Legal Updates

Settling an FLSA Collective Action? Not So Fast!

By:  Amy Traub and Christine Fletcher

Once a settlement has been reached in an FLSA collective action, the defendant-employer typically wants that settlement to go into effect and end the case as soon as possible, so that the company can get past the myriad of distractions brought by the suit. However, as litigants increasingly are finding, the parties’ agreement to settle an FLSA collective action is nowhere near the end of the road, or the end of the case. There is a “judicial prohibition” against the unsupervised waiver or settlement of claims brought under the FLSA. Settlements must be “supervised” by the Department of Labor or a court, and gone are the days where the court would rubberstamp the parties’ FLSA collective action settlement agreement. Instead, courts nowadays are scrutinizing the settlement to ensure the “fairness” of the agreement.

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FLSA Claims Are Becoming More Difficult to Settle Prior to Class Certification

Arnstein & Lehr attorney E. Jason Tremblay

E. Jason Tremblay

On August 4, 2011, we reported on the case of Dionne v. Floormasters Enters, a case from the Eleventh Circuit Court of Appeals that effectively allowed an employer to avoid paying attorneys’ fees in an FLSA lawsuit and also allowed the dismissal of an FLSA lawsuit prior to class certification where an offer of judgment made by the employer made the plaintiff-employee “whole.” However, since then, several other circuits, namely the Third and Ninth Circuit Courts of Appeal, have published contrary decisions holding that an offer of judgment made by an employer to a plaintiff-employee in an FLSA case will not moot the case where the court has not yet ruled on class certification.

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Unemployed – A New Protected Characteristic?

By: Michael A. Kalish

The following does not depict an actual interview.  Rather, it is a fictitious illustration (at least for now).

Interviewer:    So tell me why you’re interviewing for the position we’ve advertised.

Interviewee: That’s an easy one.  Because I’m unemployed and I need a job.

Interviewer: What happened with your last job?

Interviewee: I wasn’t very good, and they needed to reduce headcount, and I was an easy place to start.

Interviewer: There appears to be gaps on your resume between all six of the jobs you’ve had.  Six months here, two years there.  What happened with your leaving those jobs?

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Gifts of art to the nation

Tomorrow is the last day for responding to the Government’s consultation paper on the new scheme for tax incentives for giving art to the nation.  http://tinyurl.com/6b56c63
The idea was first raised in the March 2011 budget.  The rationale, according to Jeremy Hunt, Secretary of State for Culture, Media and Sport, is that (and I paraphrase the Treasury press release) “With art being so expensive to buy for the nation, we would rather encourage philanthropists to give us art, in return for some tax incentive”.
Fair enough, but it can’t be any old item of art.  It must be a “pre-eminent object or work of art”.  That is likely to include items with an especially close association to our history or national life, that are of artistic or art historical interest and perhaps have an especially close association with a particular historical setting.
It is not yet known what the tax reliefs will be, but they will be capped at only £20m per year, which is for the whole scheme.  That cap is to be shared with the existing “acceptance in lieu” (AIL) scheme, which allows assets to be transferred to the Government in place of tax. AIL already accounts for about £12m per year, which does not leave much for the new scheme.  It seems that the relief will have to be rather mean or the works not particularly pre-eminent, or there can’t be many of them, which makes one wonder if the scheme is going to be worth the effort.
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New York City Raises the Bar for Employers to Show ‘Undue Hardship’ in Addressing Employees’ Religious Accommodation Requests

by Susan Gross Sholinsky , Dean L. Silverberg, Steven M. Swirsky, and Jennifer A. Goldman

New York City employers take note: under the New York City Human Rights Law (“NYCHRL”), it is now considerably more difficult for employers to establish “undue hardship” in the context of denying an employee’s request for a reasonable accommodation due to his or her religious observance or practice. While previously silent on the issue, the NYCHRL now includes a definition of the term “undue hardship,” as follows: “an accommodation requiring significant expense or difficulty (including a significant interference with the safe or efficient operation of the workplace or a violation of a bona fide seniority system).” This language mirrors the definition currently included in the New York State Human Rights Law (“NYSHRL”), and along with other changes described below, was included in Local Law 54, 2011 (entitled the Workplace Religious Freedom Act) (the “Act”). The Act was unanimously passed by the New York City Council and became effective when signed by Mayor Michael Bloomberg on August 30, 2011.

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New York City Raises the Bar for Employers to Show ‘Undue Hardship’ in Addressing Employees’ Religious Accommodation

by Susan Gross Sholinsky, Dean L. Silverberg, Steven M. Swirsky, and Jennifer A. Goldman

New York City employers take note: under the New York City Human Rights Law (“NYCHRL”), it is now considerably more difficult for employers to establish “undue hardship” in the context of denying an employee’s request for a reasonable accommodation due to his or her religious observance or practice. While previously silent on the issue, the NYCHRL now includes a definition of the term “undue hardship,” as follows: “an accommodation requiring significant expense or difficulty (including a significant interference with the safe or efficient operation of the workplace or a violation of a bona fide seniority system).” This language mirrors the definition currently included in the New York State Human Rights Law (“NYSHRL”), and along with other changes described below, was included in Local Law 54, 2011 (entitled the Workplace Religious Freedom Act) (the “Act”). The Act was unanimously passed by the New York City Council and became effective when signed by Mayor Michael Bloomberg on August 30, 2011.

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CMS Innovation Center Announces Four Models in Bundled Payments for Care Improvement Initiative

by Lesley R. Yeung, Shawn M. Gilman, and Serra J. Schlanger

On August 23, 2011, the Centers for Medicare & Medicaid Services (“CMS”) Innovation Center announced a new initiative to encourage health care providers to better coordinate patient care. The Bundled Payments for Care Improvement Initiative (“Bundled Payments Initiative”) seeks to align the financial incentives among hospitals, physicians, and non-physician practitioners through the use of a single negotiated payment for all services provided during an episode of care. The use of a bundled payment is expected to encourage hospitals, doctors, and other specialists to coordinate in treating a patient’s specific condition during a single hospital stay and recovery.

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Multistate Tax Alert: Beware non-Ohio residents: If you sell debt or equity of an Ohio business, be prepared to pay tax on the gain!

Surprisingly, Ohio has a Rule that has the potential to be very costly to non-Ohio residents. Specifically, the Rule applies to the sale of debt or equity in certain Ohio businesses. The non-Ohio resident who sells either a closely-held pass-through entity or closely-held C corporation is expected to pay a hefty tax to Ohio on the capital gain in Ohio. The Rule, which is partially contained in Ohio Revised Code Section 5747.212, is the subject of much debate among Ohio tax practitioners. There are many details to the Rule, which is described in this Alert, but suffice it to say, the Rule should be thoughtfully considered by any non-resident who is considering the sale of an Ohio entity that is a “section 5747.212” entity.

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Labor & Employment Alert: NLRB continues on its mission to revamp labor law: Modifies standard for determining…

In our January 10, 2011 alert, “Inch by Inch, Row by Row,” we advised that the National Labor Relations Board (the Board) was re-evaluating how it determines an appropriate bargaining unit in non-acute health care facilities. In (Specialty Healthcare and Rehabilitation Center of Mobile), 357 NLRB No. 83 (Member Hayes dissenting…again), the Board found that Certified Nursing Assistants (CNA) may comprise an appropriate bargaining unit without including other nonprofessional employees. In doing so, the Board announced that it overruled Park Manor Care Center, Inc., 305 NLRB 872, 875 (1991) as “obsolete.”

As discussed previously, the Board historically has taken a more flexible approach as to what constitutes an appropriate bargaining unit for unionization of non-acute health care facilities, opting to evaluate appropriate bargaining units on a case-by-case basis. See 29 CFR § 103.30(g). Under this case-by-case approach, the Board has typically applied a “pragmatic” or “empirical”, “community-of-interests” standard, grouping employees by, among other things, similarity of wages and hours, extent of common supervision, frequency of contact with other employees, areas of practice, and patterns of bargaining in a non-acute care setting. 

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Energy Alert: Attention Ohio business owners: Are you making the best electricity choice?

A smart electricity choice for your business can save your company a considerable amount of money. Because Ohio now has a deregulated electricity environment, almost invariably you can get a much cheaper price by shopping your electricity load rather than accepting the electricity pricing provided by your current utility. Even the smallest company can benefit from shopping.

Ohio provides additional opportunities for the sophisticated buyer. A company can reduce its electricity costs by taking its load to auction and/or by negotiating directly with electricity providers in order to secure a better rate. AEP recently filed a settlement with interested parties for its new Electric Security Plan beginning January 2012. While the plan is now pending Public Utilities Commission (PUCO) approval, a key item in this plan is a cap on the percentage of customers switching from AEP to a retail supplier. McDonald Hopkins can help you navigate energy choices during this transition period. Additional options for energy savings are available for mercantile customers, defined as commercial or industrial customers that use at least 700,000 kilowatt hours per year. Among these options are:

  • Obtaining a waiver for the costly efficiency rider
  • Exploring alternative tariff rate options
  • Pursuing a unique arrangement
  • Taking advantage of the proposed economic development incentive
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