Week in Review

February 09, 2015

February 9,2014

Nearly $800,000 in judgments issued against Papa John's franchise for underpaying workers

The New York Attorney General's office has obtained two separate judgments against Emstar Pizza, a Papa John's franchisee, and its owner and operator for underpaying employees. The violations include shaving workers' pay by under-reporting hours and rounding down hours worked to the nearest whole hour increment (and paying nothing for fractions of hours), as well as nonpayment of overtime premiums-all in violation of New York State Labor Law.

Kings County Supreme Court Justice Johnny Lee Baynes issued a judgment for $789,507.06 in owed wages, uniform maintenance, liquidated damages, and interest to hundreds of employees who have worked for him over the past six years. The order also permanently enjoins Emstar Pizza Inc. and its owners and operators from selling any stores unless proceeds from the sale are held in escrow by the Attorney General, which the Attorney General may use to distribute as restitution to underpaid employees.

Wisconsin company facing ADEA suit for firing workers when they turned 62

The EEOC has filed a lawsuit against a Wisconsin-based Mechanical Contractor asserting that the heating and plumbing contractor violated the ADEA by firing two employees when they reached age 62 and retaliated against one of them for resisting the company's plan to discriminate against her. According to the suit both employees had repeatedly warned the companies owner that his plan to fire them when they turned 62 was illegal, but the owner refused to relent and, after firing one of the workers, retaliated against the other for her complaints-first by denying her a raise and then by demoting her and cutting her hours and pay while waiting for her to turn 62. One of the discharged employees had worked for the company for 16 years and the other for 25 years. The agency is seeking back pay, reinstatement, front pay, and liquidated damages for both employees, as well as an order barring future discrimination and retaliation.

Wellness Plans: EEOC litigation inconsistent with Affordable Care Act

The U.S. Senate Committee on Health, Education, Labor & Pensions recently held a hearing on employer wellness plans. It is clear that both Republican and Democrat Senators view wellness plans favorably, recognize the crucial role that wellness plans play in lowering health care costs, and are concerned with the Equal Employment Opportunity Commission's litigation challenging wellness plans, especially in the absence of an articulated policy by the EEOC.

Under the Affordable Care Act ("ACA"), and its implementing regulations issued by the Departments of Labor employers may offer financial incentives to employees up to 30% of their health care premiums for participating in and/or reaching certain health outcomes in a wellness plan (and up to 50% for smoking cessation programs). Under the Americans with Disabilities Act ("ADA"), medical examinations and/inquiries (including biometric screening) are not permitted unless such inquiries are either job related and consistent with business necessity or voluntary.

Late last year, the EEOC filed high profile litigation against Honeywell International seeking a preliminary injunction to stop it from implementing its wellness plan, which required employees to undergo biometric testing. Employees who chose not to participate forfeited a contribution to a health savings account of up to $1,500, were assessed a $500 surcharge, and were potentially subjected to a $1,000 nicotine surcharge. Ultimately, the EEOC's theory was that Honeywell's incentives offered through its wellness program made participation non-voluntary under the ADA even if the incentives complied with the ACA and its implementing regulations. From both sides of the aisle, the tone was clear Congress permitted incentives for wellness plans that now the EEOC is litigating against. Given that uncertainty, employers are going to be forced to pull back their wellness offerings. We clearly expect that the EEOC will issue regulations on the issue as this topic has been included on the EEOC's most recent regulatory agenda.

$2.4 million settlement reached with Daimler Trucks over civil rights complaint

A comprehensive compliance and $2.4 million settlement agreement has been reached between Daimler Trucks North America, six former employees, and the Bureau of Labor and Industries stemming from civil rights complaints filed last year by employees at the Portland Truck Manufacturing Plant, according to Oregon Labor Commissioner Brad Avakian. The agreement also settles a Commissioner's Complaint filed against Daimler on behalf of the people of Oregon. In the original complaint filed September 25, 2014, Commissioner Avakian filed a commissioner's complaint against Daimler Trucks North America alleging severe civil rights violations that included Daimler employees using racial epithets to refer to African-American colleagues and charges that the company failed to take corrective action to address the racially motivated behavior and treatment.

The settlement comes after BOLI investigators interviewed more than 60 current and former Daimler employees and supervisors and reviewed hundreds of documents pertaining to the North Portland facility's operations.

The agreement will compensate employees for damages and includes strong compliance measures to ensure a harassment and discrimination-free workplace for current and future employees. Non-monetary terms of the settlement include the installation of a civil rights complaint hotline for workers with recordings available to the BOLI during a three (3) year monitoring period. Five additional complainants have withdrawn their complaints against Daimler and stated their intention to go to civil court.