Archives for September 2016

Not so Fast, Department of Labor — Here come the Republicans (Again)

In a move that once again smacks of partisan politics, Texas and Nevada are leading a 21-state challenge to the U.S. Department of Labor’s recent update to overtime regulations for white collar workers. Not surprisingly, 20 are led by Republican governors. The suit claims that President Obama’s Department of Labor exceeded its authority in enacting the regulatory updates, which are scheduled to take effect December 1, 2016. Its focus appears to be the procedure employed to make the changes, though Republican leaders are plainly more concerned with the new rule’s substance.

The Department announced earlier this year that, after lengthy study that included the review of almost 300,000 comments to the proposed regulatory updates, the following changes would take effect later this year:

  1. An increase in the minimum salary that must be paid to white collar workers who otherwise are exempt from overtime pay requirements, from $455/week to $913/week ($47,476 per year). Workers who make less than this amount must receive overtime, regardless of other factors;
  2. An increase in the ‘highly paid’ employee exemption for white collar workers from $100,000/year to $134,004/year. Workers whose earnings exceed this amount will be exempt from overtime pay; and
  3. A mechanism for automatically adjusting the minimum and highly paid thresholds to keep up with inflation.

Opponents of the changes are concerned with their effect on business; they predict dire consequences if the rules are implemented. Joining the 21 states in suing to block the new regulations is a coalition of 50 businesses led by the U.S. Chamber of Commerce. Not surprisingly, both suits were filed in Texas for the obvious reason that the litigants hope to again find a sympathetic ear in a court that has previously shown its predilection against President Obama’s initiatives.

Employers must Investigate Sexual Harassment Complaints to Reduce Risk of Punitive Damages

When in doubt, investigate – carefully and thoroughly. That’s the message again delivered to employers by a recent decision of Massachusetts’ highest court. When an employee complains about sexual mistreatment or other discrimination, it’s critical that he/she be taken seriously and that appropriate remedies be implemented to address any allegation that is borne out by a fair investigation.

Lexus of Watertown learned this lesson the hard way recently. After its former employee filed suit for sexual harassment, among other things, a jury awarded her $40,000 for emotional distress and another $500,000 in punitive damages. On appeal, the Supreme Judicial Court rejected Lexus’s argument that it did not act badly enough to justify a punitive damages award, which can be used to punish employers only in cases of outrageous or egregious misconduct.  Lexus, the court found, exposed itself to a punitive damages award because it did not adequately investigate its employee’s complaints after it learned about them. Those complaints were later proved true at trial, at least to some degree.

“Where the employer is aware of a sexually hostile or offensive work environment, the potential for punitive damages against the enterprise is triggered and an inquiry into the response by the employer is warranted….The failure to do so opens the door to the potential imposition of punitive damages if the jury conclude that the employer’s failure was sufficiently outrageous and egregious,” the SJC found.

Although Lexus of Watertown in fact conducted an investigation, the court found that it was inadequate. It was conducted by a supervisor who doubted the complainant from the outset, did not include interviews of all relevant personnel, and did not involve the complaining employee. Though the investigation did not corroborate any of the complaints, a former manager had previously circulated a memo regarding the harasser’s inappropriate behavior. At trial, many of the complaints were corroborated by testimony. Other employers should learn from this case. All complaints should be investigated fairly by an impartial person. Counsel should either guide the investigation or conduct it.

Court Rejects Another Expansion of At-Will Employment Rule

Yet another attempt to expand the public policy exception to the Massachusetts at-will employment rule has fallen by the wayside. This time, the court rejected a former employee’s challenge to his firing based on a concept termed, “honest, open and accountable government.”

“The question what exactly is required by the policy of open, honest and accountable government… is both difficult to define and open to debate,” the Appeals Court wrote on August 4, 2016. “The Supreme Judicial Court…has made clear that the public policy exception must be construed narrowly in order to avoid effectively imposing a just cause requirement for termination of at will employees….”

The at-will employment rule provides that either employees or their employers are free to end their working relationship at any time, for any reason, and either with or without cause. This means that employees generally have no recourse when fired except as may be provided by particular laws. The Massachusetts anti-discrimination law and anti-retaliation language in the state’s Wage Act are examples. Absent those legal protections, employees can challenge their firings only if they can identify an exception to the at-will rule.  Exceptions are few and far between.

In Tramontozzi v. Mass. Dept. of Transportation, a former employee of the Massachusetts Transportation Department claimed he was unfairly made a scapegoat after a light fixture fell from the Central Artery Tunnel in Boston. He accused the Department of unfairly blaming him for alleged delayed disclosure of the incident in order to provide cover for higher authorities. While the Appeals Court agreed that government should be open and honest, it declined to create a public policy exception to the at-will rule on this basis.