Discrimination and Compensation Issues

Paul A. LampFeldman, Rogers, Morris & Grover, L.L.P.5718 Westheimer, Suite 1200Houston, Texas 77057(713) 960-6000(713) 960-6025 - facsimile

Laws Governing Discrimination

Many federal laws prohibit employment discrimination, including: Title VII ADA

Americans with Disabilities Act ADEA

Age Discrimination in Employment Act FMLA

Family and Medical Leave Act (other rights)

How Many Employees Must I Have for The Regulations to Apply?

Title VII 15 Employees

ADA 15 Employees

ADEA 20 Employees

FMLA 50 Employees

How Many Employees Do I Have?

This is a very fact-specific determination.

The mere creation of multiple corporations or businesses is not the end of the analysis. Under some circumstances, the courts will combine the multiple companies for purposes of counting employees and applying discrimination laws.

“Joint Employers” and Total Employee Counts

In the Fifth Circuit, four factors determine whether two entities may be held liable as a joint employer: Interrelation of operations; Centralized control of labor relations; Common management; and Common ownership or financial control.

Where is Discrimination Prohibited?Every Aspect of Employment.

Recruitment Hiring Promotion Benefits Work Assignments Performance

Evaluations Training Transfer

Leave Discipline Reductions in Force Discharge Any other term,

condition, or privilege of employment

Disparate Treatment Intentional Discrimination

Members of a race, sex, or ethnic group have been denied the same employment, promotion, membership, or other employment opportunities as have been available to other employees or applicants

Includes not only animosity but also conscious and unconscious stereotypes about the abilities, traits, or performance of individuals with certain characteristics

Disparate Impact

Employer uses a particular employment practice that causes a disparate (disproportionate) impact on the basis of race, color, religion, sex, or national origin.

This is discrimination unless the practice is: Job related; and Consistent with business necessity.

What is Retaliation?

Burlington Northern & Santa Fe Railway v. White sets the standard: A plaintiff alleging retaliation must show

that the employer’s challenged action would have been material to a reasonable employee, which means that it would likely have dissuaded a reasonable worker from making or supporting a charge of discrimination.

Harassment Verbal or physical conduct based on a

person’s sex, race, color, religion, national origin, or disabilities constitutes unlawful harassment when the conduct: Has the purpose or effect of creating an

intimidating, hostile, or offensive working environment.

Has the purpose or effect of unreasonably interfering with an individual’s work performance.

Otherwise adversely affects an individual’s employment opportunities.

Examples of conduct contributing to harassment

Threatening or intimidating conduct

Offensive jokes Ethnic/racial slurs or

jokes Epithets or name

calling Rumors Physical aggression

or assault

Offensive objects or pictures

Interference with work performance

Intimidation Ridicule or mockery Insults or put downs Graffiti or printed

material promoting negative stereotypes

Damage to property; theft

How much is too much? An incident of harassment that is not severe

standing alone may create a hostile working environment when frequently repeated.

An isolated incident would not normally create a hostile working environment unless it is extremely serious: Physical assault motivated by race, national origin. Threat of physical assault motivated by race,

national origin. Use of derogatory term. Use of derogatory symbol.

Harassment

Keep in mind… Even if the harassment does not

necessarily violate the law, it is not acceptable in the workplace.

You can be disciplined for harassment even if it does not rise to the level of being illegal. …including termination.

EEOC / TWCCRD Process For Title VII, ADA, and ADEA claims (not FMLA),

employees must file charges with the Equal Employment Opportunity Commission (EEOC) or the Texas Workforce Commission Civil Rights Division (TWCCRD) before they may file a lawsuit in court.

The EEOC or the TWCCRD the goes through its own investigation and process, and will make the determination whether to issue the employee a “right to sue” letter.

Time Limits for EEOC Charges

An employee must file charges with the EEOC within 300 days of the alleged discriminatory action or adverse employment action.

Otherwise, it is “too late.” Harassment claims: at least one act

must occur within the 300 day timeframe.

Switching Gears – the FLSA

FLSA The Fair Labor Standards Act.

Interstate Commerce and FLSA

The FLSA applies to any business involved in interstate commerce.

What is interstate commerce? Almost anything! Your business is involved in interstate

commerce! See Heart of Atlanta case.

Heart of Atlanta Heart of Atlanta Motel v. United States was a landmark 1964 United States

Supreme Court decision which held that the government may use its Commerce Clause powers (under the Constitution) to eliminate discrimination by businesses.

The Heart of Atlanta Motel was a small roadside hotel in Georgia which refused to rent rooms to African-Americans. The owner argued that the federal government could only enforce its anti-discrimination laws for businesses involved in interstate commerce. The Court found that the motel was involved in interstate commerce because it might refuse to rent a room to a traveling African-American and interfere with that person’s interstate travel.

The bigger picture: The court essentially said that nearly any business is involved in interstate commerce. If one person driving from Texas to Louisiana buys a soft drink at your store, you are involved in interstate commerce, and the anti-discrimination provisions apply to your business. The case was combined with one by the Pickrick Cafeteria, owned by Lester Maddox (who

later became Governor of Georgia). He refused to serve African-Americans, and chose to sell the restaurant to its employees rather than change the policy. The original Pickrick building, on the Georgia Tech campus, was torn down Friday, May 15, 2009 in order to create a park and green space.

Compensation and Minimum Wage Requirements

Non-exempt employees covered by the FLSA must receive a minimum standard of pay for each hour of work performed.

Minimum Wage Requirements

Non-exempt employees are not required to be paid on an hourly basis. However, regardless of the basis of pay, the pay received must meet or exceed the minimum hourly rate.

The current minimum wage is $6.55 per hour.

On July 24, 2009, the minimum wage will increase to $7.25 per hour.

Overtime Requirements Non-exempt employees must be

compensated at a rate of one and one-half times the regular rate of pay for all hours worked over 40 in any one workweek.

Example: A nonexempt employee paid at the rate of $8 per hour works for 50 hours during one workweek. The employee is entitled to $8 per hour for the first 40 hours ($320), plus at least $12 per hour ($8 x 1.5) for the remaining 10 hours ($120), for a total of $440. The regular wages of $320 plus the overtime wages of $120 = $440.

Overtime Requirements

The regular rate of pay is an hourly rate of pay that includes all payments made by the employer to, or on behalf of the employee.

Travel expense reimbursements, paid leave, discretionary bonuses, overtime pay, and tuition reimbursement are not included in the regular rate of pay.

Overtime Requirements The workweek is defined as a seven-

consecutive-day period. An employer may choose its workweek (i.e. Sunday through Saturday or Monday through Sunday). The workweek may be adjusted so long as the adjustment is intended to be permanent and not to avoid overtime requirements. Each workweek stands alone.

Record Requirements

Employers must keep time records of the daily and weekly hours worked during each pay period for non-exempt workers.

Duplicate records are not required.

Record Requirements

Time clocks are not required and no particular form of records is defined. The records must only include certain identifying information about employees, hours worked, and wages earned. Actual work time must be recorded, not just scheduled time.

Overtime for Hours over 40

The real key to compensation under the FLSA is that an employer must pay non-exempt employees time-and-a-half (1.5x their usual hourly rate) for all hours above forty hours per week.

Comp Time and Swapping

Private employers cannot give employees “comp time” under the FLSA. You must pay time-and-a-half for all hours above forty per week.

Employers may not “swap” hours to avoid paying overtime. An employee cannot work 45 hours this week in exchange for only working 35 hours next week. Actual time (and any overtime) must be properly paid.

Exempt Employees

FLSA overtime pay requirements do not apply to “exempt” employees who work in a “bona fide executive, administrative, or professional capacity.”

The Department of Labor defines the employees that meet these exemptions.

The Executive Exemption

An employee employed in a bona fide executive capacity is an employee: Compensated on a salary basis, not less than $455 per

week; Whose primary duty is management of the enterprise; Who customarily and regularly directs the work of two or

more other employees; and Who either has the authority to hire or fire other employees

or their suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight.

See 29 C.F.R. § 541.100(a).

Lovelady v. Allsup’s Convenience Stores, Inc.

United States Court of Appeals for the Fifth Circuit – December 23, 2008.

The Court held that the store managers of the Allsup’s chain of convenience stores were exempt employees under the FLSA, under the executive employee exception.

Even though the store managers did other tasks, even more often than their management tasks, the court found that their “chief or principal duty” was day-to-day management of the store, and that they were exempt as a result.

THEEND