Are Male Strippers Exempt From the FLSA As Creative Professionals?

No – the U.S. District Court for the Northern District of Georgia recently rejected the argument that male strippers qualify as exempt “creative professionals” under the Fair Labor Standards Act (FLSA).

In Henderson v. 1400 Northside Drive, Inc., a group of male strippers sued an adult nightclub, which they alleged misclassified them as independent contractors and, as a result, failed to pay them the minimum wage required by the FLSA.  No. 1:13-CV-3767-TWT (N.D. Ga. June 19, 2015).  One of the defenses that the employer raised was that, even if the strippers were employees, they were exempt from the FLSA as creative professionals.  To qualify as a “creative professional,” an employee must be (i) compensated on a salary basis or fee basis at a rate of not less than $455 per week; and (ii) his or her primary duty must be the performance of work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor.  29 C.F.R. § 541.300.

The Henderson court rejected the employer’s creative professional argument, finding that “little creativity is required to be a dancer at the Club.”  The court noted that the evidence showed that original dance moves were not a requirement for the job and that many of the strippers did not know how to dance.  The court further found that hiring decisions were based primarily on the applicants’ looks and that no special training was required.  As a result, the court determined that the strippers’ jobs did not require sufficient creativity to qualify as exempt creative professionals.

Takeaway:  The Henderson case is part of broad trend of wage and hour lawsuits in the adult entertainment industry.  Employers who operate adult nightclubs should ensure that they pay their dancers in accordance with the requirements of the FLSA.

Does a Supervisor’s Use of the Words “Historically” and “Old School” Prove Age Discrimination?

No – the Eighth Circuit Court of Appeals recently rejected a plaintiff’s argument that his supervisor’s use of the terms “historically” and “old school” constituted direct evidence of age discrimination.

In Wagner v. Gallup, Inc., the plaintiff sued for age discrimination after his employer terminated his employment. No. 14-2746 (8th Cir. June 12, 2015). In support of his claims, the plaintiff cited a recorded phone call with his younger supervisor shortly before his termination. During the conversation, the supervisor questioned how the company could push the plaintiff to think about his work in a different way than he had done “historically but kind of pushing forward a more creative thought process for our clients.” The supervisor also encouraged the plaintiff to consider whether references he made while working with clients to a previous book he published were truly relevant to the client’s business problems or whether it might “feel like old school.”

When analyzing the supervisor’s comments, the court held that the words “were not uttered in a vacuum but rather must be placed in context.” In context, the court explained that the supervisor used the word “historically” as a temporal reference to things that had been done in the past. The court also explained that the supervisor used the words “old school” to refer to ideas that may not be relevant to a particular situation, not as a reference to the plaintiff. Accordingly, the court held that the comments did not establish direct evidence of age discrimination.

Takeaway: Sometimes plaintiffs attempt to use isolated words out of context to try to establish their claims. The Wagner case is good for employers because it supports the proposition that courts should analyze comments in context, not in isolation.

Don’t Forget: The Minimum Wage in Minnesota Will Increase On August 1, 2015

On August 1, 2015, the minimum wage will increase again for Minnesota employers. Here’s what employers need to know about the minimum wage increase that will soon take effect:

  • Large Employers: “Large employers” – whose gross annual volume of sales made or business done is $500,000 or more – will need to pay a minimum wage of at least $9.00 per hour.
  • Small Employers: “Small employers” – whose gross annual volume of sales made or business done is less than $500,000 – will need to pay a minimum wage of at least $7.25 per hour.
  • Exception for Employees Under the Age of 18: “Large employers” may pay employees under the age of 18 a lower minimum wage of at least $7.25 per hour.
  • Exception for Employees Under the Age of 20: During the first 90 days of employment, any employer may pay an employee under the age of 20 a lower minimum wage of at least $7.25 per hour.
  • Exception for Certain Summer Work Travel Employees: An employer that is considered a “hotel or motel,” “lodging establishment,” or “resort,” as defined by Minnesota law, may pay a lower minimum wage to employees working under a summer work travel exchange visitor program nonimmigrant visa if the employer also provides a food or lodging benefit to the employee. The minimum wage rate for these employees will be $7.50 per hour.

See Minn. Stat. § 177.24.

Takeaway: Employers should prepare for the new minimum wage increase that will take effect on August 1, 2015.

Are Racist and Profane Comments Made During Union Picketing Protected Under the NLRA?

Yes – according to an administrative law judge for the National Labor Relations Board (NLRB), racist and profane comments made during union picketing qualify as protected concerted activity under the National Labor Relations Act (NLRA).

In Cooper Tire & Rubber Co., the employer and the union reached impasse during collective bargaining, and the employer locked out the employees and hired replacement workers. No. 08–CA–087155 (June 5, 2015). In response, the union employees picketed outside of the workplace. When vans of replacement workers arrived, the union employees made obscene gestures and shouted multiple racist and profane statements at the replacement workers. These statements included, but were not limited to, the following:

  • “Hey, did you bring enough KFC for everyone?”
  • “Go back to Africa, you bunch of f***ing losers.”
  • “Hey, anybody smell that? I smell fried chicken and watermelon.”

Consistent with the employer’s policies against racial harassment, the employer discharged the employee who made these statements. The employee then filed an unfair labor practice charge with the NLRB.

Because the comments were made during picketing related to a labor dispute, the ALJ concluded that the comments were protected concerted activity under the NLRA. The ALJ then considered whether the comments were so egregious as to lose their protection under the NLRA. The ALJ decided that because the statements did not tend to coerce or intimidate other employees in the exercise of their rights under the NLRA and did not raise a reasonable likelihood of imminent physical confrontation, the statements were not so egregious as to lose their protection.

The ALJ explained that while the comments were certainly “racist, offensive, and reprehensible, . . . they were not violent in character, and they did not contain any overt or implied threats to replacement workers or their property.” In addition, the comments were “unaccompanied by any threatening behavior or physical acts of intimidation.”

The ALJ also explained that picket-line activity is judged by a different, more lenient standard than activity in the workplace. Because the ALJ determined that the conduct was protected by the NLRA, it ordered the employer to reinstate the employee and pay him back-pay.

Takeaway: Although potentially subject to appeal, the Cooper Tire & Rubber Co. case is another in a series of cases (like this one) in which either an ALJ or the NLRB has found that reprehensible employee conduct is protected by the NLRA.

Do Lawful Consumable Product Statutes Protect The Off-Duty Use of Marijuana?

No – the Colorado Supreme Court recently held that because medical marijuana remains illegal under federal law, an employee’s off-duty use of prescribed medical marijuana was not protected by the state’s lawful activity statute.

In Coats v. Dish Network, the employer fired an employee who tested positive for marijuana after using medical marijuana during non-work hours.  The medical marijuana used by the employee was lawfully prescribed under Colorado law, which also recently legalized the recreational use of marijuana.  2015 CO 44 (Colo. June 15, 2015).  The employee sued and alleged that the termination violated the Colorado lawful activity statute.  Unless limited exceptions apply, the Colorado lawful activity statute prohibits employers from terminating “the employment of any employee due to that employee’s engaging in any lawful activity off the premises of the employer during nonworking hours.”  See Colo. Rev. Stat. 24-34-402.5.

The Colorado Supreme Court held that the lawful activity statute did not protect the employee’s lawful use of medical marijuana because even though it was legal under state law, it remained illegal under federal law.  The court held that the term “lawful” in the statute only applied to “those activities that are lawful under both state and federal law.”  Although not necessarily binding in other states, the Colorado Supreme Court’s decision is persuasive precedent that suggests that off-duty marijuana use may not be protected under many states’ lawful consumable products statutes.

Like Colorado, Minnesota has a lawful consumable product statute, which generally allows employees to use “lawful” products during non-work hours.  See Minn. Stat. §181.938.  Under the reasoning of Coats, this statute likely does not protect off-duty marijuana use.  Therefore, if an employee tests positive for marijuana because the employee used recreational marijuana in a state where recreational marijuana was legal (such as Colorado or Washington), the lawful consumable products act would arguably not protect that employee.

Employers need to be careful, however, because some states explicitly protect the off-duty use of medical marijuana.  For example, under Minnesota’s new medical marijuana law, which will take effect on July 1, 2015, an employer generally cannot discipline an employee for the lawful, off-duty use of medical marijuana.  If this law had been in effect in Colorado, the Coats case likely would have turned out differently.

Takeaway:  The Coats case suggests that off-duty recreational use of marijuana will not be protected by Minnesota’s lawful consumable products statute even if the use occurs in a state where it is legal.  On the other hand, Minnesota law generally prohibits employers from disciplining employees for the lawful use of medical marijuana, so employers will still need to exercise caution when disciplining employees for marijuana use.

The Evolving Law Regarding Restroom Access for Transgender Employees

Just as Caitlyn Jenner has brought renewed attention to the issue of gender identity, there have been several recent legal developments relating to restroom access for transgender employees.  Here’s what employers should know:

First, the U.S. Department of Labor Occupational Safety and Health Administration (OSHA) recently released a guide regarding best practices for restroom access for transgender workers. The guide explains that OSHA’s sanitation standard requires that all employees, including transgender employees, must have access to sanitary restrooms. The guide further states that:

[A]ll employees should be permitted to use the facilities that correspond with their gender identity. For example, a person who identifies as a man should be permitted to use men’s restrooms, and a person who identifies as a woman should be permitted to use women’s restrooms. The employee should determine the most appropriate and safest option for him- or herself.

The guide further explains that the “best” employer restroom policies provide additional options, which employees may choose, but are not required to use. These options typically single-occupancy, gender-neutral facilities or multiple-occupant, gender-neutral facilities with lockable single occupant stalls.

Second, the EEOC decided a case in April of 2015 in which it held that an employer violated Title VII’s prohibition against sex discrimination by prohibiting a transgender employee from using the restroom that corresponded to her gender identity. The EEOC has interpreted Title VII to prohibit discrimination against transgender individuals since at least 2012.

In Lusardi v. McHugh, the employee worked for the U.S. Army and transitioned from male to female in 2010. (April 1, 2015). Following her transition, the employer restricted the employee from using the women’s restroom and required her to use a single-user restroom. The employee’s supervisor also continued to refer to her by male pronouns.

The EEOC held in Lusardi that even though other employees may be afraid or embarrassed to share a restroom with a transgender employee, “supervisory or co-worker confusion or anxiety cannot justify discriminatory terms and conditions of employment.” The EEOC further explained that “[a]llowing the preferences of co-workers to determine whether sex discrimination is valid reinforces the very stereotypes and prejudices that Title VII is intended to overcome.” The EEOC concluded that the Army’s restriction of the employee from the female restroom constituted discrimination on the basis of sex in violation of Title VII.

The EEOC’s Lusardi decision and the recent guidance from OSHA represents somewhat of a change in the law regarding transgender access to restrooms. For example, fourteen years ago, the Minnesota Supreme Court decided a case in which it held that the Minnesota Human Rights Act (MHRA) neither requires nor prohibits restroom designation according to self-image of gender or according to biological gender. Goins v. West Group, 635 N.W.2d 717 (Minn. 2001). Although this remains good case law for purposes of the MHRA, the Lusardi case and the recent OSHA guidance show that this reasoning is arguably inconsistent with the requirements of federal law.

Takeaway: Restroom access for transgender employees is one area in which the law appears to be in transition. Employers should continue to monitor developments regarding this subject, such as the recent OSHA guidance and the EEOC’s Lusardi case, to ensure they are in compliance with the most recent legal guidance.

What Employers Need To Know About The Supreme Court’s Abercrombie & Fitch Religious Discrimination Case

In EEOC v. Abercrombie & Fitch Stores, Inc., the U.S. Supreme Court reversed summary judgment in a case in which Abercrombie & Fitch was accused of religious discrimination due to its refusal to hire a Muslim woman whose headscarf was deemed inconsistent with the store’s “Look Policy.” No. 14–86 (June 1, 2015).

In the case, a woman interviewed for a job at Abercrombie & Fitch while wearing a headscarf. She did not inform the interviewer that she wore the headscarf for religious reasons, nor did she request an accommodation for her religious practices. The interviewer later consulted her supervisor about whether the headscarf would be consistent with the store’s “Look Policy,” which prohibited headwear. The interviewer informed her supervisor that she believed the woman wore the headscarf due to her faith. After the supervisor determined the headscarf would violate the company’s policy, the company decided not to hire the woman.

The Supreme Court held that there was sufficient evidence for a jury to conclude that the store violated Title VII by refusing to hire the woman to avoid accommodating her religious practices. Title VII requires employers to provide reasonable accommodations to an employee’s religious observances or practices unless it would impose an undue hardship on the conduct of the employer’s business. 42 U.S.C. § 2000e(j). The Court rejected the employer’s argument that it could not have discriminated against the applicant because it did not know for certain that she wore her headscarf for religious reasons and because she did not affirmatively request an accommodation.

The linchpin in the Court’s reasoning was the distinction between an employer’s “knowledge” and its “motive.” The Court explained that:

An employer who has actual knowledge of the need for an accommodation does not violate Title VII by refusing to hire an applicant if avoiding that accommodation is not his motive. Conversely, an employer who acts with the motive of avoiding accommodation may violate Title VII even if he has no more than an unsubstantiated suspicion that accommodation would be needed.

The Court further explained that “the rule for disparate-treatment claims based on a failure to accommodate a religious practice is straightforward: An employer may not make an applicant’s religious practice, confirmed or otherwise, a factor in employment decisions.”

The Court strongly suggested that a plaintiff must prove that the employer at least “suspected” the practice in question was religious. Because there was no dispute that Abercrombie & Fitch suspected the woman’s headscarf was religious, however, the Court did not need to reach the issue of what level of proof was necessary to prove the employer’s suspicion.

Takeaway: Title VII prohibits employers from refusing to hire someone to avoid accommodating a “suspected” religious practice even if the employer does not know for certain that the practice in question is religious.

Can An Employee Assert State Law Wage Claims Based on Alleged Wrongful Tax Withholding?

No – a recent Sixth Circuit case makes clear that wage and hour plaintiffs cannot try to characterize alleged tax withholding violations as an alleged failure to pay wages or other state law claims.

In Ednacot v. Mesa Medical Group, PLLC, the plaintiff sued her employer and asserted a number of state law claims, including conversion, negligence, fraud, and failure to pay wages and overtime owed under state law. The theory of the plaintiff’s complaint was that the employer failed to pay her full salary because it wrongfully withheld money from her paycheck to cover the employer’s share of federal FICA and FUTA taxes.

Both the district court and the Sixth Circuit Court of Appeals agreed that the plaintiff’s claims in Ednacot were preempted and barred for failure to exhaust administrative remedies under 26 U.S.C. § 7422. Section 7422 is a provision of the federal tax code, which provides that:

No suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with [the IRS] . . . .

The court explained that “Section 7422 was designed to funnel claims like Ednacot’s through the administrative machinery of the IRS rather than piecemeal through individual state and federal lawsuits.” Because the plaintiff had not filed a claim with the IRS and because her claims related to federal taxes that were allegedly withheld improperly, the court held that it lacked jurisdiction to decide the matter due to the plaintiff’s failure to exhaust administrative remedies.

Takeaway: Creative plaintiffs will sometimes try to characterize a tax withholding claim as a wage, contract, or tort claim. In other instances, they may seek to recover allegedly wrongful tax withholding as part of a broader claim for alleged failure to pay wages or overtime. The Ednacot case shows that employers have a strong defense to these kinds of claims when the employee fails to exhaust his or her administrative remedies with the IRS.

The 2015 Legislative Session: A Recap for Employers

The Minnesota Legislature just finished its most unproductive session in history, passing only 80 bills.  As this chart shows, that is the fewest number of bills passed in one legislative session since the Legislative Reference Library started to keep track back in 1874.

So what’s new for employers?  Nothing.  Here’s a rundown of the bills that Minnesota Employer was tracking during the 2015 session and their status:

Because the legislature did not address several key issues during the legislative session (like education), there will be a special session in the near future to tie up a few loose ends.  It’s theoretically possible that some employment law topics could be addressed during the special session, but it looks unlikely.

Takeaway:  Just because these legislative proposals did not pass in 2015 doesn’t mean that they are necessarily going away.  Remember that in 2013, there was a lot of talk about the legislature raising the minimum wage, but the minimum wage increase did not pass until 2014.

Can Caucasian Employees Bring Race and National Origin Discrimination Claims?

Yes – a recent case illustrates that Caucasian employees from the United States may be able to prevail on claims for race and national origin discrimination under Title VII.

In Koehler v. Infosys Technologies Limited, Inc., a group of Caucasian employees from the United States filed race and national discrimination claims as a putative class action against their employer. No. 13-CV-885-PP (E.D. Wis. May 8, 2015). The employees alleged that their employer, which was based in India, systematically discriminated against Caucasian employees and employed predominantly South Asian employees with either Indian, Bangladeshi, or Nepalese national origins.

The complaint alleged that in one business unit, approximately 96% of the employees were South Asian. One of the Caucasian plaintiffs alleged that the employer set unrealistic goals for him, denied him bonuses, and fired him soon after he finalized a contract with a major client. Another Caucasian plaintiff alleged that she interviewed for a higher position, but was hired for a lower position with less pay and responsibilities, and that she was continually denied promotions as other South Asian employees were promoted.

The complaint also alleged that some of the employer’s executives openly acknowledged the alleged discrimination. For example, the complaint alleged that the executives encouraged recruiters to hire South Asians because “they will work off the clock without murmur and they can always be transferred across the nation without hesitation unlike [a] local workforce.”

After the complaint was filed, the employer filed a motion to dismiss. The court denied the motion, reasoning that the complaint set forth plausible claims of race and national origin discrimination. As a result, the plaintiffs’ claims will proceed to the discovery phase of litigation.

Takeaway: It’s important for employers to remember that all employees belong to one protected class or another, whether its race, national origin, gender, sexual orientation, or another status. An employee may be able to assert plausible claims of discrimination even if the employee belongs to a group that is not characteristically associated with discrimination.

Chambers Ranks Briggs and Morgan as a Top Labor and Employment Law Firm In Minnesota For 2015

Chambers recently released its annual law firm rankings, and once again, ranked the Employment, Benefits, and Labor section at Briggs and Morgan, P.A. as “Band 1” for labor and employment law in Minnesota. That is the highest ranking available.

Although all of the attorneys in the Employment, Benefits, and Labor group at Briggs contribute to its success, Chambers particularly recognized Ann Huntrods, Michael Miller, and Gregory Stenmoe for their excellence in the field of employment law.

For more information about the rankings, click here.

Is a Blanket Savings Clause Sufficient To Protect an Employer’s Policies Under the NLRA?

Probably not – in a recent case, an administrative law judge (ALJ) for the National Labor Relations Board (NLRB) rejected an employer’s argument that a savings clause added to the beginning of its employee handbook shielded the employer from liability.

The focus of the dispute in Macy’s, Inc. was whether the employer’s policies were unlawfully overbroad under Section 7 of the National Labor Relations Act (NLRA). No. 1-CA-123640 (May 12, 2015). The Union and the NLRB General Counsel argued that a number of the employer’s policies chilled the exercise of employees’ Section 7 rights. The ALJ agreed that many of the policies violated the NLRA for reasons similar to those discussed in the recent advice memorandum from the NLRB Office of General Counsel regarding employment policies. For example, the confidentiality provision was overbroad because it prohibited disclosure of “the personal information of the Company’s employees and customers.” In addition, the intellectual property policy prohibited the use of the Company’s logo or trademark, which the ALJ concluded may discourage employees from using the Company’s logo or trademark in Union materials.

After finding the employer’s policies violated the NLRA, the ALJ analyzed whether the employer’s savings clause neutralized the employer’s policies. Specifically, the employer sent its employees a message in April of 2014, notifying them that it added the following disclaimer as an introductory page to its handbook:

Nothing in the Code or the policies it incorporates, is intended or will be applied, to prohibit employees from exercising their rights protected under federal labor law, including concerted discussion of wages, hours or other terms and conditions of employment. This Code is intended to comply with all federal, state, and local laws, including but not limited to the Federal Trade Commission, Endorsement Guidelines and the National Labor Relations Act, and will not be applied or enforced in a manner that violates such laws.

The ALJ explained that in order to repudiate unlawful policies effectively, a savings clause must be “timely, unambiguous, specific in nature to the coercive conduct, and untainted by other unlawful conduct.” The ALJ determined that the employer’s savings clause was too generic in contrast to the specificity of the unlawful policies, and it did not specifically reference those policies. In addition, the savings clause was not added until 17 months after the promulgation of the rules at issue. Therefore, the ALJ concluded that the savings clause was ineffective.

Takeaway: A blanket savings clause at the introduction of an employee handbook may not be sufficient to bring overbroad employment policies into compliance with the NLRA.