Millennials love information. Information means transparency. And that means pay equity cannot hide. A case in point: The EEOC prevailed where two high school friends, Jensen Walcott and Jake Reed, applied to work at Pizza Studio as “pizza artists” in 2016. After both were interviewed and offered jobs, Walcott and Reed discussed their starting wages. Upon learning that Reed–the male– was offered 25¢ more per hour, Walcott called the restaurant to complain about the unequal pay. When she did so, the company immediately withdrew its offers of employment from both Walcott and Reed. Not the best practice, maybe the worst.
The Kansas federal court ordered that compensatory, liquidated and punitive damages be paid by the store’s holding company (the store had closed). A very expensive lesson learned:
We can help. Check out our Pay Equity Service http://www.foleyworkplacelaw.com/pay-equity-audit-service.htm
Take the case of “The Jumping Toy” a/k/a the “SkyDriver”. The inventor, Will Isaksson, entered into an oral royalty sharing agreement with marketer, Craig Nadel and his company, Design O Matic, to market a toy known as “the Modified Kenner Car”. The parties to the oral contract agreed to evenly split any royalties. However, because they failed to commit their agreement to writing, the parties soon crashed into a costly and protracted lawsuit concerning several important contract terms.
As luck would have it, Isaksson altered the design of the Modified Kenner Car by adding a fin. This fin made the toy jump. Isaksson naturally called the toy “the Jumping Toy”, and he presented it to Nadel for possible marketing. Isaksson wanted the toy marketed to Hasbro, but Nadel suggested a smaller company. This disagreement drove Isaksson to go direct to Hasbro with the toy. Hasbro agreed to sell the toy under the name “SkyDriver”, and the toy generated approximately $535,000.00 in royalties.
As you might expect, Nadel demanded 50% of the royalties from the SkyDriver and Isaksson refused. For his part, Isaksson alleged that the oral agreement with Nadel was limited to the Modified Kenner Car and any royalties generated by it. Nadel meanwhile alleged that the oral agreement covered any toy that arose out of the design underlying the Modified Kenner Car.
In April 1998, the parties wheeled their dispute into the United States District Court for resolution. In December 1999, nearly 20 months later, the case was tried to a jury and Nadel won. The jury decided that the SkyDriver was not a new toy but merely a modification of the Modified Kenner Car, and therefore covered by the oral royalty sharing contract. The jury awarded Nadel his share of the royalties. But this toy story did not end there…
The case was appealed by Isaksson. And, in February 2003 nearly five years after the lawsuit was filed, the Appellate Court decided the appeal. The Appeals Court accepted the jury’s determination that the SkyDriver was not a new toy. However, the Appeals Court also ruled that there was another critical question that the jury needed to answer before deciding the case. The Appeals Court sent the case back to the trial court and the jury to decide whether or not Nadel earned his share of the royalties under the oral contract. The specific questions that the Appeals Court required the jury to answer – (1) what performance the Modified Kenner Car agreement required of Nadel for him to earn a share of the royalties, and (2) whether Nadel fulfilled those performance obligations?
The parties ended up resolving this dispute in a confidential settlement before returning to the jury for answers to these additional questions. However, neither party could take a victory lap in this case, having spent too many years fighting and thousands upon thousands of dollars on lawyers. This dispute could have been avoided with a well-crafted contract.
Do you want to lower your risk of a contract dispute and avoid Court? We can help!
You can reach us at 508.548.4888 or firstname.lastname@example.org
© Foley & Foley, PC 2017
Clients often receive pressing, official-looking notices urging the purchase of mandatory employment law postings. While you do have to post, you do not have to buy. Although some states also try to sell posters
which is really cheap, all required postings are available free of charge (keep scrolling). Please see the links below, from the federal government and states where we practice:
New Hampshire: https://www.nh.gov/labor/forms/mandatory-posters.htm
North Carolina: http://www.nclabor.com/posters/posters.htm
As always, should you have any questions including information for additional state postings, please contact us. We can help. Mike@foleylawpractice.com or 508-548-4888
Happy Memorial Day! For many, this is a day to honor fallen soldiers and also a time to get ready for summer.
Have you done the following?
If you answered “No” to any one of these questions, we can help! Read on.
It is outside our wheelhouse but we do like to be helpful. See the latest list from Consumer Reports. http://www.consumerreports.org/sun-protection/get-the-best-sun-protection/
In 2016 alone, California, New York, Nebraska, Maryland and Massachusetts passed aggressive equal pay legislation. If you are not in this group, the EEOC’s proposed expansion to the EEO-1 reports means more pay data will be required from federal contractors and employers with more than 100 employees.
Do I Need to Buy More Software?
Absolutely not. By now you may have seen software solicitations touting the importance of statistical analysis to comply with pay equity. Beware. Sizes matters: unless an employer has a significant number of employees performing the same role and a statistically significant amount are women, a statistical analysis will not produce reliable results. Most of our clients should perform a cohort analysis, which better compares the factors affecting pay.
Why Should I Use Your Pay Equity Audit?
By partnering with an attorney, the process is protected by the attorney-client privilege. Any pay equity found will be kept strictly confidential. Moreover, in Massachusetts you create a rolling affirmative defense by conducting an evaluation of pay practices if it is completed within three years prior to the commencement of a wage discrimination claim. We have developed an effective and painless Pay Equity Audit to achieve compliance and create an affirmative defense.
The effective date of the MA Pay Equity Law is July 1, 2018. Many of you are planning for 2018 in your budgets and hiring. Include Pay Equity in that list to be compliant and create the rolling affirmative defense against any future claims.
Software slamming aside, Bill Gates is a pretty smart guy. His summer reading list looks terrific. Check it out! https://www.gatesnotes.com/About-Bill-Gates/Summer-Books-2017?WT.mc_id=05_22_2017_10_SummerBooks2017_BG-media_&WT.tsrc=BGmedia
MIDYEAR HANDBOOK AND DIAGNOSTIC AUDIT
Probably not high on your reading list but terribly important is your employee handbook. When is the last time you read it? We recommend that you review and update your handbook on an annual basis. Now is a particularly good time given the many local and state law updates. Marijuana, equal pay, paid family leave, sick leave—many changes have taken place that are probably not properly addressed in your handbook.
Why Worry about the Handbook?
A well-crafted handbook serves many valuable purposes:
Your Handbook are a valuable tool for you and an important resource for employees.
What is the Diagnostic Audit?
The Risk Management Diagnostic Audit is a tool we have developed to allow you to identify and respond to the compliance risks at your workplace. This audit targets your organization’s unique vulnerability and provides action items to put you on the path to compliance. Please check out our website or call 508-548-4888 for the steps and timelines for this popular service. http://www.foleylawpractice.com/diagnostic-compliance-audit.html
Enjoy the long weekend!
Contact us at 508-548-4888 or email@example.com
On May 4, 2017, President Trump signed an Executive Order Promoting Free Speech and Religious Liberty. Could this order allow discrimination against LGBTQ individuals and women, as feared? Will this impact the workplace? No. Here is the line to remember: Existing laws cannot be overturned by Executive Orders.
Let’s take a look at this Order as a good example. The portion of the Order that pertains to Federal law is:
_Sec_. _4_. _Religious Liberty Guidance_. In order to guide all agencies in complying with relevant Federal law, the Attorney General shall, as appropriate, issue guidance interpreting religious liberty protections in Federal law.
Attorney General Jeff Sessions can issue guidance until the cows come home: The US Equal Employment Opportunity Commission (EEOC) does not answer to him. The EEOC is an independent federal agency charged with enforcing federal laws against illegal discrimination in the workplace. Laws like the ADA, ADEA, FLSA, FMLA and Title VII are under the purview of the EEOC for enforcement and guidance. Congress may make changes to the laws and the courts can overrule, clarify or uphold the laws.
Executive Orders might be good optics but cannot impact the rule of federal. state or local law in the workplace.
Last month, a Massachusetts US District Court judge held that a former employee who quit was still eligible for $32,000 in sales commissions despite a commission plan that provided otherwise. (Israel v. Voya Institutional Plan Services, LLCI) Voya’s commission plan specifically stated that an employee who resigns is not eligible for further commission payments. The plan was clear and on point. How did the judge get to yes on the commission?
Voya’s plan could not override the Wage Act requirement that sales commissions be paid promptly once the amount is “definitely determined”–at that point the commission becomes “due and payable.” The judge distinguished a sales commission, as a share of sales revenue generated by an employee, from other types of variable compensation– like a bonus. Because the amount of commission was known and earned based on sales, it fell under the Wage Act’s strict payment requirements.
Massachusetts employers who provide commissions as part of their pay structure are advised to review their commission plans in light of this decision. As we all know, the MA Wage Act, with its costly provisions for damages and attorney’s fees, is not to be taken lightly.
It has been noted politicians campaign in poetry and govern in prose. That may sound too lofty to describe current times, but the sentiment remains: promises made on the campaign trail do not easily translate into law. We have a Republican President and a Republican Congress, which historically has meant a more business-friendly regulatory environment. Yet as the first 100 days will show, unwinding is neither quick nor easy. The Affordable Care Act has not been repealed and little is on the horizon. The President’s Budget Blueprint for 2018 proposes to slash the Department of Labor’s (DOL) budget by 21%. What does this mean for employers right now, or even over the next year?
In short, not a lot. Meanwhile, state and local governments are legislating like mad to fill the gaps that could be created by proposed budget cuts and executive orders. President Trump is an active Twitter user but as detailed below, that communication belies the actual activity of the federal government. #Realtalk
Are employers off the hook for federal mandates? Not so fast. Most of the federal regulations that govern the workplace remain in place and, given the inability to repeal the much lamented ACA, may not change at all.
Below is a quick overview of the current federal landscape under President Trump. Without actual policy as a guide, we are using the President’s proposed budget as a crystal ball. Please note that many states, including Massachusetts and California, have stricter mandates than the federal laws:
THE FUTURE OF DOL/OSHA/EEOC ENFORCEMENT
The President has proposed $2.5 Billion in cuts to the U.S. Department of Labor’s (“DOL”) operating budget. Because Congress has to approve the budget this is only an outline of the actual budget. The blue print is short on details, but does expressly call for reduced funding for grant programs, job training programs for seniors and disadvantaged youth, and support for international labor efforts. It also proposes to eliminate the U.S. Chemical Safety and Hazard Investigation Board (“CSB”) – an independent, federal, non-enforcement agency that investigates chemical accidents at certain facilities. These cuts account for $500 million dollars of the DOL budget. The blueprint does not specify where the other $2 billion in cost savings will come from, except to say more funding responsibility will go to the states. If approved by Congress—a big if–the cuts will involve a loss of funds that could be distributed heavily through DOL’s enforcement programs. This will include the EEOC and OSHA. Yet the process by which these agencies collect fines is a valuable revenue generator and unlikely to end easily.
At this point, the likelihood of the final budget looking like the proposed one is total conjecture. Furthermore, even with the expected cuts to the DOL’s enforcement and regulatory programs, it is important to recall that under the last Republican administration—no fan of regulation– the DOL still enforced the law. Moreover, as the federal government delivers more labor enforcement responsibility to the states, employers will increasingly be forced to work to achieve compliance on two fronts, instead of one.
Every administration has used the media as a means of furthering and communicating its chosen agenda, and the Trump administration is no exception. The choices the administration makes in what it chooses to publicize likely signal the administration’s direction; but also shape the public’s perception of what it is actively doing. The Trump administration and President Trump in particular use social media and news reports for the purpose of shaping the public’s understanding their activity. From a compliance standpoint, this actually creates risk for employers.
Despite the President’s proposed budget and awaited confirmation of a new Labor secretary, the New York Times reported that DOL enforcement actions continue. In a departure from past practice, the department has stopped publicizing fines against companies. As the New York Times points out, the Obama administration used the announcements as an enforcement tool, and a means to influence employers. However, the announcements also served as an important window for employers into the DOL’s current position on important compliance issues such as wage and hour or OSHA safety enforcement. If a company in the same industry was recently fined for a practice, that action provided others in the industry with important notice to examine their practice. Employers no longer have this benefit. Furthermore, those who believe that the lack of information surrounding DOL enforcement means they no longer have to worry about the threat of an audit do so at their own peril. At the present, and until the new budget is confirmed months from now, agency enforcement has not changed. For those inclined to believe the confirmation of the new Labor secretary will change that should keep in mind that DOL audits are a money-maker for the agency. There seems to be little reason for them to stop.
WHAT TO DO
The last few years have seen a seismic change in the number of employment laws on both the state and federal level. If it has been a few years since your organization has updated its employee handbook, you have a compliance problem on your hands. Updating your handbook and policies is an important step to mitigate risk.
And remember, statutes, regulatory guidance and case opinions published by the courts are what impact compliance obligations, not the news. What happens on Twitter does not reflect the actions of the agencies of the federal government. #Really
“..[I]t is actually impossible to discriminate on the basis of sexual orientation without discriminating on the basis of sex…” wrote Chief Circuit Judge Diane P. Wood of the 7th Circuit Appeals Court, wiping away prior ambiguity surrounding Title VII protections based on sexual orientation. The 8-3 decision, held in a rare en banc hearing, arose out of Indiana professor Kimberly Hively’s lawsuit against her former employer Ivy Tech Community College. Hively claimed her denial of promotions, tenure and her eventual termination were because she is a lesbian.
The 7th Circuit completely bypassed the issue of Congressional intent of the word “sex” in Title VII. Judge Posner opined that the court was not the “obedient servants of the 88th Congress (1963-1965)” and the court was “[T]aking advantage of what the last half century has taught.”
This case matters beyond Illinois, Indiana and Wisconsin. This decision reflects what many state and local government have already done to protect LGBT workers, and similar cases will be heard in other circuits. Most importantly, it is a best practice to implement policies, procedures and training that prohibits discrimination based on sexual orientation in the workplace.