Photo: Jason Lawrence via Flickr (CC by 2.0)
Photo: Jason Lawrence via Flickr (CC by 2.0)

UBER has settled two class-action lawsuits — one filed in California in 2013 (O’Connor) and one in Massachusetts in 2014 (Yucesoy) — by drivers who sought to be considered employees rather than independent contractors.  In those cases, plaintiffs were seeking additional compensation, including reimbursement for expenses and tips.  The two cases had about 385,000 drivers as class members.

In the settlement reached in April 2016, UBER agreed to pay $84 million to the class of plaintiff-drivers.  UBER will pay an additional $16 million if it goes public and if its valuation increases by one and a half times its 2015 valuation within the first year of an IPO.

Additionally, under the terms of the settlement, drivers will remain independent contractors and not employees.  UBER will provide drivers with more information about their individual ratings and how each driver compares with his or her peers.  It agreed to introduce a policy explaining the circumstances under which UBER deactivates drivers from using its app.  The company’s official driver deactivation policy has been posted.  UBER also agreed to create an association in each state to allow drivers a venue for discussing drivers’ issues.  Furthermore, UBER drivers will be allowed to post signs in their cars that tell passengers that while not required, tips are welcome.

While a judge needs to approve the settlement, UBER’s Co-Founder and CEO Travis Kalanick issued a press release highlighting the settlement terms.  He views the resolution a win for the company.  He expressed that many drivers prefer to be their “own boss” and would remain independent contractors under these settlement terms.  As Mr. Kalanick explains, “Uber is a new way of working: it’s about people having the freedom to start and stop work when they want, at the push of a button.  As we’ve grown we’ve gotten a lot right—but certainly not everything. “

Lessons to be learned from UBER?  Companies should review how they classify workers.  Companies should also review and update any third party services agreements they are currently working under.  Misclassification creates risks for companies that may lead to costly class action lawsuits.

Computer keyWith the number of emails, texts, and other electronic data in the workplace today, not knowing your company’s litigation preservation duties or not having proper procedures in place to meet those responsibilities may later lead to court sanctions such as fines or the loss of a lawsuit. The law prohibits the destruction of potentially relevant evidence.  Today, a company must know (1) when it has an obligation to preserve information and (2) what information it must preserve.

This responsibility usually falls on the shoulders of the business managers and human resources people who address the issue before outside counsel become involved.  Managers and HR professionals must understand the instances that may give rise to the duty in the employment context, and they must be able to assess what evidence to preserve and what steps to take to ensure preservation.

The duty to preserve documents and electronic information arises when an employer has notice that the information is relevant to litigation or when an employer should have known that the information may be relevant to future litigation.  In other words, documents and electronic data must be preserved when litigation is “reasonably anticipated.”  The usual circumstances kick-starting this duty might be a lawyer’s letter, notice of a complaint filed with the EEOC or a state agency, or notice of a lawsuit.  Depending on the circumstances, the duty to preserve may arise even before this.

What information must be preserved depends on two variables:  (1) who is involved; and (2) what documents such people have.  When a reasonable anticipation of litigation arises, a company should ascertain the key players or which employees are likely to have relevant information.  A company should then determine what documents each person may have.  That inquiry inherently requires an investigation of the types of information that each key player may have and the locations where that information may be stored, including documents in various electronic forms and mediums (desktop, laptop, server, thumb drive, audio, camera, cell-phone, etc.).

As a company learns more about a potential dispute, it should reassess whether it has preserved all of the evidence that it must preserve.  That involves reassessing whether there are additional key players, whether there are new issues that require the preservation of a broader type of evidence, or whether evidence spans a broader time period than initially preserved.

The obligation to secure evidence can require a company to take a number of different actions.  Some of the common steps include:

(1)        Determine the scope of the litigation hold (including subject matter and issues, key players, location of data, and relevant time periods) and promptly stop automatic destruction processes until the proper scope can be determined.

(2)        Issue litigation hold notices to key players and other corporate employees, such as IT people, informing them that there is a hold on the destruction of any documents subject to the preservation obligation. Key players should be reminded that preservation includes all information within the scope identified no matter where the data is located.

(3)        Interview key players, and determine any required expansion of the scope of the hold and segregate them to prevent any destruction.

(4)        Work with IT people to ensure that routine data destruction measures are appropriately stopped according to the hold.

(5)        Make electronic forensic images of the hard drives and other electronic devices of certain key players.

A company must take prompt steps to preserve potentially relevant evidence when a reasonable anticipation of litigation arises.  It should have procedures in place for determining the key players, the relevant time period, and where any documents and data may be stored.   A company may consider consulting with counsel on the duty and scope of a litigation hold so that it does not face problems later.

 

Photo: dbking via Flickr (CC by 2.0)
Photo: dbking via Flickr (CC by 2.0)

In Tyson Foods, Inc. v. Bouaphakeo, the U.S. Supreme Court held that statistical or representative evidence could be used by a class of employees to prove liability for an employer’s failure to pay them for donning and doffing protective gear in violation of the Fair Labor Standards Act (FLSA).  In this class action lawsuit, workers at a meat-processing plant alleged that Tyson failed to give them credit for time spent donning and doffing protective gear and walking to and from their production line.  The workers were claiming overtime pay as a result of all hours worked over 40 hours a week when adding this additional time.

A jury found for the workers and awarded the class about $2.9 million in unpaid wages.  At trial, the court allowed the employees to use representative or an average sample of time it took workers in donning and doffing their gear rather than requiring each class member to present individualized proof of time spent.  Plaintiffs’ expert testified at trial that he determined the average time it took 53 of the 3,344 workers in the class to do these tasks and concluded that an average of 18 minutes a day needed to be added to weekly hours worked for one department and 21.25 minutes a day for another department.  Plaintiffs claimed it could be presumed that all class members were identical to the statistical average and that the workers were owed overtime for all time over 40 hours when adding the representative time to the weekly time worked.

Tyson argued that the trial court erred because the time per employee to perform those tasks was so different that they cannot rely on averages and the class should not have been certified under Federal Rule of Civil Procedure 23(b)(3).  The U.S. Supreme Court disagreed and found that a categorical exclusion of the use of samples made little sense.  It held that it would allow statistical samples to establish liability on a case by case basis — depending on the purpose for which the evidence was being introduced and on the elements of the underlying action.  In reaching this decision, the Supreme Court highlighted the employer’s violation of its duty to maintain records of this time.  Because there was a gap in employer required records of work-time, each employee could have relied on the average sample of time to prove liability and therefore the representative evidence could be used on a class-wide basis.

The Supreme Court explained that its holding was consistent with its 2011 decision in Wal-Mart Stores, Inc. v. Dukes as that case involved 1.5 million employees who were not similarly situated because they were at different stores and under different policies.  The class in Dukes failed to meet even Rule 23(a)’s basic requirement that class members share a common question of fact or law.  On the contrary, in Tyson, the employees worked out of the same facility, did similar work, and were under the same policies for pay.

While refusing to establish a general rule governing the use of such evidence, the Supreme Court widened the potential liability for employers in defending class action suits by allowing representative samples.  This is particularly the case where there are record keeping violations by the employer in the wage and hour area.  Employers should make sure that they review their practices and procedures and confirm that they are maintaining appropriate records of time for all employees.

 

Last session the New Hampshire Legislature enacted a new law designed to protect patients of health care facilities from the dangers associated with drug-use and drug-diverting by health care workers.  RSA 151:41, which was effective August 25, 2014, requires most health care facilities and  licensed providers to adopt a written drug testing policy which must also address the issue of diversion of controlled substances. This law affects facilities including hospitals, infirmaries or health centers of educational institutions, home health care providers, ambulatory surgery centers and many other medical facilities.

The stated purpose of the law is to establish procedures for the “protection, detection and resolution of controlled substance abuse, misuse and diversion.”  The policy adopted by the employer must apply to all employees, contractors and agents “who provide direct or hands-on care to clients.”

The appropriate policy will address:

• How the facility will educate workers regarding drug use;

• Procedures for monitoring, storing, distributing and procuring controlled substances;

• Procedures for voluntary self-referral by addicted employees and for reporting of abuse by co-workers;

• Procedures for drug testing, including, at a minimum, reasonable suspicion testing;

• Requirements for confidentiality and employee assistance;

• Procedures for investigating, reporting and resolving misuse and diversion concerns; and

• Consequences of violating the policy.

The Legislature did not provide a great deal of guidance concerning the meat of the policy, and employers, therefore, do have some flexibility in the type of policy they would like to adopt.  A medical provider must develop a policy “appropriate to its size, the nature of services provided and its particular setting.”  An infirmary at a college or university with just a few affected employees would likely adopt different policies and procedures than would a hospital with hundreds of employees providing direct care.

The law requires testing when there is reason to believe an employee is impaired, but policies may go further if the employer deems it reasonable.  For example, pre-employment or random drug testing may actually provide greater protection to patients, and testing of those who do not provide direct care may be important as well.

A drug test will identify a user of illegal drugs and controlled substances, and employers will need to decide the consequences of a positive test. Those options should be outlined in the employer’s policy, and employers should strive to be consistent in the application of discipline that results from policy infractions.  The statute is not specific about the potential penalties for a licensed provider’s failure to comply, but it certainly establishes a standard by which providers will be measured in terms of patient protection.

The New Hampshire Commission for Human Rights has released data on discrimination charges filed by employees in 2013.  Last year, the Commission received 222 discrimination charges against employers.  This number was slightly down from the year before at 257.  Retaliation across all categories topped the list at 93 claims.  Following closly behind with 89 charges was disability discrimination.  There were 64 claims based on sex discrimination and 31 claims based on age.  Of the sex discrimination claims, the charges included 17 gender, 36 harassment, and 11 pregnancy.

The Commission found probable cause to proceed with a hearing in 3 cases — 2 for disability discrimination and 1 for sex (pregnancy) discrimination.   No probable cause was found in 37 of the cases.  Additionally, 13 cases were removed to federal court; 34 were removed by the complainant to state court and 2 were removed by the respondent to state court.  The Commission closed 199 cases in 2013.

With the report of these statistics, it is a good time for employers to review, redistribute, and reinforce their anti-harassment and non-discrimination policies to all employees.  Employers should confirm their handbooks cover all protected categories under federal and state laws.  Companies should also provide training for employees on their nondiscrimination and anti-harassment policies.  Supervisors and managers need to be trained on the policies as well as receive an overview of the laws relevant to the workplace.  All of these steps can help companies safeguard against liability for harassment and discrimination in the workplace.

The start of a new year is always a good time for employers to review their HR policies.  As part of this process, employers can conduct self-audits of their wage and hour practices to determine compliance with the law.  The NH Department of Labor just recently posted the top ten most common labor law violations from last year.  The list is a tool to assist businesses in uncovering any concerns with compliance with wage and hour rules.

The following are the 2013 Top Ten wage and hour violations by employers in New Hampshire:

10.Failure to pay minimum wage for all hours worked.  * RSA 279:21

9. Illegal deductions from wages. *RSA 275:48 and Lab 803.02(b),(e),(f)

8. Illegal employment of workers under 18 (not having proper paperwork, hours violations, or working in a hazardous environment).  *RSA 276-A: and Lab 1000

7.  Failure to pay 2 hours minimum pay at their regular rate of pay on a given day that an employee reports to work at the request of the employer.  *RSA 275:43-a and LAB 803.03 (h),(i)(j)

6.  Failure to provide written notice to employees of their wage rate, pay period, pay day and a description of fringe benefits, including any changes.  *RSA 275:49 and Lab 803.03

5.  Failure to secure and maintain workers compensation coverage and misclassification of employees.  *RSA 275:42 I & II and RSA 281-A

4.  Employing Illegal Aliens (not having proper documentation).  *RSA 275-A:4-a

3.  Failure to have a written safety plan, joint loss management committee and safety summary form filed biennially, as required.  *RSA 281-A:64 and Lab 602.01, 602.02, 603.02, and 603.03

2.  Failure to keep accurate record of all hours worked.  *RSA 279:27 and Lab 803.03

AND THE #1 MOST COMMON VIOLATION IN 2013

1.  Failure to pay all wages due for hours worked, fringe benefits, breaks less than 20 minutes, etc.  *RSA 275:43 and Lab 803.01.

Do not become a statistic in 2014.  For more information, visit the NH DOL website at www.nh.gov.

 

Even when an employer takes prompt remedial action to defeat a sexual harassment claim, it may still be liable for retaliation.  A NH employer was reminded of this recently in Rand v. Town of Exeter (11-CV-55-PB) (10/2/13).

Brenda Rand worked as a solid waste transfer operator for the Town’s Highway Department.  Rand alleged that a coworker sexually assaulted her one morning at the transfer station when both were alone.  Rand confided in a coworker 5 days after the incident and then reported it to the HR Director and her supervisors.

To prove sexual harassment by a coworker, an employee must show that the employer knew or should have known of the harassment yet failed to take prompt remedial action.

On a motion for summary judgment filed by the employer, the federal trial court found that the Town had taken prompt and remedial action when it learned of Rand’s complaint.  As the Court explained, the company HR Director conducted an investigation into the allegations, prohibited the alleged harasser from going to Rand’s worksite during the investigation, and had interviewed 3 of the witnesses within 3 days of learning of the complaint and had a report prepared 5 days after the final interview.  The Town informed Rand of the investigation outcome two weeks later.

The Court noted that while Rand disagreed with the Town’s internal investigation outcome, the issue as to employer liability is whether the employer is negligent in allowing the harassment to occur and whether the employer took reasonable steps to respond.  Here, the Town had an anti-discrimination policy, no reason to anticipate the alleged assault, and took prompt and effective action to respond to and investigate Rand’s complaint.  As a result of the steps taken by the employer, the federal Title VII and state harassment claims were dismissed.

As this case shows, anti-discrimination policies and effective internal investigations play important roles in protecting companies from workplace liability.  Taking complaints seriously, dealing with them objectively and promptly, and taking appropriate remedial measures, if necessary, following the investigation may shield employers from claims.

Unfortunately for this employer, the case is not done.  While the harassment claims were dismissed, the Court allowed Rand’s retaliation claims to continue.   Rand had produced sufficient evidence to support her complaint, including negative performance reviews and reprimands after her complaint and evidence employees were told to avoid her.  Additionally, the Town placed Rand on administrative leave and refused to turn over her personnel file shortly after Rand filed an EEOC complaint.  As the Court explained, motive and intent are better suited for the jury, and a trial has been scheduled for February 2014.

With retaliation at the top of the list of discrimination filings, employers must take heed.  An employee may lose on the underlying discrimination claim and still be successful on the retaliation claim for conduct occurring after the complaint. Employers should have strong policies against retaliation and should train all supervisors and employees on this prohibited conduct.  Do not learn this lesson the hard way.

 

A growing area of concern regarding employee compensation is the use of smartphones or tablets by hourly or nonexempt employees after hours and on weekends.  Employers provide these electronic devices to employees to allow them to stay connected with the office, co-workers, and clients.  This may include answering and reading emails or texts or making and taking telephone calls.  With this increase in productivity for businesses has come some challenges for employers under the Fair Labor Standards Act (FLSA).  Nonexempt employees must be paid for all hours worked – including any hours for work performed on a smartphone or tablet outside the office.  Just as an employee who eats lunch at his/her desk and regularly answers the telephone and refers callers is working and entitled to compensation for that time so too is an employee who does this after hours and on the weekend via a smartphone.

Employers have a legal obligation to track all hours worked so employees can be properly paid.  Even if those hours were not approved by the company, employees working over 40 hours in a workweek are entitled to overtime pay.  Problems arise in our growing technological world when work time creeps into personal time and when employers fail to recognize and count certain hours worked as compensable hours.

To address this growing area of wage disputes, more companies are putting in place written policies covering the expectation of the use of smartphones or tablets after hours and beyond the workday by nonexempt (or hourly) employees.  Employers considering such policies should include a notice as to the company’s expectation of use of such devices during these off hours and a process for the employee to obtain required approval for work conducted during off hours as well as a process for tracking that time spent by employees on the device.  Other companies are choosing to limit such devices to exempt employees only.  With the boundaries of work and free time blurring, cases in this area are expected to increase.  Employers should be prepared.

 

Employer liability for harassment in the workplace is before the U.S. Supreme Court.  On November 26, 2012, the Supreme Court heard oral argument in Vance v. Ball State University.  At issue is the scope of the “Supervisor” Liability Rule in discrimination cases under Title VII.  This is a long awaited case on who qualifies as a “supervisor” for purposes of establishing employer liability in the workplace context.

The determination of whether there is a basis for employer liability under Title VII depends on whether the harasser is a supervisor or a co-worker.  In Faragher v. City of Boca Raton, 524 U.S. 775 (1998), and Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998), the Supreme Court held that an employer is vicariously liable under Title VII for severe or pervasive harassment of an employee by a supervisor.  This Supervisor Liability Rule applies even if the employer is unaware of the discrimination.  On the other hand, if the employee’s harasser is a co-employee, the employer is not liable unless the employer was negligent in allowing the conduct.

In Vance, an African-American server in the Banquet & Catering Department at Ball State University complained that she was continually harassed at work due to her race by her co-workers.  One of those co-workers oversaw and directed plaintiff’s daily work but did not have the power to hire or fire plaintiff.  In upholding summary judgment for the employer, the Seventh Circuit held that harassment by an employee who was considered a supervisor by the employer because of the authority to direct and oversee the plaintiff’s daily work was not sufficient to make the employer strictly liable because the harasser did not have the power to take formal employment actions against the plaintiff.

Vance will decide a split in the Circuit Courts since Faragher and Ellerth.  The First, Seventh, and Eight Circuits limit the scope of “supervisor” liability to those harassers who have the power to hire, fire, demote, promote, transfer,  or discipline the victim.  The Second, Fourth, and Ninth Circuits expand liability to include harassment by those with oversight authority in the workplace generally.

A decision is expected before the end of the term in June 2013.  If the Supreme Court holds a “supervisor” includes the broader category of employees with authority to direct and oversee another employee’s daily work, employers could see an increase in claims of discrimination for hostile work environment.  Employers should continue to  implement anti-harassment training for all employees, including those with any supervisor or managerial job duties.

See Vance v. Ball State University, No. 11-556.