Employers' Lawyers Blog

Interns – To Pay or Not to Pay?

By Alyssa Yatsko 

Unpaid interns may seem like a great way to get some additional help without breaking the budget.  Recent lawsuits, however, reveal the danger in having unpaid interns perform work that otherwise would be done by paid employees.  If interns do not fall within the “trainee” exception to the Fair Labor Standards Act (FLSA) and analogous state laws, you could be liable for unpaid wages and overtime, liquidated damages and civil penalties. Willful violations can be prosecuted criminally, with possible imprisonment for repeated willful offenses.   Take note of lessons to be learned from these high profile cases so that you don’t find yourself in court and in the news. 

Judge Rules Movie Interns Are Employees under the FLSA 

Unpaid interns who worked for Fox Searchlight Pictures, Inc., a movie production company, sued the company alleging that they were “employees” under the FLSA and the New York Labor Law (NYLL) and were entitled to be paid minimum wage and overtime for all hours worked.  They asserted that they worked approximately 95 days for the company, and sometimes worked up to 50 hours per week.  The interns stated that they performed “routine tasks” including various administrative duties that otherwise would have been performed by paid employees.   The company argued that the interns were not “employees” as defined by the FLSA and the NYLL. 

A federal district judge in New York ruled in favor of the interns.  Judge Pauley found that the interns did not fall under the “trainee” exception to the FLSA as established by a 1947 U.S. Supreme Court case and reinforced by the U.S. Department of Labor, Wage and Hour Division (WHD), which enforces the FLSA.   The judge granted the intern’s motion to certify a class action under the NYLL on behalf of all unpaid interns who worked for four Fox Entertainment divisions between September 2005 and September 2010 and conditionally certified a related FLSA collective action.   

Interns File Lawsuit against Magazine Publisher for Minimum Wage Violations 

Additional intern wage cases in the news include a new class action lawsuit filed this week by two former interns of W Magazine and The New Yorker, both published by Conde´ Nast, alleging that the publisher failed to pay them minimum wage for their summer jobs.  Although one intern received $300-$500 for the summer and another received $12 per day, both allege that such sums amounted to less than $1 per hour for their hours worked.  The lawsuit seeks class certification to recover unpaid wages, interest and attorneys’ fees and costs on behalf of all interns who worked for certain departments at the magazines from June 2007 until the date of final judgment in the lawsuit. 

New Nevada Law Restricts Use of Credit Checks for Employment Purposes

By Anthony Hall and Dora Lane 

Nevada recently joined the ever-growing list of states that restrict the use of credit reports by employers.  Effective October 1, 2013, Senate Bill 127 will, with limited exceptions, prohibit Nevada employers from making an adverse employment decision based on credit information and from requesting or requiring any prospective or current employee to submit a consumer credit report as a condition of employment.   

Use of Credit Reports as an Unfair Employment Practice 

By amending the Employment Practices chapter of the Nevada Revised Statutes, Senate Bill 127 makes it unlawful for any Nevada employer to: 

1)  Directly or indirectly require, request, suggest or cause any employee or prospective employee to submit a consumer credit report or other credit information as a condition of employment; 

2)  Use, accept, refer to or inquire about a consumer credit report or other credit information; 

3)  Discipline, discharge, discriminate against or deny employment or promotion, or threaten to take such action, against any prospective or current employee on the basis of the results of a credit report or for refusing or failing to provide a credit report; or 

4)  Discipline, discharge, discriminate against or deny employment or promotion or threaten to take such action against any prospective or current employee for filing a complaint or instituting (or causing to be instituted) a legal proceeding under this law, testifying in any legal proceeding (actually or potentially) to enforce the provisions of this law, or exercising (individually or on behalf of another) rights afforded under this statute. 

Fired for Dating a Client, Employee Fails to Prove Violation of Colorado’s Lawful Activities Statute

By Mark Wiletsky 

Dating a client is probably never a good idea.  In some professions, it is a violation of ethical responsibilities.  In other cases, it may be bad for business when the relationship goes sour.  In the case of a family advocate for a social services organization, it created the appearance of a conflict of interest.  That conflict of interest saved a small Colorado employer from being liable for a violation of Colorado’s Lawful Activities statute when it terminated the family advocate for dating a client.  Ruiz v. Hope for Children, Inc., 2013 COA 91. 

Romantic Relationship as Lawful Activity Conducted Outside of Work 

Charlotte Ruiz worked as the only family advocate at a small non-profit social services organization in Pueblo called Hope for Children.  Seledonio Rodriguez became a client of Hope for Children when he attended a court-ordered fathering class there.  Ruiz didn’t meet Rodriguez until he completed his first class and needed assistance to sign up for a second class.  Shortly after completing his second class, Rodriguez ran into Ruiz at the Colorado State Fair and sometime thereafter, they began dating.  When Hope for Children’s executive director learned about the romantic relationship, she told Ruiz she could not continue to work for the organization if she wanted to continue to date Rodriguez.  Ruiz refused to give up the relationship, so she was fired. 

Ruiz sued Hope for Children alleging that she was terminated in violation of Colorado’s Lawful Activities Statute, which prohibits terminating an employee for engaging in a lawful activity outside of work.  After a two-day bench trial, the judge concluded that Ruiz was indeed terminated for engaging in a lawful activity outside of work.  However, the judge also found that the relationship raised a conflict of interest, or at least, the appearance of a conflict of interest which kept the termination from violating the statute.

Conflict of Interest Defense to Lawful Activities Statute 

Colorado’s Lawful Activities statute provides defenses that allow an employer to restrict employees’ off-duty, off-premises lawful activities, namely when the restriction: (1) relates to a bona fide occupational requirement or is reasonably and rationally related to the employment activities and responsibilities of a particular employee or group of employees; or (2) is necessary to avoid a conflict of interests with any responsibilities to the employer or the appearance of such a conflict of interest.  Before this opinion, no Colorado appellate opinions interpreted these statutory defenses.  In the Ruiz case, the Court of Appeals ruled that the conflict of interest defense was not limited to financial conflicts or an actual interference with the employee’s ability to perform a job-related duty.  Instead, the Court stated that the determination of a conflict of interest, or appearance of one, must be made in light of the facts and circumstances of each particular case looking at both the context and industry involved. 

In Ruiz’s case, the Court agreed that there was sufficient evidence to support the trial court’s conclusions that Ruiz’s romantic relationship with a client created an appearance of a conflict of interest with her job duties.  The relevant facts in this case included that: (a) Ruiz might be called to testify in court about Rodriguez’s completion of his court-ordered fathering class; (b) Hope for Children does not “close” its files and frequently worked with families over the course of many years, meaning Rodriguez would always be considered a client; (c) most of the organization’s budget was from a state agency grant and referrals from the agency would be negatively affected by permitting employees to date clients; (d) a romantic relationship between an employee and a client would negatively impact the credibility of the social services organization, as testified to by a former director of another social services agency and board member; and (e) the organization’s funding might be revoked if it allowed its employees to date clients.  Based on the appearance of a conflict of interest created by Ruiz’s relationship with Rodriguez, the Court agreed that Hope for Children’s termination of Ruiz fell within the statutory defense language contained within the Lawful Activities statute and therefore, did not violate the statute. 

What do we learn from this case?  First, be cautious before terminating an employee for otherwise lawful, off-duty activities, at least in Colorado and other states that protect such conduct.  Second, a romantic relationship can be a lawful, off-duty activity under the Lawful Activities statute.  Therefore, if you terminate an employee for a romantic relationship, be sure you are on solid footing to establish a defense to a wrongful termination claim. 

Criticizing Employer on Facebook Leads to Termination

By Steve Collis 

Griping about your employer on Facebook may feel liberating, but for one Colorado employee, it liberated him right out of his job.  Joe Lobato was feeling really sick at work.  He states that when he told his supervisor he was sick, his supervisor told him not to leave his machinery again.  Lobato then sat at his work computer to compose a long Facebook update complaining about his employer, apparently including the statement, “Guess they think a person is a machine and can’t get sick.” 

A co-worker, and Facebook “friend” of Lobato, reported the Facebook post to the company.  The company fired Lobato for “gross misconduct” for posting negative statements about the company on a public forum.  Now Lobato is talking to the media because he is about to lose his house and wants to get his job back. 

Can’t an Employee Gripe Online? 

Employees have the right to talk about their working conditions and terms of employment with their co-workers, even if such “talk” occurs online.  The National Labor Relations Board (NLRB) has focused a great deal of attention on employers’ social media policies, examining whether restrictions in the policies violate an employee’s right to engage in such conversations.  In fact, overly restrictive polices or actions taken in response to such policies could result in an unfair labor practice charge against the employer.  However, employees’ online rants are not protected when they are not for the mutual aid or protection of an employee or co-workers. 

In addition, in some states, employers may be legally prohibited from accessing their employees’ private online accounts.  Colorado recently passed a law prohibiting employers from requesting or requiring applicants/employees to disclose their user names or passwords for access to their personal electronic communications.  Numerous other states have similar laws restricting employer access to private electronic accounts. 

Lobato, however, appeared to be griping alone.  He did not appear to be initiating any discussion with co-workers for their mutual aid or protection.  In addition, the company learned of the negative comments from someone who had access to Lobato’s Facebook page, not through any apparent improper access.  Moreover, Lobato posted his rant while he was on company time.  Lobato says he has been told that his termination was justified. 

As Facebook, Twitter, and other social media become the new “water cooler” where workplace conversations take place, employees need to realize that comments made online can have consequences.  Employers, on the other hand, need to update their policies and procedures to define acceptable and unacceptable employee use of social media and company electronic resources, without making their policies too restrictive so as to run afoul of the NLRB.  While these new and ever-changing online platforms help shrink the universe by connecting us with acquaintances around the world, they raise unique challenges for both employees and employers alike when used in ways that touch the workplace.

October 1 Deadline for Employers to Provide Notice of Health Care Exchange

By Elizabeth Nedrow

Employers recently were given the green light on a notice requirement related to health care reform. 

The central feature of much of health care reform is the exchange system. No later than October 1, 2013, employers must provide each employee a written notice:

• Informing the employee of the existence of the exchange including a description of services provided by the exchange, and the manner in which the employee may contact the exchange to request assistance;
• Explaining that the employee may be eligible for a premium tax credit if the employee purchases a qualified health plan through the exchange; and
• Including a statement informing the employee that if the employee purchases a qualified health plan through the exchange rather than choosing employer-offered health coverage (if any), the employee may be foregoing the employer's contribution (if any) to the employer-offered health coverage, as well as a statement that such employer contributions are often excludable from income for federal income tax purposes.

 Read our entire alert on this notice requirement here. 

Addressing ADA Concerns When Employee is Physically Able But Psychologically Impaired

By Jude Biggs

The Tenth Circuit's decision in Koessel v. Sublette County Sheriff's Dep't, No. 11-8099 (10th Cir. May 14, 2013) raises an interesting issue: if an employee’s doctor says he can physically perform the essential functions of his job, but another doctor says psychological issues may interfere with his ability to perform his job, must an employer keep him on the job? The good news? Koessel says , “No.”

Kevin Koessel worked as a patrol officer with the Sublette County Sheriff's Office when he suffered a stroke. After he recovered, he worked part-time until he was cleared to work full-time. Co-workers reported concerns about his behavior, so a neurologist examined him. The neurologist found him physically able to work from a neurological standpoint, but recommended Koessel be examined by a psychologist due to cognitive issues. The psychologist found some of Koessel's symptoms (for instance, fatigue, episodes of lightheadedness, and weeping) could interfere with the performance of the high-stress parts of his job. Koessel returned to a temporary position, but was terminated after funds were cut from the Sheriff’s budget. Koessel sued for, among other things, disability discrimination under the ADA.

Koessel’s employer argued it properly let him go, as he was unable to do essential functions of his job. The psychologist had recommended Koessel be placed in a low-stress position that did not require frequent contact with the public; hence, he could not preserve the peace at public gatherings, neighborhood disputes and family quarrels; testify in court; or apprehend suspects. Koessel agreed those were essential job functions, but argued he could do them because his own doctor cleared him to return to work full time and he had performed 35 traffic stops without incident after returning from work.

The Tenth Circuit concluded Koessel’s examples only showed he could do the job physically, not that he could handled his job psychologically in high-stress situations. In so ruling, the Tenth Circuit disagreed that a jury should decide the issue of whether Koessel was qualified for his job, because there was no indication the psychologist's report was unreliable; there was no question Koessel remained impaired cognitively and psychologically; and there was no evidence Koessel had encountered high-stress situations after returning to work.

Employers will deal more and more with Koessel-like situations as baby boomers age and suffer strokes, heart attacks, or other medical issues that can have an impact on cognitive abilities. It shows the importance of getting an expert/specialist’s opinion before making a termination decision, as a specialist’s opinion is more likely to “trump” a general practitioner’s opinion. Still, given the risk of disability and age related discrimination issues, and the sympathy a jury is likely to feel for a former employee who has health issues, it also shows the importance of proceeding with great care (and with the advice of counsel) before making such termination decisions.

5 Tips for Handling Holiday Pay

By Joanna Vilos 

With a holiday weekend upon us, it’s a good time to address holiday pay concerns.  Many employers struggle with how to pay employees for holidays, especially when the holiday overlaps overtime hours, FMLA leave, or another provided benefit.  Here are some tips to help guide you through the pay issues so that you may enjoy the holiday. 

1.  Holiday Pay Is Not Required  

Employers are not required to provide holiday pay under federal law.  That means you don’t have to pay non-exempt employees holiday pay for taking the day off.  Of course, if non-exempt employees perform work on a holiday, you need to pay them their normal wages for all hours worked.  But no premium pay is required.  For exempt employees, in order to meet the salary requirement to maintain exempt status, you cannot dock their salary if they do not work on the holiday.   

Even though it is not required by law, many employers choose to offer holiday pay as a company-provided benefit.  If your company offers holiday pay, read further for additional tips. 

2.  Holiday Policy May Provide Conditions 

You may establish conditions that must be met in order for an employee to receive holiday pay.  For example, you may require that an employee work the day before and after a paid holiday in order to receive holiday pay.  If you include such conditions in your holiday policy, be sure to communicate your policy to your employees and then enforce the policy uniformly and consistently. 

3.  Paid Holiday Hours Need Not Be Counted When Determining Overtime 

If you provide holiday pay to employees who do not work on the holiday, you do not have to count the paid holiday hours as hours worked for purposes of determining whether an employee is entitled to overtime that week.   

4.  Holidays During FMLA Leave 

If a holiday falls when an employee is out on FMLA leave, holiday pay will be due if you have a policy of providing holiday pay to employees out on other types of unpaid leave.  However, if your policy is not to pay holiday pay to employees out on other types of leave, then you do not have to provide holiday pay to the employee on FMLA leave.  In other words, you must treat the employee on FMLA leave the same as you would treat employees on other non-FMLA leaves as found in your company policies. 

5.  Holiday on Regular Day Off or During Vacation 

What do you do if a holiday falls on an employee’s regular day off or during a scheduled vacation?  Because holiday pay is a company-provided benefit, you can choose what to do in such situations.  Perhaps you choose to allow such employees to observe the holiday on the preceding work day.  Or instead you choose to allow the employee to pick any other regular workday off.    Perhaps you decide to pay the holiday pay but not allow another day off.  Whatever you choose to do, establish a uniform policy that will work for your operation, let employees know what your policy is and ensure that you treat all similarly-situated employees similarly. 

Hopefully these tips help take the stress out of your holiday.  Always review the law in your state to make sure your policies comply with state-specific requirements.

Colorado Expands FMLA Coverage to Civil Union and Domestic Partners

By Alyssa Yatsko

Under the newly passed Family Care Act (House Bill 13-1222), Colorado employers must extend leave under the federal Family and Medical Leave Act (FMLA) to permit eligible employees to care for their civil union partner or domestic partner who has a serious health condition.  The law goes into effect on August 7, 2013 so covered employers should act now to update their FMLA policies and procedures.  Here are the details of this new Colorado law. 

FMLA Leave Available to Care for Civil Union Partner or Domestic Partner 

Prior to this law, Colorado employees seeking to take job-protected family or medical leave looked only to the federal FMLA.  Under the federal FMLA, leave to care for a family member with a serious health condition is limited to the employee's spouse, child or parent. The federal FMLA does not permit leave for an employee to care for his or her civil union partner or domestic partner.  The Family Care Act allows an eligible employee in Colorado to take leave to care for the employee’s partner in a civil union or the employee’s domestic partner (if the employer recognizes the person as the employee’s domestic partner or the domestic partnership is registered with the municipality or the state, as applicable).  The employer may require that the employee provide reasonable documentation or a written statement of the family relationship as well as medical certifications as may be required under the FMLA.  Upon meeting these terms, eligible employees are entitled to take up to 12 weeks of unpaid FMLA leave in a 12-month period. 

“Double Dipping” of FMLA Leave 

We have previously written in this blog about how the Family Care Act potentially could permit certain employees to take up to 24 weeks of FMLA leave in a 12-month period.  However, the circumstances in which this may occur is limited, meaning many employers will not face a “double dipping” situation.  To learn more, check out our previous post. 

Colorado’s Family Care Act not as Expansive as First Proposed 

As enacted, the Family Care Act is greatly downsized from the original bill introduced into the Colorado House in February.  The initial bill would have expanded the group of family members for whom Colorado employees are entitled to take leave under the federal FMLA to include care for any person related to the employee by blood, adoption, legal custody, marriage or civil union partners and domestic partners.  This would have permitted leave to care for siblings, grandparents, grandchildren and in-laws, regardless of age or dependency.  Due to significant opposition by business groups, the bill was amended to remove all additional family members except civil union and domestic partners for the expanded FMLA coverage.   

Update Your FMLA Policies and Forms Now 

To prepare for the August 7th effective date of the new leave entitlement, covered Colorado employers should revise their FMLA policies and forms now to include provision of leave to care for a civil union partner or domestic partner with a serious health condition.  Remember to update the FMLA policy contained in your employee handbook.  As always, it is wise to consult with your legal counsel to ensure your policies and practices comply with all applicable laws.

Colorado Prohibits Employer Access to Social Media Accounts

By Alyssa Yatsko 

Under a new bill recently signed into law by Colorado Governor John Hickenlooper, employers are prohibited from requiring access to an applicant’s or employee’s personal social media account.   Violations could result in penalties and fines.  Here are the details of this new law. 

Employers Denied Access to Private Social Media Accounts 

Colorado joins the growing trend of states restricting employer access to private social media and other online accounts of job applicants and employees.  Colorado’s new law, House Bill 13-1046,  applies to any employer engaged in a business, industry, trade or profession in the state, except government law enforcement agencies.  It prohibits employers from suggesting, requesting or requiring that an applicant or employee disclose their user name, password or other means of accessing their personal account or online services.  Employers also may not compel an applicant or employee to add anyone to their list of contacts (e.g., to “friend” on Facebook, etc.) or to change their privacy settings on their social media accounts.  Employers violate this law if they discipline, discharge or otherwise penalize an employee, or fail to hire an applicant who refuses to disclose any of the prohibited information or refuses to add the employer to their contacts or to change their privacy settings. 

A person harmed by an employer’s violation of the law may file a complaint with the Colorado Department of Labor and Employment (CDLE).  The CDLE is required to investigate the complaint and issue findings within 30 days after a hearing.  The law provides that the CDLE may create rules regarding the penalties for violations, including imposing fines of up to $1,000 for a first violation and up to $5,000 for each subsequent violation. 

Access Permitted for Company Systems and Certain Investigations  

Two exceptions to the prohibition on requiring access to online accounts are spelled out in the law.  First, employers are permitted to require employees to disclose any user name, password or other access to non-personal accounts or services that provide access to the employer’s internal computer or information systems.  Second, employers are allowed to conduct investigations in two areas:  (1) to ensure compliance with applicable securities or financial law or regulatory requirements based on the receipt of information about the use of a personal online account by an employee for business purposes; and (2) to investigate whether an employee has made an unauthorized posting of the employer’s proprietary information or financial data to a personal online account.  No “fishing expeditions” are allowed under the investigative exceptions; employers may only access personal online information for these investigative purposes following the receipt of information that the employee is using his or her personal online accounts in these specific, inappropriate ways. 

Employers Permitted to Enforce Non-Conflicting Policies 

Existing employment policies that do not conflict with the provisions of this new law are permissible and may be enforced.  Employers should examine their policies and practices that may conflict with this law and revise them to remove any requirements or actions prohibited by this law.  Specifically, employers should revisit their background check practices related to social media, workplace investigation procedures, policies governing use of company computers, electronic accounts and personal online accounts as well as any other policy addressing technology and employer access to accounts.

D.C. Circuit Court Tears Down NLRB Poster Rule

By Brad Williams

The writing’s still not on the wall.  On May 7, 2013, the U.S. Court of Appeals for the District of Columbia Circuit rejected the National Labor Relations Board’s (NLRB) controversial poster rule requiring 6 million private employers to post a government-issued notice advising employees of their union-related rights.  The rule remains in limbo pending a related appeal in the U.S. Court of Appeals for the Fourth Circuit, and potential appeal to the U.S. Supreme Court.

Poster Rule and Business Group Backlash

The controversial rule was issued in August 2011 under the NLRB’s purported statutory authority to enact rules “necessary” to carrying out the National Labor Relation Act’s provisions.  The Board had long been empowered under Section 6 of the Act to engage in administrative rulemaking, but had generally eschewed this power to enforce union-related rights through case-by-case adjudication.  In justifying its unusual poster rule, the NLRB claimed that many employees were unaware of their union-related rights.  It cited the small percentage of unionized employees in the private workforce, and claimed that immigrants and high school students were particularly unlikely to be aware of their workplace rights.

The NLRB poster rule required all private employers covered by the Act—6 million businesses—to post an 11-by-17 inch government-issued notice in “conspicuous places,” and on intranet or internet sites used to communicate with employees.  The poster advised employees of their rights to organize and join unions, to collectively bargain, and to strike and picket.  Failure to post was an unfair labor practice, and could separately be used as evidence of an employer’s unlawful motive in other Board cases.  The statute of limitations on unfair labor practice charges would also be tolled in cases where employers failed to post.

Business groups excoriated the rule as unbalanced.  The poster did not advise employees of their additional rights to decertify unions, to refuse to pay dues in right-to-work states, or to object to dues payments in excess of those needed for representational purposes.  The rule also arguably implicated employers’ free speech rights, and exceeded the NLRB’s Section 6 authority because the Act does not expressly mandate that the Board educate employees about workplace rights.  Some groups claimed that the Obama administration was also improperly attempting to bypass the legislative process through substantive rulemaking.