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German-style works council coming to Chattanooga?

September 13th, 2013  |  David Stephanides  |  Add a Comment

The United Auto Workers issued a statement on September 6 regarding its discussions about representation and a “works council” for Volkswagen’s new plant in Chattanooga, Tennessee. If fruitful, the discussions may lead to the introduction of a new labor relations model in the United States.

The term “works council” is foreign to U.S. labor law. According to WikiPedia, a works council is a “shop-floor organization including workers and executives that functions as local/firm-level complement to national labor negotiations. Works councils exist with different names in a variety of related forms in a number of European countries. Works councils safeguards employees’ collective interests and have three primary duties:

  1. The duty to work cooperatively and in good faith with trade unions and the employer
  2. The duty to preserve peace in the workplace. This means that it cannot initiate any form of industrial action to exert pressure on the employer.
  3. The duty to defend the principle of equal treatment with regard to age, and the personal development of staff members.

The works council has various rights according to the German Works Constitution Act, none of which are executive in nature. Only the employer can implement measures within the business unit, such as hiring, dismissal, operational changes, etc. Some of the rights of the work council include:

  1. Information Rights: The works council has a general right to be kept informed in detail and without delay in keeping its duties under the Works Constitution Act. The employer is obliged to give the works council a hearing before reaching a decision on certain matters and to take its arguments into account. However, management is not bound to accept these arguments. Most important is the right to be heard before every dismissal and informed of all reasons of the dismissal.
  2. Consultation Rights: The works council has the right to be consulted on such matters as workplace design and equipment, personnel planning, and vocational training. Again, the employer is not obliged to implement the works council’s proposals.
  3. Co-determination Rights: The most far-reaching rights of the works council are those of co-determination, which mean that measures cannot take effect until the works council’s approval is granted. Any social, personnel-related, and economic measures planned by the employer require the works council’s approval before they can be implemented.

According to Associated Press, the UAW’s regional director responsible for Tennessee, Gary Casteel, said September 13 that workers at the plant have signed authorization cards including a statement about wanting to join VW’s global works council and supporting cooperative and collaborative relations with the company.  In Germany, unions bargain for wages, while works councils weigh in on job security, safety and other plant-specific matters. So how the UAW’s role would intermesh with a works council is at this point somewhat unclear, but would be totally different from established relationships with U.S. automakers. 

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Employers beware: New “alt-labor” group could be coming to your neighborhood

September 11th, 2013  |  Pamela Wolf  |  Add a Comment

By Pamela Wolf, J.D.

For employers that aren’t already clued into the changing face of labor in the United States, the AFL-CIO’s 2013 Convention has provided a jolt of reality. Among the several resolutions approved at the federation’s big event, which kicked off September 8 in Los Angeles, is one that permits any U.S. worker to join the labor movement. The federation says it will develop new pathways, either through affiliate unions, AFL-CIO’s community affiliate Working America, worker centers, or through students. The union umbrella organization clearly intends to expand its outreach through so-called “alt-labor,” but it also will carefully avoid any detrimental impact on the unionized labor segment.

Expanding alt-labor presence. According to Resolution 5, transparently aimed at growth, the labor movement must be broad and inclusive, and “cannot be confined within bargaining units defined by government agencies or limited to workplaces where a majority of employees votes ‘Yes’ in the face of a ruthless campaign by their employer to deny them representation.”

Noting that the labor movement includes all workers who wish to take collective action to improve wages, hours and working conditions, the resolution says: “Our unions must be open to all workers who want to join with us. The AFL-CIO and affiliated unions must continue to innovate and experiment with new forms of membership and representation to achieve the ultimate objective of assisting all workers to bargain collectively through an affiliated union.”

For these and other reasons, the resolution says, the AFL-CIO and its affiliate unions should “expand existing forms and create new forms of membership to make membership available to any worker who wants to join the labor movement,” targeting those who are not already covered by a CBA, a union member, represented by a union, or included in an affiliated union’s organizing plan.

Via Resolution 5, the federation has invited “every worker in the United States to join the labor movement either through an affiliate or through Working American.” Working America is “another form of membership” created by the AFL-CIO — its alt-labor group.

Balance between Working America and union activity. “The AFL-CIO will continue to experiment with this form of membership in close cooperation with affiliates and without undermining affiliates’ current collective bargaining relationships or organizing plans and with the ultimate objective of enabling workers to obtain representation for purposes of collective bargaining through an affiliated union,” according to the resolution.

Reaching nonunion workers. To make these new, expanded, open forms of membership meaningful, democratic, and self-sustaining, Resolution 5 directs that the AFL-CIO, affiliates, and Working America shall:

  • Develop forms of workplace representation and advocacy that can benefit members outside collective bargaining by educating them about their workplace rights, providing assistance when their rights are violated, encouraging concerted action to redress workplace problems, and by other lawful means.
  • Seek to extend non-collectively bargained benefits to those members who are not represented for purposes of collective bargaining in cooperation with Union Privilege.
  • Provide members with education, training, and leadership development opportunities.
  • Mobilize these new members in electoral and other political efforts and in support of organizing drives and collective bargaining campaigns.

Resolution 5 also calls on the AFL-CIO and affiliated unions to “deepen their relationship” with worker centers and other emerging organizations that serve as advocates for workers not covered by a CBA, who are not union members, and are not represented by a union, with the aim to “better further the common objective of expanding the labor movement and raising workers’ standard of living.” The AFL-CIO and affiliated unions should also “renew and strengthen their ties to students, recognizing that students have a vital interest in working with union members to ensure that the workplaces they are about to enter are just, fulfilling and rewarding,” according to the resolution.

Traditional unions in decline. As virtually everyone knows, traditional unions in the United States are on the decline. According to the U.S. Bureau of Labor Statistics, the union workforce membership rate was 11.3 percent in 2012, down from 11.8 percent in 2011. In 1983, the participation rate was 20.1 percent. The public sector membership rate in 2012 was 35.9 percent as compared to a private sector rate of 6.6 percent. New York had the highest union membership rate in 2012 at 23.2 percent, and North Carolina had the lowest participation rate at 2.9 percent.

Controversy over nonunion organizations. But other labor advocacy efforts are on the rise. Indeed, the line between union and nonunion labor organizations is increasingly blurred. Many of the recent nationwide protests against low wages and lack of benefits in the fast food and retail segments, as well as those against Walmart, have been supported by unions.

In a July 23 letter, the House Committee on Education and the Workforce asked Secretary of Labor Thomas Perez to weigh in on the question of whether so-called “worker centers” are “labor organizations” or otherwise fall under the Labor-Management Reporting and Disclosure Act (LMRDA) and thus, are subject to annual filing requirements.

John Kline (R-Minn), Chairman of the Education and Workforce Committee and David P. Roe (R-Tenn), Chairman of the Subcommittee on Health, Employment, Labor and Pensions wrote: “In the last decade, the line between so-called ‘worker centers’ and labor organizations has blurred. Today, many of these ‘worker centers’ are dealing with employers directly on behalf of employees. Given these activities, a case has been made that at least some ‘worker centers’ are labor organizations as defined by the Labor-Management Reporting and Disclosure Act (LMRDA), which would make them subject to annual filing requirements.”

The two committee chairmen accordingly have requested an official determination as to the LMRDA filing requirements pertaining to worker centers, as well as all documents and communications used by the agency to reach its determination.

According to the committee chairmen, worker centers “have traditionally been ‘defined as community-based and community-led organizations that engage in a combination of service, advocacy, and organizing to provide support to low-wage workers.’” These organizations provide “information and training in workers’ rights, employment, labor and immigration law, legal services, the English language, and many other programs,” the chairmen wrote. They have, however also “taken direct action to alter conditions of employment and organize employees.”

Work councils coming? Another potential development is the importation of European-style work councils, as foreshadowed by a United Auto Workers statement, issued on September 6, regarding the union’s discussions about representation and a works council for the Volkswagen plant in Chattanooga, Tennessee. If fruitful, the discussions may lead to the introduction of a new labor relations model in the United States.

The UAW confirmed that officials of Volkswagen Group, the Volkswagen Global Works Council, and the UAW met in Wolfsburg, Germany, on August 30, in continuation of a series of meetings between their respective representatives. “The meeting focused on the appropriate paths, consistent with American law, for arriving at both Volkswagen recognition of UAW representation at its Chattanooga facility and establishment of a German-style works council,” the UAW said.

The UAW touted VW’s Global Labor Charter and its Social Charter, noting that they go beyond international labor standards to establish principles that govern labor relations and social matters, including remuneration systems, information and communication, training, occupational health and safety, social and ecological sustainability, labor standards at suppliers and, most recently, principles for the use of temporary workers. In addition, the Charter establishes annual labor-management meetings and gives employee bodies the right to hold workforce meetings at least once a year during which management informs the workforce on the economic situation and developments in the area of human resources and social matters, the UAW said.

“VW workers in Chattanooga have the unique opportunity to introduce this new model of labor relations to the United States, in partnership with the UAW,” according to the union. “Such a labor relations model would give workers the job security that would accompany their having an integral role in managing the company and a vehicle to provide input on workplace improvements that will contribute to the company’s success.”

Alt-labor vulnerability. Three questions employers might want to consider:

  • Is your workforce likely to be targeted by an alt-labor group, and if so, why?
  • Have you completed a workforce compensation analysis and compliance check recently with an eye toward determining worker satisfaction/organizing vulnerability?
  • Is there a process in place that gives workers a voice?

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Employers struggle with employee drug problems, both real and imagined

September 7th, 2013  |  Lorene Park  |  Add a Comment

By Lorene D. Park, J.D.

This past year, many headlines on employee drug use have focused on new state laws on the medicinal use of marijuana. Decisions out this summer, however, reflect a much wider array of concerns that employers should take to heart. These include the overuse of prescription medication, defamation based on false reports of addiction, and more. Wise employers will stay abreast of recent developments, make sure that their drug use policies comply, and train all supervisors and investigators on the importance of even-handed enforcement, maintaining privacy, and ensuring that decisions are grounded in fact and based on business necessity.

Overmedicated. Most cases concerning overmedicated employees seem to involve pain or anxiety medication. For example, in Shirley v Precision Castparts Corp, an employee had long been prescribed Vicodin to manage pain from work-related injuries. He started taking multiple prescriptions from different doctors and, after a near overdose, went on FMLA leave. He twice failed to finish drug treatment programs and was fired under a drug-free workplace policy. Affirming summary judgment for the employer on his FMLA and ADA claims, the Fifth Circuit found that the termination did not violate either law and that he was a “current” drug user, not covered by the ADA’s safe harbor provision.

In another case, an employee became depressed and anxious after his mother died; his doctor prescribed Klonopin (Schummer v Black Bear Distribution, LLC). When the employer learned he was overmedicating himself, it provided FMLA leave and helped him find a physician. Three weeks after he returned, he was observed slurring his words, nodding off, and standing with difficulty. He was fired for violating the employer’s policies and coming to work in an “unfit condition.” Granting summary judgment, the court found the employer had a legitimate reason for firing him and did not violate the FMLA or New Jersey law.

As these cases suggest, the fair, even-handed enforcement of a drug-free workplace policy is generally a legitimate reason for taking an adverse action against an employee, including termination. Indeed, despite all the media hype about the new medical marijuana laws and what they mean for employers, the same holds true in that context as well.

Medical marijuana. Most state medical marijuana laws do not relate directly to workplace drug testing and none require employers to accommodate marijuana use on duty. The ones prohibiting discrimination make exceptions where the level of THC (the active ingredient in marijuana) in the blood is high enough to impair an employee while at work. Significantly, regardless of state law, marijuana use continues to be illegal under federal law, leaving employees who use medical marijuana with little recourse against employers for actions taken based on that use.

For example, in Curry v MillerCoors, Inc, a court dismissed the wrongful discharge claim of an employee who was fired for testing positive for marijuana, even though he had a state license to use medical marijuana, had never used it on the employer’s premises, and was not under the influence at work. A positive test for marijuana, even from medical use, is a legitimate basis for discharge under Colorado law, the court noted. Moreover, the state’s “lawful activities” statute (which prohibits termination based on lawful activity off premises and after hours) did not save the claim because the term “lawful” refers to both state and federal law and the latter prohibits marijuana use. The employee’s disability discrimination claim also failed because there was no allegation that the employer enforced its policy in a disparate manner.

When employers are wrong. While proper enforcement of a drug-free workplace policy can shield an employer from liability, the converse is also true. As illustrated by Williams v FedEx Corp Serv, there are many ways that supervisors can take the wrong steps and, if that happens, an employer may end up paying for defamation, invasion of privacy, or other claims. In the FedEx case, an executive took medical leave for stress after his workload tripled due to reorganization. When his short-term disability was denied, the insurer allegedly informed FedEx that his leave was due to a drug/alcohol related illness and FedEx concluded he had self-reported drug use. It required him to enter treatment and to take 11 drug tests, all of which were negative. The court refused to dismiss his intrusion upon seclusion claim because a reasonable person would find it “highly offensive” to be forced into drug treatment despite the lack of a drug problem.

The executive’s defamation claims also survived against FedEx and the clinic where he had his drug tests. His supervisor allegedly denigrated him, spread false rumors that he tested positive for illegal drugs, and disclosed health information to others. As for the clinic, the executive was twice informed in front of other patients that he had been reported as testing positive in the past. A third time, he was required to do the urine test in the presence of a counselor. This was enough to state a defamation claim. Note that his ADA claim failed, however, because he did not show he had a disability under the Act or was regarded as such. In addition, though the court found it to be a closer question, his emotional distress claim also failed.

School your employees. It should go without saying that employers must school supervisors, investigators, and HR staff on the laws that apply when an employee is suspected of misusing prescription medication or using an illicit substance. Applicable laws vary depending on the circumstances. As far as federal laws, both the FMLA and ADA can apply, particularly if an employee takes leave and/or seeks treatment for an addiction. Note that obligations under the ADA can include making a reasonable accommodation for prescription medication and related side effects. In one case, an employer accommodated the side effects of an employee’s sleeping medication by allowing her one hour of unpaid leave every morning (Murry v General Serv Admin).

There are also Title VII discrimination cases involving the disparate enforcement of drug policies (e.g., Ivie v Exterran Energy Solutions, LP). Other laws that could apply include OSHA (which imposes a general duty to provide a safe work environment); the Drug Free Workplace Act of 1988 (which applies to federal contractors or grantees), and industry-specific regulations (e.g., DOT regulations require drug testing in some instances).

Common law claims are also a significant risk depending on how employers respond to suspected drug use. Anyone involved in an investigation or in decisionmaking should be trained on privacy-related claims such as false light and intrusion upon seclusion claims, as well as defamation, emotional distress, and other claims that can arise in this context. It would not hurt to point out the potential for individual liability. The fear of personally being sued can be a powerful motivator for supervisors and others to take the training to heart.

Policy considerations. When drafting or tailoring your policy to comply with laws applicable in your jurisdiction, consider the following:

  • Focus on promoting a safe, health, and productive environment
  • Follow the bounds of applicable law (use statutory language as necessary) when listing the types of conduct prohibited and the consequences for engaging in it
  • Identify when drug tests may be required (workplace accidents, erratic behavior, other reasonable grounds that are clearly defined in the policy)
  • Consider other standard provisions in drug policies, including standard at-will disclaimers, details on the logistics of a test (where it is done; who pays) and a release that gives the employer consent to receive test results, among other provisions

Decisions should be grounded. In general, make sure the policy is clear and uniformly applied. Require that decisionmakers have a legitimate business reason for taking any adverse action. In one case, for example, a welder who took medication for hand pain survived summary judgment on his ADA claim against a company that withdrew his conditional offer of employment because there was a dispute over whether its drug policy, which precluded narcotic use within eight hours of a shift, was based on business necessity (Huffman v Turner Industries Group, LLC). The court noted that the welder had evidence that he did not experience side effects, as well as statistical evidence that few workplace accidents were actually caused by the medication.

Also insist that supervisors, investigators, and HR reps have a solid basis for any conclusion that an employee has violated a drug policy (e.g., an admission or a positive test result). In light of the FedEx case, it wouldn’t hurt to limit the number of negative results it takes to end the matter (e.g., the court found 11 tests excessive, considering they were all negative). Given the vast potential for liability, every drug-free workplace or substance abuse policy should be reviewed by an attorney before use.

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Employers that ignore or fail to investigate sexual harassment will pay for it

September 5th, 2013  |  Lorene Park  |  Add a Comment

By Lorene D. Park, J.D.

In the past two months, courts have rendered decisions involving truly jaw-dropping sexual harassment claims. In fact, just yesterday I read a case where a TSA employee who reported sexual harassment (including two assaults on airport property) was allegedly coerced into signing a pre-written statement indicating the relationship was consensual (Marugame v Napolitano). Other cases have included supervisors who call female subordinates “work wife,” “slave,” and other inappropriate pet names; who detail their sexual prowess and offer their services; and worse.

As deplorable as some of this conduct is, it is even more troubling when employers fail to respond to complaints, conduct only a minimal investigation, or even retaliate against the person complaining. Interestingly, most, if not all of the employers in these cases have sexual harassment policies in place. The cases thus make it obvious that merely having a policy is not enough — it has to be reasonable and properly enforced, and there must also be an effective internal procedure for grievances that allow employees to bypass supervisors when necessary. Here are some recent examples of how not to respond to a sexual harassment complaint:

Ignoring complaints. A female dispatcher who described her alleged harasser as a “peeping tom” and “a persistent pest” who refused to take “no” for an answer, texted her repeatedly, wore short shorts with no underwear, recited love poems, and showed up to her chemotherapy appointment uninvited, survived summary judgment on her hostile work environment and constructive discharge claims (Hollis v Town of Mount Vernon). Her repeated complaints to both the acting police chief and the chief who was on leave resulted in no relief. The acting chief told her the mayor would not fire the male dispatcher and the only thing she could do was take it to the town council. When she started to stand during that night’s council meeting, the acting chief pulled her down and told her that they’d handle it in the morning. They didn’t. He was eventually fired for a different reason, but by then the employee had already resigned.

Appointing harasser’s BFF to investigate. In Miles v Davita Rx, LLC, Inc, an administrative assistant at a dialysis clinic complained (to the wrong person apparently) about her supervisor’s repeated sexual comments and conduct. Among other things, he called her his “work wife” and his “slave,” rubbed her shoulders as she worked, and positioned himself so she backed into his crotch when she moved boxes. He also made sure to point out to his female staff that he could fire them at any time. Fed up, the employee quit. She also wrote a note to higher-level executives detailing the harassment and they responded by putting the alleged harasser’s “dear friend,” an HR manager, in charge of an investigation. That investigation consisted entirely of an interview with the alleged harasser, who denied everything. The employer’s motion for summary judgment on the employee’s sexual harassment claim was denied.

The slap on the wrist. In another case, a legal secretary who the law firm knew had survived a violent rape in the past was repeatedly sent sexual emails by one of the attorneys for whom she worked, notwithstanding her repeated objections (Elster v Fishman). One was an email, which was jokingly set up to appear to be from a client, inquiring about the size of the attorney’s penis. Another included a picture of a naked woman who he proclaimed was his new trainer. After the employee complained to an office manager, a partner informed her that she would no longer be on the distribution lists. However, the same attorney who sent the prior emails sent another with a picture of a naked woman wearing only a Santa hat, and a message stating “Says she knows you!” The employee complained again and the attorney was made to apologize (insincerely, she believed). Soon, a printed email was given to the secretary that referred to an interlude between the attorney and his wife. On these facts, a California appellate court found the trial court erred in sustaining the defendants’ demurrer to her sexual harassment and intentional infliction of emotional distress claims.

Pleading “he said, she said.” In Arabalo v City of Denver, a corrections officer complained that she had been drugged and raped by two deputies. Her immediate supervisor’s response was to say it was a “he said, she said” situation and should be kept under wraps. Meanwhile, another supervisor often asked the employee what she was wearing, requested she lift her shirt, and suggested she sit on his lap for a “big surprise.” In addition, when the employee complained of sexual harassment by inmates and requested a transfer, she was told that it was her job to endure it. Although she was later fired for what the court found were legitimate reasons (mishandling funds; falsification of documents) and most of her claims failed, her hostile work environment claim against the employer survived a motion to dismiss.

Laughing at the situation. Based on evidence that a manager called an employee a “dumb f*cking c*nt” each day he saw her; displayed images of nude women, repeatedly said women do not belong in the oil field; told the employee not to waste her time applying for a job because she had “tits” and “bros before hoes;” and got angry that she would not have sex with a customer’s employee, a court rejected an employer’s argument that the alleged harassment was not sufficiently severe and pervasive to support a hostile work environment claim (Crooks v National Oilwell Varco, LP). Moreover, the employer could not defend its inadequate response to the employee’s repeated complaints — a regional manager laughed and told her it was a “joke.”

Retaliating against the victim. Another gem of a supervisor (de facto supervisor in this case) told a parks and recreation employee that he “owned” her (Lindquist v Tanner). He also hugged her, kissed her, called her at home, and frequently urinated in her presence. After she complained to the parks commission, not only did the harassment continue, but her hours were reduced and discussions of possible future full-time work ceased. Her job was eliminated but the commission retained two other part-time workers who did not complain. The court denied the employer’s motion for summary judgment on her hostile work environment claim and her retaliation claim.

Best practices

Employers must do a better job of responding to sexual harassment complaints than the employers in the above examples. To begin with, have an effective anti-harassment policy and enforce it. At a minimum, a policy should state:

  • that the company will not tolerate sexual harassment in the workplace; define “sexual harassment” clearly and succinctly; provide examples (e.g., touching, suggestive jokes or comments, flirtatious gifts, obscene gestures, blocking free movement, leering, graphic photos or cartoons, questions about personal life);
  • that managers at all levels are responsible for preventing harassment and must immediately report complaints or conduct by anyone (coworker, supervisor, or nonemployee) that may be harassment, even if it looked welcomed;
  • a procedure outlining multiple ways for employees to report harassment, e.g., a manager, a human resources rep, or a tip line;
  • that all reports will be investigated;
  • that there will be no retaliation for reports of harassment.

Merely having a policy is not enough, though — it must be enforced. Treat all complaints seriously and fully investigate, using an impartial investigator. Also, take intermediate measures during the investigation to protect the employee who complained. At the conclusion of the investigation, take appropriate disciplinary measures if called for. Check in again afterwards to make sure that the measures you took were effective and that any and all harassment has actually stopped.

An effective anti-sexual harassment policy, well enforced, does not just benefit employees; it also gives an employer the chance to defend a sexual harassment suit with the Ellerth/Faragher affirmative defense (for laypersons, this involves avoiding liability by showing the employer exercised reasonable care to eliminate harassment and showing the employee unreasonably failed to take advantage of preventative or corrective opportunities). Even if the Ellerth/Faragher defense turns out to be unavailable, the responsive and corrective measures taken by an employer to end harassment can go a long way to limiting subsequent liability.

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Court can’t disregard fluctuating workweek method in calculating overtime for store managers

September 3rd, 2013  |  Ron Miller  |  1 Comment

Most employees have probably never heard of the fluctuating workweek method (FWW) for calculating overtime pay. However, the concept has been around for nearly 70 years since the Supreme Court first recognized it in Overnight Motor Transp Co v Missel. Now found in Department of Labor regulations at 29 CFR Sec. 778.114. Under Missel, the FWW is the proper method of calculating overtime when an employee is paid a weekly wage and is expected to work fluctuating hours. But sometimes, even the courts get it wrong. That was the case in the district court ruling in Ramson v M. Patel Enterprises, Inc dba Party City, where the court adopted a magistrate judge’s unorthodox methodology for calculating overtime damages and disregarded the FWW method.

Following a jury’s finding that executive managers at certain Party City retail stores were misclassified as exempt from overtime compensation, the district court adopted the magistrate’s methodology for calculating overtime damages. Before the magistrate, the employees had argued for the “EZPawn” method, derived from In re EZPawn LP Fair Labor Standards Act Litig. Generally speaking, this method computes an employee’s “regular rate” of pay by dividing his weekly salary by 40, the number of hours in a standard workweek. An overtime payment of 150 percent of the regular rate for all hours worked over 40 during the workweek is then awarded. The employer, on the other hand, argued for application of the FWW method.

In Ramson, the magistrate divided the employees’ weekly salary by 55, the number of hours he found that their weekly salary was intended to compensate. According to the magistrate the employees had been paid for all hours they were entitled to for the hours zero to 40; for hours over 40 and up to 55, they had been paid their regular rate; and for hours over 55 they had not been paid at all. The magistrate awarded one-half the regular rate for each hour over 40 and up to 55, and for all hours over 55, they received one and one-half times their regular rate.

However, the Fifth Circuit found that there was no support in the record for the magistrate’s conclusion that the parties had an understanding that the employees’ salary was only intended to compensate for a set 55-hour workweek.

Length of workweek. According to the appeals court, the overwhelming evidence showed that the employees’ salary was intended to compensate for all hours worked, and that those hours would fluctuate. Consequently, the magistrate’s calculation — which rejected the FWW method — was based on a misunderstanding of the law and was clearly erroneously. Here, the understood arrangement was not a written agreement that clearly laid out the employees’ terms of employment, observed the appeals court. The magistrate, however, interpreted the parties’ mutual understanding to mean that the employees’ salary compensated specifically for 55 hours per week. Yet, the magistrate’s expressed findings did not support such a view. While there were numerous statements in the record indicating that employees were expected work a minimum of around 50 to 55 hours per week, none of those statements established that the store manager’s salary was intended to compensate for a set 55-hour workweek.

On the other hand, testimony that the magistrate did not consider clearly showed that the managers knew their hours would fluctuate and that their salary would not increase or decrease with those fluctuations. Moreover, the employer’s employment application explicitly stated that stores had extended hours for certain occasions, and applicants were asked: “Can you work flexible schedule where days and number of hours scheduled is different each week.” Further, a review of the weekly data revealed only a handful of times that any of the managers worked a precise 55-hour week, but more often 58 or 59 hours. Thus, the magistrate erred in finding that the mutual understanding was for a workweek specifically only for 55 hours.

Written agreement not required. The magistrate also erred in concluding that because the parties did not have a written agreement Missel did not require the use of the FWW. This assumption was wrong, concluded the Fifth Circuit. Rather, the appeals court observed that there is no authority that requires the agreement to be in writing. Moreover, the job application clearly indicated, in writing, that the employees understood their job included “flexible schedules” and “different hours each week.”

Rather, the appeals court observed that Blackmon v Brookshire Grocery Co was the controlling authority in the Fifth Circuit for resolving this case. Thus, Blackmon and Missel reflect the same instruction: FWW is the proper method of calculating overtime when an employee is paid a weekly wage and is expected to work fluctuating hours. Consequently, the ruling of the district court was reversed and the amount of damages vacated and remanded for recalculation.

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