Thursday, April 18, 2019

Sixth Circuit: Being Unable to Work for Mean Supervisor Is Not a Substantial Limitation in the Ability to Work

Last month, the Sixth Circuit affirmed the summary judgment dismissal of an ADA claim that the defendant employer failed to accommodate the plaintiff’s PTSD by transferring her away from her supervisor, which was apparently her only trigger.  Tinsley v. Caterpillar Financial Svs. Corp., No. 18-5303 (6th Cir. 3/20/19).  The plaintiff claimed to only be disabled in the ability to work with that particular supervisor and did not claim to be impaired outside of the workplace or in her job duties.  However, the Court concluded that being disabled from working requires being unable to work in a broad class or range of jobs, not just with one job, in one workplace or for one particular supervisor.  Because she was not “disabled” under the ADA, the employer was not required to provide her with any accommodation and did not constructively discharge her.  Because the employer failed to address her FMLA retaliation claim on appeal, the case was remanded for that issue.

According to the Court’s opinion, the plaintiff reported in mid-April that her changed family and work responsibilities were stressing her out and requested to be removed from a team assignment. She then took three days of FMLA medical leave.  Some of her assignments were reassigned and she indicated that this improved her mental health.  Two months later, her work performance was criticized as well as her leaving early without approval and four months later she was placed on a performance improvement plan.  She claimed that the PIP was in retaliation because she complained about co-workers bouncing stress balls at work.  She then protested the PIP, claimed a hostile work environment created by co-worker horseplay, and said the unreasonable deadlines from a new assignment created too much stress, although other steps taken since her first complaint had improved her stress level.  An investigation of her concerns did not substantiate them.  She took another month of medical leave and was returned to work without restrictions with the recommendation that she be transferred to a different manager.   Instead, the employer granted her another 8 weeks of medical leave – putting her at 18 weeks of time off.  By January, the plaintiff was informed that she would not be transferred and would not be approved for more medical leave.  The plaintiff then retired and filed suit.

This Court has previously held that to be substantially limited from working––and thus eligible for ADA protection––an individual must be significantly restricted in the ability to perform either a class of jobs or a broad range of jobs in various classes as compared to the average  person having comparable training, skills and abilities.”  Swanson, 268 F.3d at 317 (citation  omitted).  Following this Court’s decision in Swanson, Congress enacted the ADA Amendments  Act of 2008, which relaxed the definition of “substantially limited” and noted that establishing a  qualifying disability is not meant to be a demanding standard. . . . Additionally, due to the broader definition of “substantially limited” under the Amendments, the interpretative guide produced by the Equal Employment Opportunity Commission (“EEOC”) notes that the major life activity of working “will be used in only very targeted situations” to determine whether an individual is disabled.

In such “targeted situations,” however, the EEOC has largely endorsed the pre-Amendments analysis for determining whether a person’s claimed impairment sufficiently impacts the major life activity of “working.”  Specifically, the EEOC’s interpretive guide explains that an individual who asserts that she is disabled because she is unable to perform the major life activity of “working” must still show that “the impairment substantially limits . . . her ability to perform a class of jobs or broad range of jobs in various classes.”  Id.  The EEOC further states that “[d]emonstrating a substantial limitation in performing the unique aspects of a single specific job is not sufficient to establish that a person is substantially limited in the major life activity of working.”  Id.  Thus, to the extent the Amendments have altered the scope of the ADA’s protections, a plaintiff who asserts that her impairment substantially limits the major life activity of “working” is still required to show that her impairment limits her ability to “perform a class of jobs or broad range of jobs.”           
      . . . .

                the record is replete with undisputed evidence showing that Tinsley’s issues stemmed directly from Kaikaris’ management style as opposed to the responsibilities of a broad range of jobs.  The clearest example of this is when Tinsley told Human Resources that she would be able to continue in the same position so long as she was under the direction of a different supervisor because her disability was triggered by “the way [Kaikaris] managed . . . with all the ball bouncing.”   . . .  For instance, on August 19, when Tinsley emailed Human Resources to request a new position, she explained that “the work itself was not the primary issue.”  And in the Charge of Discrimination, Tinsley wrote that the company could have accommodated her disability by switching her supervisor.  Last, her doctor cleared her to return to work at one point “at full capacity,” suggesting only that the company switch her supervisor to alleviate any medical concerns.  Tinsley’s diagnosis does not limit her ability to work a broad class of jobs; rather, it relates solely to her ability to work under a specific manager.  Accordingly, she is not “disabled” pursuant to the ADA and was thus not entitled to a reasonable accommodation of additional time off or a transfer.

The Court rejected her argument that her PTSD precluded her from working in a broad range of high-stress jobs because she consistently related her stress to her particular manager’s style and not to the type of work being performed.

Importantly, Tinsley’s physician cleared Tinsley to return to work without restrictions.  The only recommendation that Tinsley’s physician made––to have Tinsley transfer to a different supervisor––related to her stress level under Kaikaris specifically.  This is further illustrated by the fact that, when offered the same position under a different supervisor, Tinsley agreed that she would be able to perform the job duties.  Thus, Tinsley’s limitations were more accurately a product of the “unique aspect” of her “single specific job,” i.e., working as an analyst under Kaikaris’ particular management style.  Id.  Although we can certainly theorize a case in which an employee’s disability actually limited her from engaging in a broad range of similarly high-stress positions, Tinsley has not pointed to any record evidence permitting us to make that necessary inference.

Finally, the Court noted that she had sufficiently alleged a prima facie case of FMLA retaliation when she received her negative performance evaluation within two months of taking three days of FMLA leave.  Because that issue had not been addressed on appeal, it was remanded for further consideration.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Monday, April 15, 2019

Sixth Circuit Finds Insurance Agents Were Not Common Law Employees Under ERISA

In January, the Sixth Circuit again held that insurance agents were independent contractors and not common law employees entitled to ERISA benefits, and reversed a trial court decision holding otherwise.  Jammal v. American Family Ins. Co., No 17-4125 (6th Cir. 1-29-19).  Because the case was being heard as an interlocutory appeal, the Court only examined the legal conclusions and whether the common law factors were factual or legal conclusions.  The Court concluded that some factors  -- skill required and hiring of assistants -- had been applied incorrectly and favored non-employee status.  It also found that the trial court failed to give sufficient weight to the parties’ written agreement.  Because ERISA focuses on employee benefits, the factors relevant to such a consideration should have been given more weight than other factors.

According to the Court’s opinion, the plaintiffs were hired pursuant to independent contractor agreements, paid their own taxes, hired and paid their own staff, bought their own office furniture and supplies, and did not receive vacation, holiday or sick pay.  Nonetheless, training manuals referred to them as employees, all other individuals working for the company were employees,  and the sales managers were unaware that the agents were not employees.  In addition, the sales managers sometimes interfered in running the offices, and directed some daily activities.  Agents also attended a comprehensive several month training program, receive type of retirement plan, are precluded from selling competing insurance, are subject to non-competition agreements, cannot sell their agencies and are discouraged from other employment.  The case was tried to an advisory jury which found that the agents were employees.

On interlocutory appeal, the Court concluded that the trial court incorrectly weighed the factors of whether the agents required special skills or hired their own assistants. “This circuit has previously held that the skill required of insurance agents weighs in favor of independent-contractor status because ‘the sale of insurance is a highly specialized field” that requires “considerable training, education, and skill.’”

Though American Family preferred hiring untrained, and often unlicensed, agents, the underlying discipline of selling insurance remains the same regardless of American Family’s hiring preferences.   . . . .  The district court therefore misapplied the legal standard to the facts; the correct application would have weighed this factor in favor of independent contractor status, as this circuit has done previously.   

The trial court also found the agent’s hiring and paying of staff was neutral, when the evidence showed otherwise.  While the company imposed certain minimum requirements, would not provide computer access without approval of the candidates and could require the termination of an agent’s employees,

 . . .American Family agents were responsible for paying their own staff, determining and paying for any benefits and taxes associated with that staff, and deciding whether to classify their staff as employees or independent contractors.  While American Family provided “pre-approved” candidates, whom the agents could select as their staff, it did not require the agents to hire these pre-screened candidates.  Agents also had sole discretion in staff-compensation matters and the sole responsibility to withhold and remit taxes to the federal government as the employers of their staff.  

“If the hired party has the ‘primary authority over hiring and paying its own assistants,’ the Darden factor regarding ‘the hired party’s role in hiring and paying assistants’ should weigh in favor of independent-contractor status.”

Further, given our determination regarding the existence of each of the Darden factors, the district court also erred by not properly weighing those factors that are particularly significant in the legal context of ERISA eligibility.  . . . . But “the relative weight given each [Darden] factor may differ depending upon the legal context of the determination.” . . . Because ERISA cases focus on the financial benefits that a company should have provided, the financial structure of the company-agent relationship guides the inquiry.  Here, the Darden factors that most pertain to that financial structure favor independent-contractor status and, accordingly, carry more weight in the ERISA context.
                . . . . Because this inquiry exists in the legal context of ERISA benefits, this collection of factors—particularly the ones relating to the source of the instrumentalities and tools, the method of payment, the provision of employee benefits, and the agents’ tax treatment—is especially important in determining the parties’ financial structure.  Accordingly, these factors should have carried greater weight in the district court’s final analysis. . . . .

As further evidence of the financial structure of the parties’ relationship, the lower court should have also given greater weight to the parties’ express agreement.  In determining the parties’ relationship in the Darden context, we have several times “look[ed] to any express agreement between the parties as to their status as it is the best evidence of their intent” and placed great weight on that agreement. . . . A written contract shows “how the parties themselves viewed the nature of their working relationship” and therefore carries great— but not dispositive—weight in determining an independent-contractor relationship.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Monday, April 8, 2019

Whirlwind of FLSA Activity

As previously mentioned, the DOL has been busy with the Fair Labor Standards Act and has issued a number of Opinion Letters in the past few months.  Because most of them are very fact specific, they will only be briefly summarized and readers can read their few pages in full by clicking on the links.

l  No. 2019-5: Activities of farm employees to prepare produce for the owners own farmer’s market and to deliver the produce to market can be exempt secondary agricultural activities. 

l  No. 2019-4: County Extension (i.e., 4-H) nutrition and cooking  outreach instructors (who are only required to have a GED) qualify for the exemption for teachers from overtime and minimum wages.

l  No. 2019-3: Could not determine from the facts presented whether a youth residential care facility provided enough medical care to qualify for 8 and 80 overtime system (i.e., overtime is paid when the employee works more than 8 hours in a day or 80 hours in a two week period).

l  No. 2019-2: Employers need not compensate employees for genuinely volunteering for a charity after hours even if they could receive a bonus for doing so:  The employer encouraged its employees to volunteer at sponsored events during the work day (for which they were paid) and during their free time after work.  Teams competed against each other and the winning team could win a prize.   The employer considered the number of hours that each team volunteered and was considering using an app to track employee volunteer hours.  An employer may use an employee’s time spent volunteering as a factor in calculating whether to pay the employee a bonus, without incurring an obligation to treat that time as hours worked, so as long as: 1) volunteering is optional, 2) not volunteering will have no adverse effect on the employee’s working conditions or employment prospects, and 3) the employee is not guaranteed a bonus for volunteering. The employees could select the charity or the employer’s choice.

l  No. 2019-1: Live-in building custodians are subject to the FLSA and it is not a good faith defense to rely on state-law exemptions.  But an employer may enter into reasonable agreement with individuals as to what constitutes working hours.

l  No. 2018-29: Members of religious commune who volunteer their services are not employees.

l  No. 2018-28: Employer’s compensation system complied with minimum wage requirements, but only with overtime requirements when employee’s regular rate was under $10/hour.  The employer calculated their weekly wage by multiplying the employee’s hourly rate by the number of hours the employee spent working time with clients and then divided that number by the total hours worked that week (including travel).  With this system, the employer guaranteed the employee earned above the minimum wage.   If the employee worked over 40 hours in a week, the overtime rate was calculated at the typical wage of $10/hour (even if regular rate was more than $10/hour).  That system only complied with overtime wage requirements if the employee’s regular rate was less than $10/hour. 

l  No. 2018-27: When tipped employees wear two hats and when the tip credit can be taken (i.e., if waiter is also bussing or being a janitor).

l  No. 2018-25: An employer can pay a salaried employee too much.  The employer paid its engineers a minimum $2100/week, but also paid an additional $70/hour for all hours worked over 30 each week (because their working hours varied so much throughout the year). Hours were unpredictable and some employees earned $3750 some weeks – almost twice minimum salary.  That could be too much distortion to constitute a regular salary. 150% is close to, but not necessarily, the maximum distortion.  While employers are permitted to pay salaried employees extra pay, there is still a requirement that the extra pay bear some relation to their regularity of salary. 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

2019 Is a Busy Year for the FLSA

The federal Department of Labor is making up for lost time with a lot of activity by the Wage and Hour Division.  Three notices of regulatory changes have been proposed, as well as several enforcement actions and five Opinion Letters.  The regulations concern the minimum salary for white collar overtime exemptions, what to include in the regular rate for calculating overtime and who is a joint employer for purposes of the FLSA.  While all of the regulatory proposals could change before final enactment, employers can use the time to prepare for any adjustments.

White Collar Exemptions.  The prior administration proposed to raise the minimum salary to almost $50K (from $23K) and to require an automatic annual increase.  This regulation was enjoined at literally the last second.  Instead of moving to dismiss the litigation, the Trump Administration merely requested that it be stayed while it developed a slightly different proposal:  The proposal released on March 7, 2019 provides:

¡  Raise minimum annual salary from $23K to 35,308/year

¡  Raise highly compensated executive minimum salary from $100K to $134K

¡  No change in duties test

¡  No automatic annual increase

¡  Nondiscretionary bonuses and incentive pay (i.e., commissions) can count up to 10% of salary test if paid at least annually

Joint Employment. The DOL proposed a regulation on April 1 to regulate joint employment for purposes of the FLSA. The DOL would examine whether a business is a “joint employer”—equally liable for liability under federal wage and hour laws—with a simple four-part test, assessing whether the potential joint employer:

¡  hires or fires the employee;

¡  supervises and controls the employee’s work schedule or conditions of employment;

¡  determines the employee’s rate and method of payment; and

¡  maintains the employee’s employment records.

The DOL will ignore right to control, economic dependence, and business model or arrangements.

Regular Rate: The DOL proposed on March 28 a new regulation clarifying (but not necessarily changing) what is and is not included in the “regular rate” for purposes of calculating overtime pay.  This issue is still mostly governed by statute and is defined as any and all remuneration for employment paid to, or on behalf of, an employee. This includes not just cash wages but many other types of compensation (such as meals and lodging, commissions, shift differentials, certain nondiscretionary bonuses, etc.)   Nonetheless, the regular rate does not include other types of compensation, such as paid time off, show-up pay where the employee is paid for hours not worked, and discretionary bonuses.

The proposed regulation clarifies that certain compensation need not be included, such as:

¡  Cost of providing wellness programs, onsite specialist treatment, exercise opportunities, employee discounts on retail goods and services, and certain tuition benefits;

¡  Discretionary bonuses as provided in examples;

¡  “Call-back" pay and other similar payments similar when "infrequent and sporadic," but not when such payments are so regular that they are essentially prearranged;

¡  Reimbursed expenses which are not be incurred "solely" for the employer's benefit;

¡  Unused paid leave, meal periods and PTO pay;

¡  Most travel reimbursements

¡  Benefit plans contributions (like accident, legal services)

Settlements.  The DOL has also investigated two Ohio employers for failing to properly pay overtime, improper deductions and recordkeeping violations and recovered $37,658 from a Lebanon employer and $48,698 from a Dayton employer

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Friday, April 5, 2019

The Importance of Being Prompt Under the FMLA

Last month, there were two developments with the Family and Medical Leave Act highlighting the strictness of deadlines.  In the first, the Department of Labor issued an opinion letter on March 14 which confirmed that employers must ordinarily provide written notice designating FMLA leave within five days of learning enough information that the leave qualifies under the FMLA even if the employee would prefer to delay the designation or is utilizing a paid leave policy.  Employers may also not designate more than twelve weeks of leave as covered by the FMLA even if the employer provides more generous paid leave policies.  Second, the Sixth Circuit affirmed an employer’s summary judgment after terminating the plaintiff for poor attendance when he called off late even on days when he was requesting intermittent FMLA leave.  Njaim v. FCA US LLC., No. 18-3831 (3-19-19).  

According to the Court’s opinion, the employer’s call off policy required employees to call off work at least 30 minutes before their shift.  The plaintiff was suffering from mental health and substance abuse issues.  Prior to requesting FMLA leave to obtain inpatient treatment, he had incurred several attendance points for failing to call off at least 30 minutes in advance.  Upon and after returning from treatment, he again failed to show up or call of work at least 30 minutes in advance (even when taking time off because of FMLA covered mental health conditions).  Accordingly, he has assessed with more points and ultimately terminated.

The Court found that the employee could not show that his absences on those days were covered by the FMLA because he failed to comply with the employer’s attendance policy. On one day, he failed to report to work on time and on the other he only called off ten minutes prior to his shift, in violation of company policy. “[A]n employee cannot “satisfy the first element of a prima facie FMLA case” when he does not follow the employer’s leave policies.  Alexander v. Kellogg USA, Inc., 674 F. App’x 496, 501 (6th  Cir. 2017).

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.