Nolo's Employment Law Blog

Earlier this week, the Department of Labor (DOL) announced its regulatory agenda for Spring 2010. As always, the plan includes a number of discrete areas where the DOL plans to draft or revise regulations (for example, to require coal mine operators to inspect areas where miners will be working). This time around, the agenda also includes a broad paradigm shift: The DOL wants to replace what it calls a "catch me if you can" model, in which violations are stemmed only if and when the DOL steps in, to a "plan/prevent/protect" model, in which employers take the lead in finding, fixing, and preventing workplace problems.

What will this mean in practice? It's not entirely clear, as the DOL hasn't yet issued any proposed regulations or concrete details of how the plan will shape up. However, The New York Times reported today that the new approach will require employers to draft compliance plans explaining how they will make sure they aren't violating workplace safety and wage and hour laws. Employers will also be required to document key decisions -- for example, why the employer has determined that an employee is exempt from overtime or that a worker should be classified as an independent contractor rather than an employee -- and then provide that documentation to both the worker and the DOL. 

The federal agencies have released their Regulatory Plan and Unified Agenda of Regulatory and Deregulatory Actions (known as the "Unified Agenda.") Twice a year, federal agencies must provide this information to let the public know what regulatory actions they're planning and to coordinate rulemaking among the agencies.

The Unified Agenda can be somewhat daunting, both in length and in jargon (OMB Watch, a nonprofit that works to promote greater transparency in federal regulatory and budget matters, has a nice guide to some of the terms used in the Unified Agenda). Each federal agency that's included in the Unified Agenda must indicate what rulemaking it has planned in coming months. The list of agencies in the current Unified Agenda is here; when you click on an agency's link, you can see its statement.

The EEOC has identified two regulatory priorities:

1. Implementing the employment provisions of the Americans with Disabilities Act Amendments Act (ADAAA). The EEOC issued proposed regulations on the ADAAA in September 2009 (you can check out my blog post reviewing the regs here), and asked for public comments to be submitted by November 23. Now, the agency must review all of those comments and come up with final regulations.
2. Amending its regulations on the "reasonable factor other than age" defense to an age discrimination claim under the Age Discrimination in Employment Act (ADEA), an issue the Supreme Court addressed last year. (Here's my blog post on that case, Meacham v. Knolls Atomic Power Laboratory.)

The Department of Labor painted with a broader brush: It begins its regulatory plan with a sort of mission statement, lising 12 "strategic outcomes," from improving health benefits to helping injured workers return to the job, all intended to further the agency's goal of "good jobs for everyone." Here are the specific regulatory proposals that interested me:

1. Updates to the child labor regulations.
2. A review of the military leave provisions and the 2009 regulations interpreting the Family and Medical Leave Act (FMLA).
3. Changes to the record keeping regulation for Fair Labor Standards Act (FLSA). 

Layoffs have been much in the news for more than a year, and with good reason: Unemployment has reached 9.8%, and is expected to continue growing in the months to come. But lost jobs aren't the only employment story of the economic downturn. Many struggling companies are trying to get more for less -- more work out of their employees for less money, that is. When companies combine layoffs with pay cuts and hour cuts, the inescapable result is that remaining employees have to work harder for less pay.

As statistics show: The Bureau of Labor Statistics (BLS) has released its latest figures on what it calls "labor productivity," a measure of employee output per hour as compared to the cost of that labor. Here's the good news: Employee productivity is up by 6.6% in the second quarter of this year. (Way to go, people!) The bad news is that we realized this improvement not by boosting overall productivity -- which actually declined by 1.5% -- but by working faster. Work hours declined by 7.6% in the same period. (This decline encompasses hours lost both to reduced work schedules and to layoffs.) In fact, the New York Times reported today that pay cuts -- which are often tied to reduced hours -- are more common now than at any time since the Depression.

Even those at the bottom of the economic ladder are facing declining wages: Colorado has said that it will have to cut the minimum wage from $7.28 an hour to $7.24 an hour as a result of deflation. Colorado is one of ten states in which the minimum wage is tied to inflation. This type of legislation is typically intended to protect low wage workers by making sure that the minimum wage keeps up with the cost of living. But when the cost of living drops, these laws requires the minimum wage to drop along with it.   

Those of us who live in the Bay Area are familiar with Cafe Gratitude, a small chain of raw food restaurants. These restaurants have a particular atmosphere and culture, one that feels very familiar to me as a local child of the 60s and 70s. I think of it as "control-freak hippie," an apparently easy-going presentation with a very strident center. (As in, "Hey people, I think it would be really cool if we could all DO THIS EXACTLY THE WAY I WANT RIGHT NOW!") 

A game created by the founders, called Abounding River, is available to play at the many shared tables, so diners can explore "Being Abundance" and discover a "Spiritual Foundation that opens up to a whole new way of looking at money and resources" (quotes from the Cafe's website). Everything on the menu is called "I am [positive adjective]", such as "I am worthy," "I am present," or "I am dazzling." And that's what you have to call it when you order: If you try to get away with, "I'd like the pesto pizza," you will be gently encouraged to call it by its true name ("you mean, 'I am sensational'?"). And when your pizza arrives, the server smiles, looks you in the eyes, sets it in front of you, and says, "you are so sensational!" The staff is friendly, the atmosphere is warm, and there are rules.  

As the East Bay Express recently reported, the Cafe's philosophy and culture stem from the Landmark Forum (which grew out of est (Erhardt Seminar Training)), a "transformative learning" program whose graduates sometimes recruit others in ways so insistent that it can feel like proselytizing.

As some Cafe employees have discovered: According to the Express article, all employees are "encouraged" to attend the Landmark Forum, a weekend-long introductory course, and all managers are required to go -- and pay for it. Managers hold daily "clearings," "during which employees answer a series of questions before 're-creating' each other in a process aimed at freeing the workers to be present and alive in the moment for the job" (quote from the Express article). 

Would you like a side of "I am litigious" with that? Because there could be some employment law problems here, as the article also points out. First of all, employers that require employees to attend training sessions have to pay for it -- twice. The employer has to pay the cost of the training, and then has to pay employees for the hours they spend doing it. Then there's the potential religious discrimination problem: Whether or not the Landmark Forum or the owners of Cafe Gratitude would describe their philosophies as "religious," the belief in human potential -- that we create our own reality -- may itself conflict with a religious view that a higher power does the creating. And, if an employer fires or disciplines those who don't share the company's official belief system or complain about feeling pressure to adopt it, an experience one employee described in the Express article, a retaliation claim may not be far behind.   

Earlier this month, a report was released on a 2008 survey of low-wage workers in the cities of Chicago, Los Angeles, and New York. The title of the report, "Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in America's Cities," kind of gives away the ending. The statistics are truly shocking:

• More than a quarter of those surveyed reported that they had received less than the minimum wage in the previous week, and 60% of those reported being underpaid by more than $1 per hour.
• More than three-quarters(!) of those surveyed reported not being paid for overtime worked in the previous week -- and they averaged 11 hours of weekly overtime.
• Almost a quarter worked off the clock (and weren't paid for it), and nearly two-thirds of those entitled to a meal break didn't receive the full, uninterrupted, work-free break required by law.
• 41% had illegal deductions taken from their paycheck (for breakage or to pay for tools or other items required for work, for example).
• 43% of those who had made a complaint or tried to form a union in the past year faced retaliation. One-fifth reported that they had not complained about a serious workplace problem in the past year, primarily because they feared losing their job.

Secretary of Labor Hilda Solis told the New York Times that the report "shows that we still have a major task before us." She also indicated that she's in the process of hiring 250 more wage and hour investigators.

Despite some signs of an economic rebound in the stock market, housing sales, and other areas, unemployment continues to rise. Earlier this month, the Bureau of Labor Statistics announced that the national unemployment rate has reached 9.7%. The San Francisco Chronicle reported that the jobless rate in California has hit 12.2%, with 2.25 million residents of the Golden State out of work and actively looking for new jobs.

People are starting to refer to our current economic situation as a "mancession," because so many who have lost their jobs are male. Nationally, the BLS reports that the male unemployment rate is 10.1%, while the female unemployment rate is only 7.6%. As a result of this skew, women now make up virtually half of the workforce, for the first time in history.

This morning, the New York Times reported on one effect of these statistics: Women who left the workforce after having children are trying to return to work, often to replace a spouse's lost income or hedge against the possibility of a spouse's layoff down the road. 

The article focuses on women who had the option of staying home with their children, so it's necessarily limited in scope to the upper end of the economic spectrum. A lot of the women profiled were attorneys, for example. And, it's a little bit hard to find too much sympathy for someone who had to return to work in part to offset investment losses "in the healthy six figures." Still, it's one more fundamental change attributable to the recession.

I'm interested in hearing how this gender shift in employment will affect overall pay and benefits. Not every working woman is an attorney pulling down a six-figure salary. In fact, women tend to earn less than men on average (currently thought to be about 80 cents on the dollar), are more likely to work part-time jobs, and are less likely to receive benefits. Will the gender shift -- and the resulting increase in families being supported primarily by women's work -- lead to higher pay and benefits for women? Or will pay and benefits decrease as women increase their participation in the labor force?    

Last month, the Ninth Circuit Court of Appeals decided that a group of employees could pursue claims for unpaid wages against three individual managers of a company that was in bankruptcy. In Boucher v. Shaw, the Court reinstated a complaint brought by several employees against their former managers at the Castaways, a casino and entertainment center in Nevada. The Castaways was still operating and in Chapter 11 bankruptcy when the employees lost their jobs; shortly afterwards, the bankruptcy was converted to a Chapter 7, and the company was liquidated.

The employees claimed that they never received their accrued vacation and holiday pay and that they were paid late (or not at all) for their final weeks of work. The employees' union also sued to recover dues that had been withheld from employee paychecks. Rather than suing the bankrupt company, the employees sued three individuals: the company's CEO (who owned 70% of the business), the person responsible for handling labor and employment  matters at the company (who owned the remaining 30%), and the CFO (a nonowner). All claimed that they couldn't be sued individually -- and, even if they could, that the lawsuit was barred by the automatic stay, which protects those in bankruptcy from creditor efforts to collect their debts.

The Court rejected both of these arguments and allowed the employees' lawsuit to go forward. The Court found that all three of the individuals were "employers" under the Fair Labor Standards Act (FLSA), because all had control over the employment relationship. The Court also found that the automatic stay protected only the Castaways itself, not the individual owners and managers.

Given the number of businesses that are going under, this case is a timely reminder that employee wages must be paid, regardless. If the company itself declares bankruptcy, individual managers can be sued. Even if those managers declare personal bankruptcy, unpaid wages are considered a "priority debt," which means they jump to the head of the repayment line along with unpaid child support and tax debts.  

In the past few weeks, we've heard a lot about the unemployment rate. By the end of June, the jobless rate reached 9.5%, the highest it has been in more than 25 years. This data put the kibosh on all the talk from just a month earlier that things were looking up because the economy had lost fewer jobs than expected in May.

The unemployment rate counts only those who are able to work, available to work, looking for work, and not working at all. But what about all of those who are working less than they would like to be, whether because of losing one part-time job, being forced from full time to part time, or taking an hours cut? The New York Times crunched those numbers, and today told us just how high the jobless rate would be if these folks were included: 20% or higher -- that's one in every five workers -- in the states of California, Oregon, Rhode Island, South Carolina, and Michigan. The article said that the rate could reach 25% by the end of the summer in California. Ouch.

The problem of underemployment is highlighted by statistics showing that the aggregate weekly hours worked by private employees in this country has declined to the lowest level since 1964. In fact, most of us are working fewer hours per week now than we were a year ago, according to data from the Bureau of Labor Statistics.

One reason for this decline is that employers are cutting employee hours across the board -- in the form of temporary reductions or unpaid furloughs -- as a way to lower payroll costs and avoid layoffs. Most of the working stiffs I know have faced wage cuts, hour cuts, or both, and have accepted them gracefully, knowing that these measures are helping save jobs.

But employers beware: A recent spate of articles warns that there is currently some legal confusion -- and therefore, a stronger possibility of lawsuits -- over how furloughs can be implemented without running afoul of wage and hour laws. And that's assuming employees really aren't working during the hours for which they aren't being paid. Some experts even advise making sure employees can't work while on furlough by requiring them to leave their company-issued laptops, BlackBerrys, and phones at work. The web is sufficiently tangled that it makes sense for employers considering furloughs to consult first with an experienced employment lawyer.   

The New York Times reported this morning on a forthcoming report from the Government Accountability Office (GAO) that reveals serious problems in enforcement at the Wage and Hour Division of the federal Department of Labor, which enforces the minimum wage, overtime laws, and child labor laws. Apparently, undercover agents posed both as workers with serious claims of labor violations and as employers with little inclination to solve those problems, and nine out of ten cases were mishandled.

Generally, calls from workers went un-returned, the division failed to investigate serious allegations, and workers were often told to file lawsuits rather than rely on the division to enforce their rights. Here are some of the lowlights (you can read the full report here):

• Five of the cases were never even entered into the division's database.
• In two of the cases, the division recorded that the employer had paid back wages -- even though it had not.
• The division closed one case after the employer offered to pay $1,000 before the statute of limitations ran; the employer owed more than $200,000 in unpaid overtime.

The Times reported that the Wage and Hour division will hire 250 more investigators -- increasing its staff by one third -- to improve its enforcement.

It turns out that taking time off work isn't just a luxury -- it improves our health, the quality and quantity of our sleep, and our reaction times. According to an article by Alina Tugend in the New York Times, "Vacations Are Good for You, Medically Speaking," a study has shown that women who took a vacation only once every six or more years were eight times more likely to develop coronary heart disease or have a heart attack than women who took at least two vacations a year. Another study showed that men who didn't take annual vacations had a 21% higher risk of death from all cases, and were 32% more likely to die of a heart attack.

The article also cites interesting research on how vacations affect our sleep. After a few days on vacation, participants were averaging an hour more of good quality sleep, and registered an 80% improvement in their reaction times as measured by vigilance testing. The benefits continued, though less markedly, after vacationers returned home.

The sleep survey involved vacationers who were flying from the West Coast of the United States to New Zealand for at least a week of vacation. But will more modest vacationing - occasioned by this year's flagging economy and high gas prices -- offer the same rewards? According to an AOL Travel/Zogby survey, more than half of the respondents felt that they had less money to spend on summer vacations this year than last year. Perhaps as a result, a third of respondents were planning to stay with family and friends rather than in a hotel. And, campgrounds around the country are reporting high numbers of reservations. It remains to be seen whether we'll get an extra hour of quality sleep on the ground or the hide-a-bed.

Lisa Guerin