Reprinted with permission from the October 14th edition of The Legal Intelligencer. (c) 2022 ALM Media Properties. Further duplication without permission is prohibited.
Employers eager to recapture the costs of hiring foreign citizens often use damages or repayment provisions in employment agreements. A recent case in the Southern District of New York illustrates a challenge to that strategy. The Southern District’s recent decision in Baldia v. RN Express Staffing Registry LLC to allow a complaint under the federal Trafficking Victims Protection Act (“TVPA”) to proceed, is part of a growing trend in using the TVPA to challenge such agreements.
The plaintiff in the Baldia case, Marie Alexandrine Baldia, is a citizen of the Philippines. RN Express Staffing recruited her from the Philippines and hired her as a registered nurse supervisor after sponsoring her visa to work in the United States. Baldia signed an Employment Agreement for a three-year term, that included a liquidated damages provision. Specifically, the Employment Agreement required that in the event Baldia left the employ of RN Express Staffing, “without cause”, before the end of the three-year term, she would need to repay the costs of “recruiting, training and placement”. The Employment Agreement recited that the “Company Recruitment Costs” totaled $33,320, and that the number would be reduced after her first full year of employment.
Reprinted with permission from the June 23rd edition of The Legal Intelligencer. (c) 2021 ALM Media Properties. Further duplication without permission is prohibited.
The United States Supreme Court narrowed the application of the Federal Arbitration Act (“FAA”) in its June 6, 2022 opinion in Southwest Airlines Co. v. Saxon, 596 U.S. ____ (2002). The case, along with the earlier case New Prime Inc. v. Oliveiri, 556 U.S. ____ (2019) , represents the narrowest narrowing of the Supreme Court’s broad holding in Epic Systems Corp. v. Lewis, 284 U.S. ____ (2018). In Southwest Airlines v. Saxon, the court answered the narrow question of whether an employee employed as a “ramp supervisor” fell within the Federal Arbitration Act’s exemption of “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce”, concluding that the workers did fall within the exemption. The case does not presage a trend towards narrowing the application of the Federal Arbitration Act, and instead demonstrates that the Court intends to encourage honoring arbitration agreements by insisting on a textual and precedential approach to the FAA.
Saxon was employed as a ramp supervisor at Southwest Airlines at Chicago Midway International Airport. At the beginning of her employment, she signed an employment agreement agreeing to arbitrate wage disputes individually. As a ramp supervisor, Saxon’s job was to train and supervise teams of ramp agents. Ramp agents are employees who physically load and unload baggage, airmail and freight. Occasionally, ramp supervisors assist ramp agents in loading and unloading cargo. Saxon filed a putative class action of ramp supervisors against Southwest, alleging violations of the Fair Labor Standards Act (“FLSA”). Southwest moved to dismiss, citing Saxon’s employment agreement which required arbitration pursuant to the FAA. Saxon argued that the ramp supervisors were exempt from the FAA pursuant to the exemption for “workers engaged in foreign or interstate commerce.” The United States District Court for the Northern District of Illinois dismissed the case, agreeing that the exemption did not apply. The United States Court of Appeals for the Seventh Circuit reversed, finding that the loading of cargo to be transported interstate is “itself commerce.” The Seventh Circuit’s holding conflicted with an earlier decision of the United States Court of Appeals of the Fifth Circuit. The Supreme Court granted certiorari and found that Saxon belong to a “class of workers engaged in foreign or interstate commerce”, and was exempt from arbitration.
Reprinted with permission from the April 14th edition of The Legal Intelligencer. (c) 2021 ALM Media Properties. Further duplication without permission is prohibited.
42 U.S. § 2000e, et seq. (“Title VII”) imposes caps on damages that limit the recovery for plaintiffs in employment discrimination cases. The plaintiffs in Yarbrough, et al v. Glow Networks (United States District Court for the Eastern District of Texas, 4:19-cv-00905) employed an interesting theory to avoid those caps, and the strategy paid off. On February 18, 2022, a Texas jury returned a verdict of $70 Million Dollars for ten race discrimination and retaliation plaintiffs, who asserted claims pursuant to 42 U.S.C. § 1981 (“Section 1981”). The Yarbrough Plaintiffs asserted no claims under Title VII.
The Yarbrough Plaintiffs alleged discrimination in the workplace at Glow Networks. They alleged that Glow Networks treated Africans and African-Americans differently than other employees and subjected them to a hostile environment in several ways. For example, they alleged that Glow Networks monitored their workspaces in a manner that they did not monitor other employees; that they were written up and reprimanded for conduct that Glow Networks ignored in other employees; and, that they did not receive promotions despite recommendations from their managers, and that the promotions went to non-Africans and non-African Americans. The Yarbrough Plaintiffs included white managers of the African and African American employees who reported the alleged discrimination to management. The African and African American plaintiffs also asserted retaliation. Some of the employees were terminated, and others resigned, alleging a constructive discharge. Plaintiffs alleged one count of violation of Section 1981. The case was tried by a jury from February 7, 2022 through February 18, 2022, when the jury returned a verdict. For each of the ten plaintiffs, the jury awarded $2 Million in past pain and suffering damages; $1 Million in future pain and suffering; and $4 Million in punitive damages, resulting in a $70 Million verdict. On April 6, 2022, Glow Networks stated in a Response to plaintiffs’ Motion to Enter Judgment that it intends to file post-trial motions for judgment as a matter of law and for a new trial.
Courts generally analyze claims under Section 1981 and Title VII in the same manner, using the burden-shifting framework set out in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). Castleberry v. STI Group, 863 F.2d 259, 263 (3d Cir. 2017). While both statutes prohibit discrimination on the basis of race, Section 1981 contains no damages cap. The most a plaintiff can recover in “non-economic” compensatory and punitive damages in a Title VII is $300,000.00. 42 U.S.C. § 1981a(b). The complaint in the Yarbrough case does not allege Glow Networks’ number of employees, but assuming the maximum would apply, the damages in the case would have been limited to $3 Million, instead of the $70 Million alleged. This difference alone requires race discrimination plaintiffs to consider asserting claims under Section 1981.
A recent decision by the Pennsylvania Supreme Court underscores the fact that although an employer may be in compliance with the federal Fair Labor Standards Act (“FLSA”), it may at the same time be in violation of the Pennsylvania Minimum Wage Act (“PMWA”).
The case, In Re: Amazon.Com, Inc. et al. v. Amazon.com, Inc., Amazon.com.DEDC, LLC, and Integrity Staffing Solutions, Inc. (43 EAP 2019), involved a class action brought by two employees who worked at an Amazon warehouse in Pennsylvania and sought to be compensated for time spent at the premises waiting to undergo and undergoing mandatory security screening.
As discussed below, a federal district court had dismissed the employees’ claims under the FLSA and the PMWA, but the federal Sixth Circuit Court of Appeals certified the case to the Pennsylvania Supreme Court to address the questions as to whether the PMWA applied to the employees’ claims and whether there is a de minimus exception to the PMWA.
Reprinted with permission from the June 21st edition of The Legal Intelligencer. (c) 2021 ALM Media Properties. Further duplication without permission is prohibited.
Since its enactment in 1986, employers have used the federal Computer Fraud and Abuse Act, 19 U.S.C. §1030 (“CFAA”) to vindicate violations of the employer’s workplace policies regarding use of computers, email accounts, and other electronic information by departing employees. The CFAA inevitably appeared as a claim in an employer’s complaint to address such conduct as downloading information from work computers and email accounts, or wiping devices and removing valuable information. The CFAA potentially provided relief where the information taken might not meet the definition of a “trade secret” in the federal Defend Trade Secrets Act (18 U.S.C. §1986), or Pennsylvania’s Uniform Trade Secrets Protection Act (12 P.S. § 5302). Further, and perhaps providing leverage for employers, the CFAA provided a criminal remedy for such violations. In Van Buren v. United States, 592 U.S. ___ (June 3, 2021), the United States Supreme Court may have eliminated that claim for wronged employers.
The CFAA prohibits intentionally accessing a computer with or without authorization or exceeding authorized access of a computer. The Act defines “exceeding authorized access” as accessing a computer with authorization and using that access to obtain information in the computer to which the individual is not otherwise entitled. The CFAA imposes criminal liability for violations of these prohibitions. It also imposes civil liability through a private cause of action if there is “damage,” meaning, an impairment to the integrity or availability of data, a program, a system or information.
Reprinted with permission from Lower Bucks Chamber of Commerce Outlook Magazine, July/August 2021 Edition
The pandemic changed the workplace dramatically, and perhaps permanently. COVID called upon employers to adapt to remote work with very little notice and preparation. Employers then adapted their offices and workspaces to allow employees to work safely in their facilities with masks and social distancing. And then, just as quickly, CDC modified its masking guidance. Employers are challenged to comply with changing guidelines and existing laws and a very competitive job market. Employers must consider new masking guidelines, vaccination mandates and remote work options, as well as the laws that apply to those considerations.
When the pandemic started, CDC guidelines presented a simple rule: In-person workplaces should require employees to wear masks, unless there was a health reason that prevented an employee from doing so. If an employee had a health reason not to mask, the employer could comply with the Americans with Disabilities Act, and the Pennsylvania Human Relations Act, by accommodating the employee who provided medical documentation of the health issue. The CDC recently changed its guidance to state that vaccinated people do not need to wear masks, and this is where it gets complicated.
Reprinted with permission from the April 16th edition of The Legal Intelligencer. (c) 2021 ALM Media Properties. Further duplication without permission is prohibited.
The American Rescue Plan Act of 2021 (ARPA), among other significant items, imposed new obligations for employers pursuant to the Consolidated Omnibus Reconciliation Act (“COBRA”). Specifically, ARPA requires employers to provide COBRA premium subsidies to certain employees from April 1, 2020 through September 30, 2021. The requirement comes with complicating definitions, retroactivity provisions, and new forms, creating a temporary compliance issue for employers. On April 7, 2021, the United States Department of Labor issued Model Notices and “FAQ’s” to assist with these compliance issues.
The COBRA subsidy is available from April 1, 2021 to September 30, 2021 to “assistance eligible individuals,” that is, individuals who are eligible for COBRA coverage as a result of an involuntary termination or a reduction in hours. The Act specifically excludes individuals who voluntarily terminate their employment. “Assistance eligible individuals” are not required to pay their COBRA premiums from April 1, 2021 through September 30, 2021. The employer or plan to whom the individual would normally pay premiums is entitled to a Medicare tax credit for the amount of the premium assistance. There is no guidance from the Department of Labor or the Internal Revenue Service regarding these tax credits.
Reprinted with permission from the February 22nd edition of The Legal Intelligencer. (c) 2021 ALM Media Properties. Further duplication without permission is prohibited.
In Martinez v. UPMC Susquehanna, the United States Court of Appeals for the Third Circuit clarified the specificity required in pleading prima facie cases of discrimination in light of the holdings in Ashcroft v. Iqbal, 556 U.S. 662 (2009) and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). The Third Circuit held that an age discrimination plaintiff need not plead the exact age or duties of the plaintiff’s alleged replacement in order to survive a motion to dismiss.
The plaintiff in the Martinez case appealed an order issued by the United States District Court for the Middle District of Pennsylvania dismissing the case for failure to state a claim under Iqbal and Twombly. The defendant, UPMC Susquehanna, employed the plaintiff, Dr. Martinez, as an orthopedic surgeon. Dr Martinez alleged in his complaint that UPMC Susquehanna terminated his employment and advised him that it was “moving in a different direction and his services were no longer needed.” UPMC Susquehanna also told Dr. Martinez that his termination had “nothing to do with his performance.” Dr. Martinez pleaded that he was seventy (70) years old, and that UPMC Susquehanna hired two doctors after his termination. The Complaint alleged that one of the hired physicians took over some of Dr. Martinez’s job duties, and that the second doctor was hired in response to a job posting for an orthopedic surgeon. Relevant to the Court’s analysis, Dr. Martinez alleged that both doctors were “significantly younger”, “less qualified,” and “less experienced” than Dr. Martinez.
Reprinted with permission from the June 19th edition of The Legal Intelligencer. (c) 2020 ALM Media Properties. Further duplication without permission is prohibited.
The Supreme Court of the United States held in Bostock v. Clayton County, Georgia, 590 U.S. ___ (US 2020) that Title VII’s prohibition against discrimination on the basis of sex also bars discrimination on the basis of sexual orientation and gender identity. The Court’s opinion relies on the text of the statute, rejecting arguments from employers regarding the failure to specifically include gender identity or sexual orientation in the statue. The Supreme Court’s decision in Bostock is historic – it expands the protections of Title VII to sexual orientation and gender identity, protections previously denied. The Court’s ruling requires employers to update and modernize their policies and procedures, hiring practices, training and workplace culture.
May 14, 2020
Yesterday the Small Business Administration (SBA) issued updates to its Frequently Asked Questions (FAQs) guidance on the Paycheck Protection Plan (PPP) Loans, and added Questions/Answers (Q&A) 45 and 46, with the latter Q&A being directly related to the certification issues, and to the corresponding May 14th deadline for the return of funds as a “safe harbor” from civil and criminal penalties relating to the certification of need.
As previously reported, the PPP applications required borrowers to certify that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Until its issuance of this Q&A, the SBA’s guidance suggested that it would seek to impose civil and criminal penalties relating to the certification as a first resort, if it determined that the loan was unnecessary. In doing so, the SBA induced a sense of fear; and then further induced a sense of urgency by offering the safe harbor from such penalties, allowing borrowers to return the funds on or before May 7th to avoid such penalties. Such deadline was further extended to May 14th.