Ohio Appeals Court Holds Community Support Specialist Is Not Exempt from Overtime as An Administrator or Professional

Last week, the Court of Appeals for Cuyahoga County reversed summary judgment in favor of a non-profit community mental health center employer on a claim for unpaid overtime brought by a Community Support Specialist (CSS) formerly employed by the center. White v. Murtis M. Taylor Multi-Serv. Ctr., 2010-Ohio-2602. The trial court had found that the plaintiff was exempt from overtime under both the Fair Labor Standards Act and Ohio Revised Code § 4111.03 law as an administrative and/or learned professional employee. Both courts agreed that Ohio law follows the same standards as the FLSA in evaluating an employee's exempt status and that the burden was on the employer to justify by clear and affirmative evidence that the employee was exempt from overtime pay when working more than 40 hours in a week. However, the appellate court concluded that his job duties did not fit within the administrative exemption; he did not exercise enough independent judgment or discretion to fit within either exemption; and his job did not require a specialized academic degree as required to fit within the learned professional exemption.

According to the Court's opinion, the plaintiff filed suit in January 2008 -- just over three years after he left the non-profit employer -- seeking compensatory and punitive damages. While the employer contended that the plaintiff's job required him to perform managerial duties, the Court found that the employer failed to present any evidence to support its argument. The plaintiff denied that he possessed any authority over other employees. The Court then examined the regulatory examples of duties at 29 CFR §541.201(b) which typically would be performed by an administratively exempt employee and concluded that they indicated policy-making responsibilities which were not reflected in the plaintiff's job. Moreover, the employer failed to present evidence showing that the plaintiff's job required the exercise of judgment and independent discretion over matters of significance.

The exercise of independent judgment requires "the comparison and the evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered. . . .[The plaintiff] simply assisted his clients in learning and completing everyday tasks, such as grocery shopping and locating community resources. Clearly, these are not matters of significance as contemplated by the FLSA. [The plaintiff] did not exercise independent judgment in the general business operations of [the non-profit employer]. He did not supervise anyone, nor did he perform any administrative functions such as human resources procurement or management decisions.

The Court rejected evidence that he was not required to routinely seek his supervisor's approval and that he sometimes worked unsupervised because " he was still required to submit all of his notes and case plans to [his supervisor] for approval." While most of his case plans were approved, his supervisor still impliedly rejected "some" of them.

Similarly, the Court concluded that the plaintiff did not fit within the learned professional exemption:

The first element [the employer] must satisfy to establish that [the plaintiff] is a learned professional, is that [the plaintiff] performs work that requires advanced knowledge. The work must either require advanced knowledge, or be of an artistic or creative nature. Specifically, the work is as follows:

"[P]redominately intellectual in character, and which includes work requiring the consistent exercise of discretion and judgment, as distinguished from performance of routine mental, manual, mechanical, or physical work. An employee who performs work requiring advanced knowledge generally uses the advanced knowledge to analyze, interpret, or make deductions from varying facts or circumstances. Advanced knowledge cannot be attained at the high school level." . . .

29 CFR § 301(b). "While a degree is not always required, a degree is the best prima facie evidence that an employee is a learned professional." However, the plaintiff's job description did not require any advanced knowledge or education. Rather, it only required:

some course work in social work, counseling, psychology,or related disciplines beyond high school. Bachelor's degree in Social Work, Counseling, Psychology, or related field preferred. At least one year of experience in a mental health organization with a background in substance abuse[,] abuse treatment and/or prevention essential.

"Thus, the evidence showed that the employer did not require a specialized academic degree or experience. " Indeed, the job did not require the applicant to possess any degree.

The Court found that the trial court had erred by placing "significant weight on the actual education [a bachelors degree in research biology and theology] and training [that the plaintiff] has obtained, when the proper inquiry is the education that is actually required of the position." Although the plaintiff possessed experience and training "in chemical dependency and addiction counseling, he was instructed not to provide clients with counseling; therefore, such training was similarly irrelevant to his position as a CSS 1. Courts have concluded that highly trained individuals [ like pilots] who do not possess an academic degree are not learned professionals."

Moreover, the plaintiff testified that "his work included accompanying clients to appointments and referring them to community resources" and "he did not provide treatment to his clients." His duties also

consisted of teaching daily living skills to his clients. He accompanied them on legal and medical appointments, and assisted them in completing everyday tasks such as managing their finances and grocery shopping. Such duties clearly do not fall into the category of science and learning, as these duties do not require any specialized knowledge.

His employment offer letter also "clearly indicated that [his] position as a CSS 1 was a level 1, primary support position." The Court concluded that "[s]uch a vague description does not merit the type of specialized knowledge required of a learned professional."

Finally, the Court examined an opinion letter from the Department of Labor which indicated that social worker positions which require a master's degree in social work are exempt while case workers who were not required to have a specific degree were not. "The Ohio Supreme Court has previously recognized that opinion letters are persuasive authority in interpreting federal statutes and regulations."

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 change or be 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.

Sixth Circuit Enforces Employee’s Waiver of USERRA Claims

This morning, the federal Sixth Circuit Court of Appeals affirmed summary judgment in favor of an employer in a claim brought under USERRA on the grounds that the plaintiff had signed a waiver of all claims, including those based on "veteran status" in his separation agreement. Wysocki v. IBM, No. 09-5161 (6^th Cir. 6/16/10). The plaintiff alleged that he had been terminated on account of his military service in Afghanistan. In particular, he claimed that IBM refused to provide him training to update his job skills when he returned to work and then terminated him without cause. The Court found that his USERRA claim was waived in his separation agreement even though it did not specifically refer to USERRA.

IBM responded to the complaint with a motion to dismiss, which the court converted to a summary judgment motion. The plaintiff argued that USERRA claims were not waivable under 38 USC § 4302(b). The Court reviewed the statutory text at 38 U.S.C. § 4302, which establishes that:

(a) Nothing in this chapter shall supersede, nullify or diminish any Federal or State law (including any local law or ordinance), contract, agreement, policy, plan, practice, or other matter that establishes a right or benefit that is more beneficial to, or is in addition to, a right or benefit provided for such person in this chapter.

(b) This chapter supersedes any State law (including any local law or ordinance), contract, agreement, policy, plan, practice, or other matter that reduces, limits, or eliminates in any manner any right or benefit provided by this chapter, including the establishment of additional prerequisites to the exercise of any such right or the receipt of any such benefit.

. . . .

While § 4302(b) supercedes any law, plan or agreement that "reduces, limits, or eliminates in any manner any right or benefit provided by this chapter," its application is limited by § 4302(a), which exempts any law, plan or agreement that is "more beneficial to, or is in addition to, a right or benefit provided for such person in this chapter" from the operation of § 4302(b). Therefore, the critical inquiry is whether the Release is exempted from the operation of § 4302(b) by § 4302(a), because the rights it provided to [the plaintiff] were more beneficial than the rights that he waived.

While some authorities and courts have contended that USERRA rights may not be waived, the Sixth Circuit cited legislative history to the contrary. "Clearly, the ability to waive their USERRA rights

without unnecessary court interference, if they believe that the consideration they will receive for waiving those rights is more beneficial than pursuing their rights through the

courts, is both valuable and beneficial to veterans." It also concluded that veterans should be able to decide for themselves whether the consideration they are receiving for a release is more valuable than their USERRA rights. Therefore, it found that waivers were not conceptually barred by the USERRA statute and could be enforced, as was the plaintiff's waiver enforced in this case.

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 change or be 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.

Ohio Supreme Court Gives Employers Another Reason to Ban Moonlighting

There are several reasons why employers ban employees from holding second jobs. Some do it because the second job robs the employee of rest and vitality and creates potential scheduling conflicts. Others do it because the employee may decide to take FMLA from their "hard" job while continuing to work their "easy" job. Others do it to discourage union activities or "salters" from taking a job in order to organize their co-workers. However, a significant reason to prohibit employees from taking a second job is that the employer could become liable for paying the wages for that second job if the employee gets injured at your workplace and is unable to work either job. This is not a new concept, but it is a rule that the Ohio Supreme Court confirmed this week. State ex rel. FedEx Ground Package Sys., Inc. v. Indus. Comm., Slip Opinion No. 2010-Ohio- 2451. In that decision, the Court found that the Industrial Commission did not err in including the claimant's wages from his second job in his average weekly wage for purposes of his temporary total disability claim.

According to the Court decision, the claimant "began working part-time for appellant FedEx Ground Package System, Inc., in 2004. [He] generally made between $190 and $250 per week. In April 2006, [he] took a second job with Integrated Pest Control that paid considerably more than the job at FedEx. [He] was also operating a side business, Affordable Animal Removal, concurrently with the other two jobs." After he was injured at work, FedEx, a self-insured employer, set his average weekly wage and full weekly wage based solely on the wages he earned at FedEx. The Claimant appealed on the grounds that his wages from his second, higher-paying job also should have been considered. The district hearing officer agreed that special circumstances applied based on Ohio Revised Code § 4123.61, which provides in relevant part that:

The average weekly wage of an injured employee at the time of the injury or at the time disability due to the occupational disease begins is the basis upon which to compute benefits.

In cases of temporary total disability the compensation for the first twelve weeks for which compensation is payable shall be based on the full weekly wage of the claimant at the time of the injury or at the time of the disability due to occupational disease begins; when a factory, mine, or other place of employment is working short time in order to divide work among the employees, the bureau of workers' compensation shall take that fact into consideration when determining the wage for the first twelve weeks of temporary total disability.

Compensation for all further temporary total disability shall be based as provided for permanent disability claims.

. . . . .

In cases where there are special circumstances under which the average weekly wage cannot justly be determined by applying this section, the administrator of workers' compensation, in determining the average weekly wage in such cases, shall use such method as will enable the administrator to do substantial justice to the claimants, provided that the administrator shall not recalculate the claimant's average weekly wage for awards for permanent total disability solely for the reason that the claimant continued working and the claimant's wages increased following the injury.

The decision was affirmed on appeal and the employer filed suit. The Industrial Commission argued that the regular AWW benefit included wages from a second job even without special circumstances. In addition to the unfairness, FedEx argued "that inclusion of wages from other, concurrent employment discourages claimants from continuing to work at the second job if they are medically able." The Court disagreed.

"R.C. 4123.61 refers to wages earned in the year prior to injury without qualification or exclusion." Indeed, R.C. 4123.61 . . . specifically states that the AWW includes wages for the year preceding injury without qualification or exclusion." Moreover, the Court did not believe that it was unfair because "if a claimant is so severely hurt at one job as to disable him or her from both, it is not unfair to compensate the individual for that cumulative loss. Second, the inclusion of two sets of wages was not considered unfair by the General Assembly when it promulgated R.C. 4123.61." Finally, the Court found the Industrial Commission's calculation of benefits to be within its expertise and discretion.

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 change or be 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.

Persistence Pays Off in Cuyahoga County Age Discrimination Claim When Only the Plaintiff Was Fired for Failing to Meet Sales Goals

Last week, the Cuyahoga County Court of Appeals reversed summary judgment in favor of an employer in an age discrimination claim when the plaintiff's evidence showed that he was fired in 2003 for alleged poor sales performance (in not meeting his sales goals for five consecutive years) even though the employer maintained the employment of younger salespersons whose sales quota were similar or worse, he was replaced by newly hired younger salespeople and the employer had taken away hi four largest accounts and reassigned them to younger salespeople before claiming his performance was unacceptable. Pattison v. W.W. Grainger Inc., 2010-Ohio-2484. The case bounced up and down the appellate chain on various procedural motions involving whether there was a final appealable order and timely appeal. However, when the merits of the trial court's summary judgment decision finally reached the court of appeals, it reversed the decision.

The Court of Appeals found two errors by the trial court. First, the trial court erred in finding that the plaintiff failed to satisfy his prima facie burden of proving that he was qualified for his position when it relied on the evidence asserted by the employer to justify his termination. The prima facie burden is not supposed to be difficult and the plaintiff had been employed in his sales position for more than 25 years before his termination. Former customers also spoke highly of him and several customers decreased the amount of their business with the employer after he was terminated. Thus, he was clearly "qualified" for purposes of his prima facie case.

Second, the Court of Appeals found that the plaintiff produced more than sufficient evidence of pretext to justify sending the case to a jury to resolve the factual disputes. To raise a genuine issue of fact as to pretext and defeat a summary judgment motion under this position, [a plaintiff] must show one of the following: "(1) that the proffered reason had no basis in fact, (2) that the proffered reason did not actually motivate the action, or (3) that the proffered reason was insufficient to motivate the action." First, the plaintiff produced evidence that he had been fired for failing to meet sales goals when at least five younger salespeople had similarly failed to meet the same goals and had not been terminated. Indeed, he showed that he had received performance warnings and reprimands from his new, younger, supervisor when similarly situated younger employees had similarly failed to meet the same sales goals, but were not reprimanded. On the contrary, one of the younger salespeople had been promoted even though his sales volume was less than plaintiff's volume and others were simply transferred. "Given that [the employer] transferred or promoted significantly younger TM's, who were not meeting sales goals, while terminating [the plaintiff], who was by no means the least productive, raises an inference that [the employer's] stated reason for terminating [the plaintiff] was pretextual." In fact, the court found that the employer's stated reason for his termination was false. It was also arbitrary in that the decision of when to fire a salesperson based on poor performance was left to the discretion of the manager instead of a formula.

Second, the plaintiff showed that his accounts were distributed among younger salespeople (two of whom were newly hired and one was hired four months earlier), which was evidence of setting up the plaintiff to fail and discriminatory animus. Third, he showed that in the year before his termination only 1 of the 13 territory managers (his position) met his sales goal for the prior year and that person had just been hired and did not have any performance goals. Indeed, the supervisor testified that the territory had failed to meet sales goals in five of the last seven years. Finally, the plaintiff alleged that the supervisor had forced out other, older salespeople like himself.

In light of the plaintiff's factual evidence, the court remanded the case back to the trial court for a jury trial.

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 change or be 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.

Sixth Circuit: Retired Employee Can Assert ERISA Claim Based on False Information Provided in Written Benefit Estimate

Last week, the federal Sixth Circuit Court of Appeals in Cincinnati issued a decision recognizing for the first time that a plaintiff can assert an estoppel claim against a pension plan under ERISA when the plaintiff relied to his detriment upon a written and certified estimate of his monthly retirement benefit in making his decision to retire and then was then told two years later that his actual benefits were substantially lower than the prior estimate, that his future benefits would be reduced accordingly and that he was requested to repay approximately $11,000 to the retirement plan. Bloemker v. Laborers Local 265 Pension Fund, No. 09-3536 (6^th Cir. 5/19/10). However, the Court affirmed the dismissal of the plaintiff's statutory and breach of contract claims.

According to the Court's opinion, the plaintiff's 2005 annual statement of status estimated that he "would be entitled to to a monthly benefit pension of

$2,666.99." Interested, he contacted the third-party administrator of his pension plan "to discuss the possibility of early retirement. He received a letter from her

stating that if he were to retire on April 1, 2005, he would be eligible for "approximately $2,564.00 per month, single life annuity, payable for your lifetime only."

Based on this, the plaintiff applied for early retirement benefits on February 10, 2005" and on March 1, 2005, he received a Benefit Election Form which was stamped by the TPA, stated that he would receive $2,339.47 per month for his life, and contained a certification stating:

Based on our records of your hours worked under the Plan and the contributions which have been made on your behalf, we hereby certify that you are entitled to receive the retirement benefit specified above, and that the amount shown for any optional forms of payment are equivalent to your basic benefit.

The plaintiff retired and in 2006 received a letter from the TPA indicating that a computer error caused it to miscalculate his early retirement benefits, that he was entitled to $500/month less than previously indicated and that he needed to repay the approximately $11,000 he had been overpaid to date. The plaintiff filed suit after exhausting his administrative remedies under the plan. In his suit, he alleged that the Plan and the TPA should be equitably estopped from denying him the larger retirement benefit on account of their material misstatements on which he relied to his detriment. He also alleged that the Plan and TPA breached a written contract to him in the application for benefits and that the TPA breached its statutory fiduciary duties to him. The trial court dismissed his claims

In the past, the Sixth Circuit has – unlike other circuit courts -- been reluctant to recognize estoppels claims against pension plans because estoppel "cannot be applied to vary

the terms of the unambiguous plan documents." In addition,

pension benefits are typically paid out of funds to which both employers and employees contribute. Contributions and pay-outs are determined by actuarial assumptions reflected in the terms of the plan. If the effective terms of the plan may be altered by transactions between officers of the plan and individual plan participants or discrete groups of them, the rights and legitimate expectations of third parties to retirement income may be prejudiced.

The Court remains unwilling to accept estoppels claims based on oral or verbal statements by low level employees which modify the written terms of the plan. "This policy concern is

greatly lessened when the representations at issue are made in writing, and, particularly here, where the representations constituted formal certifications."

Under Sixth Circuit precedent,

the elements of an equitable estoppel claim are: 1) conduct or language amounting to a representation of material fact; 2) awareness of the true facts by the party to be estopped; 3) an intention on the part of the party to be estopped that the representation be acted on, or conduct toward the party asserting the estoppel such that the latter has a right to believe that the former's conduct is so intended; 4) unawareness of the true facts by the party asserting the estoppel; and 5) detrimental and justifiable reliance by the party asserting estoppel on the representation.

The Court found these elements to be satisfied by the plaintiff's allegations in this case. It found the defendants' alleged gross negligence sufficient to constitute constructive fraud. Moreover, while it generally has found that a plaintiff can not prove justifiable reliance on a misrepresentation if the misstatement contradicted unambiguous plan documents, in this case, the plaintiff alleged that "it would have been impossible for him to determine his correct pension benefit given the complexity of the actuarial calculations and his lack of knowledge about the relevant actuarial assumptions."

We hold that a plaintiff can invoke equitable estoppel in the case of unambiguous pension plan provisions where the plaintiff can demonstrate the traditional elements of estoppel, including that the defendant engaged in intended deception or such gross negligence as to amount to constructive fraud, plus (1) a written representation; (2) plan provisions which, although unambiguous, did not allow for individual calculation of benefits; and (3) extraordinary circumstances in which the balance of equities strongly favors the application of estoppel.

The Court affirmed the dismissal of his fiduciary duty claims and breach of contract claims.

Section 1132(a)(1)(B) of ERISA provides that a plan beneficiary may bring suit "to recover benefits due to him under the terms of his plan." 29 U.S.C. § 1132(a)(1)(B). As discussed above, the written ERISA plan documents govern the rights and benefits of ERISA plan beneficiaries. . . . . Where a retirement plan creates benefits in excess of those established by ERISA, however, those rights may be enforceable in contract under federal common law. . . . Furthermore, when additional documents operate to modify or amend the plan, a beneficiary can rely on those modifications to determine his benefits. . . . .

However, the Benefit Election form submitted by the plaintiff "did not purport to be an amendment or a modification to the Plan. Nor did it purport to create a separate contract for benefits in addition to those provided by the Plan. Instead, it simply claimed to provide the actuarially certified benefit [the plaintiff] was entitled to, based on the Plan." Thus, there was no basis for asserting a claim for breach of contract.

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 change or be 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.