Monthly Archives: August 2014

August 22, 2014

Nevada Employees Cannot Sue For Wage Violations Under State Wage Statute

By Calder Huntington

Huntington_CEmployees seeking unpaid wages, overtime pay or other compensation under certain Nevada labor statutes cannot sue their employer, says the U.S. District Court for the District of Nevada. Gamble v. Boyd Gaming Corp., No. 2:13cv01009 (D. Nev. June 6, 2014). The Court indicated that the Nevada wage statutes at issue in the case did not provide a private right of action for enforcement, calling the issue “settled law”. Instead, enforcement of these statutes is left to the Nevada Labor Commissioner or the Commissioner’s representatives, such as the Attorney General or district attorneys.

Casino Workers Allege Rounding and Off-the-Clock Work Resulted in Unpaid Overtime

Multiple workers at the Orleans and Gold Coast casinos, operated by Boyd Gaming Corporation, filed lawsuits claiming that their employer unlawfully failed to pay overtime compensation because of the company’s alleged policies of rounding down employees’ time and requiring employees to work off-the-clock. The “rounding down” claim alleged that the company’s use of a time-keeping management system provided by Kronos resulted in significantly more time being rounded down than was being rounded up, benefitting the company and depriving workers of proper payment for hours worked. The “off-the-clock” claim asserted that employees with bank and cash handling duties were not paid for the time at the end of their shifts when they needed to cash-out their bank with the cage cashiers. The plaintiffs also alleged that the company failed to properly pay all wages due to employees upon separation. The plaintiffs sought to recover the supposedly unpaid overtime compensation, unpaid wages, and any applicable penalties under the Nevada labor statutes and to certify a collective action for violations of the Fair Labor Standards Act (FLSA), the federal wage and hour law. The lawsuits were consolidated into one case before United States District Judge James Mahan.

Nevada Wage Claims Dismissed

Boyd Gaming asked the Court to dismiss the plaintiffs’ claims for violations of the Nevada labor statutes, pointing to earlier decisions written by Judge Mahan and Judge Robert C. Jones that held that various sections of the applicable statutes did not provide a private remedy to enforce the state’s wage and hour standards. The Court agreed, dismissing the Nevada wage claims in their entirety.

Notably, other cases both support and contradict Judge Mahan’s holding (thought it does appear that more judges are siding with him). Until the Nevada Supreme Court rules on whether employees may only pursue state law overtime claims before the Labor Commissioner, the issue will remain uncertain.

Employees May Proceed with Collective FLSA Action

Despite the dismissal of their Nevada statutory wage claims, the plaintiff-employees successfully alleged that certain groups of employees at two casino locations had sufficiently similar claims to warrant a conditional class certification under the FLSA and could proceed with providing notice of the collective action to potential class members. Although the Court will revisit whether to certify the class later in the case, Boyd Gaming was ordered to disclose the names, last known addresses and known email addresses of all persons under the conditional class who had performed work in the past three years. The Court also ordered the parties to agree on a mutually acceptable notice to be circulated to the potential class members. Notable, the Court limited the conditional class to employees of two Las Vegas casinos rather than the national class Plaintiffs sought to certify.

Employees Restricted to Federal Wage Claims

This ruling is favorable for Nevada employers as it gives them more ammunition to defeat certain state overtime and other compensation claims, but it does nothing to affect federal FLSA claims. It will be interesting to see if the Nevada Supreme Court eventually addresses this issue. While the Supreme Court has ruled that there is no private right of action under certain sections of the Nevada labor statutes, it seems to have avoided addressing the issue as to overtime. We will keep you posted on any developments.

August 21, 2014

MSHA Proposes to Amend Civil Penalty Regulation

By Cole Wist and Matthew Linton

Wist_CWith the stated goals of improving the civil penalty process and reducing the number of contested citations, the Mine Safety and Health Administration (MSHA) has proposed a rule to amend its civil penalty provisions (30 C.F.R. Part 100).  If finalized, the proposal will impact mine operators significantly.  Although the existing minimum and maximum penalties for non-flagrant violations would not change, minimum penalties for “unwarrantable failure” violations would increase by 50%.  Further, as discussed below, the proposed rule would place significant limits on judicial review of assessed penalties. 

Linton_MPenalty Criteria Revised

Established pursuant to the Federal Mine Safety and Health Act of 1977, six criteria are currently used for determining civil penalties for violations of safety and health standards in mining operations.  MSHA’s proposed rule would change the relative weight given to certain criteria in order to weigh more egregious operator conduct more heavily.  Highlights of the proposed changes to the six criteria and the relative weight attributed to each are as follows:

  • Negligence of the Operator.  The number of descriptive categories for operator negligence to be used by inspectors will be reduced from five (No Negligence, Low Negligence, Moderate Negligence, High Negligence and Reckless Disregard) to three (Not Negligent, Negligent and Reckless Disregard).  The definition of “negligence” will read “[t]he operator knew or should have known about the violative condition or practice.” In addition, the relative weight of Negligence will increase in the penalty computation.
  • Gravity of the Violation.  The number of categories that inspectors currently use for the three aspects of Gravity (Likelihood of Occurrence, Severity of Injury or Illness and Persons Affected) will also be reduced.  For example,  the current five categories of Likelihood would be reduced to three: Unlikely, Reasonably Likely and Occurred.  The existing categories of No Likelihood and Highly Likely would be eliminated.  As for Severity of Injury or Illness, the existing category of Permanently Disabling will be dropped, leaving three categories: No Lost Workdays, Lost Workdays or Restricted Duty and Fatal.  In addition, the relative weight of Severity will also increase in the penalty computation. 
  • Operator’s History of Violations.  The relative weight of violation history will increase as a percentage of total penalty points.  The manner in which violation history is determined will be revised to more equitably impact the Violations per Inspection Day formula for small metal/nonmetal mines.  The proposed rule clarifies that repeat violations apply only after (1) a mine operator has 10 or more violations that become final orders, more than 10 inspection days and six repeat violations of the same citable provision of a standard which become final orders, over a 15-month period; or (2) an independent contractor has a 6 or more violations at all mines which become final orders and 6 repeat violations of the same citable provision of a standard which become final orders, over a 15-month period.
  • Appropriateness of the Penalty to the Size of the Business.  This criteria will have less weight as a percentage of total penalty points.  The proposal will reduce the penalty points for mine size and controlling entity and decrease the number of penalty points for operators and independent contractors.
  • Demonstrated Good Faith of the Operator in Attempting to Achieve Rapid Compliance After Notification of a Violation. The proposed rule will provide an additional 20% good faith penalty reduction to mine operators that do not contest a citation, promptly correct the condition or practice that was cited and pay the civil penalty.
  • Effect of the Penalty on the Mine Operator’s Ability to Continue in Business.  This criteria will not substantively change as MSHA will continue to assume that the assessment of a civil penalty will not affect the ability of the mine operator to continue operations.  Operators may continue to submit information regarding its financial status to the District Manager.

Penalty Amounts – Only Minimum Penalties for Unwarrantable Failure Violations Will Increase

The civil penalties for non-flagrant violations will remain the same, with the minimum penalty of $112 and the maximum penalty of $70,000.  In order to deter mine operators from allowing unwarrantable failure violations to occur, the proposed rule will increase the minimum penalties for such violations by 50% to $3,000 under Section 104(d)(1) and $6,000 under Section 104(d)(2).

ALJ Review of Contested Cases to Be Limited

One of the most significant changes proposed in the new rule is that Federal Mine Safety and Health Review Commission administrative law judges (ALJs) who hear contested violations and penalty cases will have less independence in evaluating the appropriateness of MSHA’s proposed penalty assessments.  The rule provides limited circumstances under which an ALJ may assess a penalty other than that indicated by MSHA’s regular formula.  The stated goal of this change is to promote greater consistency and predictability.  However, because the Commission’s scope of authority and review process was created by statute, this proposed changed is highly controversial and will likely attract significant scrutiny. 

Comment Period Open Until September 29, 2014

Interested parties may submit comments about MSHA’s proposed rule no later than midnight on September 29, 2014.  Please contact the Holland & Hart Workplace Safety / Emergency Response attorney with whom you regularly work to obtain more information.  Comments may be submitted by email to: zzMSHA-comment@dol.gov (include “RIN 1219-AB72” in the subject line).  Those that wish to comment by facsimile, U.S. mail or by courier may find instructions at http://www.regulations.gov

August 7, 2014

Favoritism to Paramour is Not Gender Discrimination

Cave_BBy Brad Cave 

Friendship, cronyism, nepotism, affairs – many types of personal relationships may result in one employee being treated better than another employee.  But is that favoritism discriminatory?  Does the non-favored employee have a discrimination claim against the employer?  No, Title VII does not prohibit favoritism based on a special relationship, says the Tenth Circuit Court of Appeals. 

“I Like You Best” 

If an employer pays the CFO’s sister a higher wage than other employees doing similar work,  offers the most lucrative deals to an employee who is the boss’s best friend or gives playoff tickets as a bonus to the manager’s boyfriend who works at the company, that special treatment is permissible because it is based on the special relationship or bond between the parties, not on a protected characteristic.  It is only when the differential treatment is based on an impermissible classification, such as gender, race or age, that it crosses the line into unlawful discrimination.  In a recent decision, the Tenth Circuit Court of Appeals affirmed that distinction, ruling that a supervisor’s favoritism toward a female subordinate based on their purported intimate relationship did not amount to reverse gender discrimination against her male counterpart.  Clark v. Cache Valley Elec. Co., No. 13-4119 (10th Cir. July 25, 2014). 

Reverse Gender Discrimination Under Title VII 

Project manager Kenyon Brady Clark sued his employer, Cache Valley Electric Company, alleging violations of Title VII.  Clark’s discrimination claim alleged that his supervisor, Myron Perschon, favored a female project manager, Melissa Silver, over him because Perschon and Silver were in a romantic relationship.  Clark asserted that Perschon gave Silver better work assignments, paid her more for performing less work and performed most of Silver’s job duties himself.  Although it turned out that there had been no affair, Clark still asserted that “whether they were having sex or not, there was favoritism.”  When asked about the reason for the favoritism at his deposition, Clark admitted that if the favoritism was not due to a romantic relationship, he did not know the reason for it. 

The Court analyzed Clark’s claim as a reverse gender discrimination case under which Clark needed to show circumstances that would support an inference that his employer discriminates against the majority (i.e., males) or that “but for [his] status the challenged decision would not have occurred.”  Significantly, Clark did not assert that the favoritism was due to Silver being a female or that Cache Valley treated women more favorably than men.  Instead, Clark focused on the preferential treatment that his supervisor offered to one specific female employee.  That deficit was fatal to his reverse gender discrimination claim.  The Court cited numerous cases where the motives for preferential treatment were other special relationships, such as friendship, nepotism or personal fondness or intimacy, in which it had ruled that such favoritism was not within the purview of Title VII’s anti-discrimination provisions.  Because Clark’s discrimination claim was based only on the favoritism shown to a special friend and not on a protected characteristic, his claim was not covered by Title VII.  The Court affirmed summary judgment in favor of Cache Valley. 

Retaliation Claim Fails Too 

Clark also raised a retaliation claim in his lawsuit against Cache Valley.  Clark asserted that his supervisor, Perschon, retaliated against him by trying to get a competitor to hire him, refusing to communicate with him and otherwise distancing himself from Clark.  Clark also alleged that he was fired in retaliation for complaining about Perschon’s favoritism and retaliation.  He had complained to management about the alleged affair between Perschon and Silver, stating that it was difficult to continually respond to vendors and suppliers who had questions about the purported relationship.  He reported that they were acting like a married couple.  He later complained about the preferential treatment that Silver received from Perschon, including receiving better job assignments and higher bonuses.  In a letter to the company’s CEO and to human resources, Clark wrote that over the past three years, he had personally and professionally suffered serious and real adverse effects to his employment due to the alleged affair.  He wrote that the affair created a hostile work environment and that it was the company’s responsibility to ensure that the workplace was free of harassment and retaliation.  Shortly after meeting with HR and the company’s legal counsel to discuss his letter, Clark was terminated. 

The Court rejected Clark’s retaliation claim.  To make out a Title VII retaliation claim, Clark needed to show that (1) he engaged in protected opposition to discrimination, (2) a reasonable employee would have found the challenged action materially adverse, and (3) a causal connection existed between the protected activity and the materially adverse action.  The Court concluded that Clark failed to show that he engaged in protected opposition to discrimination.  He needed to show that he had a reasonable good-faith belief when he complained to the company that he was engaging in protected opposition to discrimination and that his good-faith belief was reasonable both subjectively and objectively.  He failed to do so.  Although he made statements about a “hostile work environment” and “discrimination” in his complaints to the company, the Court found such statements to be conclusory and not related to gender discrimination.  The statements were about Perschon’s favoritism to Silver based on the alleged inappropriate relationship, which was not gender discrimination.  Therefore, Clark’s retaliation claim failed. 

Just ‘Cuz It’s Legal Doesn’t Make It Smart 

Clark’s reverse discrimination claim was a little more cut and dried than most because he essentially admitted that the preferential treatment shown by his supervisor to a female colleague was not due to her status as a female.  Consider whether the outcome would have been different had Clark provided evidence that the supervisor historically treated women better than men.  Or think about other situations where special relationships result in favoritism, such as when the boss takes all his male cronies to play golf with clients while the female employees toil away at work.  Even though the courts have been clear about distinguishing favoritism based on special relationships from discrimination based on a protected class, employers are wise to steer clear from favoring some employees over others, especially when it comes to pay, bonuses and benefits where the non-favored employees can prove financial harm.  Keeping the terms and conditions of employment on an even footing will help keep your workplace productive, the morale of employees high and your company out of court.

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August 6, 2014

Wrongful Discharge Claim Fails — Employee Did Not Engage in Protected Activity

Howland_PBy Pam Howland 

Idaho, like many states, recognizes a narrow exception to the employment at-will relationship where an employer terminates an employee in violation of public policy.  In order to support a claim for wrongful termination in violation of public policy, an employee must provide evidence that he or she was fired for engaging in some sort of protected activity, such as exercising his or her legal rights or refusing to break the law on behalf of the employer.  In a recent case, the Idaho Supreme Court rejected an employee’s wrongful discharge claim because the employee failed to provide evidence that she engaged in protected activity.  Venable v. Internet Auto Rent & Sales, Inc., ___ P.3d ___, No. 40939 (Idaho June 17, 2014). 

Asserting General Public Policy Violation Not Enough 

Tina Venable was a fifteen year veteran in the auto sales industry when she was hired by Internet Auto as an Internet Manager.  The auto dealer terminated her just a month later.  Venable claimed that she was fired after telling the General Sales Manager that the dealership was engaged in various deceptive sales practices and charging illegal fees to consumers.  She sued Internet Auto claiming, among other things, that she was wrongfully discharged in violation of public policy.  The district court found in favor of Internet Auto on her wrongful discharge claim and Venable appealed.  

On appeal, the Idaho Supreme Court analyzed whether Venable offered evidence that she had engaged in a protected activity that would support her public policy violation claim.  To make that determination, the Court needed to examine “(1) whether there is a public policy at stake sufficient to create an exception to at-will employment, and (2) whether the employee acted in a manner sufficiently in furtherance of that policy.”  Venable failed to provide evidence of either of these.  

Although she argued that Internet Auto violated the Idaho Consumer Protection Act and the federal Truth in Lending Act, she failed to specify the exact provisions of either law or regulation that the dealership violated. The Court stated that “a plaintiff must specifically identify the public policy in question and then provide evidence to show a violation of the public policy.”  Venable’s broad references to the entire consumer protection law were insufficient for that purpose. 

Venable also failed to identify specific actions that she took that were in furtherance of an identified public policy.  While claiming that she was terminated for refusing to commit unlawful acts and practices, Venable was unable to identify any specific instances where Internet Auto violated the law or engaged in illegal conduct.  She made numerous allegations, such as Internet Auto illegally charged consumers for acquisition fees that were owed by the dealership, sold vehicles in excess of their advertised prices, failed to disclose all material contractual and financial terms to buyers and employed “bait and switch” sales tactics.  However, she failed to point to even a single specific deal or customer where illegal conduct occurred. Similarly, she failed to provide any facts related to her own conduct that would show how she refused to engage in unlawful conduct that was requested or required by her employer.  By failing to identify even one such instance, Venable was unable to show that she was engaged in a protected activity.  The Court affirmed judgment in favor of Internet Auto on Venable’s wrongful discharge claim. 

Not All Activities Are Protected 

In discussing the public policy exception to at-will employment, the Idaho Supreme Court identified numerous types of employee conduct that has been considered to be protected activities.  These include participating in union activities, reporting electrical building code violations and complying with a court issued subpoena.  The Court also reiterated that the public policy exception would be applicable if an employee were discharged for filing a worker’s compensation claim, serving on jury duty or refusing to date a supervisor.  However, as Venable discovered, not all employment activities fall within the public policy exception, even if they benefit the community. 

Prevailing Employer Was Awarded Attorneys Fees 

Internet Auto argued that as the prevailing party in this lawsuit, it was entitled to recover its attorneys fees pursuant to the applicable Idaho statute.  Under Idaho Code §12-121, a court will award fees if it “determines that the action was brought or pursued frivolously, unreasonably or without foundation.”  Because Venable continued to rely on vague allegations of misconduct “without bothering to flesh out the details either of the alleged illegal conduct on the part of Internet Auto or of the specifics of her engagement in protected activity,” despite the district court pointing out her deficiencies, the Court awarded fees to Internet Auto. 

Favorable Ruling for Employers 

The good news for Idaho employers is that the public policy exception to the at-will employment relationship remains limited and narrowly construed.  Discharged employees must be able to articulate the particular public policy at issue, identify specific violations of the public policy by the employer and prove that the employee engaged in explicit conduct that constitutes a protected activity.  General allegations of employer wrongdoing will not be sufficient to support a wrongful discharge claim. 

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