A PAI Special Report: COURT RULINGS AND WORKERS: REPAYING
TRAINING COSTS DOESN’T PUSH YOU BELOW THE MINIMUM WAGE
By Mark Gruenberg
PAI Staff Writer
OAKLAND, Calif. (PAI)—What happens if a city trains a police officer on condition she stays five years on the job, but she resigns after two years and it docks her for training costs? Does that push her below the minimum wage – and is it legal?
The answers to those last questions, a federal appellate court said Nov. 19, are “no,” and “yes.” That could open the way for private employers to do the same thing.
The case of Oakland, Calif., police officer Courtney Gordon, who resigned in Jan. 2008, around two years after she passed training and joined the police force, and then had to repay her training costs when she left, shows the huge influence court rulings have on workers’ rights.
Most of those rulings, like the one against Gordon from the 9th U.S. Circuit Court of Appeals in San Francisco, come from the federal appellate courts, since the U.S. Supreme Court is taking fewer and fewer cases each year.
When Gordon quit, the city docked her a prorated share of what it spent to train her. It could do so under both a contract Gordon signed and under the city’s collective bargaining agreement with its police officers’ union. The net, after Oakland yanked her accrued vacation and overtime pay and added a “collection fee,” was $5,268.
That was far more than Gordon’s last pay check, which was not yanked. She paid the docked sum, as legally required, then sued the city for violating the Fair Labor Standards Act, the law that governs the minimum wage and overtime pay. In essence, Gordon said she wound up with a “negative minimum wage” because she had to use her last pay check – and more – to repay the training costs.
The 9th Circuit turned her down. The judges pointed out on Nov. 19, that Gordon got that last pay check, even if she had to use all of it to repay the training costs.
“Gordon contends there is no legal difference between deducting a sum from an employee's check and directly demanding the employee surrender a sum after being paid...Because the city issued Gordon a paycheck exceeding the minimum wage amount, the city's reimbursement demand did not violate the Fair Labor Standards Act's minimum wage provision,” the judges said.
The only way the city – or any other employer – would have broken the law is if
“the employee ‘kicks-back’ directly or indirectly to the employer or to another person for
the employer's benefit the whole or part of the wage delivered to the employee... whether the “kick-back” is made in cash or in other than cash,” the judges added.
Besides Gordon’s case, other judges around the country have issued key rulings in recent months that affect workers. Some of them include:
A company’s “alter ego” is illegal in avoiding pension obligations, as well as avoiding union contracts. That in essence, is what the 2nd U.S. Circuit Court of Appeals in Manhattan ruled in Dec. 21 in a case involving a bankrupt U.S. subsidiary of a Turkish apparel company and Unite Here’s pension plan.
The union’s pension trustees sued Kombassan Holdings of Turkey when its U.S. apparel subsidiary, Hit Or Miss, shut down, leaving $1 million, including interest, unpaid to the workers’ pension plan. Unite Here argued that Kombassan was Hit Or Miss’ “alter ego,” and thus liable for the money. Kombassan argued that because it transferred its Hit Or Miss stock – before the bankruptcy – to four other firms, it wasn’t. The judges ruled for Unite Here.
“Although perhaps a ‘germane’ or ‘sufficient basis for imposing alter ego status,’ an ‘anti-union animus or an intent to evade union obligations’ is not a necessary factor,” to decide if one firm is the alter ego of the other, the judges said. “Kombassan's argument that it cannot be an alter ego because there were no facts establishing that the assignment was done with an anti-union animus or an intent to evade the obligations of the collective bargaining agreement is without merit.”
The same issue came up when a non-union firm in central California, Simas Flooring, set up an “alter ego,” M&M, to handle union work. At first, M&M paid into the multi-employer plan jointly run by construction contractors and Painters District Council 16. But M&M withdrew in 2004 – after a strike over other issues -- leaving behind a $2.4 million liability to the pension fund. M&M paid required quarterly sums of just over $43,000 until 2008, when it went broke and shut down. The Painters sued Simas.
The 9th Circuit judges ruled on Dec. 22 that M&M was Simas’ “alter ego,” so that Simas was liable to pay the pension fund the rest of the money –- though the judges denied the Painters’ demand to speed the payments up.
“M&M was not an arm’s length subcontractor. Simas Floor controlled M&M’s work assignments. Simas Floor hired, fired, and disciplined M&M’s installers. Simas
Floor supervised M&M installers on site. Income received by Simas Floor was used to pay M&M’s pension contributions and later its withdrawal liability. And Simas Floor controlled the cash that flowed through M&M so that M&M would never have sufficient funds to meet its withdrawal liability,” the judges stated.
Racism on the job is unacceptable – and it’s based on total circumstances on the job. That’s what the 8th Circuit Court of Appeals in St. Louis decided in a case involving Teamsters Local 141 members Greg Watson and Alonzo Banks on Aug. 30.
The two African-American men worked for Ceva Logistics, a supply-chain management company that ships autos in and out of a western Missouri railyard. Watson and Banks told lower courts Ceva had a racially hostile work environment: Whites refused to work with them, used racial slurs, put up racial graffiti and walked off the job claiming working with Watson and Banks was unsafe, among other things. Some wore Confederate flags to work and one wore swastikas. Watson and Banks also said supervisors did nothing, often saying the problem was out of their hands.
Ceva responded it did what it could to stop the environment and a footnote in the case showed another facet: Watson and Banks joined Ceva while its mostly white Teamsters workforce was on strike. The strike was settled, and the regular workers returned, but the replacement workers, including Taylor and Banks, were kept, too.
Lower courts sided with Ceva. They agreed with the firm that racial hostility must be “severe and pervasive” to break federal laws. The appellate judges said that requirement is wrong. Looking at the totality of the slurs, remarks, graffiti and hostility, the appeals court sided with Watson and Banks.
“The inquiry requires a consideration of the totality of the circumstances, including the frequency of the discriminatory conduct, its severity, whether it is physically threatening or humiliating, or a mere offensive utterance, and whether it unreasonably interferes with an employee's work performance,” the appeals judges said. “Harassment need not be so extreme that it produces tangible effects on job performance or psychological well-being to be actionable…A work environment is shaped by the accumulation of abusive conduct, and the resulting harm cannot be measured by carving it into a series of discrete incidents."
The Ceva case was the most clear-cut win for workers who suffered job discrimination. Another case, where Sheri Sheriff sued her former employer, the Midwest Ob-Gyn Clinic in Nebraska, for racial and sexual discrimination and constructive discharge – forcing her to quit when the harassment got too bad to take – produced a mixed verdict.
Sheriff went to work as a physical therapist for the clinic’s new chiropractic branch in late 2003, but not for long. After repeated sexual harassment by one of the male doctors, and some ineffectual attempts by clinic managers to rein the doctor in, Sheriff became physically ill with migraines, needed therapy and was forced to quit. She then sued the clinic for its failure to really attack the problem. A jury threw out her constructive discharge charge. The 8th Circuit appellate judges said Sheriff proved her case on sexual harassment, but not on racial harassment.
You can’t sue your tugboat captain for sinking the boat in order to get out of paying him for his injuries. That’s what National Maintenance Repair, Inc. tried to do to its former tugboat captain, Vincent Deering, after the March 11, 2009, Mississippi River flood. Deering had warned his supervisor that his tugboat had defective steering, but was told to go ahead and conduct barges down the Mississippi anyway. The flood slammed his tugboat into the barges, another tugboat came to the rescue – too fast – and the resulting wave swamped and sank Deering’s tugboat.
Deering was injured, severely enough to permanently retire him from tugboats. He won damages under the Jones Act, the main U.S. maritime law. But then National sued Deering -- for sinking the tugboat.
The 7th Circuit Court of Appeals in Chicago, in so many words, called that ridiculous. “The one-two punch thrown by National by combining a property-damage counterclaim” because the tugboat sank “with a limitation of liability in order to wipe out a substantial personal injury claim (by Captain Deering) under the Jones Act is a liability-exempting device forbidden by the act,” they wrote.
You can complain about an unsafe work environment, but don’t overdo it. That’s what trucker Donald Formella did on Feb. 23, 2006 when Schnidt Cartage, a Chicago-area trucking firm, fired the veteran after he complained – too loudly and too vociferously – about the lousy condition of a Penske rental truck it ordered him to drive.
Formella raised the roof about the truck, especially its mismatched and unsafe rear tires, after his supervisor assigned him to it. The assignment occurred after an in-house meeting where supervisors inveighed against a potential union-organizing drive at Schnidt. The truck also lacked reflectors and its high beams weren’t working. Formella was so upset that other workers came running to see what was the matter.
“That’s it, Don,” one super said. Formella got canned and took his complaints to the Occupational Safety and Health Administration, then controlled by the Bush administration. Its review board, upholding the firing, said Formella’s complaints were valid but he should have been civil about them. The 7th Circuit agreed, on Dec. 10.
“An employee like Formella with a safety-related complaint should be given some leeway for impulsive behavior in pursuing that complaint, but this leeway did not include the right to engage in insubordinate and disruptive behavior,” the judges said. “Entitle-ment to submit a complaint about a vehicle’s safety would not mean the employee was similarly entitled to attach the complaint to a rock and throw it through his supervisor’s window. That is effectively what Formella did when he barged into the dispatch office.”
Press Associates, Inc. (PAI) – 1/7/2011
