Sixth Circuit holds transgendered workers are already protected by Title VII

Following a recent Second Circuit decision holding that sexual preference (LGB) is already protected by Title VII within the meaning of “sex,” the Sixth Circuit has held that being transgendered is also so protected.

While both cases may be heading for Supreme Court review, they suggest that LGBT may well be determined by other federal Circuit Courts to have been protected by Title VII since its inception in 1964. Employers are reminded that many states and local governments already have express protections for LGBT workers.

Source: EEOC v. R.G. & G.R. Harris Funeral Homes, Inc., case no. 16-2424 (6th Cir. 3/7/18).

Fun morning on 850 KOA talking about the rule of law

Fun morning on 3/20/18 talking about the Rule of Law and a recent Colorado Supreme Court case involving … a tree in Denver’s Wash Park neighborhood. In the case, the Court went all the way back to Merry Old England in the 1600’s to find relevant precedent.

Colorado Supreme Court holds statute of limitations on wage claims runs from pay period following its due date

The Colorado Supreme Court held that the statute of limitations under the Colorado’s Wage Claim Act, CRS. 8-4-101 to -123, begins to run from the pay period when the wage first becomes due and is unpaid.

The facts of the case illustrate the importance of this holding. Like many states, Colorado’s wage claim laws permit an employee to sue at the time of termination for any unpaid wages. Most commonly wage claims involve amounts that are claimed due in that final paycheck, for example, vacation pay, but what about wages that were claimed due in prior periods? This case involved a group of workers who sought wages “as far back as 1992.” Colorado’s wage laws, like federal law (Fair Labor Standards Act, FLSA), set a 2-year statute of limitations on wage claims, or 3 years if the violation is deemed wilful. The plaintiffs argued that the Act allowed them to seek all of their claimed wages, going back decades. In contrast, the company argued that they could seek only wages that came due in their final paycheck, nothing earlier.

The Colorado Supreme Court disagreed with both parties, holding that the plaintiffs can seek any wages that came due in their final paychecks plus any that came due in the 2 years preceding their termination (or 3 if the claim is deemed wilful), but that they cannot seek wages going back farther than that.

We conclude that under section 109, terminated employees may seek wages or compensation that had been earned in prior pay periods but remain unpaid at  termination. This right, however, is subject to the statute of limitations in section 122, which runs from the date when the wages first became due and payable—the payday following the pay period in which they were earned. A terminated employee is thus limited to claims for the two (or three) years immediately preceding termination.

It is noted that the Court there said plaintiffs could seek claims for 2 (or 3) years “immediately preceding termination;” however, it would seem from the language of the Act and the Court’s own reasoning that the Court meant “immediately preceding (the filing of their lawsuit seeking wages upon) termination.” That issue is likely to be litigated in future cases.

Source: Hernandez v. Ray Domenico Farms, Inc., case no. 17SZ77 (Colo. 3/5/18).

To be a Dodd-Frank whistleblower, individual must complain to SEC

Dodd-Rank is the nation’s leading securities-related whistleblower law. What if an individual complains, not to the SEC, but to the company at-issue, is a mere internal complaint to the company sufficient to trigger Dodd-Frank’s protections? In a unanimous 9-0 decision, the Supreme Court, after reviewing the text of Dodd-Frank itself, held the answer was clear: Congress wrote Dodd-Frank to protect only complaints to the SEC. Therefore a complaint to the company at-issue, alone, is insufficient to trigger Dodd-Frank’s protections.

The case is also notable for the absence of analysis regarding Chevron deference. Chevron deference is the legal term used to refer to the practice of courts deferring to agency interpretations of statutes. Here, while Dodd-Frank itself clearly required a complaint to the SEC, the SEC had interpreted the language more broadly, saying that a complaint to a company alone should also be protected. The concept of Chevron deference has become quite controversial, and commentators anticipated this might be the case by which the Supreme Court revisited the topic. However, the Supreme Court, having decided the language of the statute itself was clear, had no opportunity to do so. The continuing viability of Chevron deference remains an issue for another case to resolve.

Source: Digital Realty v. Somers, case no. 16-01276 (Sup. Ct. 2/21/18).

Dissenter rights include ability to terminate non-compete?

The Colorado Court of Appeals held that a shareholder’s statutory dissent rights, in at least the facts of the case before it, included the ability to terminate an existing non-compete. In this case, the plaintiff was a doctor at and a shareholder of a clinic. When his clinic merged with another, he disagreed and exercised his statutory right under C.R.S. 7-113-202 to dissent and demand payment for the fair market value of his shares. In addition, he contested the continuing viability of his then-existing non-compete.

In this case, the Colorado Court of Appeals held that he was entitled to be paid the fair market value of his shares but added that he was also relieved of his non-compete. To hold otherwise, the Court of Appeals said, would “further penalize Crocker’s exercise of his right to dissent, rather than protect him from the conduct of the majority” who had voted for the merger.

The decision drew a dissent as to the ruling relieving him of the non-compete. It remains to be seen whether the case will be heard by the Colorado Supreme Court.

In analyzing the case, the Court of Appeals noted a variety of facts, including the geographic radius of the non-compete versus the location of the plaintiff’s residence. It also remains to be seen whether this decision will be limited to its facts.

Source: Crocker v. Greater Colorado Anesthesia, P.C., case no. 2018COA33 (Colo.App. 3/8/18).

California is at it again, this time, how to calculate overtime

Under federal law (the Fair Labor Standards Act, “FLSA”), a non-exempt employee’s regular rate of pay is calculated, for overtime purposes, for each workweek, by totaling their compensation that week (excluding only certain limited things likely discretionary bonuses) then dividing by their total hours worked that week. They receive half that on top of the pay they’ve already received as compensation for overtime hours worked (in excess of 40).

Under a recent California case, California has decided, yet again, to be the odd jurisdiction out and, now, mandates that the denominator is only non-overtime hours.

What’s the difference? Here’s a simple hypothetical to illustrate. Assume in Week-1 of the year, John works 42 hours at a rate of $10 per hour. He gets paid $420 for that straight time (42x$10). That same week, John also receives an attendance bonus of $42. So far, his pay that week totals $462 ($420+$42). His regular rate is therefore, under FLSA, $11 ($462/42). He still hasn’t been overtime, so for overtime, he gets paid half that regular rate $5.50 ($11/2) for the 2 hours he worked overtime, in other words, an extra $11. His total pay that week, under FLSA, is $473.

Under the California approach, when it comes to calculating the regular rate, the company can only divide by 40. So his regular rate of pay is $11.55 ($462/40), nearly a 10% increase. That means his overtime rate is half that, making his total pay that week is $473.50 ($420+$42+$11.50).

Source: Alvarado v. Dart Container Corp. of Calif., case no. S232607 (Cal. 3/5/18).

Pay history bans coming, at a federal level, by way of the Circuit Courts?

A growing number of state and local governments prohibit asking applicants about their pay history or using prior employer pay histories as a basis for setting employee pay. Two Circuit Court cases suggest that such a ban may be coming, not by way of state and local legislation, but at a federal level under currently existing federal laws known as Title VII and the Equal Pay Act.

The Circuit Courts are the nation’s federal appellate courts. They are divided (and numbered) by region. They are for practical purposes generally the highest courts in the land, just beneath the Supreme Court of the United States. Very few cases result in Supreme Court review; the Circuit Courts resolve the vast bulk of federal appellate litigation without cases ever rising to the Supreme Court.

Pay history bans are growing across the country because advocates for equal pay, particularly between men and women, contend that one reason women earn less than men in many positions, is simply that women tend to have previously earned less than men in prior positions. In other words, they contend it is a self-perpetuating cycle.

In one case, the Ninth Circuit held last year, in 2017, that, consistent with its precedent, an employer may set pay levels purely on the basis of pay histories. However last summer the Ninth Circuit withdrew that decision and ordered the matter reheard en banc (by the entire bench of its judges). The case is pending reconsideration.

In the other case, the Eleventh Circuit just ruled in a Georgia case that an employer was not entitled to summary judgment, in other words, it would have to explain itself to a jury, where the female plaintiff argued she was underpaid compared to her male predecessor. The Eleventh Circuit case did not go so far as to hold that pay histories cannot be considered. It simply held, on the basis of the record before it, that pay histories were not themselves enough to warrant ruling for that employer. The Eleventh Circuit’s decision may be limited to its facts in that, there, the company’s HR manager had testified to general female-male pay disparities at the company and further that the company’s general manager had made an anti-female remark.

Employers should consider monitoring pay history bans.

Source: Rizo v. Yovino, case no. 15-372 (9th Circuit) (case pending reconsideration en banc); Bowen v. Manheim Remarketing, Inc., case no. 16-17237 (11th Cir. 2/21/18).