Employment Law Update

Michael Patrick O’Brien
May 6, 2008 | COMMENTS

California court has ordered Starbucks to pay its baristas more than $100 million to compensate for tips the company allegedly inappropriately shared with shift supervisors. The tips were collected each week and then shared with employees based on the number of hours worked. California state law prohibits managers and supervisors from sharing in employee tips. The company will appeal because it denies that the employees who shared in the tips actually are supervisors in the traditional sense of the word and notes that they also served customers and thus should share in tips. Starbucks employs some 135,000 baristas in the United States and may face similar litigation in states with similar rules. That possibility should be enough to wake up anyone without the need for much caffe latte.

Walgreens Settles for $24 Million

While Starbucks managers may need some extra shots of coffee these days, Walgreens officials might go straight for the headache drug aisle. The nation's largest drugstore chain has agreed to pay $24 million to settle a racial bias lawsuit brought by 10,000 past and present employees. The lawsuit, filed in 2007 by the Equal Employment Opportunity Commission (EEOC), claimed Walgreens showed bias against black workers in assignments and promotions. Both these cases demonstrate, again, the huge financial risk when a company fails to strictly comply with applicable employment laws.

No-Match Letter Regulations

The implementation of new government regulations on how employers should deal with no-match letters (i.e. letters from the government saying a new employee's name does not match the Social Security number provided) has been on hold since a California judge issued a preliminary injunction against their use several months ago. According to CCH, without conceding any of the issues in the pending litigation, on March 21 the Department of Homeland Security (DHS) announced that it will soon transmit a 44-page supplemental proposed rulemaking to the Federal Register that addresses the issues raised by Judge Charles Breyer of the Northern District of California when he enjoined the release of the agency's “no-match” regulation in October 2007 ( AFL-CIO v Chertoff, NDCal, No 3:07-cv-04472-CRB).

Without altering any of the steps an employer can take upon receipt of a no-match letter, the supplemental rulemaking instead: (1) clarifies DHS's policy on such letters; (2) alters the regulation's anti-discrimination language; and (3) provides an initial regulatory flexibility analysis. The supplemental rulemaking may be found at http://www.dhs.gov/xlibrary/assets/press_nomatch-snprm.pdf. Upon publication, DHS will seek to have Breyer's preliminary injunction dissolved. DOL is also appealing the injunction ruling. Watch these updates for more news on this matter.

FMLA-Related

From your devoted reading of these updates, you know about the new military leave provisions of the Family and Medical Leave Act (FMLA). FMLA now allows leave to care for a family member injured during active military duty or to help a family member prepare after a call to active duty. Temporary posters from the Department of Labor regarding these new provisions are available at: http://www.dol.gov/esa/whd/fmla/NDAAAmndmnts.pdf.

Response to Harassment Allegation Avoids Court Liability

A federal appeals court in Chicago has sustained a trial court's dismissal of an employee's sexual harassment claim because the employer took reasonable steps after receiving the report of the problem to prevent harm in the future. The case arose from a situation where the female plaintiff became intoxicated at an off-site conference and another male employee drove her to her motel, where she passed out. The plaintiff alleged that she woke up to find the male employee sexually assaulting her. She reported the incident two weeks later to her employer, which promptly initiated an investigation and notified the local police. After the police had declined to prosecute and the employer had closed its investigation because of lack of evidence, the plaintiff told her local supervisors what had happened, and she complained after seeing the male employee and his brother several times in her building. The plaintiff's supervisors instituted a new visitor policy and contacted the male employee's supervisor to request that he not be sent to her building. The plaintiff also obtained a judicial protective order. The male employee never again entered her building or tried to contact her. The court found that the employer's actions reasonably protected the plaintiff once it knew of the problem and thus the employer was not liable for alleged sexual harassment.

The Employment Law Update is a legal and legislative update service sent out about twice a month to various members of the Utah League of Credit Unions HR Council. The author, Utah law attorney Michael Patrick O'Brien, is also the Legal and Legislative Director for Utah SHRM (Society for Human Resource Management). These updates are merely updates and are not intended to be legal advice. Receipt of this information does not create an attorney-client relationship. Contact O'Brien at 801-534-7315 or mobrien@joneswaldo.com or visit www.joneswaldo.com. Reprinted with permission.