However, the Northern District Court of California denied class certification citing skepticism that an overall trend could be established through analysis of individual records. This ruling demonstrates the difficulties faced by employees who want to use the collective power granted by Class Action suits to redress illegal corporate policies that are often “off the books” and unofficial company culture.

According to court documents, “Plaintiff’s position is that common questions predominate because the main issue is whether…Joe’s Crab Shack restaurants in California followed a common unwritten policy of denying meal and rest breaks, failing to pay employees who did not take breaks, failing to pay for overtime, requiring employees to purchase their own uniforms, and so forth.”  Lawyers for the employees argued that they could establish a pattern of abuse through analysis of the restaurant’s Aloha computer system.

The Court responded that establishing this and other wrongs would emerge from individualized inquiries, thus the “only way of showing the ‘practice’ that plaintiff claims existed in California restaurants would be to determine how when and how it was applied in each instance.”

Like many systematic infractions on labor rights, the practice of discouraging or outright prohibiting meal breaks was not written into official company policy.  As such, proving that such abuses were institutional can be difficult. As the court notes, Plaintiff “must show that the employer impeded, discouraged, or prohibited him from taking a proper break.”

Examination of employee time cards clearly show a pattern of “breakless” shifts. The Court’s view is that it might have been an employee’s choice not to take a meal break. It is an interesting position: after all, how many workers routinely reject the chance to take a break and consume a meal during a long, physically demanding shift?  On the other hand, food workers are primarily dependent on tips, and time not spent on the floor waiting tables is viewed as lost money.  How does one determine collective intentions across a class?

In any event, the Court’s reasoning for declining to certify the class invites questions about the nature of Class Action in general.  If one cannot establish a pattern of institutional abuse through analyzing a trend that emerges through individual experience…then how does one construct a pattern at all?  All Classes are composed of individuals who suffered common wrongs.  Further, it is often only the collective power of a Class that can confront the combined legal might of a large corporation.

The California Court’s refusal to certify may signal a shift in the willingness of Courts to side with Workers against their Employers in the case of Class Actions.

Employees In Washington and Seattle who believe they are subject to unfair labor practices should contact an expert Labor & Industries Lawyer.  Denying basic access to meal and rest breaks and withholding pay are serious violations of Labor Laws and Workers should not be intimidated when securing their basic rights as workers. An experienced Washington L & I Attorney is waiting to speak to you.

As Dr. David Michaels (Assistant Secretary of Labor for OSHA) explains, “When workers believe their employers are violating certain laws or government regulations, they have the right to file a complaint and should not fear retaliation. Silenced workers are not safe workers.”  Therefore, as Michaels concludes, “Changes in the whistleblower provisions make good on the promise to stand by those workers who have the courage to come forward when they believe their employer is violating the law and cutting corners on a variety of safety, health and security concerns in the affected industries.”

OSHA’s new regulations cover workers with complaints across a range of industries, including railroad, public transit, commercial motor carrier and consumer product industries; in addition, they also establish more consistency among the agency’s complaint procedures. OSHA’s interim final rules create both procedures and timelines for processing complaints under the whistleblower sections of the Consumer Product Safety Improvement Act of 2008.

OSHA implements the whistleblower requirements of the OSH Act and 18 other statutes that protect workers who report breaches of airline, railroad, environmental, public transportation, securities, commercial motor carrier, pipeline, nuclear power, and health care reform laws. Details on these new statutes will be available to the public at http://www.whistleblowers.gov.

The Occupational Safety and Health Act of 1970 declared that state and private employers are responsible for ensuring safe workplaces for their employees. On behalf of American workers, OSHA assumed the role of overseeing these conditions and ensuring compliance by establishing and enforcing standards throughout the American workplace. In addition, it makes education, training, and assistance available to both employers and workers to support that objective.

If you are in need of a workers’ compensation attorney in Seattle or Washington, please contact an attorney at Emery Reddy today.

A federal district court recently ruled in favor of an employee suing several human resources executives after he was allegedly fired for requesting time off under the Family and Medical Leave Act (FMLA).  The ruling may set a precedent in which individuals can be held personally liable for damages allowed through FMLA, including financial loss from a denial of benefits, compensation for back pay, lost wages and attorney fees.

The suit was brought against Cardone Industries and five of its senior HR executives by Dmitry Narodetsky, a tool designer who worked for the company for nearly twelve years before his termination.  His case includes a three-count complaint for violation of the Family Medical Leave Act, the Consolidated Omnibus Budget Reconciliation Act (COBRA), and the Employee Retirement Income Security Act (ERISA).

Several weeks prior to his termination, Narodetsky was diagnosed with a leg injury requiring surgery.  His wife promptly notified Narodetsky’s managers that her husband would need time off for the upcoming operation, and requested that they provide short-term disability for his medical leave.  Following the conversation, three of the company’s HR executives and another manager conducted a forensic examination of Narodetsky’s work computer, uncovering evidence of a pornographic email he allegedly forwarded to a coworker over a year earlier.  Before scheduling the surgery, Narodetsky was called into a meeting attended by the defendants, shown the email he had allegedly forwarded, and fired.

Narodetsky alleges that his employers conducted the computer search solely to find a pretext for terminating his employment so they could avoid granting him leave. He filed a suit alleging that not only the company, but also the five individual defendants interfered with his rights under FMLA and the Employee Retirement Income Security Act.

Attorneys for the defense argued that none of the individual claims were warranted because Narodetsky’s suit did “little more than simply list each such defendant’s title,” and because it failed to include “any facts showing how each defendant was involved in plaintiff’s alleged request for medical leave or the decision to terminate.”

Yet U.S. District Judge Thomas N. O’Neill of the Eastern District of Pennsylvania refused to dismiss Narodetsky’s claim, noting that it went well beyond the narrow characterization of the defense by alleging that each of the individual defendants “participated in the forensic search of [the plaintiff’s] computer with the goal of finding a reason to justify his termination because he had requested FMLA leave.”  O’Neill also maintained that the executives and manager were properly named as defendants since each possessed the authority to fire and played a role in the decision to terminate Narodetsky. “The allegations support an inference that each of the defendants exercised control over the plaintiff in the decision to terminate him,” O’Neill wrote.  The judge also stated that “Given the timing of his termination–falling right on the heels of his request for medical leave–I find that it is reasonable to infer that the defendants terminated his employment for the purpose of interfering with his plan benefits.”

Both the individual defendants and Cardone Industries, Inc. have declined to comment publicly on the ruling.  The case is now proceeding to adjudication in a new trial. See O’Neill’s full opinion in Narodetsky v. Cardone Industries Inc. (pdf)

Citation: Narodetsky v. Cardone Industries et al., Case #09-4734; February 24, 2010, U.S. District Court, Eastern District of Pennsylvania.

Companies that cut costs by misclassifying regular employees as “independent contractors” will face tighter regulations and stricter penalties in 2010. The Obama administration has already begun to crack down on companies that misrepresent worker status, recently hiring one hundred additional enforcement agents to effect compliance with the law. Meanwhile, auditors at the IRS have launched an intensified campaign to determine if over 6,000 major companies are using misclassification as a way to cheat on taxes.

Business experts have shown that a growing number of companies wrongfully classify regular workers as “independent contractors” to avoid paying unemployment insurance premiums and Social Security and Medicare taxes on the wages of their employees. Since taxes are not generally paid on the compensation of independent contractors, employers reduce business costs by improperly applying this designation to individuals who should be regarded as regular employees (some of these “contractors” even have company office space and work the same hours as employees).

In a recent New York Times article, Steven Greenhouse indicated that companies wrongfully classify about 3.4 million workers as contractors; the Department of Labor largely corroborates these figures, and estimates that up to 30% of U.S. companies participate in worker misclassification at some level.

The practice has enormous economic repercussions. In Ohio, for example, close to 100,000 misclassified workers have cost the state an estimated $35 million a year in unemployment insurance taxes, and over $100 million in worker’s compensation premiums. With federal and state governments currently struggling under record deficits, businesses can expect a significant increase in penalties for misclassification in the near future. Steven Greenhouse reports that the attorney general of California is currently seeking $4.3 million from a single construction company accused of misclassifying its workers. When implemented on a comprehensive, nation-wide scale, these measures could yield significant results. According to the Obama administration’s 2010 budget estimates, tightened enforcement could translate into $7 billion in revenue over 10 years.

Yet wrongful classification of workers is not merely a matter of concern for government officials; the practice has implications on a more personal level as well, denying basic employment rights to workers. Employers often misrepresent regular W-2 employees as contractors to circumvent minimum wage, overtime and antidiscrimination laws. If workers are designated as contractors and then laid off, they are ineligible for unemployment insurance. Those who are injured on the job cannot receive workers’ compensation benefits.

Prominent members of the business community have responded to the impending crackdown with alarm. When the IRS or state tax authorities identify instances of wrongfully misclassifying workers, companies often face fines and penalties, and can be liable for back-taxes on the reclassified employee. Most employers maintain that worker misclassification is unintentional, resulting from confusion and ambiguity in the legal distinctions between independent contractors and regular employees.

While current developments demonstrate a growing political will to enforce compliance with the law, cases of misclassifying workers have repeatedly emerged in the national spotlight in recent years. Last year the attorneys general of several states threatened to sue FedEx Ground for wrongfully classifying its drivers.  According to allegations by the Teamsters, FedEx has used misclassification to prevent drivers from unionizing (since independent contractors, unlike traditional employees, cannot form unions).

Yet perhaps the most prominent case of misclassification surfaced in 2007, when the private security firm Blackwater USA came under investigation for evading payment of millions of dollars in taxes by classifying workers in Iraq as “independent contractors.” Henry Waxman, chairman of the House Committee on Oversight and Government Reform, accused Blackwater of engaging in an “illegal tax scheme” that allowed it to avoid an estimated $31 million in employment-related taxes in the last year of its contract alone. The company also attempted to prevent one of its guards from contacting members of Congress after the worker discovered this illegal practice. In a letter to Blackwater’s CEO, Waxman wrote that “it is deplorable that a company that depends on federal tax dollars for over 90 percent of its business would even contemplate forbidding an employee to report corporate wrongdoing to Congress and federal law enforcement officials.” Despite the fact that it routinely misclassifies workers as contractors, Blackwater has been awarded more than $1 billion in government contracts since 2001.

According to guidelines established by the IRS, an employee is defined as anyone who works for an employer when that employer controls what will be done on the job and how those services will be performed. Independent contractors, on the other hand, are defined in a such as way that the payer or employer can only control the result of the work performed, but not the means of accomplishing that result. This distinction is codified in revenue ruling 87-41 (generally referred to as “the twenty factor test”). For a more extensive discussion on properly classifying employees and contractors, see the official guidelines as detailed on the IRS website.

Washington Labor and Industries is in the process of overhauling its website, www.lni.wa.gov. The revisions to the Washington L&I website are the result of user feedback collected over a significant period of time, as well as the efforts of L&I website designers. The new look improves the homepage, streamlines navigation and uses space more efficiently.

The new Washington L&I homepage, the content of which provides details on injured workers’ employment and workers’ compensation rights, provides better visuals and a more welcoming portal to the rest of the L&I site. Online services like the Claim and Account Center simplify the search for injured workers’ rights and remedies, workers’ compensation information, and specific claim information.

Streamlined navigation was a major focus of the L&I site revisions, and the result is a menu that includes headings for Safety, Claims and Insurance, Workplace Rights, and Trades and Licensing. These headings are continuously available. The new L&I site also restricts views to exactly what workers need, eliminating the confusing overload of unnecessary information. An injured worker pursuing a claim will find it easier to review his or her workers’ compensation and Washington L&I rights, understand workers’ comp injury data and statistics, verify workers’ comp coverage, and complete insurance forms. These changes promise to ease the burden on workers who depend on this web tool for information about injury claims.

The new L&I website also makes the most of its available space by consistently packaging information into succinct titles and removing duplication of information, such as contact information and Spanish translation for non-ESL workers.

Of the many revisions to the L&I site, one of the most effective is a new tool that permits a site user (commonly a worker with an L&I covered injury) to maintain a set of links packaged specifically for that worker. For example, a worker who suffered a back injury on the job could build links and bookmarks about necessary claim information, PPD awards related specifically to his or her injury, relevant contact information, and crucial information the worker would need if he or she found it necessary to appeal a claim with the Washington Board of Industrial Insurance Appeals. These links would remain consistently available regardless of the user’s navigation to other locations on the site. A review of the new site is available at http://www.lni.wa.gov/refresh.

Previously, an injured worker in need of advice might navigate the L&I website without access to important links that remained buried in inconspicuous locations. New content and links refer an injured worker directly to information about pursuing claims or appeals for his or her injury.

For more information, please visit Emery Reddy, PLLC online, or contact us via telephone at (206) 442-9106.

Emery Reddy represents plaintiffs in L&I, employment law and personal injury matters.  The firm and its attorneys are trusted advocates for Washington workers who experience job related injuries.