September 19, 2014

NLRB Opinion May Make McDonald's Joint Employers with Franchisees

American business has long relied upon the franchise model. Brands like McDonald's grant individuals a license for the right to use their trademarks and sell their products. McDonald's also gives franchisees marketing plans and operations manuals. The franchisee pays McDonald's agreed-upon fees for use of their business model.

National%20%20Labor%20Relations%20Board%20Logo-001.jpgTraditionally, a franchisor like McDonald's has little to do with day-to-day franchise operations. The owners and managers at the franchise are responsible for hiring, firing and disciplining employees. They make promotional decisions independently, and they determine things like compensation and hours without input from the corporation.

It's a business model that has succeeded for many companies over a span of many years. Now that model is in jeopardy because of a National Labor Relations Board (NLRB) opinion which states that corporations like McDonald's are actually joint employers along with their franchisees. If the opinion is allowed to become policy, then large parent corporations would be just as liable in labor disputes and lawsuits as the franchisee.

Formalizing the concept that a parent corporation is a joint employer could be disastrous and may spell the end of the franchising business model. Franchisors could be held responsible for everything from a patron choking on their meal to an employee alleging discrimination. Legal costs would quickly skyrocket, and corporations could become mired in endless litigation. Franchisors would no longer enjoy the layer of protection from claims that they currently have thanks to the franchise business model. Accordingly, some companies may decide to do away with franchising entirely.

The NLRB's findings are connected to complaints filed by fast food workers who protested the unfairness of their wages. The workers claimed that their rights were violated in retaliation for their protest. Legal counsel for the NLRB decided that the workers' complaints had merit and stated that the franchisor may be named as a co-respondent.

A final determination about whether or not the McDonald's corporation will be considered a joint employer in the matter has not been made. If the corporation is named a co-respondent, it may set a legal precedent for countless legal matters.

September 12, 2014

LinkedIn Settles Lawsuit Over Sales Department Wages

Last month LinkedIn agreed to pay approximately $6 million in overtime to 359 current employees. The settlement is based on investigation by the U.S. Department of Labor finding that the company violated federal wage laws.

Social%20Media%20Compass%2054107999-001.jpgLinkedIn reached a settlement agreement with the Labor Department to pay $3.3 million in retroactive overtime wages and an additional $2.5 million in damages to workers in California, New York, Illinois, and Nebraska. A representative from the government agency reported that LinkedIn has already mailed payments to employees involved in the settlement.

To its credit, LinkedIn acted very professionally, like a good corporate citizen should. The Labor Department reported the company acted responsibly and cooperated fully by working quickly to resolve the dispute and pay back wages owed.

A representative from LinkedIn stated that the wage and hour violations were due to a systemic failure that did not allow their sales team to properly track their hours. The Labor Department’s investigation revealed that the company failed to record and compensate employees for all hours worked. This is not an uncommon violation of the Fair Labor Standards Act (FLSA). In addition to paying the $6 million settlement for unpaid wages, the company is also responsible for training employees and providing education to ensure that all work performed is “on-the-clock”.

September 5, 2014

Pennsylvania School District Settles Lawsuit with School Psychologist

A Pennsylvania school district recently settled a lawsuit involving a former school psychologist. The Burrell School District was sued by Kristin Serluco after she was furloughed in 2011. Serluco claimed that the furlough was inappropriate, and that the district owed her compensation.

Psychology%2050034652-001.jpgThe school district made a strategic decision to settle the suit. Lee Price, acting as solicitor for the district, noted disappointment in the outcome. However, they were unwilling to accrue greater legal fees, and they wanted to continue with the outsourcing project that had necessitated Serluco's furlough.

Serluco had been employed with the district as a psychologist since 2000, and had held a tenured position since 2003. Tenure gave Serluco seniority, but when the district wanted to take cost cutting measures they decided to let her go.

Prior to 2011, the district contracted with the Westmoreland Intermediate Unit to staff its special education program. Then they decided they would rather offer in-house special education. The switch was projected to save the district some $25,000 annually. An administrator who would oversee the special education program would have to be hired. At the same time, Serluco's job would be eliminated, mainly because her certifications did not include the supervision of teachers. The district went on to complete an outsourcing contract with Westmoreland for a psychologist.

Outsourcing meant that the district would not need to have a full-time psychologist on staff. In court documents, lawyers for the district noted a $144,000 annual savings because of the changes. Counsel for Serluco disagreed, estimating that the district likely only saved about $20,000 per year.

In December of 2013, Judge Gary Caruso found in favor of Serluco, awarding her some $200,000 in back wages. Neither the plaintiff nor the defendant were satisfied with the outcome, and both appealed to a higher court.

In the final settlement, the district will pay Serluco $175,000 in back wages and will no longer be obligated to hire her back. Many details of the settlement are being kept confidential.

August 29, 2014

Ride Sharing Company Uber Faces Lawsuit

Ride sharing is enjoying growing popularity. Many of these services don't provide a professional driver, opting instead to function more like a rental car company where the renter drives themselves.

Driver%20Uber%2013410617-001.jpgHowever, the ride share business run by Uber Technologies Inc. is different. The smartphone app based service provides clients with a car and a professional driver. The driver is not an employee of Uber. Instead, they are classified as an independent contractor, and Uber advertises that its drivers are essentially small business owners.

This means that Uber does not cover the cost of insurance, gas and other expenses associated with operation of the vehicles. These bills are taken care of by the drivers. These independent contractors are also obligated to send a portion of any gratuities they receive to Uber.

Shannon Liss-Riordan believes that Uber's practices are exploitative. In a lawsuit filed in Massachusetts at Suffolk Superior Court, Liss-Riordan alleges that by deliberately classifying drivers as independent contractors, Uber is skirting Massachusetts' employment laws. The state's laws regarding employee rights are among the strongest in the nation. Among these laws is one that prevents employers from taking a portion of an employee's tips.

This is not the first time that Liss-Riordan has taken on a case involving workers whom she believes are being treated unfairly. Past clients include a group of house cleaners and another of Starbucks baristas. The lawsuit against Uber Technologies was filed on behalf of one Massachusetts driver, Hakan Yucesory, but Liss-Riordan believes that all Uber drivers should be involved. A request for class action status was included in the complaint filing.

Uber has yet to comment substantively on the pending litigation. However, they are standing by their business model. Statistics released by the organization cite the creation of "20,000 new driver jobs every month" in the 38 countries in which Uber operates. Uber also says that its drivers in New York can earn $90,000 annually.

Liss-Riordan argues that these earnings do not reflect the expenses the drivers must pay for. It seems likely that this dispute will go to trial.

August 20, 2014

Whistleblowing Teacher Sues School District

The Fremont (Michigan) Public Schools District is the subject of a new lawsuit. Fremont High School teacher Scott Herlein filed it after being terminated. Herlein maintains that the district violated his First Amendment rights and his rights under the state's Whistleblower Protection Act.

Whistleblower%206928551-001.jpgThe story began on March 4 when Herlein was supervising a classroom of junior year students. The students were taking the ACT, which is required as a portion of the Michigan Merit Exam. For the math section of the ACT students are permitted to use calculators. While some students use their own calculators, others use calculators that are provided by the school.

During the course of the test, Herlein noticed that the students who were using the school issued calculators had access to ACT help files. The files had been preloaded onto the calculators by the school to help students prepare for the exam. Believing the files to be nothing other than cheat sheets, Herlein reported the use of the files to the district on March 6.

The Michigan Department of Education investigated the claims. By May 14, the investigation was over, and the department found that the school may have violated the spirit of the law, but engaged in no real wrongdoing. A loophole in ACT regulations states that files may not be erased from calculators used during the exam. Although this violates state policy, it is difficult for the department to find otherwise since the ACT would not have permitted deleting those files. About two weeks after the conclusion of the investigation, Herlein was terminated.

Since then, a new district superintendent has taken over. Herlein's lawsuit names the former superintendent and each board member individually. The details of Herlein's termination were not made immediately clear by the complaint. In fact, the current superintendent notes that Herlein remains employed and on the payroll of the district pending an upcoming tenure hearing.

Further filings in the lawsuit should prove revelatory regarding the conditions of Herlein's termination. He has already disclosed that he was "interrogated" by investigators on May 5, and was forced to admit that he was the whistleblower.

August 14, 2014

Pennsylvania Teacher's Free Speech Lawsuit Won't Go to Trial

As various social media formats and blogs continue to evolve, the definition of free speech may also evolve. That seems to be the case with a former Bucks County, Pennsylvania English teacher who sued her former employer.

Grades%20on%20a%20chalkboard%2033883975-001.jpgThe situation began in 2011, when teacher Natalie Munroe began blowing off steam through her personal blog. She routinely made attacks on her students, whom she did not name, in the blog. Using descriptors like "utterly loathsome," "frightfully dim" and "jerk."

Before long, links to her blog were being floated around parents and students in Central Bucks School District. Despite receiving positive teacher evaluations in 2008, Munroe found herself being put on a disciplinary work plan because of the furor her blog posts caused. Subsequent evaluations were poor, and Munroe was terminated.

Munroe and her attorney claim that the work plan and the poor evaluations were retaliation for the blog posts. Further, they claimed that the posts should have been protected as free speech under the First Amendment.

A recent decision handed down by U.S. District Judge Cynthia Rufe disagrees with the plaintiff's assertions. Judge Rufe used a time-tested standard for determining whether or not the blog posts were protected speech. She noted that Munroe was a public employee who may be held to a different standard when disparaging their employer. Ultimately, Judge Rufe said that the blog posts caused a significant disruption at the school and within the district. This disruption made it difficult for the district to carry on its essential function to educate students. Accordingly, Munroe's blog posts were not protected speech.

Because of the judge's ruling, this case will not be proceeding to trial. Legal scholars warn that anyone who is employed by a public entity should be exceedingly careful about their social media presence. In most instances, it's best not to blog or otherwise post comments about a public employer, coworkers or recipients of the services provided by government entities. Doing so may put the blogger's job in jeopardy, and there is a very good chance that a court will agree that the employer was within their rights.

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August 8, 2014

California Lawsuit Contends that Students Don't Get Enough PE

An enigmatic organization called Cal200 has come forward with a lawsuit that charges more than three dozen school districts with providing inadequate time for physical education. Los Angeles Unified, Riverside Unified, San Francisco Unified and Palm Springs Unified are all named among the defendants.

school%20bus%20%26%20child%2044980077-001.jpgThe complaint contends that students in the first through sixth grades in these districts are not being given the state mandated minimum time for PE. California state law dictates that students should participate in PE activities for about 20 minutes every day. The economic downturn of a few years ago meant that schools were receiving less and less funding for physical education classes. This meant that most elementary school students spent time with a designated PE teacher just once or twice a week. The students' regular teacher was supposed to supplement this time in the classroom. The reality is that it is extraordinarily hard for teachers to fit in PE while also trying to produce the high scoring students that the system requires.

Cal200 may be seeking to take advantage of this lapse. The group appears to have started only recently with the rather vague intention to raise awareness of the limited time students are given for PE. Visits to the group's website and emails with its president, Marc Babin, elicit next to no information about the group's activity, its membership or its purpose.

It's well known that teachers have little opportunity to squeeze PE into an already packed day. An attorney working with some of the school districts named in the suit noted that Marc Babin has no discernible relationship with many of the districts.

An attorney for Cal200 has asked that teachers submit lesson plans for review so that it can be determined just how much PE the students are participating in. Time will tell if the districts settle the dispute to make the problem disappear, or if the court will rule on the issue of Cal200's standing to file this lawsuit.

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August 1, 2014

Passengers Removed from Southwest Flight Over Tweet

A Southwest Airlines traveler is expressing his displeasure after he was temporarily removed from a flight for tweeting about a gate agent. Duff Watson was traveling between Denver and Minneapolis with his children, aged 6 and 9. Watson was a Southwest Airlines A list traveler, a status that granted him priority seating.

Social%20Media%20Magnified%2044298834-001.jpgWatson prepared to board the plane with his children, only to be told by a gate agent that while his A list status entitled him to early boarding privileges, his children were exempt. As a regular Southwest customer, Watson says the decision mystified him. He had been able to have priority boarding with his children on the airline on several past occasions. When the agent denied him the ability to board in the A group with his children, Watson told her that he was going to tweet about the incident.

"RUDEST AGENT IN DENVER. KIMBERLY S. GATE C39. NOT HAPPY @SWA," was Watson's all caps posting. He boarded the plane with his children, only to hear his name being called over the loudspeaker. They were being asked to leave the plane.

The gate agent said she felt threatened by the use of her name and location in the tweet. She requested that Watson delete the tweet before he and his children would be allowed to board the plane. Watson eventually complied after a supervisor was called in to handle the situation. However, the damage was already done.

The story has been reported in many media outlets with the deleted tweet being read more times than it might have been otherwise. Watson vows never to fly Southwest again. In a statement, the airline notes that a "customer was briefly removed from flight #2347 … to resolve the conversation outside of the aircraft and away from the other Passengers." The statement goes on to say that Watson was not removed from the plane only because of the tweet.

Southwest will not be releasing details about what, if any, disciplinary actions were taken against the gate agent. Vouchers were provided to all three travelers, but it seems unlikely that they will be used.

While no lawsuit has been threatened or filed, time will tell if this incident will lead to another in the evergrowing number of social media lawsuits.

July 25, 2014

Pasadena Unified School District Settles Title IX Complaint . . . . . In Everyone's Best Interest!

Girls attending middle school in the Pasadena Unified School District have declared victory in a battle over equal access to sports. The students were assisted by the California Women's Law Center and the Employment Law Center of the Legal Aid Society. Because no lawsuit was filed, the claim was settled informally outside of court.

School%20Girls%20Team%2022232833-001.jpgThe trouble centered around the school district's Pasadena LEARNs program. An after school and summer program, Pasadena LEARNs offers students enriching experiences from kindergarten through high school. Participating students may get help with homework, take performing arts classes, attend field trips and enjoy other academic activities. The program also boasts a full menu of sports. However, girls at the middle school level quickly learned that there was little opportunity for them to be involved in this aspect of the program.

Through the Pasadena LEARNs program, boys had their pick of flag football, soccer and basketball. Although most of the sports leagues were labeled as co-ed, very few girls were making the cut to play on teams. The parent of a female middle school student brought forth the complaint about a year ago when her daughter failed to make the cut on the co-ed basketball team. Other parents had also noticed that the so-called co-ed teams were heavily unbalanced in favor of boys.

A Title IX complaint was launched against the district. Title IX is a portion of the Education Amendments of 1972 that provides all students equal access to all academic and sports facilities regardless of gender. The district maintains that their after school program was in compliance with Title IX all along. Nonetheless, they are now offering girls' basketball and soccer programs and may be adding volleyball in the future.

Both sides were happy to settle the matter outside of the courtroom. The agreement saved significant costs and achieved an equitable result. Now girls who participate in the Pasadena LEARNs program will have leagues of their own and equal treatment as far as equipment, facilities, coaching and recruiting. The agreement appears to be a win-win situation for everyone involved.

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July 18, 2014

FTC Sues Amazon Over Unfair Billing Practices

The FTC has sued Amazon over its in-app billing practices. In the lawsuit, the FTC alleges that parents have been unlawfully charged millions of dollars by allowing their children to play with apps on smart phones and other devices.

Smartphone%20%26%20baby%2052239469-001.jpgThe apps are frequently free to download. Although free play is possible, the availability of in-app purchases that provide access to higher game levels or other enhanced experiences are common. The trouble is, children can easily authorize these purchases with the touch of a button. No passwords or authorization are required. Without mom and dad's knowledge, it's easy for a kid to rack up hundreds of dollars of charges worth of in-app purchases.

When the credit card bill arrives, the parents often complain to Amazon. Although Amazon states that they have offered refunds to customers who complained about the practice, the FTC feels they haven't gone far enough. In their complaint, the FTC levels accusations at Amazon of unfair billing practices that violate Section 5 of the FTC Act. T-Mobile and Apple have both been the subject of similar FTC lawsuits.

Andrew Devore, an attorney for Amazon, stated in a letter that the organization's in-app purchase policies are "responsible, customer focused and lawful." Moreover, he notes that Amazon utilizes "prominent notice of in-app purchasing ... (and) effective parental controls ..."

In a move that seems as if it was designed to help head off the litigation, Amazon made password entry a requirement for making in-app purchases that exceed $20 in March of 2012. However, the FTC seems to feel that this was a case of too little, too late. The two parties tried to reach an agreement before the lawsuit was filed. Amazon resisted the deal that the FTC proposed, particularly because they feel that their billing policies are at least as stringent as those recently enacted at Apple in response to another FTC lawsuit.

Both parties in the pending litigation seem motivated to maintain their stance. Time will tell what the resolution will be, and what effect it might have on the future of in-app purchases at Amazon and from other providers.

July 11, 2014

ABA Ruling Says Attorneys May Review Social Media Posts by Jurors

As more and more people establish a presence on social media websites, the line between the real world and the virtual world becomes increasingly blurred. That's true in many aspects of life, and it is particularly relevant when applied to jurors. In a recent ruling handed down by the American Bar Association (ABA), lawyers may rightfully review the social media postings of jurors and potential jurors. However, strict lines for appropriate conduct and ex parte communication have also been drawn.

Social%20Media%20Magnified%2044298834-001.jpgThe ruling by the ABA essentially says that it is appropriate for lawyers to peruse the social media postings of jurors at websites like Facebook and Twitter. However, it remains unethical for lawyers to make friend requests to these jurors or to "follow" their social media posts. It is believed that doing so would breach rules against ex parte communication. Accordingly, lawyers may lawfully review those posts that a juror chooses to make public. Such items as may be accessible only by the people designated as "friends" by the juror may not be reviewed by the lawyer.

Lawyers may be interested in reviewing such publicly available information in order to ascertain whether or not jury instructions are being adhered to. These postings may also be of interest during the jury selection process when an attorney may be looking for bias or prejudice.

The ABA feels that judges and lawyers in the courtroom should discuss social media expectations. Thus, a judge may instruct that it is inappropriate for jurors to make any social media postings during the course of a trial. Lawyers may monitor whether or not this activity is occurring. Jurors should also be instructed that their social media presence may be of interest to the parties involved in a lawsuit, and that their postings may be reviewed by attorneys involved in the case. The ABA feels that there will be fewer misunderstandings if clear rules regarding social media behavior are established early in the proceedings.

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July 2, 2014

Happy 4th of July

Fireworks%2039914849-001.jpgThe team at Sylvester, Oppenheim & Linde and CaliforniaBusinessLitigation.com wish all of our Clients, friends, business associates and blog readers a very safe and extremely fun 4th of July Holiday!

In observance of Independence Day our office will be closed Friday July 4th.

Enjoy your holiday, stay cool and keep your pets indoors!