New York and Connecticut Business Litigation Lawyer & Attorney : Rogers & Tartaro Law Firm : Commercial Litigation : Westchester County NY, Fairfield County CT

Last week Law.com reported, in an article by Alison Frankel of the American Lawyer (“Wal-Mart Loses $6.5 million Wage-and-Hour Class Action”) that Wal-Mart had lost a non-jury trial on complaints of violation of the Wage-Hour laws that resulted in an award of damages of $6.5 million. Law.com also reported that Wal-Mart was 0 for 3, in that, in the preceding several years it has lost two other trials, these with juries, resulting in damages of $172 million and $78 million. Appeals are pending in the latter two cases and planned in the current case, also according to Law.com. The alleged violations involved, apparently, failure to give employees rest breaks.

Normally, we do not comment on “big business.” What caught our attention was not so much the controversy and apparent hostility between Wal-Mart and the class-action bar. Both have the resources, apparently, to be formidable adversaries to each other. Nor was it Wal-Mart’s apparent willingness to accept the public relations consequences of losing these types of cases.

Rather, what caught our attention were several points about the composition of the damages that may be of interest to the attorneys and managers of businesses with much more modest resources:

• Damages accrued on each occurrence, each time there was no break; thus, the number of employees and the number of days multiplied to millions of alleged violations;
• On the table were compensatory damages, attorneys fees and punitive damages;
• After losing the federal case last week, these same allegations of Wage-Hour violations (whether or not employees were appropriately given breaks) will be the subject of state law litigation with potential for even more damages.

The Law.com article notes that not all the damages that were sought were actually awarded. That highlights the fact that the potential liabilities were even greater.

In short, the case serves as a reminder that violations of the Wage-Hour laws can be extremely serious because damages can escalate very rapidly. Business owners and managers should be aware of the potential for damages and pay careful attention to compliance.

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Conduct that amounts to quid pro quo sexual harassment and its potentially devastating liabilities are readily understood by most of our clients as conduct that is generally not inadvertent. They understand it as a forbidden bargain: employment for a sexual relationship.   

Conduct that creates a “hostile work environment,” however, might require a more active managerial approach to steer clear of liabilities that can be just as devastating.   

With that in mind, I recommend a post by Daniel A. Schwartz in the Connecticut Employment Law Blog discussing a recent Connecticut Appellate Court case in which the Court distinguishes and explains the difference between quid pro quo and “hostile work environment” sexual harassment (“Appellate Court Outlines Differences Again Between Quid Pro Quo and Hostile Work Environment Harassment”). 

The case, Griffin v. Yankee Silversmith, Ltd, is well summarized, discussed and available in full on the CT Employment Law post. I will not attempt to duplicate all that on this post.

I will note parenthetically, however, that the case involved a lawsuit against a business with one owner-shareholder, demonstrating that the issues under discussion are relevant to the broader business community and not only to “big business.”

The case under discussion technically turned on a pleading issue that might be instructive only to lawyers: whether or not quid pro quo harassment was complained of in the actual Complaint. However, the Court’s opinion and the CT Employment Law post will be helpful to both attorneys and managers who could use a better understanding of the distinction between the two types of sexual harassment, and that would be most of us.

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A law firm is being audited because it allegedly instructed its clients to contact the firm before hiring U.S. workers, according to a post by Dan Slater (“Do Lawyers Help Companies Find Reasons Not to Hire U.S. Workerson the Wall Street Journal Law Blog, citing a story in the Wall Street Journal by Nathan Koppel.”)

The audit was initiated, apparently, because the U.S. Department of Labor does not consider it proper for an employer to consult counsel before turning down a U.S. worker. when sponsoring a foreign national for permanent residence (“green card”). The issue is described more thoroughly in the LB post.

A quotation in the LB post from an immigration attorney caught our attention:

The audit, according to immigration lawyers, could deter companies from asking attorneys to help them decipher Labor Department rules. “Attorneys need to be involved in [the green-card] process,” said New York immigration lawyer Philip Kleiner. “It’s more complicated than tax work.”

Tax attorneys may argue Mr. Kleiner’s last point. But I think that a consensus is reachable: aspects of both Immigration Law and Tax Law can be complicated and the assistance of counsel is important to achieve compliance. 

Thus, the story raises a concern because the audit seems to discourage employers from seeking counsel when they most need it. Actually, the issue is more subtle than that because there are specific regulations governing the role of counsel in the process being audited and the audit is about whether there was compliance with these specific regulations.

For our business clients, the “lesson” from this story is simpler. Both Tax Law and Immigration Law have another aspect in common. In both, the complexities often (and we will concede, not always) arise when you seek the advantages or benefits of the laws. After all, many people file short-form 1040’s and the Tax Law is not that complicated for short-form filers. But, if you seek to benefit from a tax shelter, you should proceed cautiously and with the advice of counsel. 

Similarly, there are benefits to be gained for both employers and foreign nationals from the provisions of the Immigration Laws. But, the process can be complicated and, despite the audit described in the LB post, it is best to proceed with the advice of counsel.

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The New Jersey Employment Law Blog offers an amusing take on a case in which a female receptionist’s claim of sexual harassment failed when she took offense at being asked to get coffee for her supervisors (“Coffee Demand Fails to Brew Up Sexual Harassment Complaint for Female Receptionist”), 

Since the plaintiff is planning to appeal, we can assume the decision (and not the coffee) left a bitter after-taste.

What especially interests me about the case is the Court’s “Conclusion” at the end of its 14-page decision:

In sum, while the behavior of the Plaintiff’s supervisors and co-workers may have been rude, gauche or undesirable, their actions do not violate federal or state anti-discrimination laws.

 “Rude, gauche and undesirable” behavior is not good business, even when there is no liability.  Defending the case, regardless of the ultimate outcome, must have been costly. There is a lesson here which will be reinforced if the appeal turns out to be expensive.

In any case, I liked the NJEB’s blend (of serious commentary and humor, not coffee).

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At-Will employment is still the rule in New York, as its highest court, the Court of Appeals, reminded us ina decision handed down earlier this year. The decision, in Smalley v. Dreyfus Corp., 10 N.Y.3d 555, 853 N.Y.S.2d 270 (2008), is discussed in the New York State Bar Association’s New York Law Digest, No. 580 (April 2008), edited by David E. Siegel. 

At-Will employment means an employee may be fired for any reason or no reason, at any time. The At-Will concept may be trumped by violation of a statute, such as an anti discrimination statute. It may be trumped by a contract but not if the contract itself explicitly establishes the At-Will nature of the employment relationship. That was the situation in Smalley.    

Because the online version of the Digest is available only in a private area of the Bar’s website, we quote extensively from it here:

An attempt by the plaintiffs (after later being fired) to cast their claim in tort fails. The contract’s at-will employment is plain and rules the day, holds the Court in an opinion by Chief Judge Kaye, dismissing the plaintiffs’ complaint “in its entirety”. 

The tort the plaintiffs sought to allege was “fraudulent inducement to enter into and remain in the employment of” D.  More specifically the claim was that they were misled to believe that D would not merge with a certain other company, T. They said they took their jobs relying on that assurance, but a few years later such a merger did take place, and about half a year after that all the plaintiffs were fired. 

The Court distinguished a federal case applying New York law that was decided differently by the Second Circuit, Stewart v. Jackson & Nash, 976 F.2d 86 (1992). But, in Stewart the promise or representation alleged to be fraudulent concerned something that had occurred, not something that would or would not occur. Plaintiff, an environmental lawyer, took a job when told the employer had an environmental client. Again, the Digest:

She took the job only to learn that while D was still seeking the client, the client was not yet there. P got only “general litigation work”. When she was later terminated, she sued for damages and her claim – albeit at only the pleading stage - was sustained.

D’s promises in Stewart were “misstatements of present fact”, the Court explains, and her alleged injuries -

thwarting her professional objective to specialize in environmental law, and damaging her career potential – occurred well before plaintiff’s termination and were unrelated to it.

Stressing that the Court is neither adopting nor rejecting the Second Circuit’s reasoning, it observes that here in Smalley the plaintiffs have claimed no injury distinct from termination of their employment and that absent injury independent of termination, plaintiffs cannot recover damages for what is at bottom an alleged breach of contract in the guise of tort.

The Smalley case and the specific issue of whether a fired employee may sue in tort have relevance to two broad categories of our clients though, perhaps, on opposite sides of the issue: (1) business owners and managers; and (2) senior and mid-level corporate employees. For both, we offer the following points:

• A contract can either negate or establish and reinforce the At-Will nature of the employment relationship;

• A contract is not necessarily found in a single piece of paper labeled in capital letters: “CONTRACT;” rather, a contract can be found in employment manuals, offer letters, compensation plans, e-mails, course of dealing and in other ways consistent with basic principles of contract law;

• The Smalley case reaffirms the At-will rule in New York;

• However, the distinction that the Court made from the Stewart case serves as a caution that misrepresentations of present fact may leave the door open to a tort claim.

A tort claim, such as fraudulent inducement, depending on the specific facts, is more likely to put punitive damages and attorneys fees in play than a contract claim in New York. In Connecticut, another At-Will state where we practice, punitive damages are limited to attorneys’ fees but, similarly as in New York, more of a factor in a tort claim than a contract claim.

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The nature of an “adverse employment action” is discussed by Daniel Schwartz in the Connecticut Employment Blog (CEB) in a post entitled Court: Denial of Transfer Is Not Race Discrimination.  The post discusses a Connecticut District Court case, Charles v. State of Connecticut Judicial Branch, decided only a day or so ago (hence, no citation available yet), for which a link is provided in the CEB post.

In this case of alleged discrimination based on race, the Court decided a “truly” lateral transfer with “no significant changes in an employee’s conditions of employment” is not an adverse employment action. The decision still leaves open possibilities where the transfer is not “truly lateral” and where “significant changes” in employment conditions might be identified and argued. That’s a discussion for another case and another time.

The CEB post, after reviewing the case, makes two points: (1) that a small number of employees may sue for anything and (2) a good human resources practice should be about positive options for employee career paths, not just discipline and discharge.

Well said. We would add one other point: “good human resources practice” is not the concern of a specialized department of a large organization but of the management and principals of any organization of any size.   In the 16^th page of the 20 page decision, the Court reminds the parties that the issue in a discrimination case is whether an employer discriminated not whether the employer is “wise, shrewd, prudent or competent.” However, unwise, imprudent and incompetent actions are nothing to be proud of and, among other consequences, invite lawsuits.

For a fuller discussion of the case, we recommend the CEB post.

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Very few of our clients are billionaires. Actually, to our knowledge none of our clients are billionaires. We are not billionaires. It was not because of an immediate sense of identification, then, that a short piece in the Wall Street Journal Law Blog piqued our interest so much that our commentary far exceeds the length of the piece. “Not Your Father’s Employee Handbook” involves Sam Zell, identified as the billionaire owner of the company that publishes the LA Times. 

It seems that under Mr. Zell’s “auspices” (an ambiguous characterization by the Journal that could mean anything from “he was personally responsible” all the way to “he was barely aware of it but he owns the company and dropping the name of a known billionaire makes for a great hook”), the LA Times created a new Employee Handbook. This Handbook, according to the Journal, was of an unusual nature. It was one about which an (unidentified) recruiter said “I don’t think a lawyer got their hands on it and that’s fantastic.” It was a Handbook “laced with humor” and written in plain language but with “mistakes.”

My first reaction was that the root of “fantastic” is that same as that of “fantasy.” What would be truly fantastic, in any sense of the word, would be if that recruiter’s appendix had been removed and no doctors got their hands on it. Without any way of actually knowing, I’m betting lawyers did get their hands on the Handbook but there were other goals (that is, other than a strict defensive avoidance of liability) that shaped the final product. The succinct, breezy style of the Journal’s blog leaves a lot to be filled-n by our own reflections and thoughts.

Through the hazy recollection of my past association with large corporate organizations, I thought about the article a little more seriously. Mr. Zell, or his management, may have subordinated the legal purpose of their Handbook in order to emphasize motivational issues endemic to large, bureaucratic organizations. The writing style, laced with humor, served higher priorities and their “mistakes” might very well have been “tradeoffs.”

And, backed by billions, they could afford to risk the potential liabilities, perhaps merely a few million dollar settlements. They can also afford the legal defense to minimize their losses. Thus, they can afford to downplay the potential legal liabilities while emphasizing other aspects of the employment experience at the LA Times.

This is pure speculation. We have not seen the Handbook. Nor do we have any knowledge of the nature of the LA Times organization or their actual thinking in shaping their Handbook. 

But, somewhat like an ink blot test, the Journal’s story allows us to project into it our own concepts and ideas. Our blog covers developments in business litigation but with a focus on helping clients stay out litigation, if we can and manage it better, if we can’t. Towards that end, we try to derive from the litigation world recommended “best” or at least “better” practices suited to the small and growing businesses, real estate investors and non-profits (as well as professionals who serve them) that make up our intended readership. 

It is tempting to emulate the practices of billionaires with the thought of following their paths to success. But smaller to mid-sized businesses are not backed by billions, nor is it likely that they have passed through the stages of organizational growth that would engender the problems of organizational inertia and bureaucracy to which a larger, older organization may be exposed. We, and our readers, do deal with larger, unresponsive organizations, but for this article we are tending to our own gardens.

In summary, then, the LA Times may have had good reasons to give priority to factors other than avoidance of employment litigation in developing their Handbook. But, the best, or at least better, practice for the principals of smaller, growing organizations is to focus on their own real-world situation. As they grow and have a need to structure and systematize their employment practices, they are better off giving a high priority to avoidance of the potential liabilities of employment litigation. And, it follows that they are better off taking a more serious, straight and narrow approach to their Employment Handbooks. 

More specific comments about how much an organization needs to grow before needing one, what an Employment Handbook should contain and just what are the potential liabilities it addresses must await future postings. This one is long enough. 

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Partner Beverley Rogers led a lively discussion of Employment Law, primarily hiring practices, at the “Brown Bag Lunch” sponsored by the Ridgefield, CT Chamber of Commerce on Thursday, February 21. Our other partner, Angelo Tartaro, also attended and provided light assistance. The questions raised by attendees highlight issues of concern to the Ridgefield business organizations.

Our goal is to keep our clients and readers out of litigation, if possible. With that in mind, in leading the discussion Beverley did not dwell on technical distinctions and defenses such as the varying definitions of “employer” and “employee” under federal and state statutes and caselaw. Rather, the focus, as in this Blog, was on “best or at least better” practices of good management to avoid tangles of a legal dispute over hiring and other employment practices.

With that in mind, Beverley presented and discussed a series of questions that may and may not be asked at an employment interview. For example, an interviewer is asking for trouble when questions involve childcare arrangements but not whether a frequent travel schedule will be acceptable to the applicant. An interviewer should never ask whether an applicant has ever been arrested but it is perfectly acceptable to ask whether the applicant was ever convicted of a crime. Questions relating to sexual preference, religious practices, national origin (such as the derivation of your last name) have not place. Questions relating to whether the applicant can perform the essential functions of the position, with or without a reasonable accommodation, are acceptable. Of course, the interviewer should not suggest that a reasonable accommodation might be necessary; the applicant must request it. The examples discussed are too numerous to review here in detail; to download her handout, click here.

The attendees were very interested in how to handle a situation where the applicant volunteers information about a “forbidden subject.” The interviewer should state that the information is not appropriate to discuss any further and return the discussion to the essential functions of the position. And, the interviewer’s notes should not reflect any information about the inappropriate subject matter.

Beverley advised that notes of the interview should be kept separate from the job application. An attendee volunteered a humorous anecdote that reinforced the point. It seems the organization’s Human Resources auditors wanted to know why a notation of “W” was made an a job application. The implication was that the notation meant “White” or “Woman.” In fact, it denoted the “Western” division of the hiring organization. The better practice is not to have any notations that could be misinterpreted for a discriminatory purpose. Beverley presented and discussed a sample employment application from ____________________, which can be downloaded by clicking here.

Moving on from employment to other practices, Beverley explained that Connecticut and New York are still “employment at will” states in which an employee can be terminated for any reason but that protected classes of employees cannot be terminated for a discriminatory reason or under other circumstances covered by specific statutes or for specific conduct that is actionable under federal or state common law. An example of the latter was illustrated by one of our firm’s recent cases in which a client received a favorable settlement after suing an employer for defamation because he was wrongfully accused of stealing without an investigation.

In that case, an investigation was promised by the Employee Manual but the management largely ignored its manual. Attendees were very interested in Employee Manuals and the nuances of what they should or should not include as policies. That discussion was too extensive for this article but two general points stand out: (1) the better practice is to issue a manual and obtained a signed receipt when first issued and when updated; and (2) the manual does not do much good if actual practices deviate from those promised in the manual.

We may not be the most objective observers but we came away with the impression that the attendees found the event to be enjoyable, informative and topical.

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RIDGEFIELD PRESS

Dec 13, 2007
Business Update: 12/13/07

Rogers & Tartaro expanded law practice to immigration

Rogers & Tartaro, LLP, in Ridgefield has expanded its law practice to include services in immigration law for employers, families and individual clients.

Attorneys Beverley Rogers and Angelo D. Tartaro, the firm’s partners, said immigration law is a natural extension of their employment law practice and an opportunity to meet a growing and essential need.

Born in Italy and fluent in Italian, Mr. Tartaro emigrated to the United States with his parents when he was six years old. He graduated from Brooklyn College with a bachelor of arts in economics, and he holds an master of business administration from the NYU’s Stern School of Business.

He graduated magna cum laude from Pace University School of Law, where he was on the Law Review. He is a member of the American Immigration Lawyers Association, as well as the New York and Connecticut Bar Associations, and the Westchester County Bar Association.

Attorney Rogers, born in Brooklyn, is returning to college to earn a degree in foreign languages.

“Immigration is a dynamic area of law that can be as challenging and as complex as our tax laws,” she said. “Our secretary-paralegal was born in the Portuguese colony of Angola, Africa and speaks Portuguese and Spanish. Angelo speaks Italian. I thought it would be fun to round out our ‘United Nations’ law firm and become fluent in another language.”

Attorney Rogers received a bachelor of arts, cum laude, from Pace and a jurisprudence from Pace University School of Law. She is an active member of the Westchester Women’s Bar Association Judicial Screening Committee, and she is a member of the Connecticut Employment Lawyers Association and the New York Employment Lawyers Association.

She also serves on the Board of Directors of the Ridgefield Visiting Nurse Association and the Ridgefield Library. She is co-president of the Ridgefield Discovery Center.
With offices in Ridgefield and White Plains, Rogers & Tartaro, LLP, is a full service law firm specializing in business and not-for-profit law, commercial litigation, employment law, real estate and land use law, immigration law, and wills, trusts and probate.

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