Kentucky Employment Law Blog

Kentucky Whistleblower Act Protects Employees That Threaten To Report Government Wrongdoing

The Kentucky Whistleblower's Act protects employees that threaten to report wrongdoing within a government agency, department or cabinet, the Kentucky Supreme Court has ruled in Consolidated Infrastructure Management Authority, Inc. v. Allen, No. 2006-SC-000188-DG (November 26, 2008).  

Thomas Allen was the Safety Director for Consolidated Infrastructure Management Authority, a joint venture of the cities of Russellville and Auburn to administer water and sewer services.  During an inspection of the facilities he noticed numerous safety violations and twice reported them to CIMA's Board of Directors, stating that if they were not timely remedied he would request a survey from OSHA.  Three months after his second report to the Board, Allen was told that he was being "laid off" due to financial constraints.  He then made his report to OSHA, which performed a survey, found numerous violations and imposed fines.

Allen filed suit and claimed that he was terminated in violation of the Kentucky Whistleblower's Act. CIMA argued that Allen never made an actual report to OSHA before he was terminated.  The Court rejected that argument, holding that a protected "disclosure not only occurs when a report is actually made, but also when the threat of a report is made."  

Robert L. Abell

www.RobertAbellLaw.com 

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Kentucky Whistleblower's Act Applies To An Employee's Internal Report

When an employee becomes aware of actual or possible wrongdoing in their agency or department, their initial and most logical inclination is to report the matter to those persons in the agency or department with power to investigate and remedy the matter.  The Kentucky Supreme Court has ruled in Workforce Dev. Cabinet v. Gaines, No. 2005-SC-000965-DG (November 26, 2008) that such an internal report with the employee's own agency, department or cabinet is protected by the Kentucky Whistleblower's Act.

Mary Gaines, an auditor in the Jefferson County office of the Division of Unemployment Insurance within the Workforce Development Cabinet, reported the possible wrongful destruction of confidential documents to a Cabinet lawyer who, in turn, further reported the matter to James Thompson, Commissioner of the Department for Employment Services within the Cabinet.  Two days later, Gaines suffered what she alleged was a wrongful and retaliatory transfer

The issue before th Kentucky Supreme Court was whether Gaines's internal report through the Cabinet channels was a protected report under the Kentucky Whistleblower's Act.  The Court began its analysis by examining the purpose of the whistleblower's act:

The Act has a remedial purpose in protecting public employees who disclose wrongdoing.  It serves to discourage wrongdoing in government, and to protect those who made it public.  The purpose of the Whistleblower Act is clear, and it must be liberally construed to serve that purpose.

After considering the persons and entitles specifically listed to whom a protected report may be made, the Court decided whether language protecting a report to "any other appropriate body or authority" could include an employee's own agency, department or cabinet.  The Court asserted that to conclude otherwise would be "absurd," since an "internal report is often the most logical first step, and in many cases may be the only step necessary to remedy the situation."  Therefore, the Court advised and ruled as follows:

We believe that "any other appropriate body or authority" should be read to include any public body or authority with the power to remedy or report the perceived misconduct.  This interpretation serves the goals or liberally construing the Whistleblower Act in favor of its remedial purpose, and of giving words their plain meaning.  Generally, the most obvious public body with the power to remedy perceived misconduct is the employee's own agency (or the larger department or cabinet).

Robert L. Abell
www.RobertAbellLaw.com

McDonald's Assistant Managers File Class Action For Unpaid Overtime

A class action lawsuit seeking unpaid overtime compensation filed on behalf of McDonald's assistant managers claims that assistant managers were misclassified as exempt employees during a mandatory one to three month mandatory training period.  A copy of the assistant managers' complaint can be seen here. 

The lawsuit alleges that assistant managers are required to complete a one to three month training period during which they "primarily perform the same non-exempt duties as non-managerial non-exempt employees -- i.e., working at the cash register, attending to the drive through window, taking and filling orders, working at the fry and grill stations."  Also, the assistant managers do not perform managerial duties during the training period and "in fact are discouraged from exercising any such independent judgment"; they do not supervise other employees, do not have any hire and fire authority and do not contribute to personnel actions or decisions.  The assistant managers do work in excess of 40 hours per week but are not paid overtime. 

The class action seeks to recovery unpaid overtime compensation for those individuals who worked as assistant manager employees and underwent the mandatory training period from July 18, 2005, to the present at McDonald's that were owned by the parent corporation. 

Robert L. Abell
www.RobertAbellLaw.com

Retirement Plan Stock Losses Are Basis For Employees' Suit Against The Hartford

Employees, who have seen the value of their retirement accounts plummet as the stock value of their employer, The Hartford, has nosedived, have filed suit alleging mismanagement of their 401(k) retirement plans and failure to fairly and truly disclose the company's financial condition reports the Hartford Courant, "Employees Sue The Hartford Over Retirement-Plan Stock Losses."  At the end of 2007, the company's stock was valued at $87.19 and 21.4% of the employees' retirement plan holdings were invested in the company stock.  This year the stock has dropped to $10.46 per share amid continuing disclosures of poor investments by the company.  As a consequence, the value of the employees' retirement accounts has also dropped.

The suit claims that the company failed to prudently manage the plan as required by ERISA, the Employee Retirement Income Security Act, which governs the management of employee retirement accounts. 

Robert L. Abell
www.RobertAbellLaw.com 

Interrupted Lunch Breaks Cited In Wage Class Actions

Interrupted lunch breaks are the basis for class action lawsuits for unpaid wages filed on behalf of workers at two hospitals reports the Syracuse Post-Standard, "Firm Sues 2 Hospitals In Syracuse."

Wage and hour law does not require employers to pay employees for their lunch breaks.  Kentucky law specifically requires that an employee be allowed a "reasonable" time period for a lunch break as close as possible to the middle of an employee's shift.  However, employers are required to pay employees for the time they work.  If an employee's lunch break is interrupted by work duties, the employee must be paid according to the U.S. Department of Labor. 

Robert L. Abell
www.RobertAbellLaw.com 

Failure To Fully Pay Life Insurance Benefits Breached UNUM's Fiduciary Duty Under ERISA

Beneficiaries of group life insurance policies must be fully paid the policy benefits upon proof of their claim, the First Circuit has ruled in Mogel v. UNUM Life Ins. Co., No. 08-1334 (November 6, 2008).  UNUM issued group insurance policies to employees at a number of companies.  Plaintiffs were beneficiaries of those policies and presented proof substantiating their benefits claims.  However, instead of paying the policy benefits, UNUM sent the beneficiaries a checkbook and a letter advising them that (1) their benefits had been deposited in a "UNUM Security Account"; (2) checks from $250.00 up to the balance of the account could be written; and, (3) interest on the account would be paid at a varying rate.

The court ruled that UNUM breached its fiduciary duty by retaining control and use of the beneficiaries' money in what the court referred to as a "euphemistically named 'Security Account.'"  Sending the beneficiaries a checkbook "was no more than an IOU which did not transfer the funds to which the beneficiaries were entitled" and constituted a breach of UNUM's fiduciary duties under ERISA.

Robert L. Abell

www.RobertAbellLaw.com