A Reminder To Employers About Punitive Damages


The standard a plaintiff must meet in order to secure an award of punitive damages is high. Due to that, punitive damages are difficult to obtain. However, when they are awarded, there is a chance they could well exceed the amount of compensatory or nominal damages awarded to a plaintiff as recently confirmed in a Title VII case out of the 9th Circuit, Arizona v. Asarco, LLC, 733 F.3d 882 (9th Cir, 2013). In that case, the jury awarded no compensatory damages and $1 in nominal damages to the plaintiff. The jury also awarded over $800,000 in punitive damages. The employer appealed arguing that the punitive damages award was unconstitutionally excessive. The Court found that the original award was unconstitutional as it exceeded the applicable cap of $300,000 but declined to definitively impose a number on the punitive damages award it thought was reasonable. Rather, it suggested $125,000 could be reasonable based on the highest awarded ratios of compensatory to punitive damages but directed that the matter of punitive damages should be re-tried unless the plaintiff agreed to accept a remittur to $125,000.

This case is a good example of the possible impact of punitive damages. I also note that punitive damages are generally not covered by insurance in Pennsylvania. Accordingly, punitive damages are a
direct and substantial risk to employers.

Firing a Drunk Employee May Not Violate the FMLA


A recent case (Sheridan v. Arthur J. Gallagher & Co., NO. 4:13-CV-1969 (S.D. Texas, December 11, 2014)) reflects that an employer may not have to accommodate an employee who shows up to work intoxicated. In that case, the employee had a history of alcohol issues, treatment, and relapses. This ultimately led to an agreement wherein the employee agreed, among other things, not to use alcohol while working.  Thereafter, the employee showed up to work one day visibly intoxicated. The employer terminated his employment. However, during that same conversation, the employee purportedly requested FMLA leave. Nevertheless, the employer proceeded with terminating his employment. This termination was upheld by the Court. The decision in this case confirms that an employer is not obligated to overlook an employee’s intoxication in the workplace as it puts both the employee and other employees at risk.

Wage and Hour Issues Pose a Significant Risk for Employers

wagehour_lawsOne of the most prevalent issues currently facing employers is wage and hour issues. This is due to several reasons:

  • First, there are many common misperceptions about the wage and hour laws, which cause employers to inadvertently stumble into trouble.
  • Second, a changing or growing workforce can quickly turn what was lawful into an unlawful situation and/or can cause employers to overlook potential pitfalls.
  • Third, the exposure in these cases can be significant and oftentimes is not covered by insurance. The exposure can be significant for a few reasons. Back wages add up quickly. Oftentimes a mistake in the handling of a personnel matter can affect more than just one employee. Wage and hour issues can also easily lead to class action lawsuits.

In light of these risks, we offer a few tips:

  • Confirm that any people classified as an independent contractor meet the definition of an independent contractor as set forth in the FLSA.
  • Confirm that any employees labelled as exempt fit within one of the narrow exemptions set forth within the FLSA
  • Make sure that all job descriptions are accurate based on the present workforce and company.
  • Ensure that non-exempt employees are being paid for all time worked, which could include them checking email at home once they leave the office and/or working over their lunch hour.
  • Ensure you have an appropriate overtime policy in effect that is monitored and enforced.

Do you have an upcoming holiday party at your office?

office_partyHere are a few helpful hints for employers as this could be a liability producing event in addition to being a fun event:

  1. If it is a mandatory party, be prepared to grant exemptions for those employees who are unable to participate due to religious or medical reasons.
  2. Watch for potential hazards, which could result in a work injury (i.e. falling off a ladder while hanging decorations).
  3. If costumes or holiday sweaters are being worn, advise employees to avoid offensive or revealing costumes. If someone shows up in such a costume, send the employee home to change unless a modification can be made at work (i.e. covering up an offensive logo) but be careful not to infringe on anyone’s religious practices or beliefs.
  4. Watch for potential food allergies if food is being served and label any food items that may contain allergens (i.e. nuts, milk, gluten).
  5. Be cautious of the level of alcohol consumption by your employees.


Reminder to Employers to be Cautious of “Off the Clock Hours” Worked by Employees

clockA recent US Labor Department investigation confirms the importance of monitoring any off the clock worked performed by employees and of maintaining proper record keeping. An employer was recently investigated by the US Department of Labor’s Wage and Hour Division for possible violation of the overtime and record keeping provisions of the Fair Labor Standards Act (“FLSA”). That employer was alleged to have failed to record, account and pay for all hours worked in a work week. The employer has agreed to pay the overtime back wages due and to take proactive steps to prevent repeat violations. Due to this agreement, the employer is paying nearly $6,000,000 in unpaid overtime wages and damages to 359 employees. In addition, that
employer is agreeing to additional terms such as compliance training.

In light of this, we caution employers of the risks associated with non-exempt employees performing off the clock work such as checking and/or responding to emails after hours, coming in early or staying late to complete work assignments, and/or working through lunches. To the extent this time is recorded and paid in accordance with the Fair Labor Standards Act, such practices are acceptable; however, when these employees are performing this work and are not properly recording and/or receiving payment for this work, then that violates the FLSA. Under the FLSA, employers who violate the law are generally liable to employees for their back wages as well as an amount equal to those back wages in liquidated damages.

Accordingly, the damages associated with FLSA violations add up quickly. In addition, the FLSA requires employers to maintain accurate time and payroll records and prohibits retaliation against employees who exercise their rights under the law. In conjunction with this, we remind employers of the importance of ensuring that their employees are properly classified under the FSLA.

EEOC Issues Guidance on Pregnancy Discrimination


Employers are required to treat women affected by pregnancy, child birth, or related medical conditions in the same manner as other applicants or employees who are similar in their ability or inability to work. Employers with 15 or more employees are subject to the requirements of the Pregnancy Discrimination Act (“PDA”) which covers all aspects of employment including hiring, firing, promotions and benefits. Pregnant workers are protected from discrimination regardless of whether the pregnancy is current, past or potential. Under the PDA, an employer cannot take an adverse employment action against a woman if pregnancy, childbirth or a related medical condition is a motivating factor. This holds true even if the employer believes it is acting in the employee’s or the baby’s best interest.  The same also holds true for both past and potential pregnancies.

The EEOC has also cautioned that an employer violates Title VII by treating a female employee with young children less favorably than a male employee with young children based on the belief that the mother should focus on children rather than a career. In addition, the EEOC also cautions that an employer violates the ADA where it takes an adverse action against a mother of a newborn with a disability due to concerns that the mother will need to take significant time off work due to the child’s medical condition and/or due to a concern that a child’s medical condition would impose high health care costs.

The EEOC has also offered guidance that an employer has to provide light duty alternative assignments, disability leave, and unpaid leave to pregnant workers if it does so for other employees who are similar in their ability or inability to work. However, if the light duty policy restricts the number of light duty positions or the duration of such assignments, the employer may apply those restrictions to pregnant workers as long as those restrictions are applied to other non-pregnant workers.

As it pertains to leave, an employer must allow a woman with physical limitations resulting from pregnancy to take leave on the same terms and conditions as others in a similar situation who are not pregnant. An employer may not single out a pregnant employee for medical clearance procedures that are not required of other employees and may not remove a pregnant employee from her job because of pregnancy as long as she is able to perform her job. In addition, an employer must allow pregnant employees to return to work following recovery from a pregnancy related condition to the same extent as it would with other employees.

Pregnancy in of itself is not a disability; however, pregnant employees may experience impairments related to their pregnancies that qualify as a disability under the ADA.  Such conditions could include pregnancy related carpal tunnel, gestational diabetes and preeclampsia. To the extent a pregnant employee is suffering from a related condition which qualifies as a disability, the employer must provide that employee with a reasonable accommodation. Such accommodations could include, but are not limited to, temporary reassignment, leave, modified work schedules and/or policies (i.e. more frequent breaks, being allowed to keep a drink at a work station). The EEOC also notes that a reasonable accommodation could be to allow a pregnant worker who has been placed on bed rest to telework when feasible. Under the PDA, lactation is a medical condition related to pregnancy and therefore, an employer may not discriminate against an employee based on a breast feeding schedule.

We also remind employers that the birth and care of a newborn qualifies for FMLA leave and protection when the employee is FMLA-eligible.

EEOC Files Suit On Behalf Of Employees Claiming They Were Forced To Participate In Religious Activities At Work

EEOC_religionThe EEOC recently filed suit on behalf of three (3) former employees against a New York company claiming that the employees were forced to participate in religious activities at work and were fired if they refused. It is alleged that the company required the employees to pray, thank God for their jobs, and tell their managers and colleagues “I love you”. The company followed a belief system called “Onionhead” which was a doctrine created by a family member of the company’s owner. In addition, there were group prayers, candle burning, and discussion of spiritual texts in the workplace. Employees were also told to wear Onionhead buttons. It is alleged that none of these practices were work-related. It is further alleged that one employee told management that she was Catholic and did not want to participate in the Onionhead practices. That employee’s office was then relocated and a large statue of Buddha was placed in her former office. After she protested, she was then fired. The EEOC has filed suit on behalf of these employees seeking back pay with interest and unspecified damages. In addition, the EEOC is also seeking an injunction against the company relative to their religious requirements. Through this suit, the EEOC is contending that employers are not permitted to dictate the religious aspects of their employees’ lives and that work pressure to conform to the employer’s spiritual or religious practices violates federal employment law.

Without question, this case poses rather extreme facts but nonetheless it is a reminder to employers that they should not require or pressure their employees to conform to a particular religion or to require religious activity in the workplace, especially in the absence of a bona fide work related reason.

Possible Upcoming Changes to The FMLA


The US Department of Labor has announced a Notice of Proposed Rulemaking (“NPRM”) to revise the definition of spouse under the Family Medical Leave Act of 1993 (“FMLA”).  The NPRM proposes to amend the definition of spouse so that eligible employees in legal same sex marriages will be able to take FMLA leave to care for their spouse or family member regardless of where they live.  This amendment arises from the United States Supreme Court’s decision in United States v. Windsor which found Section 3 of the Defense of Marriage Activity to be unconstitutional.

The Department proposes to amend the definition of spouse in the FMLA as follows:  “Spouse, as defined in the statute, means a husband or wife. For purposes of this definition, husband or wife refers to the other person with whom an individual entered into marriage as defined or recognized under State law for purposes of marriage in the State in which the marriage was entered into or, in the case of a marriage entered into outside of any State, if the marriage is valid in the place where entered into and could have been entered into in at least one State. This definition includes an individual in a same-sex or common law marriage that either (1) was entered into in a State that recognizes such marriages or, (2) if entered into outside of any State, is valid in the place where entered into and could have been entered into in at least one State.”

Please note, this change is not yet final.  Although the Office of Budget and Management has approved and reviewed the NPRM as of the date of this information, the document has not yet been published in the Federal Register.

The impact of this change would mean that eligible employees, regardless of where they live, would be able to:

  • Take FMLA leave to care for their same sex spouse with a serious health condition;
  • Take qualifying exigency leave due to their same sex spouse’s covered military service;
  • Take military caregiver leave for their same sex spouse.

In addition, the proposed change could also entitle eligible employees to take FMLA leave to care for their step-child (the child of the employee’s same sex spouse) or step-parent (same sex spouse of the employee’s parent) even if the in loco parentis requirement is not met.

Stay tuned as further information becomes available as this is a possible change that could affect many employers.  


Recent National Labor Relations Board Decision Further Confirms the Board’s Current Position Regarding an Employee’s Right to Speak About Pay

nlrbAs you may recall, we previously reported on a decision issued by the National Labor Relations Board (“NLRB”) wherein the NLRB held that an employer may not prohibit its employees from speaking about their wages. Now, the NLRB has issued another decision which reflects on this same issue. In this case, an employee was discharged after engaging in an outburst during a meeting with the company’s owner. Prior to that meeting, the employee had repeatedly complained about his wages and commission. The employee had spoken with other employees about his concerns and had also spoken with the office manager, who had allegedly told him he could always work elsewhere. Thereafter, the owner of the company met with the employee to discuss his negativity. The owner indicated during the litigation that he did not intend to fire the employee when the meeting started, but that he changed his mind based on the employee’s behavior during the meeting. The employer allegedly told the employee during the meeting that the negativity must be discontinued and he should not complain about his pay. The employee allegedly continued to complain about his wages and the calculation of the commissions. The company owner then allegedly reminded the employee that he could work elsewhere if he did not trust the company. It is alleged that the employee then lost his temper and engaged in an outburst during the meeting which included cursing at the company owner.

Following this outburst, the employee was discharged. This case has been in litigation for over five (5) years and has a extenuated history. However, the most recent decision, which was issued by the NLRB, found that the employer violated Section 8(a)(1) of the National Labor Relations Act (“NLRA”) and ordered the dealership to immediately reinstate the employee with seniority and to pay the employee for any loss of earnings and other benefits. Although the NLRB acknowledged that the company did not intend to terminate the employee for his protected activity going into the meeting, the NLRB excused the employee’s outburst during the meeting on the basis that the employee was “provoked” into his outburst by the employer discouraging him from speaking about his pay.

The NLRB further held that although this was only one employee complaining about his pay, it is still considered protected activity under the NLRA as compensation issues affect all employees.
This decision stresses and reaffirms the NLRB’s current position regarding an employee’s right to speak about his/her pay even when the employer is non-union. Therefore, I caution employers to be careful when treading into situations involving an employee’s complaints and/or dissatisfaction about pay related issues. This decision is still subject to review on appeal and could be subject to further litigation. Nevertheless, this decision further confirms the NLRB’s current interpretation of the law.

Threatening to Punch a Co-Worker Does Not Bar a Discharged Employee from Receiving Unemployment Compensation Benefits

However unexpected this decision may be, we wanted to draw it to the attention of employers as this is a situation that many employers encounter on a rather frequent basis. The Pennsylvania Commonwealth Court recently issued a decision holding that an employee who was discharged after venting to the company’s HR Manager and voicing an urge to punch a co-worker following a dispute is entitled to receipt of unemployment compensation benefits.

Specifically, the employee had been asked by a co-worker to move a scented substance. However, these co-workers were alleged to have been having some issues between them prior to this incident. The employee who was asked to move the scented substance then called the HR Department and, during that conversation, stated that she would punch the co-worker if something was not done about the co-worker. It was alleged that the employee stated this multiple times during the conversation with the HR Department. The employer then terminated the employee for violation of the company’s no tolerance harassment policy and subsequently contested her petition for unemployment compensation benefits.

In finding the employee eligible for benefits, the Court noted that although the company had grounds upon which to terminate the employee, it did not have basis on which to prevent her from receiving unemployment compensation benefits as the conduct did not rise to the level of willful misconduct. In so ruling, the Court noted that the employee only expressed a theoretical course of behavior which cannot be covered by any work place policy. The Court also noted that the employee did not say the comment directly to the co-worker and, therefore, the statement did not constitute a threat. In addition, the Court noted that the employee was only “venting”, thought she was speaking in confidence to the HR department, and did not intend to act upon the expressed intentions.