Monthly Archives: October 2014

COMPLYING WITH WAGE AND HOUR LAWS: PAY EMPLOYEES THE RIGHT AMOUNT NOW OR PAY THEM — TWICE OR THREE TIMES — LATER

Many employers pay wages to employees without considering the laws they must comply with. Typically, employers are never “reminded” of these laws until they confront a Department of Labor audit or damages lawsuit from a disgruntled ex-employee.

The main law governing the payment of wages is the Fair Labor Standards Act (FLSA). The FLSA establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in federal, state, and local governments.   The FLSA is enforced by the United States Department of Labor (DOL). Various states, including Arizona, have their own laws regarding the payment of wages. The federal minimum wage is $7.25 per hour, but in Arizona it is $7.90 per hour. If a company’s state has a higher minimum wage than the federal minimum, the company must pay the higher amount.

PAYMENT OF OVERTIME

Unless specifically exempted, employees covered by the FLSA must receive overtime pay for hours worked in excess of 40 in a workweek at a rate not less than time and one-half their regular rates of pay. The overtime requirement may not be waived by agreement between the employer and employees. An agreement that only 8 hours a day or only 40 hours a week will be counted as working time does not affect an employer’s obligation to pay overtime. An announcement by the employer that no overtime work will be permitted, or that overtime work will not be paid unless authorized in advance, also will not impair the employee’s right to compensation for overtime hours that are worked. In short, employers should advise employees they can only work overtime that is authorized in advance. If an employee violates this policy, an employer may discipline the employee up to and including discharge — but the overtime still must be paid.

EXEMPTIONS FROM PAYING OVERTIME 

Certain employees are exempt from the FLSA’s overtime pay provisions. Exemptions are narrowly construed against the employer asserting them. Employers should always closely check the exact terms and conditions of an exemption in light of the employee’s actual duties before assuming that the exemption might apply. An employer that improperly categorizes an employee as exempt when, in fact, the employee does not so qualify can be liable for significant overtime pay, which may be doubled or tripled under the FLSA.

The most frequent FLSA exemption that confuses employers is the “administrative” exemption. The test to determine whether the administrative exemption is as follows: (1) the employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week; (2) the employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and (3) the employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

“Primary duty” means the principal, main, major or most important duty that the employee performs. “Directly related to management or general business operations” means an employee must perform work directly related to assisting with the running or servicing of the business, as distinguished, for example from working on a manufacturing production line or selling a product in a retail or service establishment. Work “directly related to management or general business operations” includes, but is not limited to, work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations; government relations; computer network, Internet and database administration; legal and regulatory compliance; and similar activities.

In general, the exercise of discretion and independent judgment involves the comparison and the evaluation of possible courses of conduct and acting or making a decision after the various possibilities have been considered. The term implies that the employee has authority to make an independent choice, free from immediate direction or supervision. Factors to consider include, but are not limited to: whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices; whether the employee carries out major assignments in conducting the operations of the business; whether the employee performs work that affects business operations to a substantial degree; whether the employee has authority to commit the employer in matters that have significant financial impact; whether the employee has authority to waive or deviate from established policies and procedures without prior approval, and other factors set forth in the regulation.

Wages may be determined on a piece-rate, salary, commission, or some other basis, but in all such cases the overtime pay due must be computed on the basis of the average hourly rate derived from such earnings. This is calculated by dividing the total pay for employment (except for the statutory exclusions noted above) in any workweek by the total number of hours actually worked.

REQUIRED RECORDKEEPING 

Every employer covered by the FLSA must keep certain records for each non-exempt employee. Employers must keep records on wages, hours, and other information as set forth in the DOL regulations. There is no required form for the records. However, the records must include accurate information about the employee and data about the hours worked and the wages earned.

An employer that fails to maintain proper records exposes itself not only to DOL penalties and fines, but also to increased employee wage claims. For example, if an employer fails to maintain records and an employee claims that he or she worked significant overtime, the DOL is more likely to accept the employee’s word when the employer possesses no records to refute the claim. This can result in substantial exposure for back wages — even for time that was never truly worked.

The following is a list of the basic payroll records that an employer must maintain:

  • Employee’s full name, as used for Social Security purposes, and on the same record, the employee’s identifying symbol or number if such is used in place of name on any time, work, or payroll records
  • Address, including zip code
  • Birth date, if younger than 19
  • Sex and occupation
  • Time and day of week when employee’s workweek begins
  • Hours worked each day and total hours worked each workweek
  • Basis on which employee’s wages are paid (e.g., “$9 per hour”, “$440 a week”, “piecework”)
  • Regular hourly pay rate
  • Total daily or weekly straight-time earnings
  • Total overtime earnings for the workweek
  • All additions to or deductions from the employee’s wages
  • Total wages paid each pay period
  • Date of payment and the pay period covered by the payment

Employers may use any timekeeping method they choose. For example, they may use a time clock, have a timekeeper keep track of employee’s work hours, or tell their workers to write their own times on the records. Any timekeeping plan is acceptable as long as it is complete and accurate.

Many employees work on a fixed schedule from which they seldom vary. The employer may keep a record showing the exact schedule of daily and weekly hours and merely indicate that the worker did follow the schedule. When a worker is on a job for a longer or shorter period of time than the schedule shows, the employer must record the number of hours the worker actually worked, on an exception basis.

CONCLUSION:  FOLLOW THE LAW OR ELSE!

Failure to comply with the FLSA and state wage laws can result in severe penalties and other consequences. Private lawsuits often result in the payment of double or triple damages plus attorneys’ fees if the employer is found liable.  The DOL uses a variety of remedies to enforce compliance with the FLSA’s requirements. When investigators encounter violations, they require changes in employment practices to bring the employer into compliance and demand payment of any back wages due to employees. In addition, willful violators may be prosecuted criminally and fined. A second conviction may result in imprisonment. For child labor violations, employers are subject to a civil money penalty of up to $11,000 per worker for each violation of the child labor provisions.  In Arizona, a bad faith failure to pay wages to employees can expose employers to damages of three times the amount actually owed.

Periodically perform self-audits to make sure you have properly categorized employees and are keeping adequate records. When in doubt, consult with legal counsel to determine if an employee is truly exempt and how best to ensure that you do not do anything to jeopardize that exemption (e.g. docking an exempt employee an hour of pay when they are late forfeits the exemption; a poor job description can be used against an employer to establish a non-exemption).

EBOLA: WHAT EVERY EMPLOYER SHOULD KNOW

Businesses should always be prepared to deal with viruses or sick employees.  The Ebola situation is real and not going away soon. Let’s walk thru what your business can do to be prepared in the face of Ebola or any potential pandemic (a“pandemic” is a global “epidemic”).

WHAT IS EBOLA

Ebola is a rare and deadly disease caused by infection with one of the Ebola virus strains.

Ebola is caused by infection with a virus. It was first discovered in 1976 near the Ebola River in what is now the Democratic Republic of the Congo. Since then, outbreaks have appeared sporadically in Africa. The natural reservoir host of Ebola virus remains unknown. However, researchers believe that the virus is animal-borne and that bats are the most likely reservoir. 

SYMPTOMS OF EBOLA

  • Fever (greater than 38.6°C or 101.5°F)
  • Severe headache
  • Muscle pain
  • Weakness
  • Diarrhea
  • Vomiting
  • Abdominal (stomach) pain
  • Unexplained hemorrhage (bleeding or bruising)

Symptoms may appear anywhere from 2 to 21 days after exposure to Ebola, but the average is 8 to 10 days. 

HOW TO PROTECT AGAINST EBOLA

The United States Centers for Disease Control and Prevention (CDC) provides the following advice to protect against Ebola:

  • Wash hands frequently or use an alcohol-based hand sanitizer.
  • Avoid contact with blood and body fluids of any person, particularly someone who is sick.
  • Do not handle items that may have come in contact with an infected person’s blood or body fluids.
  • Do not touch the body of someone who has died from Ebola.
  • Do not touch bats and nonhuman primates or their blood and fluids and do not touch or eat raw meat prepared from these animals.
  • Avoid hospitals in West Africa where Ebola patients are being treated. The U.S. Embassy or consulate is often able to provide advice on medical facilities.
  • Seek medical care immediately if you develop fever (temperature of 100.4°F/ 38.0°C or higher) and any of the other following symptoms: headache, muscle pain, diarrhea, vomiting, stomach pain, or unexplained bruising or bleeding.
  • Limit your contact with other people until and when you go to the doctor. Do not travel anywhere else besides a healthcare facility.

The EEOC has provided guidelines for “Pandemic Preparedness in the Workplace.” The following questions and answers discuss employer rights when confronting serious health issues:

May an employer send employees home if they display influenza-like symptoms during a pandemic?

Yes. The CDC states that employees who become ill with symptoms of influenza-like illness at work during a pandemic should leave the workplace. Advising such workers to go home is not a disability-related action. Additionally, the action would be permitted under the ADA if the illness were serious enough to pose a direct threat.

During a pandemic, how much information may employers request from employees who report feeling ill at work or who call in sick?

ADA-covered employers may ask such employees if they are experiencing influenza-like symptoms, such as fever or chills and a cough or sore throat. Employers must maintain all information about employee illness as a confidential medical record in compliance with the ADA.

If pandemic influenza becomes severe, the inquiries, even if disability-related, are justified by a reasonable belief based on objective evidence that the severe form of pandemic influenza poses a direct threat.

During a pandemic, may an employer take its employees’ temperatures to determine whether they have a fever?

Generally, measuring an employee’s body temperature is a medical examination. If pandemic influenza symptoms become more severe than the seasonal flu, or if pandemic influenza becomes widespread in the community as assessed by state or local health authorities or the CDC, then employers may measure employees’ body temperatures.

When an employee returns from travel during a pandemic, must an employer wait until the employee develops symptoms to ask questions about exposure to pandemic during the trip?

No. These would not be disability-related inquiries. If the CDC or state or local public health officials recommend that people who visit specified locations remain at home for several days until it is clear they do not have pandemic symptoms, an employer may ask whether employees are returning from these locations, even if the travel was personal.

During a pandemic, may an employer ask employees who do not have symptoms to disclose whether they have a medical condition that the CDC says could make them especially vulnerable to complications?

No. If pandemic influenza is like seasonal influenza or the H1N1 virus in the spring/summer of 2009, making disability-related inquiries or requiring medical examinations of employees without symptoms is prohibited by the ADA. However, under these conditions, employers should allow employees who experience flu-like symptoms to stay at home, which will benefit all employees including those who may be at increased risk of developing complications.

If an employee voluntarily discloses (without a disability-related inquiry) that he has a specific medical condition or disability that puts him or her at increased risk of influenza complications, the employer must keep this information confidential. The employer may ask him to describe the type of assistance he thinks will be needed (e.g. telework or leave for a medical appointment). Employers should not assume that all disabilities increase the risk of influenza complications. Many disabilities do not increase this risk (e.g. vision or mobility disabilities).

If an influenza pandemic becomes more severe or serious according to the assessment of local, state or federal public health officials, ADA-covered employers may have sufficient objective information from public health advisories to reasonably conclude that employees will face a direct threat if they contract pandemic influenza. Only in this circumstance may ADA-covered employers make disability-related inquiries or require medical examinations of asymptomatic employees to identify those at higher risk of influenza complications.

May an employer encourage employees to telework (i.e., work from an alternative location such as home) as an infection-control strategy during a pandemic?

Yes. Telework is an effective infection-control strategy that is also familiar to ADA-covered employers as a reasonable accommodation.

In addition, employees with disabilities that put them at high risk for complications of pandemic influenza may request telework as a reasonable accommodation to reduce their chances of infection during a pandemic.

During a pandemic, may an employer require its employees to adopt infection-control practices, such as regular hand washing, at the workplace?

Yes. Requiring infection control practices, such as regular hand washing, coughing and sneezing etiquette, and proper tissue usage and disposal, does not implicate the ADA.

During a pandemic, may an employer require its employees to wear personal protective equipment (e.g., face masks, gloves, or gowns) designed to reduce the transmission of pandemic infection?

Yes. An employer may require employees to wear personal protective equipment during a pandemic. However, where an employee with a disability needs a related reasonable accommodation under the ADA (e.g., non-latex gloves, or gowns designed for individuals who use wheelchairs), the employer should provide these, absent undue hardship.

During a pandemic, may an employer ask an employee why he or she has been absent from work if the employer suspects it is for a medical reason?

Yes. Asking why an individual did not report to work is not a disability-related inquiry. An employer is always entitled to know why an employee has not reported for work.

Example: During an influenza pandemic, an employer directs a supervisor to contact an employee who has not reported to work for five business days without explanation. The supervisor asks this employee why he is absent and when he will return to work. The supervisor’s inquiry is not a disability-related inquiry under the ADA.

May an ADA-covered employer require employees who have been away from the workplace during a pandemic to provide a doctor’s note certifying fitness to return to work?

Yes. Such inquiries are permitted under the ADA either because they would not be disability-related or, if the pandemic influenza were truly severe, they would be justified under the ADA standards for disability-related inquiries of employees.

As a practical matter, however, doctors and other health care professionals may be too busy during and immediately after a pandemic outbreak to provide fitness-for-duty documentation. Therefore, new approaches may be necessary, such as reliance on local clinics to provide a form, a stamp, or an e-mail to certify that an individual does not have the pandemic virus.

NOTE: These questions and answers were developed by the EEOC in response to the 2009 H1N1 virus. While each disease and situation is unique, the questions and answers should apply generally .   However, just as the Ebola situation is evolving, so too may the EEOC’s guidelines and the law. This article is not intended as a substitute for seeking legal advice regarding your particular workplace decisions.

 

 

 

SEVEN STEPS TO EFFECTIVELY ADMINISTERING DISCIPLINE

 

Each situation requiring employee discipline is unique. However, the following guidelines will help employers ensure that discipline is meted out fairly and properly:

1.    Act timely

  • When information comes to your attention indicating that misconduct may have occurred, you should act promptly. You should begin to investigate the situation, and possibly even suspend the employee involved pending the investigation, immediately.
  • If management delays in taking action, it may be found to have condoned or tolerated the misconduct, and may thereby lose its ability to administer effective, and necessary, discipline. If there is delay, a potential plaintiff may also contend that the misconduct was not sufficiently serious to warrant discipline, because if it was so serious management would not have waited so long to take action.

2.    Know the Company’s Rules of Conduct, Policies, and Practices

  • Obviously, in order to determine whether misconduct has occurred and to determine whether discipline is warranted, you need to know the applicable policies and rules.

3.   Investigate, Investigate, Investigate

  • It is critical that all of the relevant facts be obtained before making a decision as to what discipline, if any, should be meted out. Making such decisions based upon incomplete facts is not fair to the employee involved, co-workers, or the Company.
  • Good, thorough investigations are also an important element in prevailing in lawsuits concerning discipline.

4.   Give the Accused Employee a Chance to Tell His/Her Story

  • Before deciding what discipline, if any, to impose, give the employee under investigation a chance to give his/her version of the events.
  • This should be done even when you believe there is nothing the employee can tell you that would affect the outcome. Talking to the employee insures that a fair investigation has been conducted and that all facts and viewpoints have been obtained.

5.   Be Consistent in Determining the Appropriate Discipline to be Imposed

  • You should be consistent in the discipline that is used. This means that similar situations should result in similar discipline. However, situations which on the surface appear to be similar often turn out not to be when all the details are known. Again, this is why a careful, thorough investigation is so important.

6.    Inform Employee of What Will Happen if Further Misconduct Occurs

  • With respect to discipline for future misconduct, generally it is appropriate to say something like the following: “Any future misconduct on your part will result in further discipline, including possibly discharge.”

7.   Document Warning and Disciplinary Discussions

  • You should note who was present during the discussion, when it occurred, and summarize what was said. This written record of the discussion should be made on the same day it occurs.
  • Such documentation will, if necessary, enable the Company to show that the employee was specifically informed as to what was expected of him/her and what the consequences would be if the employee failed to meet the Company’s expectations.

 

 

THE DARK SIDE OF EMPLOYEE DISCIPLINE

Pretext

ˈprēˌtekst/

noun

A purpose or motive alleged or an appearance assumed in order to cloak the real intention or state of affairs.

HR Law Insider’s most recent article discussed the benefits of employee discipline. Implicit in the discussion is that discipline must be legitimate and proportionate. This article discusses when discipline is pretext: a bogus reason to get rid of a good employee.

Earlier this year a Staples employee was awarded 26 million dollars by a jury after it concluded that Staples’ reason for firing him was pretext. It was the largest award of its kind in Los Angeles legal history. The jury appears to have been incensed by an employer that was looking for a reason to fire an employee with a perfect track record. Staples purportedly fired the employee for “theft.” The jury concluded that this was not the real reason the employee was fired.

PRE-TERMINATION QUESTIONS EVERY EMPLOYER SHOULD ASK

A business can always find a purported “reason” to fire an employee. Before that decision is made, however, the business should consider:

  • What is the employee’s past work record? If it is good, then the termination may be deemed pretext.
  • Is there any record of the employee complaining or uncovering improper conduct by the company? If so, the risk of a pretext finding rises dramatically.
  • What are the chances the now ex-employee will bring a lawsuit against the company? What sort of claims can be brought and what is the company’s potential exposure?
  • How will the ex-employee appear before a jury? Does he or she have an exemplary past?
  • How will your own employees and ex-employees appear? Do they uniformly support your position or will some provide evidence against you?
  • What will it cost in dollars, time, and bad publicity to defend a lawsuit?
  • Can there be collateral damage (lost contracts/clients, penalties, etc.)?

Failing to identify and correctly answer these questions can result in massive pain.

SUNK COST FALLACY: DO NOT COMPOUND A BAD DECISION WITH ANOTHER BAD DECISION

Staples compounded a bad decision – the discharge of the employee with the good work record – with a worse decision: defending the bad decision. Defending the bad decision cost Staples not only hundreds of thousands of dollars in its own attorneys’ fees, but a gigantic jury verdict and horrible publicity.

Staples was guilty of “sunk cost fallacy” thinking. This occurs when one (a) reasons that a further expenditure of time or money is warranted based on past expenditures or to defend past positions but (b) fails to take into account potential losses involved in the further investment.

Toughness is a virtue. There is, however, a fine line between bravery and stupidity. “Digging in” often deepens the hole of a bad decision or poor investment.  Once a business has made a decision or investment it cannot take back, it should determine the best way forward. Sunk cost fallacy thinking can be very expensive.

I WON’T BACK DOWN

This edition’s video was recorded 10 days after September 11, 2001. As sadness, anger, pride, and revenge occupied many of our of hearts and minds, Tom Petty and the Heartbreakers performed a song that fit the day: “I Won’t Back Down.” 13 years later we continue to grapple with the events of 9/11, the wars that ensued, and whether our politicians have engaged in sunk cost fallacy thinking.

 

HISTORICAL POSTSCRIPT:  REMEMBER THE CONCORDE JET?

The sunk cost fallacy is sometimes known as the “Concorde Fallacy.” It refers to the British and French governments’ continued funding of the Concorde jet even after it became apparent that there was no longer an economic case for the aircraft. The project was regarded privately by the British government as a “commercial disaster” which should never have been started, and was almost cancelled, but political and legal issues made it impossible for either government to pull out.

 

 

 

THE FORMULA FOR MAKING GOOD HR DECISIONS

Employment lawyers routinely field calls from business clients asking for help assessing whether they are “safe” terminating particular employees. No two fact scenarios are identical. Thus, there is no precise methodology to guide such decisions.

There is, however, a solid and time tested general formula I have developed for helping businesses make good workplace decisions. It derives from a 1944 case that is required reading for all first year law students. In Carroll Towing, a flour filled barge in New York Harbor broke loose and crashed into a number of other ships, causing lots of mayhem – and damages.

What does a 1944 runaway barge case have to do making workplace decisions in 2014? Plenty. The judge’s reasoning in Carrol Towing applies to workplace decisions as well:

Since there are occasions when every vessel will break from her moorings, and since, if she does, she becomes, a menace to those about her; the owner’s duty, as in other similar situations, to provide against resulting injuries is a function of three variables: (1) The probability that she will break away; (2) the gravity of the resulting injury, if she does; (3) the burden of adequate precautions. Possibly it serves to bring this notion into relief to state it in algebraic terms: if the probability be called P; the injury, L; and the burden, B; liability depends upon whether B is less than L multiplied by P: i.e., whether B < PL.

Substitute “employee” for “vessel” and let’s walk through dealing with a problem employee. In deciding whether to discipline the employee you should consider (1) the possibility of further infractions, (2) the gravity of harm if the employee continues to misbehave, and (3) the burden of disciplining the employee or of other preventive action.

Prudent employers recognize that in most cases the “burden” of disciplining employees is slight when compared to downside of doing nothing. Two separate risks arise when employers do nothing in the face of workplace infractions or nonperformance. First, the risk of further infractions and ongoing nonperformance rises. These problems in turn hurt the company’s productivity and can cause safety and  morale problems, among others.

Second — and arguably far worse — failing to timely discipline an employee causes increases the risk of a successful wrongful discharge lawsuit. This occurs because the employer has either (a) allowed a misbehaving employee to continue unabated or (b) terminated an employee with a seemingly clean work record.

Let’s apply Carroll Towing to two hypothetical situations and watch it work against imprudent employers:

Hypothetical I: Company A has a high revenue producing male employee who enjoys harassing female employees. This creates a high probability that there will be a claim of sexual harrassment.   It is also likely that the company will be in a lawsuit and exposed to damages and bad publicity. The gravity of the resulting injury is high – like that of a runaway barge.

Company A, however, does nothing because it (1) is willfully ignorant of the probability and gravity of a discrimination lawsuit and (2) perceives the burden of disciplining the large revenue producer to be too great. Company A may likely get what it deserves: protracted legal proceedings, lots of wasted time, and multiple checks written to attorneys and plaintiffs.

Hypothetical II: Company B has a poorly performing employee that is over 40, in a minority group, and has a physical disability. The employee is not performing well and is frequently late to work (unrelated to the disability). The employer fails to understand the risk and gravity of ongoing nonperformance and fails to take the simple act of disciplining the employee.

Company B “wakes up” at some point and realizes it must terminate the nonperforming employee, who is crushing morale and productivity and can be replaced by a newfound superstar candidate. But it is too late.  The company should long ago have realized the possibility and the gravity of a Title VII charge of discrimination if it terminated the employee before there was any written record of the employee doing anything wrong.

By failing to take the simple step of disciplining the employee, Company B is now stuck on the horns of a dilemma: either fire the employee and risk a discrimination lawsuit because there is no record of nonperformance, or retain a lousy employee.

Understanding the probability and gravity of workplace problems allows businesses to take reasonable precautions to avoid them. It’s a simple formula to understand and apply.  The next time your business confronts a problem employee, evaluate:  what can the company do to reduce or eliminate the potential and magnitude of future problems.

SIDE STORY:  Back in the day — the Big 80s — I was an ocean lifeguard on Hollywood Beach, Florida.  The potential for drownings was high when weighed against the precaution of carefully watching my section of the beach/surf.

Ironically, the best lifeguards on our beach had the fewest saves.  Why?  Because a good guard quickly sees and understands a problem swimmer or bad surf or wind conditions.  This enables the guard to takes measures — moving a swimmer away from a rip current — before a rescue becomes necessary.  When company managers have the training and smarts to identify “rip currents” among employees, they too will prevent crises before they occur.

Carroll Towing applies to any number of situations in life. This week’s video pays tribute to the 29 men who died on November 10, 1975, aboard the Edmund Fitzgerald in Lake Superior. You’ve likely heard the great ballad by Gordon Lightfoot which chronicles the disaster. If you like the song, you will love this touching video (turn up the volume):

 

HOOTERS’ EMPLOYEES HAVE THE LAST LAUGH: HR LESSONS FROM A RIGGED BIKINI CONTEST

Truth is stranger than fiction. Fiction has to make sense.                                       

Mark Twain

One would think that it is lawful to maintain a work policy that “prohibits all insubordination to a manager or lack of respect and cooperation with fellow employees or guests.” This is no longer true. A judge recently ruled that such a policy violates the law.

The judge’s decision arose from a rigged bikini contest at Hooters. But do not confuse the novelty of the event with the applicability of the ruling to businesses nationwide. The next time a company thinks about terminating an employee for badmouthing it on Facebook or flaming it on Twitter, that company first needs to understand the Hooters’ case and assess the risk of an unlawful discharge lawsuit.

WHAT HAPPENED AT HOOTERS: KEY LIME PIES AND A BIKINI CONTEST GONE AWRY

Problems began at Hooters when an employee heard the company’s General Manager disparaging another “Hooter Girl”: “Angie eats too many key lime pies after her shift and she needs to go to the gym, rather than laying around with her boyfriend. And that she’s starting to look really bad in her uniform.”

Problems worsened when Hooters’ management sent a memo to employees about an upcoming bikini contest:

Hey Ladies, If you are not signed up for the contest you WILL be working that night. But to clarify if you have your name on the list and you plan on backing out cross your name off the list by Friday. If you are signed up for the contest and do not show up it will be a no call no show by our regional and GM and you WILL BE TERMINATED. Also you MUST be here by 8:30 p.m. If you are late you will not be allowed to enter the contest and you will work the floor that night like it was a scheduled shift. Any questions or if I’m not clear let me know.

This morale killing memo set the stage for post-bikini contest ugliness. The contest ended around midnight, with many tired and angry contestants. Several among the disgruntled and defeated complained that the contest had been rigged. After all, the winner was Hooters’ Marketing Coordinator who helped arrange the contest.

A particularly upset Hooter Girl told the winner, who was part of Hooters’ management, “Congratulations on cheating.” Other employees were not so understated, telling the winner “you’re an f%$ing bitch,” among other not so flattering comments.

Hooters’ Vice President of Human Resources abruptly fired the employee who made the “cheating” comment. The terminated employee was given the following notice:

On April 22, 2013 after the Ontario Swim Suit Competition you got into a verbal altercation with other employees, as well as posting disparaging comments about coworkers and managers on Social Media. This behavior violated the following provisions of the “Discipline” section of the Hooters employee handbook:

  • Acts of violence, threats of violence, dishonesty toward guest or fellow employees of Hooters.
  • Insubordination to a manager or lack of respect and cooperation with fellow employees or guest.
  • Any off-duty conduct which negatively affects, or would tend to negatively affect, the employee’s ability to perform his or her job, the Company’s reputation, or the smooth operation, goodwill or profitability of the Company’s business.
  • Any other action or activity which Hooters reasonably believes represents a threat to the smooth operation, goodwill, or profitability of the business.

THE LAWSUIT

The fired employee challenged the decision as being unlawful. The judge agreed. He found that the complaining employee had engaged in “protected concerted activity” under the National Labor Relations Act (the “Act”). Under the Act, if “employees are fired, suspended, or otherwise penalized for taking part in protected group activity, the National Labor Relations Board will fight to restore what was unlawfully taken away.” See http://www.nlrb.gov/rights-we-protect/protected-concerted-activity.

The judge also found numerous provisions of Hooters’ handbook to be unlawful. He concluded that Hooters was “maintaining the following overly broad work rules”:

(a)        That prohibit employees from discussing tips with other employees or guest.

(b)        That prohibits all insubordination to a manager or lack of respect and cooperation with fellow employees or guests.

(c)        That prohibits employees from disrespecting guests by discussing tips with guest or making negative comments or actions to guests.

(d)       That prohibits dispersal of sensitive Company operating materials including policies, procedures, financial information, and Company manuals.

(e)        That prohibits any action or activity affecting the Company’s smooth operation, good will, or profitability of its business.

(f)        That prohibits off-duty conduct which would tend to negatively affect employees ability to perform their jobs or the smooth operation, good will, or profitability of the Company’s business.

(g)        That prohibits employees from discussing the Company’s business or legal affairs with anyone outside the Company.

(h)        That prohibits employees from publishing on their social networking sites any confidential or proprietary information of the Company.

(i)         That prohibits employees from being disrespectful to the Company, other employees, customers, partners, and competitors, posting no offensive language or pictures and no negative comments about the Company or coworkers or posting any information regarding a coworker or the Company.

THE BIG PICTURE FOR COMPANIES

The judge’s decision seems extreme — and it is. Times have changed. So too must company decision makers. Gone are the days when a company can terminate first and think later when an employee disparages the company.

Not all employee conduct is protected. There are boundaries. There is a point at employee conduct goes beyond protected dissent and becomes unprotected misconduct. Determining when that point has been reached is oftentimes challenging. This is particularly so given the government’s growing zeal in prosecuting so-called “Section 7” cases (Section 7 of the National Labor Relations Act prohibits terminating employees for engaging in protected concerted activity).

Next week’s HR Law Insider will analyze real world court cases in which judges have decided specific employee conduct which is protected, versus employee misconduct that is not protected. The objective: to provide your business with guidelines for handling employee dissent, whether it arises on Facebook, Twitter, or in the unlikely event your business decides to rig a bikini contest.

This week’s video recognizes that whether one is in the 1960’s or 2014, the times they are a changin’.