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SHRM Newsletter: Five Employment Lawsuits Costs Employers Almost $20 Million
Posted on Aug. 21, 2014

This is Utah SHRM Legal-mail no. 2014-15 prepared for Salt Lake SHRM, the Human Resources Association of Central Utah (HRACU), the Northern Utah Human Resources Association (NUHRA), the Color Country Human Resources Association (CCHRA), the Bridgerland Society for Human Resource Management and Utah at-large members of the national Society for Human Resource Management (SHRM).








FIVE EMPLOYMENT LAWSUITS COST EMPLOYERS ALMOST $20 MILLION: You have heard me say it before, but contrary to popular belief, HR is a profit center for a business, not a cost center. You contribute to the bottom line by saving your company millions of dollars that might otherwise be paid out to resolve employment law claims. Want proof? Within the past week I read about five different employers who recently had to pay out almost $20 million to settle employment claims. A social media networking site paid almost $6 million to settle claims by some 400 current and former employees that they were not paid overtime as required by the Fair Labor Standards Act (FLSA). The problem apparently resulted from the company’s failure to properly track and record the hours worked by sales employees. Similarly, a financial company had to pay $3 million to settle claims that it improperly denied overtime pay to its assistant branch managers. A stock brokerage will pay over $4.2 million to settle overtime pay claims from employees who worked as client service representatives. The allegation in that case was that the employer told nonexempt employees to work off the clock. An information services company has paid over $2.3 million to settle claims that it illegally shared information about people with others in violation of the Fair Credit Reporting Act. Finally, a national package delivery company has agreed to pay $2.1 million to resolve claims that it failed to provide employees with proper meal and rest breaks. Be a wise employer and learn from the mistakes that led to these claims.

NLRB INVALIDATES EMPLOYER CONFIDENTIALITY RULE: The National Labor Relations Board (NLRB) recently ruled that a non-union grocer’s written employee confidentiality policy violated Section 7 of the National Labor Relations Act (NLRA). The NLRB concluded that the policy unduly restricted employees from acting in concert with each other by discussing terms and conditions of employment. The policy at issue told workers to keep “employee information secure” and warned such information must be used “fairly, lawfully and only for the purpose for which it was obtained.” The NLRB majority concluded, “we find that the challenged rule is unlawful…employees would reasonably construe the admonition to keep employee information secure to prohibit discussion and disclosure of information about other employees, such as wages and terms and conditions of employment.” Check out your own confidentiality policies and make sure you avoid similar broad language.  You should also consider adding a phrase to your policy that says it is “not intended or to be construed to limit employee rights to discuss terms and conditions of employment as protected by the National Labor Relations Act.”

EEOC GOES AFTER SEVERANCE AGREEMENTS: Absent even a complaint or charge from an employee, the Equal Employment Opportunity Commission (EEOC) has sued a large pharmacy company alleging that its severance release agreements are improper. The lawsuit attacks common provisions such as nondisparagement clauses and covenants not to sue, provisions it has previously approved in a similar context. One of the EEOC’s concerns appears to be its belief that such clauses will make an employee believe he/she cannot file an EEOC charge, something that can be done even if a release agreement has been signed. Yet, the challenged agreement itself contained a clause making sure the employee knew he/she retained such filing rights. The litigation of the case will play out over the next several months, maybe years. Here is a link to a good article summarizing the lawsuit and recommending some interim steps for employers:

EMPLOYEE MUST HELP EMPLOYER FIND REASONABLE ACCOMMODATIONS: A Federal Appeals Court has dismissed an employee’s claim under the Americans With Disabilities Act (ADA) because that employee failed to help the employer identify possible reasonable accommodations for the employee’s disability. As the court noted, reasonable accommodations are “modifications or adjustments to the work environment, or to the manner or circumstances under which the position held or desired is customarily performed, that enable a qualified person with a disability to perform the essential functions of that position.” The case involved an employee with Downs Syndrome who worked as a bagger at a grocery store but was having troubling controlling verbal outbursts against co-workers. Because the employee did not suggest any reasonable accommodation that would have allowed the employee to work without outbursts, the court dismissed the ADA claim. This case is a timely reminder of why it is important for an employer to engage in the interactive process, try to get a disabled employee to suggest ways the employer can help and document the whole process.

SHRM CONFERENCE HEADLINES INDICATES HR LAW TRENDS: SHRM has a national conference each summer and includes as part of that conference an interesting HR law track. The online conference daily news features news stories from those presentations. When I am not able to attend the conference, I try to at least follow the conference news.  The HR law headlines in the conference news this summer reveal some of the interesting trends and challenges facing HR professionals.  Here are a few examples: (1) “Be Fair, Be Consistent, Avoid Lawsuits” (2) “Take Practical Steps to Avoid Lawsuits in California” (3) “New Overtime Rules ‘Big Deal’ for HR (4) “FMLA Complaints, Back Pay Awards Decreasing” and (5) “Post-Traumatic HR Disorder Sweeps Through the Profession.” By the way, that last headline was a fake…it just seems real.

CROSSROADS CONFERENCE IN ONE MONTH! Get more helpful information on HR Law and other issues at the annual Utah Crossroads Conference set for September 16–17, 2014 at the Utah Valley Convention Center.  Find out more here:  

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mikeAttorney Michael
Patrick O'Brien

Mike O’Brien is an experienced and accomplished employment attorney, media lawyer and courtroom litigator.  He is active in SHRM and has received the highest possible reviews from rating services like Martindale - Hubbell (AV rating), Chambers USA, Utah Business Legal Elite, Best Lawyers in America, Who’s Who Legal USA, and SuperLawyers.  HR Executive Online has named him as one of America’s most powerful 100 employment lawyers, but keep in mind, this does not mean he is good at moving heavy furniture.

Awards and Recognition


OBrien Best

Chambers 2011 Attorney

Super Lawyers
Michael Patrick O'Brien

Best Lawyers In America, “Salt Lake City Best Lawyers Employment Law Lawyer Of The Year,” 2011-2012

Best Lawyers In America, First Amendment Law, Labor And Employment Law, 2005-2012

Chambers USA, Labor & Employment, 2003-2011

Employment Lawyer Of The Year, Utah State Bar, 2001

Human Resources Executive, Nation’s Most Powerful Employment Lawyers In America, 2010

Mountain States Super Lawyers, 2007-2012

Utah Business Magazine, Legal Elite, Labor And Employment, 2006-2012