Deck 18: Managing Diversity

Question 1

Joe Ortiz was discharged from Magma Copper Co. for absenteeism. He missed the last shift of work before he was fired because he was temporarily in custody following an arrest for a criminal offense. He filed for unemployment but was denied. Mr. Ortiz said he notified Magma that he was missing because of being detained in jail. The unemployment compensation agency says Mr. Ortiz is disqualified for benefits because he was fired for misconduct. Who is right? [ Magma Copper v Department of Employment Security, 625 P.2d 935 (Ariz. 1981)]

Answer 1

Joe Ortiz was right for claiming unemployment compensation as his firing was not because of his own voluntary choice. He was arrested by the cops. This caused the reason for him being not available for the work. His claim hence could not be disqualified under A.C.R.R. R6-3-5115(E), which provides relief for the absence due to incarceration. Thus, the claim of his misconduct could not be viable in the court of law.

Question 2

Why do you believe Stroh's had a free-beer policy?

Answer 2

Free-beer policy:
• Stroh had a policy of providing free beer to all staffs on the job at "designated relief areas".
• Employees were allowed to have beer through their break time and during lunch with no limits on the quantity.

Question 3

Donald Thompson worked as a machine operator for Hughes Aircraft for 13 years. During that time, the skin on his hands was exposed to Wynn's 331, a coolant oil. In 1978, while working with machines and using Wynn's 331 oil, Mr. Thompson developed an active scaly eruption. He required medical attention but continued to work. The scaly eruption stopped only when Mr. Thompson was off work for medical treatment. He was certified to return to work but only if he avoided contact with Wynn's 331 oil. Hughes refused to rehire him, and Mr. Thompson filed for a permanent unscheduled disability. Does he qualify? [ Hughes Aircraft v Industrial Comm'n, 606 P.2d 819 (Ariz. 1981)]

Answer 3

, Donald Thompson does qualify for the worker's compensation due to unscheduled disability because his disability occurred during his work period. The eruption of skin was because of the coolant oil with which Donald had to work. This is a job related hazard, and hence, he should be paid.

Question 4

Was Mr. Gacioch predisposed to alcoholism? Is alcoholism a disease?

Question 5

Janice W. Craig was employed by Drenberg and Associates, an insurance agency. She had approximately 15 years' experience when she started to work at Drenberg in August 1974 and was initially assigned underwriting duties in the personal and commercial lines of insurance. About the time she started to work, Drenberg began a year of explosive growth. Under normal conditions, an agency with 400,000 accounts could expect to acquire approximately 40,000 new accounts in the period of a year. Drenberg grew from 400,000 to 1,200,000 in just over one year. Craig and the agency's employees worked many overtime hours. Yet, in spite of their best efforts, the agency remained 30 days behind in its accounts.
Mrs. Craig was a conscientious perfectionist. She also took over a part of the commercial desk, handling correspondence, renewals, and changes. She was under constant pressure.
In April 1975, Drenberg purchased another agency, thereby acquiring 500 new accounts and an additional employee. Mrs. Craig was given responsibility for supervising the new employee and merging the books of the two agencies. The additional responsibility and mounting pressure began to affect her. She began to feel frustrated and ineffective. She experienced difficulty relating to her coworkers and on occasions had heated exchanges with customers. On September 25, 1975, she engaged in a particularly emotional telephone conversation with one of the agency's customers, after which she eventually left the office in tears.
In addition to Mrs. Craig's difficulties at the office, she was experiencing domestic disharmony. She and her husband argued frequently concerning his drinking habits. She encountered difficulties in relating to her daughters, and her mother's death caused additional internal pressures. On the evening of September 25, 1975, the Craigs again argued, following which she took an overdose of medication.
The following day she sought help at the Tri-City Mental Hospital and was subsequently admitted to Camelback Hospital, where her condition was diagnosed as neurotic depression, or a mental breakdown.
Mrs. Craig filed a claim with the Industrial Commission wherein she related facts establishing that she was suffering from a disabling mental condition brought on by the gradual buildup of the stress and strain of her employment.
Should Mrs. Craig receive workers' compensation? [ Fireman's Fund Ins. Co. v Industrial Comm'n, 579 P.2d 555 (Ariz. 1979)]

Question 6

What additional factual information is needed to resolve the case?

Question 7

Harry Connelly was an embalmer's helper. When he cut his hand during the preparation of a corpse, germs from the gangrenous corpse got into his cut and caused blood poisoning, and he eventually died. Would Mr. Connelly's survivors be entitled to workers' compensation? [ Connelly v Hunt Furniture, 147 N.E. 366 (N.Y. 1925)]

Question 8

How do you feel about the free-beer policy? Can you foresee other issues of liability for Stroh beyond workers' compensation?

Question 9

An employee of Walmart worked at the store on the night restocking crew. For security reasons, the manager of the store implemented a policy of locking all doors leading into and out of the store at the close of the business day. Only management personnel had keys to the store and no one in management worked on the night crew. Consequently, employees on the night crew were locked in the store without a key to exit the building until it opened the following day. While working one night, the employee suffered a stroke and collapsed, unconscious. When the emergency medical personnel arrived, approximately six minutes later, they were unable to enter the store because no one on the night crew had a key to the door. By the time the emergency crew was able to assist the employee, they were unable to revive her. The deceased employee was taken to the hospital where she was declared brain dead, and after 15 hours, the life support systems to which she was connected were discontinued. Subsequently, the executor of her estate and guardian for her child filed suit against Walmart for unlawful false imprisonment. The trial court granted Walmart's motion for summary judgment, and the executor / guardian appealed. How should the appellate court decide the case and why? [ Bryant v Wal-Mart Stores, Inc., 417 S.E.2d 688 (Ga. App. 1992)]

Question 10

Michael Kittell was an employee at Vermont Weatherboard. While he was operating a saw at work, a splinter flew into his eye and went into his cranium. Kittell filed suit against his employer because he was an inexperienced employee who was put to work straight away on the saw, without any training. He also said that his employer had removed all the safety devices from the saw thereby causing the injury to his eye and brain. Can Kittell recover from his employer? What about the manufacturer of the saw? [ Kittell v Vermont Weatherboard, Inc., 417 A.2d 926 (Vt. 1980)]

Question 11

A group of exotic dancers at several clubs in the San Fernando Valley of California brought a class action suit against their employers, the club owners, for the following violations of labor law:
• The failure to provide meal breaks
• The failure to provide rest breaks
• Club managers taking 50 percent of the dancers' tips, which resulted in some dancers earning less than the minimum wage for hours worked
• The failure to reimburse dancers for the costs of their uniforms
The club owners acknowledge that the dancers worked over 40 hours each week but that they were professionals and not subject to the provisions of the FLSA. The club owners also claim that the dancers work on a type of commission basis and so are not covered by the minimum wage law. Are there labor law violations going on at the clubs? Are you able to respond to the defenses that the club owners raised?

Question 12

Suppose an employer decided to spin off a particular plant or part of its business to avoid either unionization or the recognition of a collective bargaining agreement. Would the spin-off work, or is this an unfair labor practice? [ International Union, UAW v NLRB, 470 F.2d 422 (D.C. Cir. 1972)]

Question 13

FACTS
Hotel Oasis, Inc., operates a hotel and restaurant in southwestern Puerto Rico. Dr. Lionel Lugo-Rodríguez (defendant-appellant)(Lugo)is the president of the corporation, runs the hotel, and manages its employees. Oasis's records show that between October 3, 1990, and June 30, 1993, employees were paid less than minimum wage, were not paid for training time or meetings held during nonworking hours, were paid in cash "off the books," and were not paid correctly for overtime. Oasis also maintained two sets of payroll records for the same employees, covering the same time periods, one showing fewer hours at a higher rate, and the other showing more hours at a subminimum wage rate. Lugo maintains that the two sets of books were necessary, one for temporary employees and one for permanent employees.
On April 5, 1994, the Secretary of Labor (the "Secretary")filed a complaint in the United States District Court for the District of Puerto Rico against Oasis and Lugo ("Defendants"), alleging violations of the minimum wage, overtime, and recordkeeping provisions of the Fair Labor Standards Act ("FLSA"). The Secretary also sought liquidated damages.
After years of litigation, the district court ordered Oasis to pay $141,270.64 in back wages and an equal amount in liquidated damages to 282 current and former employees. The court also found Lugo personally liable for the back wages and penalties. Lugo and Oasis appealed.
JUDICIAL OPINION
TORRUELLA, Circuit Judge
"[T]he overwhelming weight of authority is that a corporate officer with operational control of a corporation's covered enterprise is an employer along with the corporation, jointly and severally liable under the FLSA for unpaid wages." Although we found it "difficult to accept…that Congress intended that any corporate officer or other employee with ultimate operational control over payroll matters be personally liable," we narrowly determined that the FLSA did not preclude personal liability for "corporate officers with a significant ownership interest who had operational control of significant aspects of the corporation's day to day functions, including compensation of employees, and who personally made decisions to continue operations despite financial adversity during the period of nonpayment."…
…[Because] not every corporate employee who exercised supervisory control should be held personally liable, we identified several factors that were important to the personal liability analysis, including the individual's ownership interest, degree of control over the corporation's financial affairs and compensation practices, and role in "caus[ing] the corporation to compensate (or not to compensate)employees in accordance with the FLSA."
Based on the above considerations, we affirm the district court's judgment holding Lugo personally liable for Oasis's compensation decisions. Lugo was not just any employee with some supervisory control over other employees. He was the president of the corporation, and he had ultimate control over the business's day-to-day operations. In particular, it is undisputed that Lugo was the corporate officer principally in charge of directing employment practices, such as hiring and firing employees, requiring employees to attend meetings unpaid, and setting employees' wages and schedules. He was thus instrumental in "causing" the corporation to violate the FLSA. The FLSA contemplates, at least in certain circumstances, holding officers with such personal responsibility for statutory compliance jointly and severally liable along with the corporation.
Finally, Defendants argue that the district court erred in awarding liquidated damages based on a finding of willfulness. The FLSA authorizes the Secretary of Labor to recover on behalf of employees unpaid wages and overtime compensation plus an equal amount in liquidated damages. The only way an employer can escape liquidated damages is to "show[] to the satisfaction of the court" that it acted in good faith and had reasonable grounds for believing that its acts did not violate the FLSA.
Here, the district court found that Defendants failed to show good faith or objective reasonableness, referring back to its findings on willfulness with respect to the applicable statute of limitations. Defendants "intentionally and consistently failed to keep accurate records of the time worked by its employees[,]… disguised minimum wage, as well as overtime pay violations,… did not record the amounts of cash tips… [and] most salient…[to] a finding of willfulness…[paid] employees 'off the books.'"
Oasis's failure to keep adequate payroll records and its intentional manipulation of the records it did keep are sufficient grounds for concluding that Oasis did not act in good faith or with a reasonable belief that it was in compliance with the FLSA. "[T]he fact that an employer knowingly under-reported its employee's work hours could suggest to a [fact finder] that the employer was attempting to conceal its failure to pay overtime from regulators, or was acting to eliminate evidence that might later be used against it in a suit by one of its employees."
Defendants' primary argument on appeal is that the court had indicated at trial that the willfulness issue was "close" and that the Secretary had offered no evidence that Oasis acted in reckless disregard of its statutory obligations. These arguments are unpersuasive. First, the district court noted its "initial inclination against a determination of willfulness," but explained that it ultimately relied on the employees' testimony and Defendants' own documentary evidence to reach its conclusion regarding willfulness. We have already determined that the willfulness finding is not clearly erroneous. Furthermore, it is the employer's burden to show good faith and objective reasonableness, and therefore the Secretary's alleged failure to offer evidence of willfulness is not an impediment to the court's decision to refrain from awarding liquidated damages.
Affirmed.
CASE QUESTIONS
What shows willfulness of a violation?

Question 14

FACTS
Hotel Oasis, Inc., operates a hotel and restaurant in southwestern Puerto Rico. Dr. Lionel Lugo-Rodríguez (defendant-appellant)(Lugo)is the president of the corporation, runs the hotel, and manages its employees. Oasis's records show that between October 3, 1990, and June 30, 1993, employees were paid less than minimum wage, were not paid for training time or meetings held during nonworking hours, were paid in cash "off the books," and were not paid correctly for overtime. Oasis also maintained two sets of payroll records for the same employees, covering the same time periods, one showing fewer hours at a higher rate, and the other showing more hours at a subminimum wage rate. Lugo maintains that the two sets of books were necessary, one for temporary employees and one for permanent employees.
On April 5, 1994, the Secretary of Labor (the "Secretary")filed a complaint in the United States District Court for the District of Puerto Rico against Oasis and Lugo ("Defendants"), alleging violations of the minimum wage, overtime, and recordkeeping provisions of the Fair Labor Standards Act ("FLSA"). The Secretary also sought liquidated damages.
After years of litigation, the district court ordered Oasis to pay $141,270.64 in back wages and an equal amount in liquidated damages to 282 current and former employees. The court also found Lugo personally liable for the back wages and penalties. Lugo and Oasis appealed.
JUDICIAL OPINION
TORRUELLA, Circuit Judge
"[T]he overwhelming weight of authority is that a corporate officer with operational control of a corporation's covered enterprise is an employer along with the corporation, jointly and severally liable under the FLSA for unpaid wages." Although we found it "difficult to accept…that Congress intended that any corporate officer or other employee with ultimate operational control over payroll matters be personally liable," we narrowly determined that the FLSA did not preclude personal liability for "corporate officers with a significant ownership interest who had operational control of significant aspects of the corporation's day to day functions, including compensation of employees, and who personally made decisions to continue operations despite financial adversity during the period of nonpayment."…
…[Because] not every corporate employee who exercised supervisory control should be held personally liable, we identified several factors that were important to the personal liability analysis, including the individual's ownership interest, degree of control over the corporation's financial affairs and compensation practices, and role in "caus[ing] the corporation to compensate (or not to compensate)employees in accordance with the FLSA."
Based on the above considerations, we affirm the district court's judgment holding Lugo personally liable for Oasis's compensation decisions. Lugo was not just any employee with some supervisory control over other employees. He was the president of the corporation, and he had ultimate control over the business's day-to-day operations. In particular, it is undisputed that Lugo was the corporate officer principally in charge of directing employment practices, such as hiring and firing employees, requiring employees to attend meetings unpaid, and setting employees' wages and schedules. He was thus instrumental in "causing" the corporation to violate the FLSA. The FLSA contemplates, at least in certain circumstances, holding officers with such personal responsibility for statutory compliance jointly and severally liable along with the corporation.
Finally, Defendants argue that the district court erred in awarding liquidated damages based on a finding of willfulness. The FLSA authorizes the Secretary of Labor to recover on behalf of employees unpaid wages and overtime compensation plus an equal amount in liquidated damages. The only way an employer can escape liquidated damages is to "show[] to the satisfaction of the court" that it acted in good faith and had reasonable grounds for believing that its acts did not violate the FLSA.
Here, the district court found that Defendants failed to show good faith or objective reasonableness, referring back to its findings on willfulness with respect to the applicable statute of limitations. Defendants "intentionally and consistently failed to keep accurate records of the time worked by its employees[,]… disguised minimum wage, as well as overtime pay violations,… did not record the amounts of cash tips… [and] most salient…[to] a finding of willfulness…[paid] employees 'off the books.'"
Oasis's failure to keep adequate payroll records and its intentional manipulation of the records it did keep are sufficient grounds for concluding that Oasis did not act in good faith or with a reasonable belief that it was in compliance with the FLSA. "[T]he fact that an employer knowingly under-reported its employee's work hours could suggest to a [fact finder] that the employer was attempting to conceal its failure to pay overtime from regulators, or was acting to eliminate evidence that might later be used against it in a suit by one of its employees."
Defendants' primary argument on appeal is that the court had indicated at trial that the willfulness issue was "close" and that the Secretary had offered no evidence that Oasis acted in reckless disregard of its statutory obligations. These arguments are unpersuasive. First, the district court noted its "initial inclination against a determination of willfulness," but explained that it ultimately relied on the employees' testimony and Defendants' own documentary evidence to reach its conclusion regarding willfulness. We have already determined that the willfulness finding is not clearly erroneous. Furthermore, it is the employer's burden to show good faith and objective reasonableness, and therefore the Secretary's alleged failure to offer evidence of willfulness is not an impediment to the court's decision to refrain from awarding liquidated damages.
Affirmed.
CASE QUESTIONS
What are the standards for holding an officer liable for FLSA violations?

Question 15

FACTS
Hotel Oasis, Inc., operates a hotel and restaurant in southwestern Puerto Rico. Dr. Lionel Lugo-Rodríguez (defendant-appellant)(Lugo)is the president of the corporation, runs the hotel, and manages its employees. Oasis's records show that between October 3, 1990, and June 30, 1993, employees were paid less than minimum wage, were not paid for training time or meetings held during nonworking hours, were paid in cash "off the books," and were not paid correctly for overtime. Oasis also maintained two sets of payroll records for the same employees, covering the same time periods, one showing fewer hours at a higher rate, and the other showing more hours at a subminimum wage rate. Lugo maintains that the two sets of books were necessary, one for temporary employees and one for permanent employees.
On April 5, 1994, the Secretary of Labor (the "Secretary")filed a complaint in the United States District Court for the District of Puerto Rico against Oasis and Lugo ("Defendants"), alleging violations of the minimum wage, overtime, and recordkeeping provisions of the Fair Labor Standards Act ("FLSA"). The Secretary also sought liquidated damages.
After years of litigation, the district court ordered Oasis to pay $141,270.64 in back wages and an equal amount in liquidated damages to 282 current and former employees. The court also found Lugo personally liable for the back wages and penalties. Lugo and Oasis appealed.
JUDICIAL OPINION
TORRUELLA, Circuit Judge
"[T]he overwhelming weight of authority is that a corporate officer with operational control of a corporation's covered enterprise is an employer along with the corporation, jointly and severally liable under the FLSA for unpaid wages." Although we found it "difficult to accept…that Congress intended that any corporate officer or other employee with ultimate operational control over payroll matters be personally liable," we narrowly determined that the FLSA did not preclude personal liability for "corporate officers with a significant ownership interest who had operational control of significant aspects of the corporation's day to day functions, including compensation of employees, and who personally made decisions to continue operations despite financial adversity during the period of nonpayment."…
…[Because] not every corporate employee who exercised supervisory control should be held personally liable, we identified several factors that were important to the personal liability analysis, including the individual's ownership interest, degree of control over the corporation's financial affairs and compensation practices, and role in "caus[ing] the corporation to compensate (or not to compensate)employees in accordance with the FLSA."
Based on the above considerations, we affirm the district court's judgment holding Lugo personally liable for Oasis's compensation decisions. Lugo was not just any employee with some supervisory control over other employees. He was the president of the corporation, and he had ultimate control over the business's day-to-day operations. In particular, it is undisputed that Lugo was the corporate officer principally in charge of directing employment practices, such as hiring and firing employees, requiring employees to attend meetings unpaid, and setting employees' wages and schedules. He was thus instrumental in "causing" the corporation to violate the FLSA. The FLSA contemplates, at least in certain circumstances, holding officers with such personal responsibility for statutory compliance jointly and severally liable along with the corporation.
Finally, Defendants argue that the district court erred in awarding liquidated damages based on a finding of willfulness. The FLSA authorizes the Secretary of Labor to recover on behalf of employees unpaid wages and overtime compensation plus an equal amount in liquidated damages. The only way an employer can escape liquidated damages is to "show[] to the satisfaction of the court" that it acted in good faith and had reasonable grounds for believing that its acts did not violate the FLSA.
Here, the district court found that Defendants failed to show good faith or objective reasonableness, referring back to its findings on willfulness with respect to the applicable statute of limitations. Defendants "intentionally and consistently failed to keep accurate records of the time worked by its employees[,]… disguised minimum wage, as well as overtime pay violations,… did not record the amounts of cash tips… [and] most salient…[to] a finding of willfulness…[paid] employees 'off the books.'"
Oasis's failure to keep adequate payroll records and its intentional manipulation of the records it did keep are sufficient grounds for concluding that Oasis did not act in good faith or with a reasonable belief that it was in compliance with the FLSA. "[T]he fact that an employer knowingly under-reported its employee's work hours could suggest to a [fact finder] that the employer was attempting to conceal its failure to pay overtime from regulators, or was acting to eliminate evidence that might later be used against it in a suit by one of its employees."
Defendants' primary argument on appeal is that the court had indicated at trial that the willfulness issue was "close" and that the Secretary had offered no evidence that Oasis acted in reckless disregard of its statutory obligations. These arguments are unpersuasive. First, the district court noted its "initial inclination against a determination of willfulness," but explained that it ultimately relied on the employees' testimony and Defendants' own documentary evidence to reach its conclusion regarding willfulness. We have already determined that the willfulness finding is not clearly erroneous. Furthermore, it is the employer's burden to show good faith and objective reasonableness, and therefore the Secretary's alleged failure to offer evidence of willfulness is not an impediment to the court's decision to refrain from awarding liquidated damages.
Affirmed.
CASE QUESTIONS
Explain what liquidated damages are and when they are available for recovery.

Question 16

Why was Mrs. Wimberly denied unemployment compensation?

Question 17

Was the pregnancy given as a reason?

Question 18

What is the difference between the Utah statute mentioned in the Court's opinion and the Missouri statute?

Question 19

Whirlpool is a manufacturer of household appliances. In its plant in Marion, Ohio, Whirlpool uses a system of overhead conveyor belts to send a constant stream of parts to employees on the line throughout the plant. Beneath the conveyor belt is a netting or mesh screen to catch any parts or other objects that might fall from the conveyor belt.
Some items did fall to the mesh screen, located some 20 feet above the plant floor. Maintenance employees had the responsibility for removing the parts and other debris from the screen. They usually stood on the iron frames of the mesh screen, but occasionally they found it necessary to go onto the screen itself. While one maintenance employee was standing on the mesh, it broke, and he fell the 20 feet to his death on the floor below. After this fatal accident, maintenance employees were prohibited from standing on the mesh screen or the iron frames. A mobile platform and long hooks were used to remove objects.
Two maintenance employees, Virgil Deemer and Thomas Cornwell, complained about the screen and its safety problems. When the plant foreman refused to make corrections, Mr. Deemer and Mr. Cornwell asked for the name of an OSHA inspector, and Mr. Deemer contacted an OSHA official on July 7, 1974.
On July 8, 1974, Mr. Deemer and Mr. Cornwell reported for work and were told to do their maintenance work on the screen in the usual manner. Both refused on safety grounds, so the plant foreman sent them to the personnel office. They were then forced to punch out and were not paid for the six hours left on their shift.
Explain Mr. Deemer and Mr. Cornwall's rights under OSHA. [ Whirlpool Corporation v Marshall, 445 U.S. 1 (1980)]

Question 20

Is the Missouri statute valid?

Question 21

Supervisors at Walmart asked employees to work off the clock, erase hours from their time cards, and not take lunch and other breaks. Determine whether there would be any FLSA violations if the employees voluntarily agreed to do what the supervisors requested.

Question 22

What implications does the decision carry for maternity leaves?