Association of Corporate Counsel Alabama Chapter 1 EMERGING TRENDS IN LABOR & EMPLOYEE RELATIONS March 3, 2006 Kira Fonteneau

Association ofCorporate CounselAlabama Chapter

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EMERGING TRENDS IN EMERGING TRENDS IN LABOR & EMPLOYEE LABOR & EMPLOYEE

RELATIONSRELATIONS

March 3, 2006

Kira Fonteneau


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“Give a man a fish, he’ll eat for a day. Teach aman to sue, and he’ll eat for a lifetime.”


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Employment Claims Are DownEmployment Claims Are Down

Source: www.eeoc.gov (1/6/2006)

• Charges of discrimination filed with the Equal Employment Charges of discrimination filed with the Equal Employment Opportunity Commission decreased in 2005 by 5.3%Opportunity Commission decreased in 2005 by 5.3%

• Employment claims filed in federal court in 2005 declined Employment claims filed in federal court in 2005 declined 10% from 200410% from 2004


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A Recent National Gallup Poll On Discrimination, A Recent National Gallup Poll On Discrimination, Conducted In Conjunction With The EEOC, Shows:Conducted In Conjunction With The EEOC, Shows:

• 15% of all workers perceived that they had been subjected to some 15% of all workers perceived that they had been subjected to some sort of discriminatory or unfair treatmentsort of discriminatory or unfair treatment

• 31% of Asian-Americans reported incidents of discrimination31% of Asian-Americans reported incidents of discrimination

• 26% of African-Americans reported incidents of discrimination26% of African-Americans reported incidents of discrimination

• 18% of Hispanic-Americans reported incidents of discrimination18% of Hispanic-Americans reported incidents of discrimination

• 13% of Caucasian-Americans reported incidents of discrimination13% of Caucasian-Americans reported incidents of discrimination

• Approximately 20% of women reported incidents of discriminationApproximately 20% of women reported incidents of discrimination



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Work Force By RaceWork Force By RaceProjected To 2010Projected To 2010

Source: www.dol.gov (1/6/06)

2.3 3.7 4.7 6.110.2 10.9 11.8 12.7

5.7 7.710.4

13.3

81.877.7

73.167.9

0.0%10.0%20.0%30.0%40.0%50.0%60.0%

70.0%80.0%90.0%

Asian & Other African-American Hispanic White

1980 1990 2000 2010


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Work Force By GenderWork Force By GenderProjected To 2010Projected To 2010


57.5 54.8 53.4 52.1

42.5 45.2 46.6 47.9

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Male Female

1980 1990 2000 2010


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Work Force By AgeWork Force By AgeProjected To 2010Projected To 2010


14.1

11.9 12.9

16.9

0.0%2.0%4.0%6.0%8.0%

10.0%12.0%14.0%16.0%18.0%

55 and Older

1980 1990 2000 2010


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EEOC ACTIVITYEEOC ACTIVITY


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2005 Fiscal Year Charge Statistics2005 Fiscal Year Charge Statistics

Note: Percentages add up to more than 100% because multiple bases are often alleged in a single charge filing


Total Charges Filed in FY 2005Percentage of Total Charges

20%

18%

29%

11%

31%

36%

0% 10% 20% 30% 40%

Disability

Age

Retaliation (All Statutes)

National Origin

Sex/Gender

Race


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EEOC Charge InformationEEOC Charge InformationTop Ten States For Filing EEOC ChargesTop Ten States For Filing EEOC Charges

TOTAL CHARGES FILEDTOTAL CHARGES FILEDPER CAPITAPER CAPITA

Source: EEOC’s Office of Public Relations (8/3/05)

11,738

5,762

5,124

4,778

4,681

3,140

3,118

3,087

2,899

2,827

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000

TX

IL

FL

GA

CA

AZ

AL

NY

IN

NC


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EEOC Charge InformationEEOC Charge InformationTop Ten States For Filing EEOC ChargesTop Ten States For Filing EEOC Charges

CHARGES PER PERSONCHARGES PER PERSON

Source: EEOC’s Office of Public Relations andU.S. Census Bureau (8/3/05)

.07%

.06%

.06%

.06%

.05%

.05%

.04%

.03%

.02%

.01%

.00% .01% .02% .03% .04% .05% .06% .07% .08%

AL

AZ

GA

TX

IL

IN

NC

FL

NY

CA


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EEOC LITIGATIONEEOC LITIGATION


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EEOC Lawsuits Against EmployersEEOC Lawsuits Against Employers

• claims of race/color discrimination claims of race/color discrimination

- - focus on developmental opportunities focus on developmental opportunities

• discrimination against youthdiscrimination against youth

- - 25 lawsuits over the past 2 years25 lawsuits over the past 2 years- - set up a website: set up a website: www.youth.eeoc.gov

• systemic discriminationsystemic discrimination

-- lawsuits against Ambercrombie and Fitch, Rent-A-lawsuits against Ambercrombie and Fitch, Rent-A-Center and Morgan Stanley Center and Morgan Stanley

The EEOC has recently shown an interest in litigation involving:The EEOC has recently shown an interest in litigation involving:

Source: www.eeoc.gov (1/6/2006); EEOC Commissioner Leslie Silverman (1/23/06)


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Recent Notable EEOC CasesRecent Notable EEOC Cases• EEOC v. FedEx FreightEEOC v. FedEx Freight

4:03-CV-1393 (E.D. Mo. Oct 31, 2005)4:03-CV-1393 (E.D. Mo. Oct 31, 2005)($500,000 settlement to resolve discrimination suit on ($500,000 settlement to resolve discrimination suit on behalf of 20 African-American employees who were behalf of 20 African-American employees who were denied promotions and assignments based on race)denied promotions and assignments based on race)

• EEOC v. McDonald’sEEOC v. McDonald’sCIV-05-0618 (D. Ariz. Nov. 30, 2005) CIV-05-0618 (D. Ariz. Nov. 30, 2005)

(Well-publicized pending case brought on behalf of class (Well-publicized pending case brought on behalf of class of teenage female employees subjected to sexual of teenage female employees subjected to sexual harassment by male assistant manager)harassment by male assistant manager)



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RECENT NOTABLE CASES


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Williams v. Boeing Co.Williams v. Boeing Co.No. C98-761-P (W.D. Wash. Dec. 21, 2005)No. C98-761-P (W.D. Wash. Dec. 21, 2005)

• Federal jury returned a verdict in favor of Boeing in a class Federal jury returned a verdict in favor of Boeing in a class action initially comprised of 15,000 claimants who alleged action initially comprised of 15,000 claimants who alleged that Boeing intentionally discriminated against African-that Boeing intentionally discriminated against African-American employees by denying them promotionsAmerican employees by denying them promotions

• Jury found that Boeing had clearly set forth its criteria for Jury found that Boeing had clearly set forth its criteria for promotions and consistently followed its written guidelinespromotions and consistently followed its written guidelines

• On January 16, 2006, the trial court entered judgment in On January 16, 2006, the trial court entered judgment in Boeing’s favor on disparate Boeing’s favor on disparate impactimpact claims brought by same claims brought by same plaintiffsplaintiffs


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McReynolds v. Sodexho, Inc.McReynolds v. Sodexho, Inc.No. 101-CV-510 (D.D.C. Aug. 10, 2005)No. 101-CV-510 (D.D.C. Aug. 10, 2005)

• Sodexho agreed to pay Sodexho agreed to pay $80 million$80 million and to improve its diversity and to improve its diversity program to settle a lawsuit brought by thousands of African-program to settle a lawsuit brought by thousands of African-American employees alleging that they were routinely barred American employees alleging that they were routinely barred from promotions and segregated within the company, while less-from promotions and segregated within the company, while less-qualified white counterparts were promotedqualified white counterparts were promoted

• Statistics showed that Sodexho used its internal posting system Statistics showed that Sodexho used its internal posting system to fill only 25% of its open jobs and subjective methods for the to fill only 25% of its open jobs and subjective methods for the remaining 75%, resulting in a disproportionate number of remaining 75%, resulting in a disproportionate number of African-Americans being placed in lower-level jobsAfrican-Americans being placed in lower-level jobs


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Zubulake v. UBS Warburg, LLCZubulake v. UBS Warburg, LLCNo. 02-CIV-1243 (S.D.N.Y. April 11, 2005)No. 02-CIV-1243 (S.D.N.Y. April 11, 2005)

• Federal jury awarded Federal jury awarded $29.3 million$29.3 million in damages to a single in damages to a single plaintiff claiming that she was discriminated against on the plaintiff claiming that she was discriminated against on the basis of her sex and retaliated against for complaining of the basis of her sex and retaliated against for complaining of the discriminationdiscrimination

• Analysts believe that UBS’s inability to produce relevant e-Analysts believe that UBS’s inability to produce relevant e-mails, resulting in an adverse jury instruction against the mails, resulting in an adverse jury instruction against the company, led to the large verdict company, led to the large verdict


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• Six female employees of Dresdner Kleinwort Wasserstein Six female employees of Dresdner Kleinwort Wasserstein filed a class-action gender discrimination lawsuit seeking filed a class-action gender discrimination lawsuit seeking $1.4 $1.4 billionbillion, claiming systematic exclusion from client meetings, , claiming systematic exclusion from client meetings, harassing comments and discrimination in pay and harassing comments and discrimination in pay and promotions promotions

• Plaintiffs allege that women hold 60% of the administrative Plaintiffs allege that women hold 60% of the administrative positions but only 2% of the Managing Director positions at positions but only 2% of the Managing Director positions at the 6,000-employee firmthe 6,000-employee firm

Hart v. Dresdner Hart v. Dresdner No. 06-CV-134 No. 06-CV-134 (S.D.N.Y. Jan. 10, 2006)(S.D.N.Y. Jan. 10, 2006)


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RECENT SUPREME COURT CASES


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Not So Employer FriendlyNot So Employer FriendlyAsh v. Tyson Foods, Inc.Ash v. Tyson Foods, Inc.

No. 05-379, 2006 WL 386343 (Feb. 21, 2006)No. 05-379, 2006 WL 386343 (Feb. 21, 2006)

Use of term “boy” when addressing an African-American worker Use of term “boy” when addressing an African-American worker may be evidence of discrimination without racial designation may be evidence of discrimination without racial designation

Supreme Court did not approve of visual standard articulated by Supreme Court did not approve of visual standard articulated by the 11the 11thth Circuit in pretext analysisCircuit in pretext analysis

Arbaugh v. Y & H Corp.Arbaugh v. Y & H Corp.No. 04-944, 2006 WL 397863 (Feb. 22, 2006)No. 04-944, 2006 WL 397863 (Feb. 22, 2006)

Whether an employer has 15 or more employees so as to be subject to Whether an employer has 15 or more employees so as to be subject to Title VII is an element of plaintiff’s claim and not a jurisdictional Title VII is an element of plaintiff’s claim and not a jurisdictional

issue, issue, so an employer must assert this or it is waivedso an employer must assert this or it is waived



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LABOR TRENDS


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Union Membership – Private Sector Union Membership – Private Sector 1973 – 20051973 – 2005

Share of the U.S. Workforce Share of the U.S. Workforce in Unions Held Steady in 2005in Unions Held Steady in 2005

7.8% Of Private Sector 7.8% Of Private Sector Employees Are Union Employees Are Union

Members!Members!

Source: Bureau of Labor Statistics 1/23/2006

0%

5%

10%

15%

20%

25%

30%

35%

40%

73'7

9'8

5'9

1'9

7'9

9'0

2'0

4


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Union Membership – Private Sector Union Membership – Private Sector


Union membership, however, rose in 2005 by 213,000 members to a total of 15.7 million across the U.S. economy, with 163,000 added in the public sector, according to the Bureau of Labor Statistics

The last time membership rose by more than 200,000 was in 1999 when unions added 265,000 net members

2005: Unions Netted 213,000 New Members!


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Union Membership - Demographics

Demographics compiled by the Bureau of Labor Statistics Demographics compiled by the Bureau of Labor Statistics show that union membership rates were higher for men show that union membership rates were higher for men (13.5%) than women (11.3%), although the gap has (13.5%) than women (11.3%), although the gap has narrowed since 1983, when the rate for men was ten (10) narrowed since 1983, when the rate for men was ten (10) percentage points higher than the rate for women percentage points higher than the rate for women



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Union Membership - Demographics

By race, African-Americans were more likely to be By race, African-Americans were more likely to be union members (15.1%) than were Caucasians (12.2%), union members (15.1%) than were Caucasians (12.2%), Asians (11.2%), or Hispanics (10.4%), the Bureau of Asians (11.2%), or Hispanics (10.4%), the Bureau of Labor Statistics said Labor Statistics said

Among age groups, union membership rates were Among age groups, union membership rates were highest among workers 45 to 64 years old (16.5%) and highest among workers 45 to 64 years old (16.5%) and were lowest among those ages 16 to 24 (4.6%) were lowest among those ages 16 to 24 (4.6%)



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Fair Labor Standards Act(FLSA)


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Chao v. Cingular WirelessChao v. Cingular WirelessNo. 3:05-CV-3009 (C.D. Ill. Nov. 28, 2005)No. 3:05-CV-3009 (C.D. Ill. Nov. 28, 2005)

• Department of Labor sued Cingular on behalf of 25,000 Department of Labor sued Cingular on behalf of 25,000 customer service representatives who allegedly worked off the customer service representatives who allegedly worked off the clock, both before and after their scheduled shifts, without clock, both before and after their scheduled shifts, without compensationcompensation

• Cingular agreed to pay Cingular agreed to pay $5.1 million$5.1 million in back wages as a result of in back wages as a result of these alleged off-the-clock violationsthese alleged off-the-clock violations

SETTLEMENT


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Kimbell v. Abercrombie & Fitch Stores, Inc.Kimbell v. Abercrombie & Fitch Stores, Inc.No. BC-277359 (Cal. Super. Ct. Jan. 12, 2006)No. BC-277359 (Cal. Super. Ct. Jan. 12, 2006)

• Abercrombie & Fitch agreed to a $2 Million settlement with 250 Abercrombie & Fitch agreed to a $2 Million settlement with 250 store managers who alleged that they are not exempt under store managers who alleged that they are not exempt under California law because they spent more than 50% of their time California law because they spent more than 50% of their time performing non-managerial tasksperforming non-managerial tasks

SETTLEMENT


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Graham v. Bank of AmericaGraham v. Bank of AmericaNo. 04-CV-02951 (D. Minn. Sept. 15, 2005)No. 04-CV-02951 (D. Minn. Sept. 15, 2005)

• Loan account executives brought collective action, claiming that Loan account executives brought collective action, claiming that they were non-exempt employees and that Bank of America they were non-exempt employees and that Bank of America failed to pay them overtimefailed to pay them overtime

• Bank of America agreed to settle case for Bank of America agreed to settle case for $15 million$15 million

SETTLEMENT


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LOSS

• Wal-Mart ordered to pay Wal-Mart ordered to pay $172 million$172 million in penalties and in penalties and $57 million$57 million in back wages to 116,000 current and former in back wages to 116,000 current and former employees claiming that they were required to work employees claiming that they were required to work through state-mandated lunch periods without through state-mandated lunch periods without compensationcompensation

• Documents and testimony indicated that Wal-Mart Documents and testimony indicated that Wal-Mart executives were aware that employees were not being executives were aware that employees were not being allowed breaks but failed to rectify the problems that allowed breaks but failed to rectify the problems that resulted from a change in California lawresulted from a change in California law

Savaglio v. Wal-Mart Stores, Inc. Savaglio v. Wal-Mart Stores, Inc. No. C-835687No. C-835687 (Cal. Super. Ct. Dec 22, 2005 )(Cal. Super. Ct. Dec 22, 2005 )


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LOSS

• A Minnesota court orders Farmers Insurance Exchange to pay A Minnesota court orders Farmers Insurance Exchange to pay $52.5 million$52.5 million to a class of employees who showed that they were to a class of employees who showed that they were improperly classified as exempt employeesimproperly classified as exempt employees

• Farmers could not explain, either through job descriptions or Farmers could not explain, either through job descriptions or company practice, that the job duties and functions of the company practice, that the job duties and functions of the affected employees qualified them as exempt under state wage affected employees qualified them as exempt under state wage and hour lawand hour law

Milner v. Farmers Insurance Exchange Milner v. Farmers Insurance Exchange 2005 WL 275 72912005 WL 275 7291 (Dist. Ct. Minn. April 5, 2005 )(Dist. Ct. Minn. April 5, 2005 )


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FLSA Lessons

• Monitor changes in state and federal laws to ensure Monitor changes in state and federal laws to ensure compliancecompliance

• Ensure that all positions have a job description that Ensure that all positions have a job description that accurately reflects the actual functions and dutiesaccurately reflects the actual functions and duties

• Periodically review those job descriptions to ensure all Periodically review those job descriptions to ensure all positions are accurately classifiedpositions are accurately classified

• Vigorously enforce rule that off-the-clock work is not Vigorously enforce rule that off-the-clock work is not acceptableacceptable


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White Collar Exemptions…Still “News”


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Overtime Overhaul• New regulations effective 08/23/04New regulations effective 08/23/04

• Executive, Administrative, Professional Exemptions:Executive, Administrative, Professional Exemptions:

– Salary level: $250 to $455/week, plus $100K capSalary level: $250 to $455/week, plus $100K cap

– Permits full-day unpaid docking for disciplinePermits full-day unpaid docking for discipline

• Pay not adjusted based on hours worked or quality Pay not adjusted based on hours worked or quality of workof work

– ““Safe harbor” for improper deductionSafe harbor” for improper deduction

• If isolated incident, just reimburse employeeIf isolated incident, just reimburse employee

• Otherwise, results in loss of exempt status for time Otherwise, results in loss of exempt status for time period improper deductions were made for all period improper deductions were made for all employees with same job, same manageremployees with same job, same manager


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OFCCP


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OFCCP

• No More EO SurveysNo More EO Surveys

• Change to EEO-1 Effective 2007Change to EEO-1 Effective 2007

• Internet Application Definition Effective February 6, 2006Internet Application Definition Effective February 6, 2006

• Pre-Employment tests focus and validationPre-Employment tests focus and validation


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NEW TYPES OF CLAIMS


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Whistleblowers Are Front and Center

Time Magazine®


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Whistleblower/Retaliation Claims• Sarbanes-Oxley ActSarbanes-Oxley Act

•• 90 days to file a Complaint with the Secretary of Labor90 days to file a Complaint with the Secretary of Labor

•• DOL must determine if reasonable cause exists within 60 DOL must determine if reasonable cause exists within 60 daysdays

•• Employers have no opportunity for a hearing before DOL Employers have no opportunity for a hearing before DOL issues its cause findingissues its cause finding

•• If no final decision within 180 days, If no final decision within 180 days, de novode novo civil action civil action

•• If DOL issues an initial cause finding and orders If DOL issues an initial cause finding and orders reinstatement, the employee is entitled to immediate reliefreinstatement, the employee is entitled to immediate relief

•• Employers must prove that the employee would have Employers must prove that the employee would have been been subject to the adverse employment action regardless of subject to the adverse employment action regardless of

protected activity by clear and convincing evidenceprotected activity by clear and convincing evidence