Employers Get Another Reason to Carefully Review and Comply with Wage Laws

It’s no surprise that the reach of Massachusetts’ wage laws is long, and most employers know they need to carefully abide them if they want to avoid potentially dire effects. Still, courts sometimes seem to extend the law’s reach in surprising ways. When that happens, employers to which such rulings apply might first shudder a bit, then step back and review policies to be sure they are doing things properly.

A recent U.S. District Court decision may have such an effect. In Chebotnikov v. LimoLink, the court ruled that a trial was necessary to determine whether limousine drivers are employees or contractors. It went on to also conclude that gratuities charged to customers must be remitted to the drivers under the Massachusetts tips statute. That law requires that service charges or tips from customers “shall be remitted only to the wait staff employees, service employees or service bartenders” who provide the customer service at issue.

What’s interesting here is the award of tips to individuals who may or may not be employees despite the fact that the statute involved appears to apply only to that group. The court seemed moved in large part by the clear intention of the law: to ensure that service workers get the tips that customers intend for them and not their employers to receive. Employers who collect tips or charge costs to customers that might be interpreted as gratuities need not shudder at this ruling, perhaps, but certainly should review their practices to ensure they don’t get caught in the same situation as LimoLink apparently has.

Reasonable Accommodation Laws Apply to Use of Medical Marijuana in Massachusetts

If there was any doubt that employers need to be careful about disciplining employees who use medical marijuana, it was ended today by the Supreme Judicial Court (SJC). It held that employees who are prescribed medical marijuana to treat their health conditions are protected under Massachusetts handicap law. Both employers and managers involved in decisions to punish workers for off-site medical marijuana use can be sued for damages caused by their conduct, the SJC held.

The case’s significance is patent. Under both Massachusetts and federal law, handicapped employees are protected against discrimination. If they can perform their jobs with or without reasonable accommodation, employers cannot take adverse action against them due to their disabilities. Massachusetts places a heavy burden on employers to consider accommodations their employees may need to continue working and to implement them if reasonable. Employers must both engage in an interactive discussion to evaluate potential accommodations and implement any that may exist unless they prove that doing so would pose an undue hardship. Proving undue hardship is quite difficult.

But state and federal laws diverge when it comes to marijuana use. In Massachusetts, such use is legal when medically prescribed. The drug can be sold in the Commonwealth, was long ago decriminalized, and is now wholly legal for personal use. At the federal level, none of this is true. Despite broad agreement among states that marijuana has valid medical uses that should be permitted under proper supervision, U.S. law continues to provide otherwise. It was on this basis that the employer in Barbuto v. Advantage Sales and Marketing, LLC believed it could summarily terminate its employee for a positive marijuana test. [Read more…]

Supreme Judicial Court Rules that Employees get Interest on Unpaid Wages but not Statutory Penalties

The Supreme Judicial Court this week issued its latest interpretation of the Massachusetts Wage Act, Mass. Gen. L. ch. 150, §§148-150. It ruled that prejudgment interest on unpaid wage and other benefits awarded to employees should be added to judgments at the statutory rate of 12 percent. Importantly, however, the SJC decided that no interest can be awarded on the mandatory triple damage penalties that apply under the Wage Act.

The case is significant both as to its substance and the SJC’s break with a ruling by the U.S. Supreme Court regarding prejudgment interest on wages. On substance, the SJC’s ruling will likely result in substantially reduced judgments against employers in some cases. As to federal precedent, the Supreme Court decided in 1945 that employees cannot receive interest on wage judgments under the Fair Labor Standards Act (a federal law dealing with wage payments to employees) because its liquidated damages provision superseded it. In rejecting this logic, the SJC pointed to laws in Massachusetts that require interest at 12 percent annually on damages awards. It concluded that harmonizing the Wage Act with these laws requires a reasonable balance such that interest must be awarded on actual damages awarded but not on triple damage sums. [Read more…]

Court Holds Individual Supervisor Liable under Family and Medical Leave Act

In a case of first impression in Massachusetts, a federal judge ruled that individual supervisors can be personally liable to employees for violations of the Family and Medical Leave Act.

The employee involved claimed he was treated differently at work and retaliated against in part because he requested medical leave. He sued both his employer and his immediate supervisor despite the fact that the FMLA requires only ‘employers’ to provide certain leave rights to workers. The supervisor’s motion to dismiss on this ground – he is not, he argued, an employer, and lawsuits against individuals are not authorized by the FMLA – was denied by the court, which cited to higher court interpretation of the Fair Labor Standards Act, a federal law whose definition of the term “employer” is almost identical to that in the FMLA.

The decision serves as a warning to managers and others to pay close attention to their companies’ conduct in cases that might implicate the FMLA. The law applies to employers of greater than 50 employees, and to workers who work at least 1250 hours in a prior year. It permits qualified employees to take unpaid leaves of absence for their own health reasons and those of certain close relatives. Massachusetts employers should also note that the Commonwealth provides similar protections to employees of smaller companies.

New Year Brings Renewed Efforts to Pass Non-compete Legislation in Massachusetts

Proponents in the Massachusetts Legislature may have lost several battles, but they have not given up the war. Early in the current legislative session, no fewer than six proposed laws to regulate noncompetition agreements were introduced. All were referred to one committee or another, where each is now under review. Given the past history of legislative failure and the varied approaches sponsors are taking in 2017, it’s hard to say whether a law on noncompetition agreements will ever be reported to the House or Senate floor for an up or down vote. If one is, it will likely contain several of the following limitations, each of which appears in one proposed law or another.

  • A requirement that noncompetition agreements be written between employers and employees only, and that workers receive them at least 10 business days before beginning a job.
  • If a non-compete is signed after employment begins, payment to the employee of something more than continued work.
  • Expiration of agreements that are not reviewed and renewed at least every three or five years.
  • A limit on restrictive periods to anywhere from 3 months to one year, with exceptions, perhaps, for bad actors that could extend restrictive terms to two years.
  • A requirement of formal written notice to employees of an intent to enforce a covenant no later than 10 days after employment ends.
  • Limits on classes of workers against which noncompetition agreements can be enforced.
  • Rules requiring that employees be paid during any noncompetition period.

One proposal is an outlier and would ban noncompetition agreements altogether. It would not, however, restrict employers from enforcing covenants that restrict solicitation of employees or customers. Neither would it limit non-disclosure agreements, forfeiture agreements, or non-competes that are formed in connection with the sale of a business.

Employer Learns Reasonable Accommodation Lesson that’s Instructive to All

The Supreme Judicial Court recently clarified the legal hurdles employers must satisfy when defending claims that they failed to reasonably accommodate their disabled employees. In doing so, it gave one employer a lesson that all will be well-advised to pay attention to.

The case involved a police officer who suffered a head injury. Though he contended he remained capable of performing patrol officer duties without posing an unreasonable risk of injury to himself or others, his department disagreed. It confined him to desk duty, then defended his lawsuit claiming, in effect, that it acted in a good faith belief that the officer could not perform the essential functions of his patrol job. After a superior court judge granted the department summary judgment, the SJC reversed. It held that the issue is not whether an employer in such circumstances acts in good faith — something an employee will have an extremely difficult time disproving — but whether the employee demonstrates he/she can do the relevant job with reasonable accommodation. The department now faces a jury trial on this relatively narrow and perhaps difficult question.

The case illustrates a common problem employers face in handicap cases — a failure to properly understand their duties to reasonably accommodate disabled workers. The fact is that workers must be accommodated whenever reasonably possible, and employers should consider this carefully and thoroughly before denying accommodation requests. Among other things, they should fully review all possible job adjustments and engage in meaningful discussions with their employees. Only when no accommodation is possible or the ones that do exist impose undue hardship should employers deny their employees requests. Such decisions should never be made lightly.

Federal Courts Move Toward Ban Against Sexual Orientation Discrimination

A U.S. Federal Court this week lent more weight to the notion that a federal law that bans employment discrimination applies to employers whose conduct is motivated by their employees’ sexual orientation. By a decisive 8-3 margin, the full court for the 7th Circuit applied Supreme Court precedent on sexual stereotyping to conclude that a gay professor enjoys the protections of Title VII, which proscribes certain forms of employment discrimination as part of the Civil Rights Act of 1964.

Though the ruling does not apply outside the 7th Circuit, it is significant for several reasons. First, it reverses precedent from the same circuit to the effect that sexual orientation is not a protected category under Title VII. Second, the majority reportedly consists of several Republican Party appointees, indicating broad agreement that gays are protected against discrimination under federal law just as they are by the U.S. Constitution. Third, the decision is at odds with other circuit courts, a situation that could lead the U.S. Supreme Court to settle the question. The Court frequently does so when circuits courts are split on significant issues such as the breadth of Title VII. The Equal Employment Opportunity Commission (EEOC), which enforces Title VII, agrees that sexual orientation discrimination is banned under that law.

What the federal courts ultimately decide on sexual orientation discrimination may not be as significant in Massachusetts as in other states. Here, state law already provides protections for gay workers, who can bring claims of job discrimination to the Massachusetts Commission Against Discrimination and state courts.

MCAD Decision: Employer Duty to Reasonably Accommodate Handicapped Employees is Extremely Broad

In the usual case, employers that receive reasonable accommodation requests from their employees try to help. They may adjust a work schedule, grant a leave of absence, or even modify job duties. Too often, however, those same employers fail to grasp the broad scope of their ongoing duties to accommodate. They reach what they perceive as an end point based on their own interpretations of what’s reasonable, then refuse to help workers further. Decisions like that have a high potential to lead them into hot legal waters.

A recent Massachusetts Commission Against Discrimination (MCAD) decision illustrates this point. The employer involved believed it bent over backwards, as it were, to help its employee. It gave her 12 weeks of FMLA leave, 23 weeks of part-time work, job relocation, and adjustments to avoid heavy lifting. Despite the seeming generosity of these accommodations — a fact expressly noted by the MCAD in its decision — the employer was tripped up when it refused to extend part-time work for three additional weeks so its employee could complete physical therapy and, hopefully, return to full-time work. Because the employer could not demonstrate that the continued leave would impose an undue hardship, it violated the Massachusetts anti-discrimination statute. It was ordered to pay damages to its former employee despite the fact that she did not recover sufficiently to work full-time as hoped.

The lesson for employers here is patent. Reasonable accommodation is an ongoing and fungible process that requires regular reassessment of workplace requirements and employee needs. Granting a work adjustment is not alone enough to satisfy the law, which requires an interactive engagement with employees in search of accommodations that are reasonable and appropriate under given circumstances. Employers who fail to understand that process as they seek to themselves decide what’s reasonable and what is not run the risk of lawsuits. In most cases, those suits can be avoided by careful consideration of what the law requires.

Marijuana Use Rights Arise in Employment Situations

With the enactment of two marijuana laws in Massachusetts during the past few years, there’s never been much doubt that use of it would someday become a workplace issue. Now, the Supreme Judicial Court is taking up the issue in connection with medical marijuana use. It seems likely that similar legal questions regarding recreational use of the drug will also soon arise in the wake of the 2016 legalization of marijuana in the Commonwealth.

The current case involves an employee who was fired after she failed her employer’s mandatory drug test. She sued, claiming her rights were violated because she was legally authorized to use marijuana to treat Crohn’s Disease. According to the complaint, her employer told her it did not care about her medical authorization to use marijuana because it followed federal law, under which marijuana remains illegal. After the superior court dismissed her lawsuit, the SJC opted to hear her appeal. It will reportedly consider both whether the company violated Massachusetts anti-discrimination laws and whether employees can sue their employers under the medical marijuana statute.

The case signals problems on the horizon for employers on various fronts. Drug testing has long been a problematic policy that runs headlong into individual rights of privacy. Since testing can potentially uncover drug use that occurs outside work, employers need to respond to positive tests carefully. Now that marijuana is legal for recreational use in Massachusetts, complexities with testing and in other areas of the employer/employee relationship will likely multiply. The wisest course may be for employers to treat marijuana as they commonly do alcohol — by proscribing its use only while employees are working.

U.S. Supreme Court Delays Hearing on Cases that may Decide whether Class Action Rights can be Waived

The U.S. Supreme Court may have accepted a group of cases that will determine whether companies can require their workers to waive class action rights, but that doesn’t mean it’ll be deciding this important question anytime soon. After accepting the cases for review in January, the Court announced that it will not hold oral arguments this term. The cases will be argued in Fall 2017 and decided some time thereafter, perhaps well into 2018.

The significance of this is patent. First, it suggests that the Court may be divided on the class action waiver question and requires a deciding voter. The Court now has only 8 justices in the wake of the Republicans’ 2016 refusal to consider President Obama’s nominee to the bench. They won’t do the same with their own party’s nominee(s), and the Court will surely have 9 members soon. Second, the delay means that uncertainty over class action waivers in employment agreements will remain for some time. This will likely encourage litigation in lower courts over the issue and may cause decisions to be delayed.

It is common today for companies to have their workers sign agreements that include arbitration provisions requiring lawsuits to be pursued individually. This is sometimes impractical due to the small size of a claim, and an employee or independent contractor therefore may seek to bring suit on behalf of others. The Supreme Court has previously found that mandatory arbitration agreements are generally enforceable. It’s now being asked to resolve lower court disagreement about whether federal law allows companies to avoid class action lawsuits through arbitration clauses.