New York Employment Lawyer Blog

EEOC Wants to Protect Minority Applicants

Tue, 15 May 2012 10:15:32 -0500

The U.S. Equal Employment Opportunity Commission (EEOC) recently visited the issue of an employer’s use of criminal background checks to refuse employment to job applicants. It seems that the use of criminal background checks is widespread, and the EEOC expressed concern that this hurts the employment prospects of applicants who have criminal records from trying to make an honest living. In addition to inquiring about past criminal arrests or convictions, some ninety-two percent of employers make use of criminal background checks prior to hiring.

The EEOC says that the use of criminal activity checks to dig into the past of potential employees is too widespread, and that this has a major impact on the hiring opportunities of minority employees. In fact, the EEOC is proposing that prospective employers do not even inquire about prior convictions unless they can state how and why that would make the individual unemployable. Furthermore, it is the EEOC’s position that an arrest without a conviction is no reason to deny employment to an applicant, and those who have had a conviction ought to be allowed to explain the circumstances prior to denying employment.

The bottom line is that the EEOC appears convinced that minorities are suffering most from this background screening tactic. The agency believes that issuing new guidelines sends a clear message to employers that they can’t refuse to hire someone if a prior arrest has no direct bearing on their job.

Unfortunately, the impact of the EEOC guidelines is a forced hiring of minorities with records because that, in and of itself, is not a good enough reason to decline employment. Most employers would prefer to have employees with no criminal records because of theft issues, peace of mind, the safety of themselves and other workers.

Have You Been Discriminated Against on the Job Because of a Disability?

Mon, 14 May 2012 14:07:24 -0500

If you have been discriminated against or retaliated against on the job because you suffer from some disability, you should be aware that you are protected against such unlawful conduct by the Americans with Disabilities Act of 1990 (ADA). The ADA is a federal law that makes it unlawful for any employer to fire, fail to promote, or not hire an employee because they have a physical or mental disability. By definition, a disability under the ADA is some physical disability or mental impairment that prevents an individual from being able to perform regular daily activities such as walking, talking, hearing, seeing and working without encountering considerable problems. A medical diagnosis by a physician is critical in ADA cases. Even more important, however, is how the diagnosis affects the particular individual, and what the prognosis indicates about the extent and duration of their disability. As would be expected, there are no two cases that are the same and any determination of disability discrimination under the ADA relies on the facts of your particular case.

The ADA requires employers to make reasonable accommodations for employees who suffer from a disability. A determination of what is reasonable depends on the circumstances of each individual case, including the ability of the employer to pay for the accommodations or adopt different procedures. For example, once an employee makes the request for a reasonable accommodation the employer will then have to make a decision, based upon medical evidence, as to whether it is something that it can do. The employee’s request for an accommodation must be related to the performance of their duties at work. This could be as easy as installing a wheelchair ramp to enable someone to access their place of work, or as difficult as changing established company policy. Because of this, any requests by an employee should be made in good faith so as to not cause the employer to suffer any undue hardship in the operation of their business, whether it is financial or otherwise. Again, the reasonableness of the request, or the employer’s denial of it, will be judged by the circumstances of each case.

Employers are required under the law to make reasonable accommodations for employees who suffer from a disability. The determination of what is reasonable depends on the circumstances of each individual case, including the ability of the employer to pay for the accommodations or adopt different procedures. For example, once an employee makes the request for a reasonable accommodation the employer will then have to make a decision, based upon medical evidence, as to whether it is something that it can do. It is always necessary that the request for an accommodation is related to the performance of the duties of employment. This could be as easy as installing a wheelchair ramp to access the place of employment or as difficult as changing established company policy. Because of this, any requests by an employee should be made in good faith so as to not cause the employer to suffer any undue hardship in the continuing operation of the business, whether it is financial or otherwise. Again, the reasonableness of the request or the denial of it by the employer will be judged by the circumstances of each case.

Sexual Harassment in the New York Workplace is Alive and Well

Fri, 11 May 2012 06:20:20 -0500

According to the statistics issued last by the U.S. Equal Employment Opportunity Commission (EEOC), the number of reported sexual harassment claims continually have fallen to 11,717 in fiscal year 2010, down from 15,889 in 1997. Many factors are said to be the reason for these reduced statistics, including the rising unemployment rates over the last three years. Needless to say, workers are more tolerant of sexual harassment in the workplace during times of double-digit unemployment, regardless of gender. Not only do workers fear retaliation for making a complaint, they are unsure of their ability to find another job. Other considerations are that today’s younger generation worker is far less tolerant of inappropriate sexual harassment than those in previous years, thus serving as a deterrent to such behavior. Unfortunately, notwithstanding the reduction in numbers, sexual harassment is alive and well.

Sexual harassment can manifest itself in many ways but its essence is always the same: some form of sexual conduct that causes an intimidating, hostile or offensive work environment. The age-old stereotype of an overbearing male superior making unwanted advances on a female subordinate is no longer the typical sexual harassment case. Sexual harassment can be between persons of the same sex or it can be between co-workers, rather than between a worker and their superior.

With advances in technology, the methods of sexual harassment have multiplied through the use of emails, instant messaging, text messaging, Facebook, Skype, iPhones, iPads, BlackBerry devices as well as many other smartphones and tech tools. Sexual harassment is now literally only a fingertip away from the transmission of a dirty joke, pornography, video clips or an unwanted sexual invitation or advance. Sure, there are still the unwanted physical touches and innuendos of the past, but technology has taken over sexual harassment much like it has everything else in our society. Seldom does there a day go by without reading or hearing about an individual, a celebrity, an athlete or a politician being caught sending suggestive or explicit sexual messages to a worker, a girlfriend or an aide. The same offensive, sexually explicit social media transmissions that end marriages and political careers goes on today in the high tech workplace.

Muslims Are Discrimination Targets - but Big Verdict Could Send Message

Wed, 09 May 2012 22:06:17 -0500

Employment discrimination against Muslims has spiked since 9/11. It is still going strong as American workers wage their own misguided holy war at work. A county in Pennsylvania recently reported a sharp rise in anti-Muslim sentiment and reported 12 discrimination filings by Muslims in the past year alone. See The Employment Discrimination Report. Muslims only make up about 2% of the workforce, but 25% of all religious discrimination claims in 2009 were filed by Muslims. But a recent $5M verdict against AT&T shows that some people have had enough and want to stop the abuse against Muslims.

Over the years, discriminatory conduct against Muslims have included calling them terrorists, comments about praying at work, asking about al-Qaeda membership, preventing women from wearing a head scarf or hijab, ordering men to shave beards and various racial slurs.

The case against AT&T was filed by Susan Bashir who converted to Islam in 2005. Soon after her conversion, workers turned against her and created hostile work environment. Co-workers referred to her hijab as "that thing on her head," called her a terrorist, a towel head, and asked if she was going to blow up the office, reports the Washington Post.

Ms. Bashir worked for AT&T for 10 years in Kansas as an optics network builder earning $70,000 a year. She endured years of abuse and asked the company to help her but was ignored. She filed a complaint with the EEOC, but that only ramped up the hostility and she was then fired.

The jury awarded her $5M in punitive damages and $120,000 in lost wages. But Ms. Bashir said the discrimination was hard on her and her family and she is now going through a divorce and has since moved to Alaska with her daughter.

AT&T had been hit with a prior religious discrimination verdict of $1.3M for firing two employees who attended a Jehovah's Witness convention.

What is causing the anti-Muslim sentiment? A poll conducted in York County Pennsylvania found that some people felt that the recent Republican presidential primary had stoked anti-Muslim feelings. Others said it was based on the 9/11 attacks. As in all cases of discrimination, the conduct amounts to people acting on false assumptions or misplaced fear. Islam is the second largest religion in the world with over 1.5 billion followers, but the religion is rooted in non-violence. It is a peaceful religion that has been misjudged by the conduct of a few extremists and exploited by soulless American politicians.

The AT&T verdict, hopefully, is the beginning of a wider recognition that Muslim workers had been misunderstood. Discrimination against Muslim workers should not be tolerated and if you have been subject to discrimination based on your religious beliefs, please give us a call.

Do Employment Lawyers Charge Too Much?

Wed, 09 May 2012 13:55:45 -0500

Employment lawyers can generally be put into two groups, those who represent companies and those who represent employees. This post is about the latter, firms like mine that represent employees.

The public implosion of Dewey & LeBoeuf makes it clear to me that the old way of doing business is over. Dewey & LeBoeuf is just one of many large legacy firms that have collapsed recently. Why have they collapsed? The short answer is simple - lawyers charge too much. These big firms that collapsed refused to accept the reality that clients no longer are willing to pay those big fees and the firms failed to lower their operating costs and they eventually ran out of money.

Those large law firms, from the little I know about them, were based on the hourly fee model. They had hundreds of lawyers billing at high hourly rates and this generated a lot of money, but clients pushed back and demanded efficiency and lower rates. This resulted in less revenue for the firms.

Employment law firms that represent employees, on the other hand, are often based on a different economic model. Most employees do not need legal help until they are fired and often in economic distress. Law firms that represent employees typically cannot base their operation on hourly fees, instead a good part of their practice is based on the contingent fee model where they get a percentage of the case proceeds. The traditional contingency rate is one-third and sometimes the rate is 40% or more.

Is the standard one-third contingency fee unreasonably high? Lets see how that operates in a typical employment case. Assume Mr. Jones earned $100,000 a year and was fired based on his age and was out of work for two years before obtaining comparable employment. In this case, Mr. Jones' economic damages would be approximately $200,000 (more if you add interest, benefits etc. but lets keep it simple). Mr. Jones decides to settle his case for $100,000 before filing suit in order to avoid the risks and costs associated with litigation. Lets how much of that $100,000 will end up in Mr. Jones' pocket if he had a one-third contingent fee arrangement with a law firm.

Gross Settlement Amount: $100,000
Legal Fee (1/3 contingent): $33,300
Net Recovery: $66,700
Estimated Tax on Net (40%): $26,680
Final After Tax Net Recovery: $40,020

After taxes and legal fees, Mr. Jones is left with $40,020 out of his $100,000 settlement. Does this sound reasonable? The law firm made almost as much as Mr. Jones. Also, the law firm in this example did not do much. No suit was filed. At a rate of $500 an hour, the firm would need to bill 66.6 hours to generate a bill for $33,300. But who knows how much effort was expended to settle the case. Each case is different, some cases settle easily and others take enormous effort.

At my firm, sometimes we spend more than 66 hours on cases like this, but sometimes we get lucky and settle one quickly. When looking at contingency fees from the law firm's perspective, you really need to look at a time period and average them to get a true sense of things. Looking at just one case does not tell the whole story because each case is different. But the law firm's interests do not matter. What matters are the client's. Clients deserve access to excellent legal services are reasonable rates.

Was the one-third contingent fee in Mr. Jones' case fair to Mr. Jones? Did the lawyers earn too much in that case? Should plaintiffs employment law firms focus on reducing their operating costs so they can offer lower rates to their clients? Or are client's ok with the standard one-third contingent fee?

EEOC Ruling Extends Sexual Discrimination Protection to Transgender Employees

Wed, 09 May 2012 08:01:51 -0500

In early 2011, Mia Macy, 39, was promised a job with the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives at the crime lab in Walnut Creek, California. This was when Ms. Macy was a male police detective who had served in the U.S. military. Thereafter, she declared to the bureau that she was going to live the rest of her life as a female, rather than being a male. Shortly after this disclosure was made to the bureau, Ms. Macy was advised that the position that she was promised was no longer available. Today, Mia Macy is married to a former military veteran who is also a female.

After filing a complaint with the bureau, she was told only that issues regarding gender identity were covered by U.S. Justice Department rules and internal procedures, as opposed to sexual discrimination, which is under the jurisdiction of the U.S. Equal Employment Opportunity (EEOC). Apparently, the EEOC differed in its opinion of who had jurisdiction over the matter. On April 24, 2012 the EEOC ruled that “intentional discrimination against an individual because that person is a transgender” is illegal and prohibited under Title VII of the Civil Rights Act of 1964. This is a landmark decision for transgendered employees across the country.

When people talk about sexual discrimination they typically are referring to situations where an individual is treated differently because in the workplace because they are male or female. Whether it is not being hired or promoted, not receiving the same pay for the same work, discrimination in benefits or job title differences, individuals are protected from discrimination because of sex, age, race, religion, disability, national origin or sexual orientation. Likewise, it is unlawful for any employer to discriminate against an employee because of their sexual orientation. Whether the individual is homosexual, heterosexual, bisexual or asexual, employers are prohibited from treating them differently in the workplace.

Are You Being Paid for All of Your Work?

Tue, 08 May 2012 09:15:06 -0500

As an hourly or non-exempt employee, you need to be paid for all of the time you spend working. This includes anything you do that is required by your employer, even if it is not during regular work hours or at the office. Here are some common examples of work that is often overlooked and not paid to employees.

1. "Off-the-Clock" Work

"Off-the-Clock" time is the time a person spends doing work that is not within their normal shift or schedule. Many shifts or jobs with set schedules require workers to do some kind of preparation before starting the shift. For example, call center employees are usually required to be in place ready to take calls at the start of their shift. But before they can start the shift, they have to boot up a system or check on pending issues from prior shifts. In order to do this preparation, the workers are required to arrive 30 or 15 minutes early so they are ready to start when the shift or schedule begins. This extra 30 or 15 minutes of prep time must be paid even though it is outside of the shift or schedule. If you are required to do the work, you must be paid for it.

Many companies try to get free work from employees by requiring them to engage in various tasks that are "off-the-clock" or outside of the shift. Don't let this happen to you. If you work 9 hours a day, then you must be paid for it even if your schedule or shift is only 8 hours.

We are currently investigating several "off-the-clock" cases at large call centers. There are two possible wage violations at issue. The first is that the call center workers are required to start at a set time but the systems they use require about 15 minutes of time to boot up and get ready and the employees are not paid for this 15 minutes of prep time. The second violation occurs after the shift ends. The companies require employees to resolve all pending calls before leaving. If they are on a call they must finish the call even if their shift has ended - so many employees wind up working well past the end of the shift to close out pending calls. So between the prep time at the beginning of the shift and closing out calls at the end, employees often work an extra hour a day but they are not paid for those extra hours. This is a classic example of "off-the-clock" time.

2. Training Programs and Seminars

If employees are required to attend training programs or seminars that are job related, they must be paid for that time. But if the program is voluntary and not directly related to the job, then they are not entitled to be paid for the time.

3. Work Performed While Commuting

Employees are normally not entitled to be paid for time spent traveling to and from work.
But, if an employee is doing work while commuting they are entitled to be paid for that time. For example, if an employee is asked to deliver documents on their way home, then that time must be paid. Or if the employee is working while commuting by making work related phone calls or handling work email on a smart phone, that time must be paid just like they were sitting in their office. The general rule is that employees must be paid for all work they do - no matter where they do it or when they do it.

If you have questions about unpaid time, please give us a call at 866-571-5010. You can speak to an employment lawyer about your case for no charge. We handle most all wage cases on a contingent fee basis which means that we don't get paid until you do.

What Service Employees Need to Know

Mon, 07 May 2012 08:57:20 -0500

Thousands of young people come to New York each year to seek their fortune on Wall Street, in the theater, work in marketing, or in the fashion industry. Often times, many of these people end up taking a “temp to hire” job, or working in the food and beverage business until their dream job comes along. These are the service workers of New York City.

Service employees are those employees that we all like to reward for a job well done when we go out to a restaurant for dinner or a drink after a hard day at work. Thousands of waiters, waitresses, bartenders and service people of all descriptions depend largely upon the gratuities left for making us feel special and providing excellent service. With rare exceptions, these employees receive a fairly nominal salary or hourly rate, with the idea that their real earnings will come from customers who appreciate their service and attention. There is also a large number of other service employees, other than waiters and waitresses, that rely heavily on tips and gratuities, including barbers, hair stylists, housekeepers, cab drivers, porters and bellhops, to name a few.

The golden rule of tips and gratuities is that the employee who earned them is entitled to them, rather than their employer. The tips and gratuities in restaurants and bars are handled in several different ways. Some places have an established fee for large functions and a gratuity is often included for parties over a certain size. Some have an arrangement where all of the tips earned are pooled together and distributed among the employees on an equal basis or a method decided by the workers. Some allow each employee to keep all of the tips that they earn on any given day or evening.

Regardless of the particular arrangement that any employer has, the other golden rule of tips and gratuities is that an employer is not entitled to any portion of the tip money earned by its service workers.

Second Circuit Reverses Dismissal of Same Sex Harassment Case

Fri, 04 May 2012 13:08:41 -0500

Today, the Court of Appels for the Second Circuit reversed a finding of summary judgment dismissing a claim of same sex harassment under Title VII. The case represents a much needed victory for employees and it is significant because it establishes that summary judgment is often inappropriate in sexual harassment and other employment cases that involve conflicting interpretations of conduct, especially when intent is at issue. The case is Redd v. NY State Division of Parole decided today, May 4, 2012. Download Case

Fedie R. Redd, a woman, worked in a Parole Division office in Queens in 2005. Sarah Washington was an Area Supervisor working out of the same office in Queens. The thrust of Redd's claim is that Ms. Washington made numerous homosexual advances to her and touched her breasts on three different occasions. Ms. Washington denied the charges and said she "did not touch PO Redd in any inappropriate manner" and did not sexually harass her.

The defendant moved for summary judgment on the ground that the alleged touchings, at best, were isolated accidental events and were not motivated by Redd's sex. But Redd disagreed and argued that the supervisor touched her breasts in connection with repeated homosexual advances and that the touchings were intentional "feels" causing severe anxiety and stress.

The lower court characterized the allegations as "relatively minor, incidental physical contact" and may been "purely accidental." Moreover, the court held that the touchings were not "physically threatening or humiliating" and were "episodic, rather than continuous and concerted." In dismissing the case on summary judgment, the lower court found that "no reasonable jury could find Washington's conduct to be so severe or pervasive as to be objectively hostie or abusive."

Redd appealed because, in her view, the district court was dead wrong in finding that no reasonable jury woud find in her favor. There were two versions - the defendant's story and Redd's story and if the jury believed Redd, they could easily find that she was sexually harassed at work by a supervisor in violation of Title VII.

The Second Circuit issued a 29 page opinion that outlines the basic tenants of sexual harassment. The general rule in a Title VII case is that the alleged conduct must be objectively and subjectively severe and pervasive and create an abusive working environment. The plaintiff in such a case has to prove that the conduct was motivated by their sex. There is no bright line rule as to how much is enough. Most courts have found that one incident alone is not enough unless that one event is "sufficiently severe." Often a pattern of conduct is required.

The court noted that same sex harassment cases require "careful consideration of the social context in which the behavior occurs and is experienced by the target." The court cited the USSC holding in Oncale that explained the difference between a football coach smacking a player on the buttocks versus the same coach smacking his secretary on his/her buttocks. The point is that the same conduct can be benign in one case and abusive in another.

The court in Redd pointed out that in same sex harassment cases, and as is often the case in all sex harassment cases, "fact questions such as state of mind or intent are at issue" and summary judgment should be used sparingly. Likewise, the court explained that the "question of whether a work environment is sufficiently hostile to violate Title VII is one of fact" and interpretations of ambiguous conduct is an issue for the jury, not the court.

The court held that the district court inserted its own judgment in finding that no jury could find that the alleged conduct could amount to a violation of Title VII. The Second Circuit reasoned that a jury could conclude that the facts did amount to sexual harassement under Title VII. Moreover, the lower committed more error by failing to view the record in the light most favorable to Redd as required in summary judgment motions. The lower court ruling was reversed and Ms. Redd will now have her chance to have a jury decide her case rather than a federal judge.

Whistleblowers Can Recover Huge Awards

Fri, 04 May 2012 08:51:55 -0500

With the dot-com bubble, the beginning of the longest bear market that the stock markets had seen since The Great Depression and massive accounting scandals that ruined Arthur Andersen, Enron, Tyco, WorldCom and other companies, the public and investors lost all trust and confidence in Wall Street firms. Out of these 'cooking the books' debacles came the Sarbanes-Oxley Act of 2002, also known as the Corporate and Criminal Fraud Accountability Act.

Sarbanes-Oxley was passed into law to protect employees at public companies from retaliation if they provided their employer, the U.S. Securities Exchange Commission (SEC) or Congress information about corporate fraud or the violation of federal securities law violations at work. Because of this protection afforded to employees who provided facts detailing wrongful acts of employers, the act was tagged to be the “Whistleblower Act.” Significantly, an employee who successfully proved that they were fired for exposing the company's wrongdoing could get their job back, lost wages, large punitive damages and interest, among other things.

Then in 2008, another stock market disaster occurred when the housing bubble and predatory lending by Wall Street financial institutions led to bailouts of Fannie Mae, Freddie Mac and the collapse of Lehman Brothers. This led to passage of the long debated Dodd-Frank Wall Street Reform and Consumer Protection Act, another federal law that added new protection on top of that already afforded whistleblowers.

Dodd-Frank provided incentives for those who gave the SEC information leading to a successful enforcement action which results in the recovery of more than $1 million in monetary sanctions. Dodd-Frank became effective on August 12, 2011. Despite being a hotly debated issue, a whistleblower is not required to report any alleged wrongdoings first through his employer’s internal compliance program.

Here are a few key points summarizing some of Dodd-Frank's provisions:

The whistleblower must be an individual, thereby disqualifying corporations and legal entities from becoming whistleblowers;
The information provided to the SEC must be given voluntarily;
It must be original; and
It must result in a successful SEC enforcement action resulting in monetary sanctions of more than $1 million.

If the whistleblower meets all of these requirements, he or she can be entitled to can be entitled to as much as 10% to 30% of the monetary sanctions recovered by the SEC, which is solely at the discretion of the agency. Factors that the SEC weighs in making that determination include the significance of the information provided, the assistance provided by the whistleblower, law enforcement interest in deterring federal securities violations and participation with internal compliance programs. Protection of the whistleblower is still of utmost importance and retaliation is prohibited against any individual who provides information when they have a reasonable belief that a securities law has occurred, is about to occur or is continuing.

Wrongful Termination and You

Thu, 03 May 2012 10:23:50 -0500

Being "let go" by an employer is never any fun, regardless of whether the termination of the employer-employee relationship was "downsizing", "our needs have changed", or flat just being "fired" for whatever reason. The fact is that it hurts and it is embarrassing, not to mention the stress and worry about finding another job in today's marketplace with double-digit unemployment.

Unfortunately, as much as you might want to seek revenge by filing a claim or cause of action against your former employer for wrongful termination, you may not have a leg to stand on depending on the totality of the circumstances of your particular situation. The reason for this is that the employer-employee relationship is one of employment at will. Employment at will essentially means that you can leave your employment at any time without notice for any reason and have no obligation to your employer.

The reverse is also true, that is your employer can let you go or fire you for any reason and without notice. Often employees feel that they have been wronged simply because they have been loyal to the company for such a long time that they are entitled to more than just a goodbye. Unfortunately, unless there is some oral, or even better a written contract between the employer and the employee, the employer-employee relationship is one at will.

Employees have the right to be protected from the breach of any oral or written contractual agreement between the employer and employee, as well as protection against any illegal acts by the employer. For example, if the termination was not in accordance with the outlined procedures in the employment contract; if there was some form of discrimination involved regarding sex, disability, race, religion, sexual orientation etc.; if the termination failed to follow HR procedures or if their was some form of retaliation for reporting other acts of discrimination or violations of federal securities laws, there could be a claim or cause of action for wrongful termination. Every case is different and each is determined on the specific details and circumstances of the termination of the employer-employee relationship.

Are You Misclassified as a Worker?

Wed, 02 May 2012 12:55:27 -0500

With the cost of employee benefits spiraling, employers are continuously leaning more ways to reduce their costs of doing business in a highly competitive market place. Often employers misclassify workers as independent contractors instead of employees to save money. Not only can this save substantial sums of money in payroll taxes, but it can also relieve employers from the responsibility of providing various other benefits to which employees are entitled, such as overtime pay, workers compensation and healthcare benefits.

To find out whether a worker is an employee or independent contractor, there are many factors that need to be examined. Generally speaking, this boils down to the extent of supervision that is required for the worker to perform his or her duties and the nature and extent of the direction and control exerted over him or her on a daily basis in the performance of those duties.

Some of the many aspects of an employer-employee relationship are as follows. (1) Employers decide when, where and how the work is done. (2) Employers decide what the pay is going to be, establish the hours of the workday, pay overtime, provide direct supervision of the tasks and supply all of the tools and supplies necessary to do the job. (3) Employers can require exclusivity, review and evaluate a worker’s performance and have the right to hire and fire.

Independent contractors on the other hand have freedom to perform the job when, where and how they want to without the direct supervision and direct control of another in the performance of their duties. Some of the aspects of independent contractors are that they set their own work schedule, buy their own tools and supplies to complete their tasks, buy their own insurance, pay for their own advertising and all other costs of doing business, in addition to determining their rate of pay. In today’s workplace, it is often difficult to tell who is an employee and who is an independent contractor with so many people performing business functions from their homes, out of satellite offices and on hand held devices such as iPhones, iPads, BlackBerry smartphones, and other high tech tools.

The Wal-Mart Overtime Pay Settlement

Wed, 02 May 2012 12:07:15 -0500

Do you know what a $5 million oversight looks like? The retail giant recently agreed to pay employees $4.8 million in back wages and damages after the Department of Labor found that the store failed to pay overtime to over 4,500 employees between 2004 and 2007. Wal-Mart will also pay $463,000 in civil penalties.

How does a company overlook so many employees? A common culprit in these cases: misclassifying employees as exempt. A serious wage and hour violation, Wal-Mart’s violation of the FLSA’s overtime laws were not the company’s first offense. The misclassified workers in the current settlement will see awards ranging from $30 to $10,800 according to the Wall Street Journal.

Overtime violations are an all too common issue. The basic rule is this: Federal law requires that employees who are non-exempt receive overtime compensation for any time worked over eight hours in a given day and 40 hours in a work week. The definition of a work week is fluid to take into account jobs that veer from the traditional Monday-Friday , 9-5 arrangement. As long as the start of the week and end are applied consistently, the work week may start at anytime. Wal Mart is a perfect example of having employees with different work weeks. Open 7 days a week, many employees may work every weekend and have a week day off.

One final note about overtime – employees may not waive their right to it. If an employee is non-exempt, they need to be paid the correct wages for their work, every single time. The recent Wal-Mart settlement certainly sheds light on overtime misclassification problems and if you feel like you may be similarly misclassified, do not hesitate to give us a call for a free consultation.

Tax Savings Tip for Severance Payments

Tue, 01 May 2012 12:54:54 -0500

We negotiate a lot of severance packages for our clients. The main goal in negotiating a severance agreement is to increase the value of the total package, but another goal is structuring the deal to reduce the tax consequences. Any cash payments made are treated as ordinary income and taxed accordingly. So avoiding cash payments to the employee is often a good idea as this will reduce the tax burden.

One way to avoid a cash payment is to have the employer make direct payments to a departing employee's COBRA plan. Any direct payments made to the COBRA plan are not subject to income tax pursuant to IRC sec. 106 (gross income of an employee does not include employer-provided coverage under an accident or health plan).

For example, if an employer is willing to pay a departing employee $100,000 in severance payments, the employee will have to pay tax on that $100,000. Rather than receiving the $100,000 in cash, the employee should ask the company to use part of those funds to pay his or her COBRA payments for the full COBRA period. Any payments that the company makes directly to the COBRA plan are not taxable so this will result in a substantial reduction in taxable income to the employee (the amount depends of course on the employees monthly COBRA payments). But this is a win for the employee and it does not impose any additional cost upon the employer.

If you have any questions about a severance package that you are evaluating, feel free to give us a call.

The Tip Credit - An Employee's Right to Minium Wage

Mon, 30 Apr 2012 19:45:13 -0500

Wage and hour laws are intended to protect employees. Covering everything from minimum wage requirements to overtime violations, wage and hour laws are necessarily expansive.

When it comes to tipped employees, there are some interesting demands to ensure that these employees receive at least minimum wage on a bad day.

To begin, a tipped employee is any employee who regularly receives more than $30 in tips on a monthly basis. Bartenders, waiters and valets are some common examples of this class. Because of the potentially high amount of compensation outside of a base wage, employers can use this income against their minimum wage obligation.

Known as a tip credit, the Federal Labor Standards Act provides for a simple math equation for determining what the employer must pay based on the current federal minimum wage.

But what happens when the employee doesn’t make enough in tips to make up the difference? The answer is simple—the employer must make up the difference.

In those situations in which an employee’s sole income is tips, the employer must pay the entire minimum wage when there is a work day without tips. Employers are also prohibited from calculating the tip credit on anything other than tips actually received. For instance, an employer cannot average a week of tips to escape financial obligations for a day when tips were below the federal minimum wage.

One of the best pieces of advice I can give tipped employees is to keep good track of your tips to ensure that on a bad day you are at least making minimum wage. At no point can a day’s pay be below minimum wage. If it is, give us a call for a free consultation.