Category: Workers’ Rights

FMLA

Superintendent’s wrongful discharge, FMLA retaliation claims valid

On November 14th, the United States District Court for the Southern District of Ohio Eastern Division granted and dismissed portions of the Defendant’s (CB&I Constructors) Motion for Summary Judgement, which aimed to throw out certain claims alleged by the Plaintiff (Lightner). The Defendants wished to dismiss his assertions of FMLA retaliation, wrongful discharge, and FMLA interference. Only the latter ended up being dismissed.

Evan J. Lightner was employed as a Site Superintendent by CB&I Constructors from July 2009, through June 2014. During most of that period, he was considered an exemplary employee, having received positive reviews of “meeting or exceeding expectations” annually. His job as a Site Superintendent was to ensure OSHA (Occupational Health and Safety Administration) compliance, as well as supervising solid waste and landfill development projects. Lightner had a great amount of experience in the field, having worked for years prior in similar supervisory positions and receiving special training/certification from OSHA.

Lightner was dealt a devastating blow when his wife was diagnosed with cancer in August 2011. His then supervisor and Operations Manager Mike Mehalic told him that the employers would be “more than happy” to help him care for his wife, and helped Lightner reach out to Human Resources. He was granted intermittent FMLA leave when needed, and stated he was “very happy” with the support he received from the company.

Then, things seemingly began to change in 2012 when Greg Cooper replaced Mehalic as the Operations Manager. It wasn’t until July or August of 2013 however that the situation started taking a turn for the worst. Lightner brought unsafe situations he had noticed to the attention of Cooper and another supervisor that acted as the Project Manager in the Solid Waste Group, Josh Broggi. Lightner stated that he noticed unsafe dump truck operations, as well as observing workers that were “unqualified and untrained” welding pipes. Despite his concern, Cooper and Broggi assured Lightner that the workers had enough prior experience to make up for their lack of formal training and certification.

In October 2013, Lightner and his co-workers began working on a project in Miami, Florida. Upon arrival at the site, Lightner noticed the same aforementioned “untrained and uncertified” employees completing welding tasks. Once again, he expressed his concerns about this to Broggi. Both Cooper and Broggi responded by telling Lightner that it was “too costly” to have the employees trained and certified. Lightner persevered in attempting to remedy the problems, having telephone and in-person conversations on the subject with the Division Safety Manager Greg McElroy. This supervisor assured Lightner that he had discussed the matter with Broggi and Cooper, and promised to have the employees appropriately trained “in the very near future”. However, that never happened.

Not only were the employees not trained, but their performance actually seemed to get worse as time went on. The environment became so dangerous in the eyes of Lightner that he believed the employees should either be dismissed, or the site should have been shut down entirely. Yet again, Lightner made desperate calls to Cooper and others. Cooper did fly to Miami in order to observe the situation for himself. Despite having observed several concerning things, such as employees not being able to properly operate an “off-road dump truck without causing damage”, he told Lightner that it would “be easier to hire five of the untrained employees and get rid of [him]”.

Cooper also commented that the employees were the “best the company could afford and still turn an adequate profit.” The reason for Cooper’s concern about profitability seems to stem from the fact that CB&I was in the process of acquiring another company at the time. This meant that, according to Cooper, they needed to “do whatever was possible” to ensure the transition period went smoothly. Apparently, this included not reporting safety incidents. Lightner’s job became blatantly threatened as Cooper instructed him not to report a particular incident involving a bulldozer, or else “be the person that left before the other employees did”.

Similar incidents continued to occur, then in May 2014, Lightner noticed a lump in his neck which seemed to be growing rapidly in size. As his doctors advised, he underwent a procedure to remove the mass so a biopsy could be performed. The lump turned out to be benign, but due to the nature of the procedure, Lightner and Cooper discussed him taking 3-4 weeks off. The very next day, Cooper called Lightner and told him that he was likely to be “furloughed” due to various business reasons. On June 2nd 2014, this indeed came to fruition and Lightner was let go allegedly as part of a reduction in force.

 

Sources:

http://www.employmentlawdaily.com/index.php/news/reduction-of-one-suggested-supervisor-was-fired-for-reporting-unsafe-conditions-seeking-fmla-leave/

http://hr.cch.com/eld/LightnerCB&I111416.pdf

 

wage

Wage case against McDonald’s continues…

Yet another McDonald’s franchise is in the news again for court drama. This time, the case is regarding a wage and hour class action lawsuit (ref: wage and hour lawsuit) against a chain of 16 locations in Pennsylvania. The case was initially filed back in 2013, after an employee quit due to the outrageous fees associated with the chain’s mandatory pay card system. After quitting, she called a law firm to see if the practices were legal – which they weren’t.

The issue arises from the employers (owners Albert and Carol Mueller) requiring non-managerial employees to accept payment via a JP Morgan & Chase pay card, rather than being issued an itemized check/cash. This violated the Pennsylvania Wage Payment Collection Law (WPCL), which states that, “wages shall be paid in lawful money of the United States or check”. Employers will sometimes utilize a pay card system in order to avoid costs associated with printing and distributing checks, which can be expensive. Cash is not usually a practical form of payment for established businesses. It’s difficult to track and itemize. Another reason employers may be shifting towards the option of pay cards, is that banks may offer incentives to employers for providing them with new customers, aka the employees.

The courts reasoned that the pay cards are not “lawful money”, though the employers insisted it is a “functional equivalent”. However, the court stated that it was not a “functional equivalent” due to the fees that could be incurred for various reasons such as inactivity. The class action representative, Natalie Gunshannon, chose not to activate her pay card after reviewing the hefty fees, which included $1.50 per ATM withdrawal, $10 per month after 3 months of inactivity, 75 cents per online bill payment, and $1 each time they checked the balance. Additionally, users of the cards were allotted only one free over-the-counter withdrawal per deposit. After the initial withdrawal, a $5 fee was incurred each subsequent time. “I tried to work with the company. They refused. I tried the main office in Clarks Summit. They refused,” Ms. Gunshannon said. “I never activated the card. I refused the fees. I just want it to be fair.” An expert witness in the case stated that between the fall of 2010 and the summer of 2014, the employees were subject to a collective estimate of 47,000 fees.

While this case is set in Pennsylvania, it would most likely fare similarly here in California. The DLSE has opined that pay cards can be legal forms of payment so long as they are voluntary on the part of the employee. This means that the employee must have the option to receive a check or other form of payment if they would prefer. The DLSE states that the alternative form of payment must be “easily turned into cash” without a fee. Because the employees in the Pennsylvania case were not given the option to an alternate form of pay other than the card, the system would still be considered illegal in California. Then of course there is the issue with the fees, which also would be considered unlawful and cause to bring suit or request reimbursement.

An inquiry to the DLSE on this subject was answered back in 2008. Carl Morris and Daniel Schwallie asked whether their payroll services complied with California labor laws. The letter cites California Labor Code section 212, which reads:

“No person, or agent or officer thereof, shall issue in payment of wages due, or to become due, or as an advance on wages to be earned:

(1) Any order, check, draft, note, memorandum, or other acknowledgment of indebtedness, unless it is negotiable and payable in cash, on demand, without discount, at some established place of business in the state, the name and address of which must appear on the instrument, and at the time of its issuance and for a reasonable time thereafter, which must be at least 30 days, the maker or drawer has sufficient funds in, or credit, arrangement, or understanding with the drawee for its payment.

(2) Any scrip, coupon, cards, or other thing redeemable, in merchandise or purporting to be payable or redeemable otherwise than in money.

(b) Where an instrument mentioned in subdivision (a) is protested or dishonored, the notice or memorandum of protest or dishonor is admissible as proof of presentation, nonpayment and protest and is presumptive evidence of knowledge of insufficiency of funds or credit with the drawee.

(c) Notwithstanding paragraph (1) of subdivision (a), if the drawee is a bank, the bank’s address need not appear on the instrument and, in that case, the instrument shall be negotiable and payable in cash, on demand, without discount, at any place of business of the drawee chosen by the person entitled to enforce the instrument.”

Sources:

http://www.dir.ca.gov/dlse/opinions/2008-07-07.pdf

http://www.employmentlawdaily.com/index.php/news/mandatory-payroll-debit-card-violates-pennsylvania-wage-payment-law/

https://thinkprogress.org/after-ruling-that-mcdonalds-can-t-pay-workers-in-bank-cards-the-bank-pays-up-79e8661e1d95#.5nzbjtqoc

 

whistleblowers graphic

Government whistleblowers to receive $29 million reward

Two whistleblowers will be reaping a big reward – a $29 million dollar reward to be exact. This is because settlement has been reached in the case of United States v. Life Care Centers of America. The defendants will be paying a record breaking $145 million dollar settlement for allegedly violating the False Claims Act between January 2003 and February 2013. The False Claims Act (31 U.S.C. §§ 3729–3733, also called the “Lincoln Law”) is an American federal law that imposes liability on persons and companies (typically federal contractors) who defraud governmental programs. It is sometimes called the Lincoln Law because it was initially passed under President Abraham Lincoln during the Civil War.

Life Care Centers of America is a chain of private nursing homes with more than 200 locations across the country. The lawsuit against them was initiated because former employees turned whistleblowers Glenda Martin and Tammie Taylor tipped the government off to the possible fraud, leading to what is called a Qui Tam case. This type of case is when whistleblowers alert the Government that they are being defrauded. The Justice Department alleged that the company purposely entered patients into the highest level of care even when it wasn’t necessary, in order to bill Medicare and TRICARE at the highest rates. The complaint states that “while Life Care punished those facilities and employees that failed to meet its Ultra High targets or that complained about corporate pressure, it rewarded and applauded those that met its targets. As part of its goal to maximize Medicare and TRICARE payments, Life Care also frequently overrode or ignored the recommendations of its own therapists and unnecessarily delayed discharging beneficiaries from its facilities…. As a direct result of Life Care’s corporate pressure to maximize its Ultra High billings, Life Care therapists provided Medicare and TRICARE beneficiaries with excessive amounts of therapy that was not medically reasonable and necessary, and sometimes even 2 harmful. Moreover, instead of providing skilled rehabilitation therapy that was tailored to beneficiaries’ particular needs, Life Care therapists routinely provided generic, non-individualized services that did not (and could not) benefit the beneficiaries and that served primarily to inflate what Life Care billed Medicare and TRICARE for those beneficiaries.”

A statement released by the company vehemently denies any wrongdoing, stating, “Life Care has strongly disagreed with the allegations, and believes that it was entitled to payment for services rendered”. Legal action was also taken against the owner and sole shareholder of the chain, Forrest L. Preston, as the Justice Department claimed he was “unjustly enriched” by the practices. The statement continues, “We deny in the strongest possible terms that Life Care engaged in any illegal or improper conduct. We are, however, pleased to finally put this matter behind us, without any admission of wrongdoing, and we look forward to continuing our efforts to deliver quality care and services to our patients, residents and their families”.

Not only will the company be paying the hefty settlement amount, they have also agreed to their therapy services being monitored for five years, entering into a Corporate Integrity Agreement with the US Department of Health and Human Services. A $45 million down payment will be made this year, with the remainder of the settlement amount to be paid out over the course of the next three years.

This lawsuit is hardly the first legal issue the company has come across. In recent years, several other lawsuits have been initiated. The first lawsuit arose in 1998, alleging that the company negligently allowed a patient to fatally beaten by another patient with a history of violent outbursts. Two years later, an eerily similar case was initiated, alleging that a female patient was also attacked by a violent patient, resulting in her death. In 2003, a $12 million lawsuit claimed that the facilities failed to provide basic care such as proper bedding and ulcer prevention after a patient’s leg had to be amputated due to infection. From 2004 to 2008, three more bed sore cases were initiated which claimed that the facility neglected to provide basic care, nutrients, and medical attention to patients that were suffering from dehydration, thrush, and staph infections. As if all of that wasn’t enough, all patient admissions were suspended for a time in 2011 due to allegations of cooking malfunctions, patient abuse and sexual assault.

Sources:

http://www.thedailytimes.com/news/life-care-center-denies-fraud-allegations/article_ad47686e-48dc-5292-8b1a-e49b1115fb61.html

https://oig.hhs.gov/fraud/enforcement/criminal/2012/Life_Care_Complaint_Intervention_11.28.2012.pdf

http://health.wusf.usf.edu/post/life-care-will-pay-145m-settle-medicare-lawsuit#stream/0

Overtime

Obama “Time Card” overtime rule faces new challenges

A new bill was introduced on September 29th by Republican senators, which would make changes to the overtime bill introduced by the Obama administration back in July. The Regulatory Relief for Small Businesses, Schools, and Nonprofits Act (or H.R. 6094) passed in the House of Representatives 246 to 177 and will delay the Department of Labor final rule until July 2017. The changes to current overtime laws were supposed to go into effect on December 1st , but the updated bill seeks to spread out these changes over the next 5 years, rather than everything going into effect all at one time. Not only would the bill raise the overtime threshold gradually from $23,600 to $47,476 through the 5 years, it would also require an “independent government watchdog study” of the rule after it’s first year in effect. If the rule is found to negatively impact “American workers and our economy, non-profits—including colleges and universities—along with state and local governments and many Medicaid- and Medicare-eligible facilities such as nursing homes or facilities serving individuals with disabilities will be exempt from any further increases under the rule.” Additionally, it would prevent a possible threshold raise in 2017, as well as the automatic increases that were supposed to occur every 3 years.

Senators Lamar Alexander (R-TN), Susan Collins (R-ME), James Lankford (R-OK), Tim Scott (R-SC), and Jeff Flake (R-AZ) introduced the legislation in fear that the sudden doubling of the salary threshold would be too extreme, and therefore detrimental to various employers. Senate Labor Committee Chairman Alexander states, “the Overtime Reform and Review Act makes urgently needed modifications to the administration’s rule, which will otherwise on December 1 force changes in overtime pay that are too high, too fast and will result in employers, non-profits, colleges and others cutting workers’ hours, limiting their workplace benefits and flexibility, as well as costing students more in tuition….This is a moderate, bipartisan approach that should be able to pass both Houses before December.” Senator Collins adds, “The Department of Labor’s overtime rule will be extremely damaging to small businesses, universities, nonprofit organizations, and service industries, particularly in rural states like Maine…While it is time for a reasonable update in the threshold, doubling the threshold overnight will hurt workers and employers alike and limit the services provided by nonprofits and educational institutions. Our legislation takes a common-sense, bipartisan approach that would phase-in an increase to the overtime threshold over five years, providing businesses with additional time to prepare for this major federal rule change.” Similarly, Senator Lankford states, “This federal overtime rule is devastating for small businesses, colleges and nonprofits all across America, but particularly in states with a low cost-of-living…The economic realities and regional cost of living differences that exist throughout the country were completely ignored in favor of yet another one-size-fits-all approach by this administration. I have been told from small business owners, colleges and nonprofits that this federal overtime rule will quickly lead to job loss, increased tuition, and the reduction of charitable services. I think this rule should be pulled entirely, but at least its implementation should be delayed or slowed.”

A copy of the Overtime Review and Reform Act has not yet been made available to read, but proponents of the bill (i.e. employees) will surely be disappointed by its terms. Meanwhile, letters of support for the revised bill and its originators have been pouring in. The White House issued a Statement of Administration Policy on September 27th, strongly opposing H.R. 6094. The statement gives facts supporting the necessity of the December 1st implementation. Additionally, the statement clearly and in no uncertain terms indicates that if the bill reaches President Obama’s desk, he will veto it. Perhaps the most powerful text in the statement reads, “While this bill seeks to delay implementation, the real goal is clear—delay and then deny overtime pay to workers. With a strong economy and labor market, now is a good time for employers to provide these essential protections for workers, who cannot afford to wait.”

Sources:

https://www.aamc.org/advocacy/washhigh/highlights2016/470736/093016housepassesdolovertimeruledelay.html

http://www.employmentlawdaily.com/index.php/news/new-senate-bill-would-further-delay-ot-rule-implementation-potentially-create-exemptions/

 

 

Domino’s Franchise Wage and Hour Lawsuit Settles

The class action lawsuit against a Georgia Domino’s franchise has settled, awarding class members $995,000 collectively. The lawsuit was initially filed in 2015, and aimed to recover the unpaid wages due delivery drivers for the chain, who were not properly reimbursed for the use of their personal vehicles. Not being paid enough to cover vehicle expenses caused the drivers’ pay to dip below the federal minimum wage at times.

Defendants Cowabunga Inc. and Cowabunga Three LLC are one of the largest Domino’s franchises in the country, with over 100 stores across 3 states (Georgia, South Carolina, and Alabama). According to the company website, they employ over 1,800 people. Ironically enough, the company website also touts their company values to include “respect, responsibility, trust, fairness, and contribution”. A total of 565 drivers opted into the lawsuit, which means the average amount each individual will receive is $1,138. The named plaintiff Chadwick Hines will also receive a $7,500 service award. Chadwick was employed by the company in Savannah, GA from approximately April to October of 2014.

The minimum wage violation occurred because while the company reimbursed their drivers, the amount was too little to compensate for out of pocket costs drivers incurred by using their own personal vehicle to make deliveries. By using their personal vehicles, drivers became responsible financially for upkeep of the car including the cost of gas, insurance, vehicle maintenance, and depreciation. According to the court complaint, drivers were reimbursed only one dollar per delivery. The IRS reimbursement rate for the applicable period of time ranged from $.55-$.57 per mile, while AAA found that the average cost to drivers in the job field (who drive a sedan) was actually $.592-$.608 per mile. Per the complaint, “The driving conditions associated with the pizza delivery business cause more frequent maintenance costs, higher costs due to repairs associated with driving, and more rapid depreciation from driving as much as, and in the manner of, a delivery driver. Cowabunga’s delivery drivers further experience lower gas mileage and higher repair costs than the average driver used to determine the average cost of owning and operating a vehicle described above due to the nature of the delivery business, including frequent starting and stopping of the engine, frequent braking, short routes as opposed to highway driving, and driving under time pressures.” Because Cowabunga only reimbursed drivers $1 per delivery, an average delivery of 5 miles round trip means that drivers were only being reimbursed $.20 per mile. The drivers should have received, at the very least, $2.80 reimbursement per delivery. With all of the out of pocket costs factored in, the drivers received an hourly pay rate of only $3.65-$4.95 per hour – far below the federal minimum wage of $7.25 per hour. The complaint also mentions that several employees brought these pay issues to the attention of the management, but nothing was ever done to address the concerns.

The suit alleges a violation of the FLSA (The Fair Labor Standards Act), which is a “federal law that protects employees’ rights in order to ensure workers receive fair wages, are fully compensated for all hours worked, and work in a safe work environment. The law ultimately protects workers from potential exploitation or abuse from employers.”

Many people don’t realize it, but delivery drivers (and others who drive for a living) are often subject to many forms of wage and hour violations. Aside from not being reimbursed for vehicle expenses such as gas and insurance as this lawsuit mentions, they are also typically vulnerable to lost lunches and breaks. Because more often than not they are the sole operator of the vehicle, no one is there to relieve them for breaks and lunches when they are on a time crunch or have a deadline to meet. Additionally, there is no manager there to ensure a break or lunch occurs. Cases such as this one are rampant in the driver work field.