Trend Toward Enforcing FLSA Settlements

The general rule regarding out-of-court settlements for claims brought under the Fair Labor Standards Act (“FLSA”) is that in order to be enforceable, the settlement agreement must be approved by the Department of Labor or by a court. This rule has long posed a burden on employers because unlike many other employment-related claims that could be resolved through a private settlement agreement, settlement agreements in FLSA claims need to be filed in the public record for necessary court approval.

A recent ruling out of the Fifth Circuit Court of Appeals has provided a breath of fresh air for employers. In the case of  Martin v. Spring Break ’83 Productions, LLC, a group of film-industry technicians brought a claim under the FLSA for additional compensation for hours they allegedly worked. After an investigation, a union representative determined that it would be impossible to determine whether the technicians actually worked on the days they claimed.  Subsequently, the union and employer entered into a private settlement agreement regarding the disputed hours. Though the settlement agreement was entered, the technicians filed suit seeking unpaid wages under the FLSA. The employer moved to dismiss due to the previous settlement agreement. The Fifth Circuit ultimately ruled that there existed a bona fide dispute as to the number of hours allegedly worked. Because of this, the court held that the settlement payment was “an enforceable resolution of those FLSA claims predicated on a bona fide dispute about time worked and not as a compromise of guaranteed FLSA substantive rights.”

Importantly, the court allowed this private settlement because it “resolve[d] a bona fide dispute as to the number of hours worked – not the rate at which [the technicians] would be paid for those hours.” Employers must take note that nothing in this opinion allows for employees to privately waive or release substantive rights provided under the FLSA. For example, nothing in this opinion would allow an employer to enter into a settlement agreement whereby the employer would settle to pay half of an employee’s claimed overtime compensation or where the employer negotiated to pay a higher rate of pay than allowed for hours worked in excess of 40 per workweek.

Although the Fifth Circuit came to this conclusion, other jurisdictions may not necessarily reach a similar conclusion.  The Fifth Circuit is the appellate jurisdiction covering Louisiana, Mississippi, and Texas. The Fourth Circuit covering Virginia and Maryland has not yet permitted a private settlement waiver of FLSA overtime claims.  This decision calls into question the long standing principle that FLSA settlements must always be approved by a court or the Department of Labor to be valid. Employers should take note of this opinion and discuss with counsel its potential impact on any FLSA settlement.

Posted by Nick Johnson, Associate Attorney at Berenzweig Leonard, LLP, a business law firm in the DC region.  Nick can be reached at NJohnson@BerenzweigLaw.com.

Not All Employee Insults Are Defamatory

A surgeon at Inova Fairfax Hospital claimed that the hospital and several of its staff members defamed him by making a number of statements challenging his abilities as a doctor.  Among the allegedly defamatory statements the doctor claimed the staff made were the following:

• That he was “incompetent and unqualified.”
• That he was “a bad surgeon who had poor technique.”
• That he was “a foreigner with a bad accent and that American patients do not like foreign doctors.”
• That he had “no compassion” for a particular patient.
• Telling potential patients that his “hands shake.”

The hospital defended the lawsuit by claiming that the above statements were statements of opinion, which do not give rise to a claim for defamation.

The Court had to determine which of the above statements were factual in nature (that could support a defamation claim), and which were statements of opinion which could not support a defamation claim.
A Fairfax County Circuit Court recently found that only the last one, regarding the doctor’s alleged shaking hands, was factual in nature.  The Court found that the other statements above were opinions that could not be proven in fact as either true or false.  Therefore, the first four statements above could not be used by the doctor in bringing his defamation case against the hospital.

Posted by Declan Leonard, Managing Partner of Berenzweig Leonard, LLP DLeonard@BerenzweigLaw.com

Social Media Policies Under Scrutiny by the Government

Social media is everywhere.  Most people are interacting through social media outlets such as Facebook, Twitter and LinkedIn.  The ability to interact with friends, family and colleagues in real-time is unprecedented in modern day society.  However, given the transparent nature of social media outlets, privacy issues can be problematic, especially in the employment context.

Recently, the National Labor Relations Board (“NLRB”) has taken an aggressive stance on analyzing employee social media policies and has issued multiple reports over the last year guiding employers in drafting them.  The NLRB’s main focus is whether the policies hinder or violate an employee’s right to engage in protected concerted activity, such as discussing the terms and conditions of employment. Given the uptick in social media, most policies receive scrutiny when an employee is terminated based on discussions or comments posted on a social media site.

Important take-aways regarding recent NLRB opinions:

• Employers are allowed to prohibit employees from sharing confidential and/or proprietary information online.  It is Best Practice to give examples of what is considered confidential and/or proprietary information.
• Employers are allowed to prohibit employees from posting vulgar or obscene language, as well as intimidating or harassing material. 
• A simple disclaimer such as “nothing herein prohibits protected conduct under Section 7 of the NLRB” will not, by itself, save an overly broad social media policy. However, it is Best Practice to include it, thus ensuring that the remaining social media policy is not overly broad. 
• Policies cautioning employees about posting inaccurate, misleading or internal company information have been determined to be overly broad.
• Policies stating that employees are prohibited from disparaging or defaming the company through social media have consistently been struck down, thus employers should avoid such language. 

There is a clear trend from the NLRB to strike down social media policies that are overly broad or determined to be restrictive.  As an ever-evolving area of the law, social media policies that may have been acceptable a few years ago may no longer be considered lawful. Employers should be mindful of this and understand that drafting employee handbooks and policies is not a one-time event, but rather a continuing and evolving process.

Nick Johnson, is an Associate Attorney for Washington, DC business law firm, Berenzweig Leonard, LLP. Email Nick Johnson

Disciplinary actions and racial discrimination

A new case out of Charlottesville looks at whether employers can be held liable for discrimination if they discipline an employee of one race for an infraction but not an employee of another race.

A Caucasian employee for the Department of the Army noticed a dirty coffee cup and spoon left in the sink in the workplace kitchen for several days, and she finally threw them in the garbage.  The items belonged to an African American co-worker, who claimed the coffee cup had sentimental value and was very upset to learn it was thrown away.  A series of accusatory emails were exchanged between the two employees, with the African American employee ending one email with the biblical verse that she takes “comfort in knowing that in the Bible God says vengeance is mine.”  The agency investigated the matter, but only the Caucasian employee was issued a written counseling notice.  She sued the agency, claiming that disciplining her and not her African American co-worker for the perceived threat amounted to discrimination on the basis of race.

A federal judge in Charlottesville denied the Army’s motion to dismiss and allowed the case to move forward.  The court said illegal discriminatory discipline occurs when disciplinary measures taken against one employee are harsher than those taken against another employee of a different protected class such as race.  The court did not rule that the Caucasian employee had proven her case of disciplinary discrimination, but did find that she made sufficient allegations to be able to proceed further in litigation with her case.

This case is a wake-up call to employers that they have to be constantly cognizant of how they treat one employee compared to another, especially where there is a difference of protected traits between co-workers. 

Posted by: Declan Leonard, dleonard@berenzweiglaw.com