Kentucky Employment Law Blog

Overtime Suit Settled By Police Canine Handlers

Police canine handlers have settled an overtime compensation lawsuit against National City, California reports the San Diego Union-Tribune, "Overtime Approved For Police Dog Handlers." The lawsuit claimed that the federal Fair Labor Standards Act required they be paid overtime for the time they devoted after the end of their shifts in caring for the canines. This time included about an hour a day devoted to grooming, feeding and training the dogs as well as taking them to the vet and other duties.

Robert L. Abell
www.RobertAbellLaw.com

Defamation Verdict Upheld For Employee Fired On False Charge of Theft

An employee falsely charged with theft and terminated from her employment sued for defamation. She was awarded $224,481 in damages. The Connecticut Supreme Court upheld the verdict in Gambardella v. Apple Health Care, Inc., No SC 17977 (May 19, 2009).

Laurie Gambardella worked as a nursing home admissions counselor. She met an Eleanore O'Sullivan in the course of admitting O'Sullivan's aunt, Fannie Lauro, who passed away shortly after being admitted to the nursing home. When O'Sullivan came to the nursing home later to retrieve some of Lauro's property, she took what she wanted and told Gambardella she could have the rest, which included furniture and other items. Gambardella selected a couple of chairs; a nursing supervisor, Busk, removed a dresser. Gambardella told the facility's maintenance man, Stolfi, that the rest of the furniture could be used as needed in the facility. Stolfi contacted John Sweeney, the facility administrator. 

Sweeney asked Gambardella about the disposition of Lauro's property. He told her that there was a corporate policy against accepting gifts from residents and/or their families; Gambardella then returned the chairs. O'Sullivan was contacted and confirmed that she had told Gambardella she could have the items. Sweeney then contacted O'Sullivan himself and she again confirmed the account. O'Sullivan then sent a letter repeating that "the property had been left for the plaintiff to keep for herself or distribute to others in her sole discretion."

Despite O'Sullivan's repeated written and oral recitations that Gambardella had been given the property, Sweeney resolved that Gambardella had engaged in theft. That Gambardella was fired on an allegation of theft leaked and, as the court noted, "other people, including the plaintiff's daughter, also had heard that the plaintiff had been fired for 'taking furniture from a dead lady....'"

Gambardella sued for defamation. She was awarded damages, including punitive damages, in total sum of $224,481, upon a finding that "defendants had published false allegations of theft to third parties, which constituted defamation per se."

The employer argued that the statements concerning Gambardella were immune from liability under the qualified intra-corporate privilege. This qualified privilege protects communications between managers regarding an employee's job performance and/or termination. However, the qualified privilege is lost where there is a showing of actual malice or malice in fact. "Actual malice" is shown by the publication of a false statement with knowledge of its falsity or reckless disregard for the truth. "Malice in fact" is shown by the publication of a false statement with bad faith or improper motive.

The court concluded that Gambardella had proved actual malice in the making of the false statements. First, the court noted that the evidence was unchallenged that O'Sullivan had given the property to Gambardella not the facility. Second, the defendants' reliance on the corporate policy concerning gifts was misplaced, because theft is a specifically defined criminal offense. Third, the court noted that Busk had also received an item of furniture and had not been fired.  Finally, the court rejected defendants' claim that they believed Gambardella had stolen the property: "It is axiomatic that a defendant who closes his eyes to the facts before him cannot insulate himself from a defamation charge merely by claiming that he believed his unlikely statement."

Robert L. Abell
www.RobertAbellLaw.com

Earlier Discriminatory Acts of Supervisor Admissible In Support of Failure to Promote Claim

The discriminatory acts of a prior supervisor marred the work record of an employee when he later sought promotion. The employee sought to present evidence on these past discriminatory acts to support his failure to promote claim based on race. The trial judge excluded this evidence and, in doing so, committed reversible error the Sixth Circuit has ruled in Cobbins v. Tennessee Dept. of Transportation, No 07-6491 (April 2, 2009). 

Gregory Cobbins, an African-American male, was a ten year employee of the Tennessee Department of Transportation and sought promotion to a supervisor position. He was unsuccessful and one of the explanations for the decision was that the successful candidate had no record of disciplinary action, while Cobbins "had several oral and written warnings in his work file."  The warnings were all received between 1998 and 2002 by a former supervisor, Yocum. Cobbins claimed in a prior lawsuit that these warnings were the product of race discrimination by Yocum. The prior lawsuit was dismissed without a judgment on the merits of Cobbins' claim. In this case, he claimed that these earlier discriminatory acts by Yocum deprived him of the opportunity to compete fairly for the promotion to the supervisor position.

The "cat's paw" theory in employment discrimination litigation refers to a situation in which a biased subordinate, who lacks decisionmaking power, influences the unbiased decisionmaker to make an adverse hiring decision, thereby obscuring the subordinate's discriminatory intent. See Arendale v. City of Memphis, 519 F3d 587, 604 n.13 (6th Cir 2008)("When an adverse hiring decision is made by a supervisor who lacks impermissible bias, but that supervisor was influenced by another individual who was motivated by such bias, this Court has held that the employer may be held liable under a 'rubber-stamp' or 'cat's paw' theory of liability.").  Here, Cobbins sought to show that Yocum's past discriminatory acts, which resulted in warnings in his file, influenced the decisionmaking process that resulted in Cobbins' being passed over for promotion unfairly:

Plaintiff seeks only to demonstrate that certain conduct and actions of his supervisor at that time impacted his work record and promotion chances; and such evidence is, therefore, relevant in this case.

This case represents an often-encountered scenario: the discriminatory bias of a supervisor inflicts permanent damage to an employee's career by packing his or her file with unfounded or unfair warnings.

Robert L. Abell
www.RobertAbellLaw.com

Recoupment of Previously-Paid Bonuses Eliminates Overtime Exemption

An exemption from overtime was eliminated by a compensation policy where the employer reserved the right to make (or actually made) deductions from employees' base salaries to recover earlier bonus overpayments the Sixth Circuit has ruled in Baden-Winterwood v. Life Time Fitness, Inc., Nos. 07-4457/4438 (May 19, 2009). 

The employees were paid a base salary and, in addition, were paid monthly bonuses on year-to-date performance guidelines. So if an employees' sales were ahead of their performance plan for the year, he or she would be paid a bonus. If their production later slipped under 80% of their plan, the employer, Life Fitness, could recoup previously made bonus payments by reducing an employees' base salary.

The employer claimed that the employees' positions were exempt from overtime under the "bona fide executive, administrative, or professional capacity" exemption. To be exempt under this provision a job must satisfy three tests: (1) a duties test; (2) a salary-level test; and, (3) a salary-basis test.

The Sixth Circuit ruled that the employees' exemption from overtime was eliminated because the company's compensation policy carried a significant likelihood of deductions. This was in accord with the Supreme Court's decision in Auer v. Robbins, 519 U.S. 452 (1997). The "salary-basis" test was not met for the entire time the employees' were subject to the significant likelihood of deduction from their base pay. However, after August 23, 2004, the effective date of new regulations, the overtime exemption was lost only during those pay periods where deductions were actually made from the employees' base pay.

Robert L. Abell
www.RobertAbellLaw.com

Pregnancy Discrimination Harms Perpetuated By Supreme Court

The United States Supreme Court on Monday in its decision in AT & T Corp. v. Hulteen perpetuated the decades-in-accruing harms of pregnancy discrimination. The Court ruled 7-2 that working women must continue to bear the harm and the lower pension benefits inflicted by systematic pregnancy discrimination prior to enactment of the Pregnancy Discrimination Act in 1979. 

The case arose from the method by which AT & T calculated service credit time toward determining an employee's pension benefits. Basically, an employee received service credit time toward his or her pension for all leaves of absence caused by medical conditions, except those caused by pregnancy. The plaintiffs, four women who were or are life-long employees of AT & T, claimed that this method exclusing pregnancy leave from the calculation of service credit time discriminates against them based on their female sex.

The Court rejected their argument based principally on its 1976 decision in General Electric Company v. Gilbert, 429 U.S. 125 (1976), which held that a disability benefit plan excluding disabilities related to pregnancy was not sex-based discrimination within the meaning of Title VII. The Gilbert decision departed from the decision of every appeals court that had ruled on the issue. Just two years later, Congress enacted the Pregnancy Discrimination Act "so as to make clear that it is discriminatory to treat pregnancy-related conditions less favorably than other medical conditions."

But the Court ruled that the Pregnancy Discrimination Act did not help, because the Court majority held that the PDA applied only prospectively and did not ameliorate the discriminatory practices that Gilbert sanctioned. And so 31 years after the PDA was enacted, the Supreme Court disregards Congress's efforts to correct the Gilbert decision and perpetuates the discrimination that the PDA was intended to eliminate.  

Robert L. Abell
www.RobertAbellLaw.com

Retroactive Termination of Medical Insurance Violates FMLA

The Family Medical Leave Act (FMLA) prohibits an employer from interfering with or retaliating against an employee who asserts or exercises her rights to take leave from work under the FMLA. Both these prohibitions were violated by the employer's retroactive termination of an employee's medical insurance the Seventh Circuit has ruled in Ryl-Kuchar v Care Centers, Inc., No. 08-2688 (May 11, 2009).

Kathleen Ryl-Kuchar had worked for Care Centers, Inc. for over 17 years when she became pregnant with triplets in late 2002. She worked all the way up to delivery on July 17, 2003, although during the later part of her pregnancy, she worked from home and in some weeks less than 35 hours per week. Ryl-Kuchar returned to work right after delivery but began FMLA leave a short time later. A few weeks later, she elected to terminate her employment effective October 1.

About six weeks after resigning, Ryl-Kuchar learned that her health insurance had been retroactively cancelled on June 15 -- just at the point where, as the court observed, she really began "piling up" the medical bills related to her pregnancy. The employer asserted that it had retroactively cancelled her medical insurance on the grounds that she had become ineligible for the coverage by having worked for less than 35 hours some weeks prior to delivery.

Ryl-Kuchar sued under the FMLA and claimed that the retroactive cancellation of her medical insurance was based on her decision to take FMLA leave. She presented evidence "that Care Centers was concerned with rising health care costs, as evidenced by an article in the company newsletter," and that the claim she had become a part-time employee was groundless, since she was a salaried employee and had kept, at all times, the same rate of pay. Only after she took FMLA leave, Ryl-Kuchar pointed out, was there an audit of her payroll records and a claim of "mistake" regarding her eligibility for medical insurance. This proof, the court ruled, was enough to show that Care Centers retaliated against Ryl-Kuchar for taking FMLA leave by retroactively cancelling her medical insurance.

The court also ruled that Ryl-Kuchar had easily show unlawful interference with her rights under the FMLA. The court explained that the FMLA requires that an employee on FMLA leave is "entitled to have health benefits maintained while on leave as if the employee had continued to work instead of taking the leave."

Robert L. Abell
www.RobertAbellLaw.com

Racing Officials Not Exempt From Overtime Requirements

Racing officials, a placing judge, a paddock judge, a horse identifier, and a clerk of scales, are not exempt from the overtime compensation requirements of the Fair Labor Standards Act (FLSA) the Fourth Circuit has ruled in Desmond v. PNGI Charles Town Gaming, No. 08-1216 (April 30, 2009). The Court reversed a district judgment and ruled that the racing officials’ positions did not fall under the administrative exemption to the FLSA.

The plaintiffs worked as racing officials at the Charles Town race course in the positions of placing judge, paddock judge, horse identifier, and clerk of scales during horse racing at that facility. They filed suit under the FLSA seeking overtime compensation, because they regularly worked more than 40 hours per week.

The issue was whether the racing officials’ positions fell under the administrative exemption to the overtime requirement. The administrative exemption has three components: (1) the employee must be compensated at a salary rate of not less than $455 per week; (2) the employee’s primary duty must consist of the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and (3) the employee’s primary duty must include the exercise of discretion and independent judgment with respect to matters of significance.

The court ruled that the racing officials’ jobs were not directly related to the general business operations of the race course. The court noted that the racing officials have no supervisory responsibility and do not develop, review, evaluate, or recommend business policies or strategy with regard to the horse races put on by their employer. While acknowledging that the racing officials’ jobs were important to the operation of the racing business and indeed that state law required the positions to exist, the court concluded that the positions “are unrelated to management or the general business functions of the company.”

 The court also analogized the racing officials’ work to those of a manufacturing production employee, stating that the position of racing official consists of “the day-to-day caring out of [Charles Town Gaming’s] affairs to the public, a production-side role.” Therefore, the court ruled that the racing officials’ position does not satisfy the requirements for the administrative exemption under the FLSA.

Robert L. Abell
www.RobertAbellLaw.com