New York Employment Lawyer Blog

On October 26, 2006, the Department of Labor issued an opinion letter which had a massive impact on California’s IT community. Resolving a long standing dispute, DOL stated that employees who provide computer help desk support are not exempt from overtime under the “administrative” white collar or computer exemptions.

The industry has responded slowly to the DOL opinion, and many companies remain unaware of the implications of misclassifying tech workers as exempt. Jackson West with Valleywag notes that the practice of misclassifying nonexempt IT professionals as exempt is “endemic in California,” particularly at start-ups where long hours are common. One year ago, Kent Blake of Redmondmag.com, an online magazine which follows issues impacting the Microsoft IT community, characterized the scope of the problem as “the help desk overtime bomb.” Is the bomb ticking or has it exploded? Ask Apple and IBM. They have both been sued for misclassifying help desk employees and network engineers, with IBM settling their lawsuit in November 2008 for $65 million dollars.

If you are a computer professional in a tech position, your entitlement to overtime depends on whether your duties involve systems analysis and the application of programs, or implementing specifications developed by someone else for the purposes of troubleshooting customer or employee problems.

Suppose you and your spouse work for the same company and your spouse is one of those rebel rousing whistle blower types.   First, consider finding a new job or a new spouse.  But if you can’t do either, then you should carefully track the outcome of Thompson v. North American Stainless.  

That case is pending before the U.S. Supreme Court and it involves a man who was fired shortly after his fiancee filed an EEOC charge against their common employer.   The Court will decide if the anti-retaliation provisions of Title VII extend to third-parties like husbands and wives and the like.     Thanks to Ross Runkel at the Law Memo for reporting this development. 

Paralegals are entitled to overtime pay (time and half for each hour over 40 per week).  But a NY paralegal was not paid overtime by her law firm and she sued them to recover her pay.  The law firm argued that the paralegal was not entitled to overtime because she fell into the “highly compensated employee” exception.  

The highly compensated employee exception provides that anyone who earns over $100,000 a year is not entitled to overtime.  (This is a broad summary – the rule is slightly more complex.)  she earned over $100,000 a year, but about a third of that came through a company she owned.  

She was only paid about $66,000 a year in salary by the law firm, but her company was paid another $50,000 a year by her law firm.   Her company performed filing services for her law firm and several other law firms.  

Her employer argued that they paid her over $100,000 a year and therefore she was not entitled to overtime as a highly compensated employee.   But the Court disagreed and held that the money paid to her company did not count because it was not compensation paid to her as an employee.  

Since she earned less than $100,000 a year as an employee, she was entitled to overtime and the law firm will be forced to pay her for the upaid wages plus possible penalties and related costs.

“What can brown do you you?”  A group of 660 big brown delivery drivers are ready to tell the  company what it can do for them – it can pay them 12.5M.  UPS just agreed to settle an overtime class action brought by delivery drivers who were misclassified as independent contracts.  

The drivers claim they were deprived of benefits that regular employees receive because they misclassified as independent contractors.

The settlement was reported by law.com last week.  According to the article, the parties settled after a multi day mediation with JAMS mediator Ronald Sabraw. 

Companies can save money by classifying workers as independent contractors because contractors typically do not get benefits such as health insurance.  Independent contractors are not entitled to overtime either. 

Certain strict requirements need to be satisfied in order for workers to be properly classified as independent contractors and companies often misclassify to reduce costs.   But the reality is that companies usually do not get caught misclassifying employees so it usually pays off, unless they get sued.  Here, UPS got caught.  

Today’s National Law Journal covers a recent 1st Circuit ruling that allows pending employment discrimination claims to be flushed down the bankruptcy toilet.  The article says that this was a case of first impression.

In that case, an employee filed a disability discrimination claim against U.S. Airways with the EEOC and the Rhode Island Human Rights Commission.   The airline then filed bankruptcy and the discrimination claim became part of the bankruptcy case.  

The plaintiff received a notice of claim and did not respond because she thought her claim was covered by the airline’s insurance policy.   The bankruptcy court later approved the airline’s reorganization plan and the company emerged anew from bankruptcy.  

The Rhode Island Commission on Human Rights later dismissed the plaintiff’s claim and she filed a federal discrimination claim against U.S. Airways.   But the plaintiff had her claim promptly thrown out of court because the judge ruled that her case had been discharged in the airline’s prior bankruptcy case.   The plaintiff appealed and lost. 

The Court of Appeals for the 1st Circuit reasoned that a pending discrimination claim is just like any other claim for money and is subject to  discharge in bankruptcy.  According to the Court, a discrimination claim is just like a pending invoice from plumber or the water company.   But wait, isn’t there a difference between vender invoices and unconstitutional conduct? 

 Justice Sotomayor’s first ruling from the U.S. Supreme Court went in favor of an employee in a retaliation case and company defense lawyers are worried about the ruling’s impact on company privacy.   

To summarize briefly, Norman Carpenter told his HR department that the company was hiring undocumented immigrants.  He was fired shortly thereafter and he sued claiming that he was fired in retaliation for his complaint about the hiring of undocumented immigrants.  During the lawsuit, the company was ordered to disclose it’s internal investigation report regarding the matter.  The company tried to appeal the order compelling the disclosure of it’s investigation report on the ground that the report was protected by the attorney client privilege.   Justice Sotomayor ruled that the company could not appeal and had to turn over the report and proceed to trial.   The case is entitled Mohawk Industries v. Carpenter. 

In a Lawyers USA article about the case, defense lawyer Michael E. Lackey, Jr. of Mayer Brown states that “Lawyers start from a place of being very risk averse, and we are very careful of what we do.”  He added that “Now attorneys will be very wary of what kind of documentation they are creating when they are doing investigations [of possible job bias], and that is a shame.”  Mr. Lacky’s concerns are misplaced.  Mohawk was forced to disclose it’s investigation only because it waived the attorney/client privilege by making statements in a related class action suit.   Companies can protect the confidentiality of their reports – they just need to follow the basic rules that govern the attorney client privilege. 

  If anyone reading this is an employment lawyer, keep on reading because this may pertain directly to you.   A judge ruled earlier this month that an employee’s email sent from his work email account to his private lawyer was confidential and protected by the attorney/client privilege.  The case was first reported by the Legal Times: District Court Finds Personal E-Mail From Work Still Privileged, by Tresa Baldas. 

Here are the key factors that create the right of privacy:

- The employer does not ban personal use of work email

- The employee was not aware that his employer regularly saved and accessed his emails

- Due to the above circumstances, the employee had a reasonable expectation of privacy and therefore he did not waive the attorney/client privilege by sending emails to his personal lawyer from his work email account.

The case is entitled  Convertino v. United States DOJ, 2009 U.S. Dist. LEXIS 115050 (D. D.C. December 10, 2009) and here is the relevant part of the ruling courtesy of Fourthamendment.com:

Mr. Tukel reasonably expected his e-mails with his personal attorney to remain confidential. (Id.) Case law in this jurisdiction is not directly on point but New York gives the Court some direction. "[T]he question of privilege comes down to whether the intent to communicate in confidence was objectively reasonable." In re Asia Global Crossing, Ltd., 322 B.R. 247, 258 (S.D.N.Y. 2005). In order for documents sent through e-mail to be protected by the attorney-client privilege there must be a subjective expectation of confidentiality that is found to be objectively reasonable. See id. at 257 (outlining four factors to determine reasonableness; "(1) does the corporation maintain a policy banning personal or other objectionable use, (2) does the company monitor the use of the employee's computer or e-mail, (3) do third parties have a right of access to the computer or e-mails, and (4) did the corporation notify the employee, or was the employee aware, of the use and monitoring policies?"). Each case should be given an individualized look to see if the party requesting the protection of the privilege was reasonable in its actions. See Curto v. Med. World Commc'ns, Inc., No. 03-CV-6327, 2006 WL 1318387, *6 (E.D.N.Y. May 15, 2006); see also O'Connor v. Ortega, 480 U.S. 709, 718 (1987) ("Given the great variety of work environments, ... the question whether an employee has a reasonable expectation of privacy must be addressed on a case-by-case basis.").

On the facts of this case, Mr. Tukel's expectation of privacy was reasonable. The DOJ maintains a policy that does not ban personal use of the company e-mail. Although the DOJ does have access to personal e-mails sent through this account, Mr. Tukel was unaware that they would be regularly accessing and saving e-mails sent from his account. (See Tukel's Mot. and Mem. of Law in Opp'n to Pl.'s Mot. to Compel at 4; see also Pl.'s Opp'n to Non-Party Tukel's Mot. to Intervene at 5-6.) Because his expectations were reasonable, Mr. Tukel's private e-mails will remain protected by the attorney-client privilege.

Have you ever noticed that people with lofty job titles are almost always paid on a salary basis?   There is a reason for that.   People who are “Professionals” are not entitled to overtime pay.   Companies often misclassify employees as professionals in order to avoid paying them overtime and a fancy title is good cover. 

For example, in Young v. Cooper Cameron, the company did not pay its “engineers” any overtime pay.   The “engineers” were all paid salaries and were not pay extra for overtime because the company classified the engineers as professionals.   This was a mistake.

The title of engineer was a little misleading.   None of the engineers had any college training.  They were all high school graduates.   Under the law, In order to be properly classified as a “professional” and exempt from overtime, you generally need a college degree or even an advanced degree. 

The workers in Young were misclassified as professionals and they should have been paid overtime.   No wonder, the title of engineer does sound professional, but a title alone is not enough.  Don’t be fooled by a title.  You might be entitled to overtime even if you have a title such as manager, engineer or the like.   For a more detailed discussion of the Young case, see our prior post below or the always insightful Waist a Second! blog.  

The California Workforce Resource Blog has a post lamenting the recent decision in Davis v. J.P. Morgan Chase & Co. In Davis, the court held that Chase erroneously classified its loan officers as exempt administrative employees. The court held that the loan officers were nothing more than financial production workers churning out the bank’s lending products and therefore were entitled to overtime. The bank had erroneously classified these workers as administrative employees who were salaried and exempt from overtime.

This decision means that thousands of wall street support personnel are likely being deprived of overtime.  Now, loan officers, brokers, analysts, account executives and many other positions are entitled to overtime. 

According to the Davis case, an employee qualifies for the administrative exemption under the Fair Labor Standards Act only if the employee’s primary purpose is devoted to the internal operations of the company such as human resources, accounting, or advertising.   These positions are considered administrative because they deal with the administration of the company itself and not with producing the goods or services of the company.  

In Davis, a group of loan underwriters were classified as administrative employees who were exempt from overtime.   The court held that this classification was wrong because the loan underwriters work was focused principally on producing the bank’s product, loans and not geared to the internal operation of the bank itself.   This ruling is likely to provoke a round of overtime lawsuits challenging wall street banks for misclassifying its employees.