U.S. Supreme Court Addresses Time Limit For Pay Discrimination Claims

In a 5-4 decision, the U.S. Supreme Court held that employees claiming they received disparate treatment in pay based on unlawful discrimination must do so within 180 days of the original discriminatory action rather than accrue them over the course of several years. The case is Ledbetter v. Goodyear Tire & Rubber Co. (No. 05-1074).

In Ledbetter, the plaintiff was hired in 1979 and alleged that, during the period of her employment, she was paid significantly less than her male counterparts who worked as managers at a Goodyear Tire plant in Alabama. The plaintiff retired from the company in November, 1998. A jury had awarded the plaintiff back pay and punitive damages; however, the 11th Circuit Court of Appeals reversed on the grounds that the plaintiff’s pay discrimination claim was time-barred inasmuch as it was asserted more than 180 days prior to the date she had made an administrative filing with the Equal Employment Opportunity Commission. The Supreme Court affirmed the 11th Circuit’s decision and held that, in disparate-treatment pay cases, the time-limitation for asserting a claim of discrimination begins to run from the date the discriminatory act occurs (i.e., the date of each alleged discriminatory pay decision), not from a later date. In this case, the limitations period was 180 days under Federal law since Alabama does not have a local administrative agency to process claims of discrimination. In States which do have such a local agency, such as New York, the time period for filing the administrative complaint is 300 days from the date of the discriminatory act.

The ruling makes it much more difficult for plaintiffs to win employment discrimination suits, and makes it easier for employers to defend against workplace discrimination claims that are based on long-ago decisions about salary and raises. In a rare instance of judicial posturing, Justice Ginsburg’s dissent urged Congress to overrule the majority opinion.

This is a tough one for employees. If they sue too early, there may be insufficient evidence to prove their case. If they wait until sufficient evidence exists, they may be time-barred by the limitations period. It's quite the conundrum for which there's no easy answer. Stay tuned.

Increase In Federal Minimum Wage

Hey, it's Memorial Day weekend and I should be at the beach with margarita in hand. Instead, I feel compelled to advise my loyal readership that the cost of labor is expected to rise very soon.

Congress has approved the first increase in the Federal minimum wage in almost a decade and the President is expected to sign the bill shortly. The current minimum wage of $5.15 per hour will rise to $5.85 per hour sometime this year, probably by summer's end. In 2008, the hourly minimum wage is slated to again rise to $6.55 with a final increase to $7.25 per hour occurring sometime in 2009.

The effect of the increase depends on the State in which your business is located. Currently, about half of the States have higher minimum wages than the existing Federal rate, so the increased cost may not kick-in right away. For example, New York State's minimum wage is now $7.15 per hour, so New York employers won't experience an increase until 2009 if the State rate remains at its current level. Readers are advised to contact their particular State Department of Labor for information on applicable minimum wage rates.

How DO They Do It?

Once again, the wheels of justice move in incomprehensible directions. The Appellate Division, First Department, has made contradictory rulings on the same day in two cases involving virtually identical issues involving the payment of prevailing wages on Federal construction projects under the Davis-Bacon Act. Ugh! Here we go.

Under Davis-Bacon, prevailing wages and benefits must be paid to those performing work on Federal public works construction projects. The First Department held previously that employees did not have a private right of action to enforce contracts requiring payment of Davis-Bacon wages. See Gonzalez v D & S Zaffuto Joint Venture, 271 A.D.2d 356 (1st Dep’t 2000). The decision in Gonzalez cited to Majstrovic v. R. Maric Piping, Inc., et al., 171 Misc.2d 429 (Sup. Ct., Kings Co. 1997) which held that no private right of action exists under the Davis-Bacon Act and that the statute preempts state law with respect to federally-funded construction projects; affected employees may pursue statutory administrative remedies rather than commence litigation. Your humble host, that’s ME, represented the defendants in Majstrovic, so you might conclude correctly that I think the courts in both that case and Gonzalez were absolutely right.

Incredibly, two separate panels of the First Department now have issued conflicting opinions, on the same day, with respect to the issue of whether a private right of action exists under Davis-Bacon. In Araujo v Tiano's Constr. Corp. (2007 N.Y. Slip. Op. 04401), the Court affirmed the holding in Gonzalez. I agree with that one. However, in Cox v. NAP Construction Co., Inc. (2007 N.Y. Slip. Op. 04402), the Court held that Gonzalez was decided wrongly, that no federal preemption exists, and that a private right of action exists to enforce Davis-Bacon wages. Note that Justice Williams, in his dissenting opinion in Cox, states: “ [i]n my view, [Gonzalez and Araujo] correctly hold that a private right of action does not exist to enforce, directly or indirectly, contracts requiring payment of Davis-Bacon Act prevailing wages.”

How do these kind of things happen? How can the same Court render inconsistent decisions regarding the identical issue? Your guess is as good as mine. Until the Court of Appeals rules on the issue, it may be best to simply flip a coin.

Subordinate Bias - The "Trickle Up" Effect

I recently came across an excellent article in the New York Law Journal written by Loren Gesinsky and Douglas P. Lipsky (May 21, 2007) concerning the concept of "subordinate bias." Under that theory, the bias of an individual who has no authority to take action against an employee (i.e., a non-decision-maker) is imputed to the employer for purposes of establishing a case of discrimination. So, for example, if the head of a field crew (having no authority to hire and fire) makes discriminatory comments to his or her Supervisor about a worker which form the basis for the Supervisor's discharge of that employee, those comments could be imputed to the employer since they influenced the actual, adverse employment decision. Essentially, this is a "trickle-up" effect where an employer can be held liable for the improper actions of low-level, non-managerial employees of which it may not be aware.

There is a split among the Circuit Courts of Appeal on this issue. As far as New York is concerned, the Second Circuit seems somewhat sympathetic to the concept (see Rose v. New York City Board of Education, 257 F.3d 156 (2d Cir. 2001)), but uses an "enormous influence" standard which appears to be much higher than lesser standards used by other courts such as the Fifth Circuit in Russell v. McKinney Hosp. Venture, 235 F.3d 219 (5th Cir. 2000)("may have affected" standard utilized). Interestingly, a recent decision from the Southern District of New York held that subordinate bias does not exist where the adverse employment decision is based on an independent evaluation by the decision maker rather than the discriminatory actions of the subordinate. See Knight v. New York City Housing Authority, 2007 WL 313435 (S.D.N.Y. February 2, 2007). In short, the issue seems to center around the degree of influence that the subordinate's actions have over the ultimate employment action.

On January 5, 2007, the U.S. Supreme Court granted certiorari in E.E.O.C. v. BCI Coca-Cola Bottling Co. of Los Angeles (06-341), a case involving subordinate bias which may resolve the split among the circuits. This is one to watch closely as it could have significant and unwelcome ramifications for employers throughout the country.

Lawyer Joke Friday

Hey, Memorial Day weekend has arrived. So, whether you're headed out of town to have some fun or working on those papers that, for some inexplicable reason, are due this coming Tuesday (ugh!), here's a little one-liner to start you off on the holiday:

"It was SO cold last winter that I saw a lawyer with his hands in his own pockets."

Have a great and safe weekend.

Congressional Accountability In Discrimination Suit

Yesterday, in the case of Office of Dayton v. Hanson (06-618), the U.S. Supreme Court declined unanimously to rule on a case involving an employment discrimination lawsuit against the office of former Sen. Mark Dayton, D-Minn. The case tests the limits of workplace protections for congressional staffers.

The plaintiff was the office manager for Senator Dayton and claims that his employment was terminated after he advised that he needed an operation to correct a heart condition. The suit was brought under the Congressional Accountability Act of 1995 (the “Act”) which applies several existing employment, civil rights, health, and safety-related statutes and regulations to the legislative branch including the Americans with Disabilities Act, the Family and Medical Leave Act and the Fair Labor Standards Act; the suit alleges violations of those statutes. Prior to the Act, Congress was generally exempt from the strictures of Federal employment laws.

The District Court denied a motion to dismiss based on a claim of immunity under the Constitution’s Speech or Debate Clause, and the D. C. Circuit Court of Appeals affirmed. The Supreme Court held that it lacked jurisdiction to consider the matter because the Act limited its review to lower court rulings concerning the Act’s constitutionality and nothing more. According to the Court, neither of the actions by the lower courts could be characterized as ruling on the Act’s constitutionality and, therefore, jurisdiction was lacking. The matter will now proceed toward trial in the District Court.

While the merits of the suit remain to be determined, it’s just great when the cloaks of immunity and secrecy are lifted from public officials, thus requiring them to account for their actions on the same terms and conditions as the rest of us.

And, Speaking Of Lawyer Jokes ...

If you can't get enough of Lawyer Joke Friday here on Juz The Fax, check out Nicole Black's new blog called Legal Antics. It's chock full of legal humor appearing on an almost daily basis. I'm sure you'll have a lot of laughs.

Lawyer Joke Friday

Hey, it's Friday once again! You know what that means ... LAWYER JOKE FRIDAY! I know that most, if not all of you are screaming "YAY! What do you have for us this week, Uncle Randy?" Here's an old favorite:

Did you hear about the new microwave lawyer? You spend eight minutes in his office and get billed as if you'd been there eight hours.

Until next week, kids.

Personal Liability Imposed Against Sole Proprietor Operating Under "D/B/A" Designation

A sole proprietor operating as a “d/b/a” (i.e., doing business as) is personally liable for ERISA fringe benefit fund contributions owed by his/her “business” as well as for attorney’s fees. So holds the United States District Court for the Southern District of New York in Trustees, Mason Tenders District Council Welfare Fund v. Faulkner, 04 Civ. 5262 (S.D.N.Y. May 1, 2007).

In Faulkner, the union benefit funds commenced an action against Thomas Faulkner d/b/a American Demolition and Thomas Faulkner, individually, for injunctive and equitable relief as well as for breach of contract. The suit was brought on grounds that the defendants had failed to permit an audit of American Demolition’s books and records, and were delinquent in making fringe benefit contributions to the plaintiffs as required by a collective bargaining agreement and ERISA. The court determined ultimately that American Demolition was a sole proprietorship and, as such, Thomas Faulkner was personally liable for the debts of his “business,” including the delinquent benefit fund contributions. The court also awarded attorney’s fees as mandated by ERISA.

In discussing its reasoning for this finding, the court noted that the designation “d/b/a” "'is merely descriptive of the person or corporation who does business under some other name [and that] [d]oing business under another name does not create an entity [distinct] from the person operating the business'" [citation omitted]. Interestingly, the court also noted that “Faulkner did not create a distinct business entity by operating his sole proprietorship under the name American Demolition.” This is somewhat inconsistent with the court’s initial conclusion that a “d/b/a” designation confers no substantive separation between the individual and the faux entity. Could the court’s latter statement be construed to mean that operating the business as “American Demolition” without the "d/b/a" designation in the title might have saved Faulkner from personal liability? Could the statement be construed to mean that Faulkner should have operated his business in some variation of the corporate form in an effort to avoid personal liability? Given the holding of the case, I think not, but I continue to be amazed that courts simply plop sentences like that into an opinion to leave open for interpretation. Ain't it a hoot trying to read tea leaves, kids?

In any event, the unwary should heed the decision in Faulkner as it confirms that operating a business as a "d/b/a" provides absolutely no protection against personal liability whatsoever. It also confirms that being cheap doesn't pay ... spend the few bucks to incorporate, observe the corporate formalities, and perhaps, if you're very, very good boys and girls, an expensive problem may be avoided.

Calculating Overtime Pay, Courtesy Of The U.S. Department Of Labor

Last week, the U.S. Department of Labor rolled out a new, on-line tool as part of its elaws Advisor program. The new tool is the FLSA Overtime Calculator which, ostensibly, seeks to help employers and workers understand and calculate overtime pay. For some strange reason, I suspect that more workers than employers will use the tool, and that those workers will be consulting their friendly, neighborhood labor attorney in the very near future.

Lawyer Joke Friday

Here's this week's latest.

Q. What's the difference between a good lawyer and a bad lawyer?

A. A bad lawyer can let a case drag out for several years. A good lawyer can let the same case last even longer.

Until next week, TTFN.

Efforts To Expand Federal Non-Discrimination Law

Employers throughout the country should take note of Congressional efforts to pass the Employment Non-Discrimination Act of 2007 (the "Act"). The bill, variations of which were proposed during the mid-1990's, was reintroduced in the House of Representatives on April 24, 2007 as H.R. 2015. Essentially, the proposed legislation would expand the scope of Title VII to make it an unlawful employment practice for an employer having 15 or more employees to discriminate with respect to the compensation, terms, conditions or privileges of employment based on an individual's sexual orientation or gender identity, whether perceived or actual. This is the first time a version of the bill has included the term "gender identity." Some States have anti-discrimination laws which are more expansive than current Federal law in that they already prohibit the termination of employment based on sexual orientation and gender identity. However, many States still permit discharge based on those characteristics.

This one's a bit tricky since the bill fails to define the term "perceived." As you might expect, such an ambiguity could open the floodgates of litigation based on allegations of perception rather than fact. That's a scary and potentially costly prospect for many employers as it could, IMHO, ostensibly legitimize bad-faith claims of discrimination for extortionate purposes. Open the door just an itsy bitsy crack and ... well, you know.

Although the Senate may introduce its own version of the bill in the near future, the Act is likely to be dead on arrival under the current administration. Of course, that could change in a heartbeat if a Democrat occupies the White House after the next election. In any event, I think Congress will have to either specifically define or eliminate the term "perceived" from the Act (in whatever version) in order to prevent possible abuse.

Credits For Prevailing Supplemental Benefits On New York Public Work

Ah, summer is almost here. The birds are singing, the sun is shining, and construction work is just about gearing up into full swing. What's wrong with this picture? Well, it seems as if some employers performing public work in New York (and elsewhere probably) may be making mistakes with respect to credits to which they are entitled when calculating the payment of supplemental benefits.

Avid readers of this humble, little blog should know that New York Labor Law Section 220, et seq., governs the prevailing wage and prevailing supplemental benefits to be paid to workers on public works construction projects within the State. The New York Law is modeled on the Federal Davis-Bacon Act, and most, if not all States have their own "mini" Davis-Bacon acts. Note that the statute has two components ... the prevailing wage portion and the portion for prevailing supplemental benefits, both of which are set forth on the applicable prevailing rate schedule published by the New York State Department of Labor. The two portions must be combined and paid in full to the worker in order to ensure compliance with Labor Law Section 220.

One area of concern to construction employers is the hourly credit to be taken for prevailing supplemental benefits provided where the employer provides health care and other such benefits to its workers through a bona fide ERISA plan. If such a plan exists, the employer is entitled to a dollar for dollar credit for the hourly cost of the particular benefit covered by the plan as calculated after performing a benefits annualization analysis. As a general proposition, if you perform public work within New York, the payment of prevailing supplemental benefits for each worker must be annualized based on all public AND private work performed by that worker during the year ... typically, the hourly credit is calculated based on dividing the annual cost of the benefit by the actual number of hours worked (if available) or a standard of 2,080 hours. So, for example, if contributions to a health plan totalled $6,000 for the year and the individual worked 2,080 hours for all jobs, the employer would be entitled to a benefit credit of $2.88 per hour (i.e., 6,000 divided by 2,080). Conversely, if the employer has no ERISA plan of any kind, then the benefit portion must be paid the worker directly, usually by separate check. Sometimes, it may be paid in cash, but I've never been a fan of that payment method since it's ripe for abuse on both ends of the equation.

There are certain items which do not qualify as a supplemental benefit for the purposes of complying with Labor Law Section 220, including but not limited to: (a) travel expenses such as meals and lodging; (b) use of a company vehicle or gas, toll and vehicle reimbursements; (c) meal allowances; (d) reimbursement for tools or company provided equipment; and (e) uniforms or uniform cleaning. In short, these items can be the employer's achille's heel; an underpayment is likely to result if an employer uses the payment for such items as a credit against the hourly supplemental benefit to be paid to the worker under the New York statute.

Navigating the vagaries of prevailing rate laws is pretty tough stuff. Don't try this at home, kids.

Lawyer Joke Friday

My, how time flies. It's Friday again, so here's this week's offering.

Q. What's the difference between a lawyer and a herd of buffalo?

A. The lawyer charges more.

Until next week, TTFN.

Thanks For The Support

Many thanks to Thomas Swartz of New York Legal Update for his encouragement, support and comments regarding my post entitled Orwellian Redux. You can read Thomas' comments here.

The Price Of Freedom

I recently posted an article entitled Orwellian Redux that dealt with the impingement on free speech by New York's Commission on Judicial Conduct. Raoul Felder, the Chairman of the Commission, has received a unanimous vote of "no confidence" from its other members based on alleged off-color, discriminatory comments contained in a book he co-wrote entitled "Schmucks."

Today, I received the following two comments on that article from "Anonymous," who appears to be the same person given the tone and writing style.

Here's comment #1, and I quote with misspellings included:

"What's wrong with you both? Are you a bunch of country bumpkins? This a [sic] Commission which decides whether or not judges should continue to serve in their posts as a result of misteps [sic] or misdeeds which give the mere "appearance" of impropriety. As Chair of this special Commission, Felder should have lived by example. If he wants to speak freely, like you or me, not a problem: Let him resign. You schucks [sic]! PS: You both may need to get better jobs so you won't have the free time to pollute the Internet with this trite nonsense. (Excuse me. But I now have to go vomit.) "

Now, here's comment #2, and I quote:

"You are a Nazi for previewing comments and stifling free and open expression on your crappy, little, amateurish blog. You are just as Orwellian as the people you mock! Loser!"

Rather than relegating these comments to the dark recesses of older post opinion or deleting them entirely, I think it's important that they see the light of day in a separate article so that everyone can judge for themselves. Name calling (particularly the use of the other "N" word in this instance), coupled with the shroud of anonymity, speak volumes as to the credibility and bona fides of the author and his/her position. The price of freedom is high, indeed.