Posts Tagged ‘employment litigation’

A Different Kind of “New Car Smell”

Thursday, December 8th, 2011

A New Baltimore, Michigan woman is suing the car dealership she purchased her 2006 Ford Expedition from for the “human corpse smell” the car started emitting.  She purchased the car from a Ford dealership in March 2010 when the temperature in Michigan was still cold.  The rotting smell became evident as the weather got warmer and the summer months went on. 

The Michigan woman filed a complaint with State Farm over the foul-smelling odor, which she believed to be the result of a dead animal.  The insurance company hired a biohazard cleanup company to search the car and they determined the odor to be of human origin.  The insurance company also discovered that the car had been stolen three times before the woman purchased it, which the dealership failed to disclose.

The woman is suing the Michigan Ford dealership for $25,000 plus court fees.  It seems that the dealership failed to follow the implied covenant of good faith and fair dealing.  Contracts impose this duty on each party as obligation for honesty while conducting a transaction.  This general presumption is applicable when two parties of a contract agree to deal with each other honestly, fairly, and in good faith, so as to not destroy the right of the other party or parties to receive the benefits of the contract (i.e. in this case, a vehicle in good “smelling” condition).  Some can argue that the dealership did not deal in good faith because they failed to disclose the past history of the Ford Expedition prior to the purchase of the vehicle.

The Lawsuits are Coming, Get Ready to Pay

Friday, April 22nd, 2011

  The Cleveland Plain Dealer reported that over 6,800 private-sector lawsuits were filed nationwide in 2010. The DOL (Department of Labor), handled about 32,000 wage and hour complaints in 2010, a jump of 33 percent in just two years.  The Equal Employment Opportunity Commission reports that pay and promotion cases are now the biggest category of employment discrimination filings but discrimination cases are also on the rise.  Broadly defined but complex new regulations on ADA (Americans with Disabilities) and GINA (Genetic Information Non Discrimination Act)  make it likely that even the best intentioned employer may inadvertently discriminate against an employee or applicant.

  Looking forward into the rest of 2011 and then on to  2012 employers should expect more new rules, with the DOL, ICE and IRS allocating more resources towards enforcement of those rules.  The DOL is planning to issue new rules on the Family Medical Leave Act and the Fair Labor Standards Act.  The National Labor Relations Board has proposed a new rule that, if adopted, would require almost all private-sector employer in the US to notify employees about their rights to unionize.

 The DOL has hired 250 new investigators and has launched the “We Can Help“ program that includes a website and bilingual public service ads designed find and correct the incorrect classification of exempt employees and other violations of wage and hour laws.  To “help” employees even more, on November 19, 2010, the U.S. Department of Labor announced a joint initiative with the American Bar Association to help employees find lawyers to enforce their rights under the Fair Labor Standards Act (FLSA) and Family Medical Leave Act (FMLA). Since December 13, 2010, employees who bring FMLA or FLSA complaints that cannot be resolved by the Department of Labor have been given a toll-free telephone number to contact a newly created ABA-approved attorney referral system that will provide information about participating attorneys in their geographic area.  The U.S. Immigration and Customs Enforcement (ICE)  will continue to increase its investigations and raids on employers who hire illegal workers, over 1000 notices were issues in the first 4 months of 2011. Don’t forget the IRS, in 2011 the IRS will conduct over 6,000 payroll tax audits focusing on companies misclassifying workers as independent contractors, fringe benefits and executive/deferred compensation, as part of a new federal and state focus on the miscallification of workers as independent contractors. 

Complex regulations, increased enforcement and easy access to plaintiff’s attorney are creating the “perfect storm” for employment lawsuits.  Are your payroll and employment practices ready? If you don’t have EPL (Employment Practices Liability) coverage call your broker now.  Consider an independent audit of your HR practices. Use automation (software) to ensure consistent process and good documentation. Plus keep your attorney on speed dial, you probably will be calling  them more than ever.

Join the conversation:  Are you worried about employment lawsuits or audits in 2011?

How Many Lawsuits Does It Take….

Wednesday, April 6th, 2011
While “How many lawsuits does it take” does sounds like the beginning of an HR joke, AutoZone isn’t laughing.  The company has faced multiple employment lawsuits over the past several years and lost all of them, resulting in some very costly verdicts.  Most recently, on March 28th 2011,  the Ninth Circuit upheld a verdict for the EEOC  against AutoZone with the damages at $65,000.  The suit alleged that an AutoZone store in Arizona had created a sexually hostile workplace.   In September 2010 the EEOC filed a lawsuit in Massachuset U.S. District Court Massachusetts, alleging that AutoZone created a hostile work based on religious discrimination.  The Seventh Circuit upheld a verdict against AutoZone for wrongful termination in violation of the ADA in Wisconsin in December 2010.   The company is also facing a class action lawsuit for wage and hour violations in Oregon, California and Arizona. 
One thing the numerous lawsuit highlight is how hard it is to ensure compliance across a wide spread organization even with the best of intentions.   According to the AutoZone website, AutoZone is the ” nation’s leading retailer and a leading distributor of automotive replacement parts and accessories with more than 4,600 stores in the US, Puerto Rico, and Mexico.”  No doubt AutoZone has strict written policies against harrassment, hostile work enviroments and discrimination.  Certainly they provide training to managers and employees on what is appropriate behavior.  The founder of AutoZone has a long standing personal committment to equal rights and is patron of the of the National Civil Rights Museum, where the current CEO is serves on the board as Treasurer.  Yet a bad or misinformed manager at just one of those 4,600 locations can result in a $65,00 verdict.   
Join the conversation:  Is it easier to ensure compliance at a large corporate with a high level of HR staff and resources or at a smaller company?

Supreme Court now hearing cases that will impact employer and employee relations and employment litigation

Wednesday, October 13th, 2010

The Supreme Court kicked off its 2010-2011 term last week and has already heard one important employment case and is planning on hearing a number of cases that could have major impact on employer and employee relationships and employment litigation. First up was NASA v. Nelson (no “I dream of Jeannie jokes” please), which considers if the National Aeronautics and Space Administration violated the constitutional right to privacy when it conducted background investigations of federal contractors. Of special issue was a question about the use of illegal drugs. Although the case is specific to federal contractors, private employers could be held to a similar standard based on the court’s decision. There is also a pair of retaliation cases before the court.  In Thompson v. North American Stainless LP the court reviews how broadly the definition of retaliation is and in Kasten v. Saint-Gobain Performance Plastics Corp. the court will review a 7th Circuit Court ruling that the anti-retaliation provision of the Fair Labor Standards Act does not extend to an employee who complained orally to his employer about the company’s timekeeping practices. Both  cases has the ability to impact pending retaliation cases in the lower courts and increase the number of retaliation claims filed. Other cases to watch are:

Staub v. Proctor Hospital considers the question of whether an employer can be held liable for the discriminatory acts of supervisors who do not make final employment decision but influences the decision maker.

CIGNA v. Amara determines whether plaintiffs are required to show “likely harm” rather than demonstrable injury. In addition, the court will review if a participant in an Employee Retirement Income Security Act-governed plan (ERISA) must make to recover benefits based on an inconsistency between the summary plan description and the plan itself. Employers might want to start double checking plan documents now.

The state of Arizona’s ongoing battle against illegal immigration takes a new twist with the Supreme Court agreeing to review a lower court decision that upheld an Arizona state law providing for the revocation of the business licenses of employers that knowingly hire illegal immigrants. The law also requires Arizona employers to use E-Verify (Chamber of Commerce of the U.S. of Am. v. Candelaria). Given the number of states that already require the use of E-Verify in certain circumstances it may be time to add E-Verify to your hiring process.

The court has also announced that it will decide whether the Treasury Department can exclude all medical residents from an exemption from Social Security taxes  (FICA) provided to university students (Mayo Foundation for Medical Education and Research v. United States of America).

Advocates and detractors of arbitration are very interested in AT&T Mobility v. Concepcion, where the court will examine whether the Federal Arbitration Act pre-empts California law.

Look for updates as the cases are heard and judgement rendered in the KPA newsletter and on this blog.

Exempt or Non-Exempt, Don’t Teeter-Totter On the Edge of Compliance

Wednesday, September 29th, 2010

Exempt or non-exempt, or maybe independent contractor- proper classification of employees has many employers teetering on the edge of compliance. With wage and hour law violations already one of the most common causes of employment litigation and regulatory audits the U.S Department of Labor, along with multiple states, has announced new legislation and enforcement guidelines.  It is more important than ever that employers ensure that all employees are correctly classified and paid accurately according to the classification.

The Wage and Hour Division (WHD) of the U.S. Department of Labor has proposed  regulations that require employers notify workers of their FLSA rights, and to provide them with information regarding hours worked and methods of wage computation. In addition to the proposed WHD regulations Congress is considering The Fair Playing Field Act of 2010 and The Employee Misclassification Prevention Act of 2010. These acts are expected to pass in 2010 or early 2011.

Beyond the federal regulations, New York, Alaska, Connecticut, Delaware, Hawaii, Idaho and Illinois require that all new hires be provided with written notice of: their pay rate(s); their overtime pay rate (if they qualify for overtime pay); and their regular payday. New York also requires that every employer that has employees classified as exempt must “ perform a classification analysis, disclose that analysis to the worker, and retain that analysis to give to the WHD enforcement personnel who might request it.”

For additional information on the Fair Labor Standards Act, employee classification and wage payment download the free webinars “Essential of Wage and Hour Law”, Advanced Wage and Hour Law” or “California Wage and Hour Law for Dealerships at   HotlinkHR clients may contact the HR Advice Line for additional assistance in employee classification.

Get Sued- The 5 Most Common Mistakes Employers Make

Saturday, September 18th, 2010

Do you want to be sued?  What a silly question, what employer wants to be sued or audited- yet too often employers become involved in employment litigation simply because they failed to follow the most basic HR practices.  In conversations with both plaintiff and defendant employment attorneys and discussions with KPA’s partner attorneys, I have found the following 5 mistakes seem to be the most common reasons for employment litigation.

1) Asking unlawful questions during the interview

2) Responding inappropriately to requests for leave (ADA, FMLA, Work Comp)

3)  Not maintaining up to date policies and handbooks and ensuring all employees are aware of and understand the policies.

4) Poor practices in disciplining employees- inconsistent disciplinary practices, inadequate documentation and incomplete follow up.

5)  Unsound termination decisions-employers have the right to terminate employees but not based on discriminatory criteria.

If you are concerned that your HR practices are not quite up to par in any of these areas join KPA on September 23, 2010 for a free webinar “Your Legal Questions Answered”. In this webinar you will have the opportunity to ask national recognized employment attorney, Jim Hendricks, your most pressing HR questions. Hear what HR legal challenges other dealers are facing. You will learn the answers to these questions and more…

  • Do salaried employees get overtime pay?
  • Can I fire someone when I have never given them a disciplinary warning?
  • Do all employees need a job description?
  • Should employees be able to see the contents of their personnel file?
  • What is reasonable suspicion for a substance abuse test?

You may submit questions in advance using the form on the registration page. You can also ask questions during the webinar. We will not disclose any confidential information, including your name or company information during the Q&A.

Register Today!