adapted to the customer’s needs."

The account manager's job was "to learn about the customer’s business and help MediaBank’s software engineers determine how its software can be adapted to the customer’s needs."  She is
on the customer’s speed dial during the testing and operation of the customer’s MediaBank software. As the intermediary between employees of advertising agencies struggling to master complex software and the software developers at MediaBank, she has to spend much of her time on customers’ premises training staff in the use of the software, answering questions when she can and when she can’t taking them back to MediaBank’s software developers, and then explaining their answers to the customer and showing the customer how to implement the answers in its MediaBank software. Identifying customers’ needs, translating them into specifications to be implemented by the developers, assisting the customers in implementing the solutions—in the words of MediaBank’s chief operating officer, account managers are expected to “go out, understand [the customers’ requirements], build specifications, understand the competency level of our customers. Then they will build functional and technical specifications and turn it over to . . . developers who will then build the software, . . . checking in with the account manager, making sure what they are building is ultimately what the customer wanted.”
 This, the court held, meant that the account managers "primary duty was directly related to the general business operations both of her employer and (as in a consulting role) of the employer’s customers."  It didn't matter, the court further held, that the account manager did not perform all or even many of the functions listed in the DOL regulation on what makes a job administratively exempt. See 29 C.F.R. § 541.202 (listing numerous "[f]actors to  consider when determining whether an employee exercises discretion and independent judgment with respect to matters of significance.")

Tuesday, May 24, 2011

General Assembly Passes Bill Legislatively Overruling Deeply Flawed Gossett Decision

A prior post addressed a bill pending in the Tennessee General Assembly which would have the effect of over-ruling the Tennessee Supreme Court's decision in Gossett v. Tractor Supply.  (My post on Gossett can be found here).

Last week, both houses of the General Assembly voted to send the bill (as amended) to the governor.  If Governor Haslam approves the bill, it becomes law immediately, but would only apply to causes of action that accrue after the Governor signs the bill (more on that in a minute).

The version of the bill that passes can be found here: http://www.capitol.tn.gov/Bills/107/Amend/SA0598.pdf.  This is an amendment the Senate adopted to clarify the effective date. The Senate passed the bill on May 20, 2011. The House approved the amendment a day later.

The purpose of this bill was to require application of the McDonnell Douglas Burdine (MDB) analysis in all THRA claims and retaliatory discharge claims (common law and statutory) including on summary judgment motions. (“The foregoing allocations of burdens of proof shall apply at all stages of the proceedings, including motions for summary judgment.”) Remember that Gossett held that McDonnell Douglas Burdine was inconsistent with the Court's summary judgment precedent.

The operative language in the bill is (similar language is used for wrongful discharge claims) is:
In any civil cause of action alleging a violation of this chapter or of Tennessee Code Annotated, Section 8-50-103[which prohibits disability retaliation], the plaintiff shall have the burden of establishing a prima facie case of intentional discrimination or retaliation. If the plaintiff satisfies this burden, the burden shall then be on the defendant to produce evidence that one or more legitimate, nondiscriminatory reasons existed for the challenged employment action. The burden on the defendant is one of production and not persuasion. If the defendant produces such evidence, the presumption of discrimination or retaliation raised by the plaintiff’s prima facie case is rebutted, and the burden shifts to the plaintiff to demonstrate that the reason given by the defendant was not the true reason for the challenged employment action and that the stated reason was a pretext for illegal discrimination or retaliation. The foregoing allocations of burdens of proof shall apply at all stages of the proceedings, including motions for summary  judgment. The plaintiff at all times retains the burden of persuading the trier of fact that he or she has been the victim of intentional discrimination or retaliation.
To anyone familiar with employment discrimination litigation, the bill requires courts apply the McDonnell Douglas Burdine analysis to all discrimination and retaliation cases.  An interesting point about the language of the bill is that in some situations, such as where the employee claims to have so-called "direct evidence" of discrimination (e.g., an admission of discrimination by the decision-maker), this bill seems to require application of McDonnell Douglas/Burdine even where a federal court might not.  This isn't a big deal as an admission of this nature is probably going to be sufficient to require a jury trial even under the federal summary judgment rule.  The argument could also be made that this bill negates any hint of a dual motive analysis under the THRA (though that was probably not the intent). Again, this is not a huge issue, as I explained in my prior blog posts about the U.S. Supreme Court's decision in Gross.

As noted, the effective date is interesting:
This act shall take effect upon becoming a law, the public welfare requiring it and shall apply to all causes of action accruing on or after such effective date.
The word "accruing" means, in this context, "happens" but that can be somewhat uncertain in the employment discrimination context.  A termination of employment claim accrues when the employee is informed of the decision.  Easy enough.  But a hostile work environment claim accrues over time, not all at one.   These will not be insurmountable problems, just headaches for judges to work out over the next few years.

Note that the bill has not been enacted yet. It still needs Governor Haslam’s approval.

On another note, the General Assembly also passed a separate bill which would require the Tennessee courts to the federal summary judgment standards.  A full explanation of this issue would be beyond the scope of this blog.   

It is enough to say that both bills, if signed by the Governor, will restore a Tennessee employer's repeatedly dashed hope of obtaining summary judgment in state court when the employee has no competent evidence to warrant a trial.

Tuesday, May 17, 2011

Court of Appeals Holds Private Employer May Refuse to Hire Applicant Who Has Filed For Bankruptcy

It isn't one of the more familiar retaliation statutes but for years, the bankruptcy code has included a provision that prohibits employers (private and governmental) from taking certain types of employment action "against[] an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt."  11 U.S.C. § 525(b).

Today, the federal court of appeals in Atlanta held that the bankruptcy retaliation statute, as to private employers, does not prevent an employer from refusing to hire an applicant who has a pending or prior bankruptcy action (I'll call the applicant a "debtor" to use the bankruptcy code terminology).

The court's reasons were pretty simple.  Subsection (a) of section 525 applies to governmental employers.  It provides that governmental employers may not "deny employment" to a debtor.  This "deny employment" language is not found in subsection (b) which applies to private employers.  The court explained:
A comparison of the words used in subsections (a) and (b) demonstrates that subsection (a) prohibits government employers from “deny[ing] employment to” a person because of his or [her] bankrupt status, whereas subsection (b) does not contain such a prohibition for private employers. Rather, the private sector is prohibited only from discriminating against those persons who are already employees. In other words, Congress intentionally omitted any mention of denial of employment from subsection (b), but specifically provided that denial of employment was actionable in subsection (a). Thus, by its plain language, the statute does not provide a cause of action against private employers for persons who are denied employment due to their bankrupt status. “Where Congress has carefully employed a term in one place but excluded it in another, it should not be implied where excluded.”
One point should be stressed (for governmental employers).  As the court said, if the employer "were a governmental unit, [the applicant] would have a refusal to hire claim; because it is not, he does not."  A governmental unit under the bankruptcy code is pretty much any public employer, federal or state.   11 U.S.C. § 101(27).

Tuesday, May 10, 2011

DOL Develops iPhone App for Employees to Track Time

I received an email from the DOL today that made me scratch my head.  It seems the DOL Wage and Hour Division has developed an iPhone "app" that is a "timesheet" that lets employees record the hours that they work.  The DOL explanation of the app is that it will "help employees independently track the hours they work and determine the wages they are owed."  It will let employees "track regular work hours, break time and any overtime hours for one or more employers."


There is a "glossary, contact information and materials about wage laws" accessible through links to the Web pages of the department's Wage and Hour Division.  The time sheet the app generates can be reviewed and emailed as an attachment.

The purpose of the app seems to be to permit employees to "keep their own record" instead of "relying on their employers' records."  The DOL says: "This information could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records."

The app does not yet provide for calculation of tips, commissions, bonuses, deductions, holiday pay, pay for weekends, shift differentials and pay for regular days of rest.  Android and BlackBerry versions are being considered.  

The reason I am skeptical is that, as anyone knows who has tracked time worked, the rules on when the work day begins and ends are not always easy to understand. Just yesterday, for example, I read about a court of appeals decision involving an employee who thought they were "working" when they drove to work because the employee had done some minor tasks at home.  I was also reviewing hand written timesheets where one employee added time for their commute from home to work and back, none of which was properly compensable.

In most instances, the start and end of the work day will not be difficult to discern.  This app, while well-intentioned, will permit employees to record their time based upon their own idea as to when the work day should start and end.  The glossary is no help; it simply instructs employees to record the hour "at what time you started working."  The app gives no caution to employees that there may be grey areas that must be considered, and worse, seems to imply that the DOL will regard the hours an employee records in the app as more accurate than the employer's official time records. 

If nothing else, the app serves as a reminder that employers should scrupulously keep accurate time records for their non-exempt employees.