Torres v. Texas Dep’t of Pub. Safety: States Do Not Have Sovereign Immunity Against Damages Claims for Servicemember Discrimination Under USERRA

In Torres v. Texas Dep’t of Pub. Safety, 142 S. Ct. 2455 (2022), the Supreme Court held that States do not have sovereign immunity against damages claims for servicemember employment discrimination in violation of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). The Court determined that by ratifying the Constitution, the States agreed their sovereignty would yield to the national power to raise and support the military. Therefore, Congress was free to exercise this power to authorize private damages suits against nonconsenting States, as provided in USERRA.

Constitutional Background – Sovereign Immunity

The Eleventh Amendment to the U.S. Constitution states:

The judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by citizens of another state, or by citizens or subjects of any foreign state.

Courts have interpreted the Eleventh Amendment and common law as barring suits for damages against states or state agencies. Sovereign immunity generally encompasses suits for damages by an employee against his or her state government employer, unless the employee’s claim is one for which sovereign immunity has been validly abrogated by Congress or waived by the state.

Sovereign immunity is the privilege of the sovereign not to be sued without its consent. As the Supreme Court observed in Virginia Off. for Prot. & Advoc. v. Stewart, 563 U.S. 247, 253-56 (2011), the Court has long interpreted the Eleventh Amendment to confirm the framers’ structural understanding that States entered the Union with their sovereign immunity intact. Thus, the Court has held that States have retained their traditional immunity from suit, “except as altered by the plan of the Convention or certain constitutional amendments.” Alden v. Maine, 527 U.S. 706, 713 (1999).

This principle that States did not retain their immunity “as altered by the plan of the Convention” was particularly important to the decision in Torres.

Additionally, State may waive its sovereign immunity at its pleasure, College Savings Bank v. Florida Prepaid Postsecondary Ed. Expense Bd., 527 U.S. 666, 675–676 (1999), and in some circumstances Congress may abrogate it by appropriate legislation. But in the absence of waiver or valid abrogation, federal courts may not entertain a private person’s suit for damages against a State. Stewart, 563 U.S. at 253-56.

Constitutional Background – Article I and the Power to Raise and Support Armies

Article I of the Constitution grants Congress the power “[t]o raise and support Armies” and “[t]o provide and maintain a Navy.” Article I, § 8, clauses 1, 12–13.

Statutory Background – USERRA

Using that Article I authority, Congress enacted the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). USSERA gives returning servicemembers the right to reclaim their prior jobs with state employers and authorizes servicemembers to file suit if those employers refuse to accommodate veterans’ service-related disabilities. See 38 U.S.C. § 4301, et seq.; 38 U.S.C. § 4313(a)(3).

Facts

Torres enlisted in the Army Reserves in 1989. In 2007, he was called to active duty and deployed to Iraq. While serving in Iraq, Torres was exposed to toxic burn pits, a method of garbage disposal that sets open fire to all manner of trash, human waste, and military equipment. Torres received an honorable discharge. 142 S. Ct. 2455, 2461.

Torres returned home with constrictive bronchitis. This is a respiratory condition that narrowed his airways and made breathing difficult. Torres alleged that this condition left him unable to work his old job as a state trooper. Torres therefore asked his former employer, Texas Department of Public Safety, to accommodate his condition by reemploying him in a different role. Texas refused to provide this accommodation. 142 S. Ct. 2455, 2461.

Torres therefore sued Texas in state court to enforce his rights under USERRA, 38 U.S.C. § 4313(a)(3). Texas tried to dismiss the suit by asserting it had sovereign immunity. The trial court denied Texas’ motion. An appellate court reversed, reasoning that, under Supreme Court precedent, namely Central Va. Community College v. Katz, 546 U.S. 356, 126 S.Ct. 990, 163 L.Ed.2d 945 (2006), Congress could not authorize private suits against nonconsenting States pursuant to its Article I powers except under the Bankruptcy Clause. The Supreme Court of Texas declined to review the case. 142 S. Ct. 2455, 2461.

After the Texas court decision, the Supreme Court issued an important ruling in PennEast Pipeline Co. v. New Jersey, 594 U. S. ––––, 141 S.Ct. 2244, 210 L.Ed.2d 624 (2021). PennEast held that the States waived their sovereign immunity as to the federal eminent domain power pursuant to the “plan of the Convention.” 142 S. Ct. 2455, 2461 (citing PennEast, 141 S.Ct. 2244, 2258).

The Court’s Decision

The Court then took Torres’ case to determine whether, in light of that intervening ruling in PennEast, USERRA’s damages remedy against state employers was constitutional.

Applying the reasoning in PennEast, the Court held that by ratifying the Constitution, the States agreed their sovereignty would yield to the national power to raise and support the Armed Forces. Therefore, in enacting USERRA, Congress validly exercised this power to authorize private damages suits against nonconsenting States for violations of USERRA.

The Court observed that in PennEast, it considered whether Congress could, pursuant to its eminent domain power (another Constitutional power), authorize private suits against States to enforce federally approved condemnations necessary to build interstate pipelines. The PennEast Court had held that Congress could authorize such suits because, upon entering the federal system, the States implicitly agreed their “eminent domain power would yield to that of the Federal Government.” 142 S. Ct. 2455, 2463 (citing PennEast, 141 S.Ct. at 2259).

The Torres Court pointed out that PennEast defined the test for “structural waiver” of sovereign immunity as whether the federal power is “complete in itself, and the States consented to the exercise of that power—in its entirety—in the plan of the Convention.” 142 S. Ct. 2455, 2461-63 (quoting PennEast, 141 S.Ct. at 2263).

Reviewing the text of the Constitution, its history, and past cases, the Court determined that Congress’ power to build and maintain the Armed Forces fit the PennEast test. Under the PennEast test, the Court observed that Congress’ power to build and maintain a national military is “complete in itself.” 142 S. Ct. 2455, 2463, 2466 (citing PennEast, 141 S.Ct. at 2263). As the Court put it in PennEast, when they entered the Union, the States agreed that their sovereignty would “yield … so far as is necessary” to federal policy for the Armed Forces. 142 S. Ct. 2455, 2463, 2466 (quoting PennEast, 141 S.Ct. at 2259). The Court further emphasized that because the States committed not to “thwart” this federal power, “[t]he consent of a State,” including to suit, “can never be a condition precedent” to Congress’ chosen exercise of its authority. 142 S. Ct. 2455, 2459, 2463, 2466 (quoting PennEast, 141 S.Ct. at 2255, 2256–2257). In these circumstances, the States simply “have no immunity left to waive or abrogate.” 142 S. Ct. 2455, 2463 (citing PennEast, 141 S.Ct. at 2263).

Accordingly, when Congress enacted USERRA, it validly exercised its power to authorize private damages suits against nonconsenting States for violations of servicemembers’ rights under USERRA. Texas therefore did not have sovereign immunity against Torres’ damages claim for alleged violations of his rights under USERRA.

Analysis

In sum, in Torres the Supreme Court held that States do not have sovereign immunity against damages claims for servicemember employment discrimination in violation of USERRA. The Court determined that by ratifying the Constitution, the States agreed their sovereignty would yield to the national power to raise and support the military. Therefore, Congress was free to exercise this power to authorize private damages suits against nonconsenting States, as provided in USERRA.

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1-434-218-3133 or send an email to info@coffieldlaw.com.

Originally published on Tim Coffield’s website.

Virginia Misclassification Anti-Retaliation Law: Protections for Employees And Independent Contractors Who Report Misclassification

Virginia’s Misclassification Anti-Retaliation Law, Va. Code § 40.1–33.1 (“MARL,” titled “Retaliatory actions prohibited; civil penalty”), provides that employers shall not discharge, penalize, or take any retaliatory action against an employee or independent contractor for reporting, or planning to report, to an appropriate authority an employer’s failure to properly classify an individual as an employee and failure to pay required benefits or other contributions.

The MARL is important because it prohibits employers from retaliating against employees or independent contractors for reporting possible independent contractor misclassification to appropriate authorities.

PROHIBITION ON RETALIATION FOR REPORTING MISCLASSIFICATION

The MARL contains a broad prohibition on employers taking retaliatory actions against employees or independent contractors who engage in either of two “protected activities.” First, the employer cannot retaliate against an individual for reporting or planning to report to appropriate authorities the employer’s failure to properly classify an individual as an employee. Second, the employer cannot retaliate against an individual for being requested or subpoenaed by an appropriate authority to participate in an investigation, hearing, or inquiry by an appropriate authority or in a court action:

A. An employer shall not discharge, discipline, threaten, discriminate against, or penalize an employee or independent contractor, or take other retaliatory action regarding an employee or independent contractor’s compensation, terms, conditions, location, or privileges of employment, because the employee or independent contractor:

1. Has reported or plans to report to an appropriate authority that an employer, or any officer or agent of the employer, has failed to properly classify an individual as an employee and failed to pay required benefits or other contributions; or

2. Is requested or subpoenaed by an appropriate authority to participate in an investigation, hearing, or inquiry by an appropriate authority or in a court action.

Va. Code § 40.1–33.1(A).

GOOD FAITH AND REASONABLE BELIEF

Importantly, the MARL provides that its anti-retaliation protections only apply if the employee or independent contractor who discloses information about suspected worker misclassification has done so in good faith and upon a reasonable belief that the information is accurate:

B. The provisions of subsection A shall apply only if an employee or independent contractor who discloses information about suspected worker misclassification has done so in good faith and upon a reasonable belief that the information is accurate. Disclosures that are reckless or the employee knew or should have known were false, confidential by law, or malicious shall not be deemed good faith reports and shall not be subject to the protections provided by subsection A.

Va. Code § 40.1–33.1(B).

ADMINISTRATIVE PROCESS

The MARL provides an administrative process for individuals who experience retaliation in violation of its provisions. Under this process, an individual who experiences retaliation in violation of MARL may file a complaint with the Commissioner of Labor and Industry. See Va. Code § 40.1–2 (defining “Commissioner” as meaning the Commissioner of Labor and Industry.) The Commission, with the employee’s signed consent, may then institute proceedings against the employer to recover appropriate remedies, including reinstatement and lost wages:

C. Any employee who is discharged, disciplined, threatened, discriminated against, or penalized in a manner prohibited by this section may file a complaint with the Commissioner. The Commissioner, with the written and signed consent of such an employee, may institute proceedings against the employer for appropriate remedies for such action, including reinstatement of the employee and recovering lost wages.

Va. Code § 40.1–33.1(C).

CIVIL PENALTY

Finally, the MARL further provides that an employer that violates its provisions will be subject to a civil penalty in an amount up to the amount of lost wages resulting from the violation:

D. Any employer who discharges, disciplines, threatens, discriminates against, or penalizes an employee in a manner prohibited by this section shall be subject to a civil penalty not to exceed the amount of the employee’s wages that are lost as a result of the violation. Civil penalties under this section shall be assessed by the Commissioner and paid to the Literary Fund.

Va. Code § 40.1–33.1(D).

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1–434–218–3133 or send an email to info@coffieldlaw.com.

Originally published on Tim Coffield’s website.

Harbourt v. PPE Casino Resorts Maryland: Fourth Circuit Recognizes Training Can Be Compensable Work Under FLSA

In Harbourt v. PPE Casino Resorts Maryland, LLC, 820 F.3d 655 (4th Cir. 2016) the Fourth Circuit held that under the Fair Labor Standards Act, compensable “work,” for which the FLSA requires employers to pay at least minimum wage, broadly encompasses physical or mental exertion, whether burdensome or not, controlled or required by the employer primarily for its benefit, and therefore training can constitute “work” under the FLSA.

Statutory Background — Compensable “Work” under the FLSA

Congress enacted the FLSA “to protect all covered workers from substandard wages and oppressive working hours.” Trejo v. Ryman Hosp. Props., Inc., 795 F.3d 442, 446 (4th Cir. 2015) (quotes omitted.) To accomplish these goals, the FLSA requires employers to pay their employees both a minimum wage and overtime pay. Hall v. DIRECTV, LLC, 846 F.3d 757, 761 (4th Cir. 2017).

Specifically, the FLSA requires employers to pay their employees at least the federal minimum wage. 29 U.S.C. § 206(a)(1). And it requires employers to pay not less than time and a half for each hour worked over forty hours during a workweek. Id. § 207(a)(1). The FLSA’s overtime requirement “was intended ‘to spread employment by placing financial pressure on the employer’ and ‘to compensate employees for the burden of a workweek in excess of the hours fixed in the Act.’ ” Calderon v. GEICO Gen. Ins. Co., 809 F.3d 111, 121 (4th Cir. 2015).

Relevant to the situation in Harbourt, the FLSA requires that employers pay employees the minimum hourly wage “for all hours worked.” Perez v. Mountaire Farms, Inc., 650 F.3d 350, 363 (4th Cir. 2011) (internal quotation marks omitted). As Harbourt pointed out, the FLSA Act does not define “work.” See 29 U.S.C. §§ 201–219. But the Supreme Court instructs that “in the absence of a contrary legislative expression” courts should assume that Congress was referring to work or employment “as those words are commonly used — as meaning physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business.” Tennessee Coal, Iron & R. Co. v. Muscoda Local №123, 321 U.S. 590, 598, 64 S.Ct. 698 (1944), superseded by statute on other grounds, Portal–to–Portal Act of 1947, Pub. L. №104–188, 110 Stat.1928. Harbourt, 820 F.3d at 658.

In Harbourt, the court addressed the question of whether a casino’s training program for prospective dealers constituted compensable “work” under the FLSA, even though the casino was not yet even open or operating at the time of the training. As explained below, the Harbourt held that such training could be compensable work for which the employer must pay minimum wages.

Facts

The defendant, PPE Casino, operated a casino in Maryland. The Casino selected approximately 830 of the applicants to attend a “dealer school.” The “dealer school” consisted of four hours of daily instruction Monday through Friday, for about twenty hours per week, for twelve weeks. The school was scheduled to conclude about ten days before the start of legalized table gambling in Maryland. 820 F.3d 655, 657–58.

Plaintiffs, who attended the dealer school, were not paid to attend it until the final two days. They alleged the training at the dealer school was specific to the manner in which the Casino’s employees were to perform the table games at the casino once it opened. The plaintiffs further alleged that although the Casino advertised the “school” as being held in conjunction with a community college, it was really just run by the Casino. The Casino authored all course materials, Casino employees provided all instruction, and attendees never interacted with anyone from a community college. During the “school,” the attendees completed employment forms, including an income tax withholding form and direct deposit authorization form. To help the attendees receive a gambling license by the end of the course, the Casino required them to submit to a drug test, provide their fingerprints and social security numbers, and authorize the Casino to obtain their driving records and perform criminal and financial background checks on them. 820 F.3d at 657–58.

The Casino did not pay the attendees to attend the dealer school until the final two days of the twelve week course. For the final two days they were paid minimum wage. The plaintiffs filed a putative class action asserting violations of the minimum wage provisions of the FLSA and various state laws. The district court granted the Casino’s motion to dismiss, holding that the plaintiffs “fail[ed] to show that the primary beneficiary of their attendance at the training was the Casino rather than themselves.” 820 F.3d at 657–58.

The Court’s Decision

The Fourth Circuit reversed, holding the plaintiffs did sufficiently allege violations of the FLSA’s minimum wage provisions.

In reaching this conclusion, the Fourth Circuit observed that “work” for FLSA purposes broadly encompasses “physical or mental exertion (whether burdensome or not) controlled or required by the employer” primarily for its benefit. 820 F.3d at 660 (quoting Tennessee Coal, 321 U.S. at 598. And the Supreme Court has held “training” can constitute “work” under the statute. Id. (citing Walling v. Portland Terminal Co., 330 U.S. 148, 151, 67 S.Ct. 639 (1947) (noting that “[w]ithout doubt the Act covers trainees”); McLaughlin v. Ensley, 877 F.2d 1207, 1208–10 (4th Cir. 1989) (holding trainee routemen of a food distribution company were “employees” for FLSA purposes when they participated in a five-day, 50–to–60–hour training program in which they learned how to load trucks and maintain food vending machines and helped experienced routemen perform their duties); and 29 C.F.R. §§ 785.27–.31 (2015) (establishing the requirements that mid-employment training must meet for the training not to count toward work hours).

The Fourth Circuit rejected the Casino’s argument that because the trainees could not interact with paying customers in the Casino during the “school,” they failed to qualify as FLSA employees performing work for the Casino. “That the Casino could not operate table games during the dealer school does not necessarily mean that the Trainees were not working for FLSA purposes in attending the required ‘school.’” 820 F.3d at 660. Rather, the Fourth Circuit observed, “whether the required training would constitute work for FLSA purposes would depend on whether it primarily constituted a benefit to the employer or the trainee.” Id.

The Fourth Circuit then found that plaintiffs sufficiently alleged facts to support a conclusion that the Casino, rather than the trainees, primarily benefited from the dealer school training. For example, the plaintiffs alleged that the Casino received a large benefit — a workforce of hundreds of dealers trained to operate table games to the Casino’s specifications when the table games became legal in Maryland. And the plaintiffs also alleged that they received very little from the twelve weeks of training that did not primarily benefit the Casino, since the training was unique to the Casino’s specifications and not transferable to work in other casinos.

The Fourth Circuit also pointed out that the plaintiff alleged the dealer school training was “either conceived or carried out in such a way as to violate … the spirit of the minimum wage law.” 820 F.3d at 660 (quoting Portland Terminal, 330 U.S. at 153. Specifically, the plaintiffs alleged that the “sole purpose” of the Casino’s “temporary makeshift ‘school’ was to hire the exact number of dealers needed to fill the vacant table games positions[,]” and that the Casino “disguised its employee-training course as a school for the purpose of not paying” the trainees. 820 F.3d at 660–61.

The Fourth Circuit found that if these allegations were correct, “a fact finder could conclude that requiring applicants to attend a training ‘school’ for twenty hours each week for a full twelve weeks, training advertised to be associated with a community college course but that allegedly had nothing to do with any college, demonstrates that the Casino ‘conceived or carried out’ its ‘school’ to avoid paying the minimum wage. Id. The Fourth Circuit observed that “a fact finder could further conclude that an employer would only take such actions to avoid paying the minimum wage to persons who were labelled ‘trainees’ but who actually worked for the Casino and were FLSA employees.” Id.

Accordingly, the Fourth Circuit held that the plaintiffs alleged sufficient facts to state a claim that the Casino violated the FLSA and the Maryland wage laws by failing to pay them for the dealer school training. 820 F.3d at 660–61.

Analysis

In sum, in Harbourt the Fourth Circuit held that training can be compensable “work” requiring at least minimum wages under the FLSA. For purposes of the FLSA, “work” broadly encompasses physical or mental exertion, whether burdensome or not, controlled or required by the employer primarily for its benefit. Therefore, an employee attending an employer’s training program can be performing “work” under the FLSA.

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1–434–218–3133 or send an email to info@coffieldlaw.com.

This article was originally published on Tim Coffield’s website.

Virginia Employee Social Media Privacy Act: Protections for Employee Social Media Information

The Virginia Employee Social Media Privacy Act, VA Code § 40.1–28.7:5 (“VESMPA”), titled “Social media accounts of current and prospective employees,” generally prohibits Virginia employers from (1) requiring employees or prospective employees to disclose their social media usernames and passwords or (2) to “friend” or “connect” with the employer on social media. As with many laws, however, the VESMPA has some exceptions to the general rule.

EMPLOYER DEFINED

The VESMPA defines “employer” broadly. The definition includes the catch-all definition under VA Code § 40.1–2:

“Employer” means an individual, partnership, association, corporation, legal representative, receiver, trustee, or trustee in bankruptcy doing business in or operating within this Commonwealth who employs another to work for wages, salaries, or on commission and shall include any similar entity acting directly or indirectly in the interest of an employer in relation to an employee.

VA Code § 40.1–2.

In addition, the VESMPA applies to government employers:

“Employer” includes, in addition to the persons enumerated in the definition of employer in § 40.1–2, (i) any unit of state or local government and (ii) any agent, representative, or designee of a person or unit of government that constitutes an employer.

VA Code § 40.1–28.7:5(A).

SOCIAL MEDIA ACCOUNTS DEFINED

The VESMPA defines social media accounts broadly, to include a wide variety of private social media activity:

“Social media account” means a personal account with an electronic medium or service where users may create, share, or view user-generated content, including, without limitation, videos, photographs, blogs, podcasts, messages, emails, or website profiles or locations.

There are limitations, however. Importantly, “social media accounts” protected by the VESMPA do not include accounts associated with the employer:

“Social media account” does not include an account

(i) opened by an employee at the request of an employer;

(ii) provided to an employee by an employer such as the employer’s email account or other software program owned or operated exclusively by an employer;

(iii) set up by an employee on behalf of an employer; or

(iv) set up by an employee to impersonate an employer through the use of the employer’s name, logos, or trademarks.

VA Code § 40.1–28.7:5(A).

PROTECTIONS

The VESMPA provides, as a general rule, that employers cannot require employees or prospective employees to disclose their social media usernames and passwords or to “friend” or “connect” with the employer on social media:

B. An employer shall not require a current or prospective employee to:

1. Disclose the username and password to the current or prospective employee’s social media account; or

2. Add an employee, supervisor, or administrator to the list of contacts associated with the current or prospective employee’s social media account.

VA Code § 40.1–28.7:5(B).

INADVERTENT RECEIPT OF SOCIAL MEDIA ACCOUNT INFORMATION AND PROHIBITION ON USE

The VESMPA clarifies that an employer does not violate the law by only inadvertently receiving an employee’s social media login information through an employer-provided device or an employer’s network-monitoring program. However, the employer still may not use the information to access the employee’s social media account:

C. If an employer inadvertently receives an employee’s username and password to, or other login information associated with, the employee’s social media account through the use of an electronic device provided to the employee by the employer or a program that monitors an employer’s network, the employer shall not be liable for having the information but shall not use the information to gain access to an employee’s social media account.

VA Code § 40.1–28.7:5(C).

PROHIBITIONS ON RETALIATION AND DISCRIMINATION

The VESMPA prohibits employers from taking action against current employees or failing to hire prospective employees for exercising their rights not to disclose social media account information under the VESMPA:

D. An employer shall not:

1. Take action against or threaten to discharge, discipline, or otherwise penalize a current employee for exercising his rights under this section; or

2. Fail or refuse to hire a prospective employee for exercising his rights under this section.

VA Code § 40.1–28.7:5(D).

SAFE HARBOR FOR VIEWING PUBLICLY AVAILABLE INFORMATION

The VESMPA clarifies that it does not prohibit an employer from viewing information about a current or prospective employee that is publicly available:

E. This section does not prohibit an employer from viewing information about a current or prospective employee that is publicly available.

VA Code § 40.1–28.7:5(E).

EXCEPTIONS

As noted above, the VESMPA contains several exceptions, under which an employer is permitted to require employees to disclose social media usernames and passwords. Generally, these exceptions allow an employer to require disclosure of social media account credentials if necessary to comply with laws or regulations.

In addition, the VESMPA does not prohibit an employer from requesting disclosure of an employee’s credentials for purposes of accessing a social media account if the employer “reasonably believes” the employee’s social media account activity is relevant to a formal investigation or related proceeding by the employer into allegations that the employee violated law or the employer’s written policies.

F. Nothing in this section:

1. Prevents an employer from complying with the requirements of federal, state, or local laws, rules, or regulations or the rules or regulations of self-regulatory organizations; or

2. Affects an employer’s existing rights or obligations to request an employee to disclose his username and password for the purpose of accessing a social media account if the employee’s social media account activity is reasonably believed to be relevant to a formal investigation or related proceeding by the employer of allegations of an employee’s violation of federal, state, or local laws or regulations or of the employer’s written policies. If an employer exercises its rights under this subdivision, the employee’s username and password shall only be used for the purpose of the formal investigation or a related proceeding.

VA Code § 40.1–28.7:5(F). If the employer obtains social media account information under this part of the law, the employee’s username and password may only be used for the purpose of the formal investigation or proceeding.

REMEDIES

The VESMPA does not provide a statutory civil right of action for any employee harmed by a violation of its provisions. However, if an employee is terminated in violation of the policy stated in VESMPA, or because the employee exercised the rights created by the VESMPA, the employee may have a common law Bowman claim of wrongful discharge in violation of public policy.

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1–434–218–3133 or send an email to info@coffieldlaw.com.

Originally published on Tim Coffield’s website.

Virginia Worker Misclassification Law: Protections for Employees Asked to Sign Agreements that Misclassify Them As Independent Contractors

Virginia’s Worker Misclassification Law, VA Code § 58.1–1900–05 (“WML”), emphasizes the rights of employees to be properly classified as such, and makes it unlawful for employers to require or request that employees sign documents incorrectly classifying them as independent contractors. While the WML does not provide a statutory right of action, an employee terminated in violation of the policy stated in this law may have a common law claim for wrongful discharge.

The WML is important because it prohibits employers from asking or requiring workers sign documents that seek to deny them basic employment rights, like payroll taxes, unemployment protections, and overtime and minimum wages, by misclassifying them as independent contractors.

CLASSIFICATION OF EMPLOYEES

Section 1900 creates a default rule that, for purposes of Virginia employment, tax, worker’s compensation, and unemployment benefits laws, an individual is an employee of the company that pays for his services, unless the company or individual can prove that the individual is an independent contractor under IRS guidelines:

A. For the purposes of this title and Title 40.1, Title 60.2, and Title 65.2, if an individual performs services for an employer for remuneration, that individual shall be considered an employee of the party that pays that remuneration unless such individual or his employer demonstrates that such individual is an independent contractor. The Department shall determine whether an individual is an independent contractor by applying Internal Revenue Service guidelines.

VA Code § 58.1–1900(A).

CIVIL PENALTIES

Section 1901 imposes civil penalties on employers, and officers and agents of employers, who fail to properly classify employees as such, and fails to pay taxes, benefits, or other contributions required to be paid with respect to the employee:

Any employer, or any officer or agent of the employer, that fails to properly classify an individual as an employee in accordance with § 58.1–1900 for purposes of this title, Title 40.1, Title 60.2, or Title 65.2 and fails to pay taxes, benefits, or other contributions required to be paid with respect to an employee shall, upon notice by the Department to the affected party, be subject to a civil penalty of up to $1,000 per misclassified individual for a first offense, up to $2,500 per misclassified individual for a second offense, and up to $5,000 per misclassified individual for a third or subsequent offense. Each civil penalty assessed under this chapter shall be paid into the general fund.

VA Code § 58.1–1901.

Debarment Penalty

Section 1902 imposes a debarment penalty, which prohibits public bodies and covered institutions from doing business with a employer that fails to properly classify a worker as an employee:

A. Whenever the Department determines, after notice to the employer, that an employer failed to properly classify an individual as an employee under the provisions of § 58.1–1900, the Department shall notify all public bodies and covered institutions of the name of the employer.

B. Upon an employer’s subsequent violations of subsection A, all public bodies and covered institutions shall not award a contract to such employer or to any firm, corporation, or partnership in which the employer has an interest in the following manner:

1. For a period of up to one year, as determined by the Department, from the date of the notice for a second offense.

2. For a period of up to three years, as determined by the Department, from the date of the notice for a third or subsequent offense.

VA Code § 58.1–1902.

PROHIBITION ON AGREEMENTS MISCLASSIFYING EMPLOYEES AS INDEPENDENT CONTRACTORS

Importantly, Section 1903 prohibits employers from requiring or requesting that a worker sign an agreement or document that results in the misclassification of the employee as an independent contractor, or otherwise does not accurately reflect the worker’s relationship with the employer:

No person shall require or request that an individual enter into an agreement or sign a document that results in the misclassification of the individual as an independent contractor or otherwise does not accurately reflect the relationship with the employer.

VA Code § 58.1–1903.

PROHIBITION ON TERMINATING AN EMPLOYEE FOR REFUSING TO SIGN AN AGREEMENT MISCLASSIFYING THE EMPLOYEE AS AN INDEPENDENT CONTRACTOR

Section 1904 makes it unlawful for an employer to terminate or otherwise discriminate against an employee to refuses to sign a document misclassifying the employee as an independent contract, or for exercising other rights under the WML:

It shall be unlawful for an employer or any other party to discriminate in any manner or take adverse action against any person in retaliation for exercising rights protected under this chapter.

VA Code § 58.1–1904.

REMEDIES

While the WML does not contain a statutory remedy, an employee terminated in violation of the WML’s provisions may be able to bring a common law claim for wrongful discharge in violation of public policy under Bowman v. State Bank of Keysville, 331 S.E.2d 797 (Va. 1985) and its progeny.

RECORDKEEPING

Section 1905 imposes on the Virginia Department of Taxation recordkeeping and reporting requirements relating to the misclassification of employees as independent contractors:

The Department shall report annually to the Governor and the General Assembly regarding compliance with and enforcement of this chapter. The Department’s report shall include information regarding the number of investigated reports of worker misclassification; the findings of such reports; the amount of combined tax, interest, and fines collected; the number of referrals to the Department of Labor and Industry, Virginia Employment Commission, Department of Small Business and Supplier Diversity, Virginia Workers’ Compensation Commission, and Department of Professional and Occupational Regulation; and the number of notifications of failure to properly classify to all public bodies and institutions.

VA Code § 58.1–1905.

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1–434–218–3133 or send an email to info@coffieldlaw.com.

Originally published on Tim Coffield Attorney’s website.

Morgan v. Sundance: Waiver, Prejudice, and Arbitration Under Federal Law

In Morgan v. Sundance, Inc., 142 S. Ct. 1708 (2022), the Supreme Court held that prejudice is not a condition of finding that a party, by litigating too long, waived its right to stay litigation or compel arbitration under the Federal Arbitration Act.

Facts

Morgan worked as an hourly employee at a Taco Bell franchise owned by Sundance. When she applied for the job, Morgan signed an agreement to arbitrate employment disputes. Morgan later filed in court a collective action asserting that Sundance had violated federal law regarding overtime compensation. Initially, Sundance defended against the lawsuit in court, filing an unsuccessful motion to dismiss and engaging in an unsuccessful mediation. Then, nearly eight months after Morgan filed the lawsuit, Sundance moved to stay the litigation and compel arbitration under the Federal Arbitration Act (FAA). Morgan opposed the motion, arguing that Sundance had waived its right to arbitrate by litigating for so long.

The Eight Circuit granted the motion holding, in relevant part, that Sundance’s delay had not prejudiced Morgan. That decision applied Eighth Circuit precedent, under which a party waives its right to arbitration if it knew of the right; “acted inconsistently with that right”; and “prejudiced the other party by its inconsistent actions. However, the prejudice requirement is not a feature of federal waiver law generally. The Eighth Circuit adopted that requirement because of the “federal policy favoring arbitration.” Other courts had rejected such a requirement. The Supreme Court took the case to resolve the split over whether federal courts may adopt an arbitration-specific waiver rule demanding a showing of prejudice. 142 S. Ct. at 1708–1712.

The Court’s Decision

The Court vacated and remanded, holding that there was no arbitration-specific waiver rule requiring a showing of prejudice. Assuming that federal law governed the issue, the Court observed that federal courts may not create “arbitration-specific variants” of federal procedural rules, like those concerning waiver, based on the FAA’s “policy favoring arbitration.” The Court observed that that policy “is merely an acknowledgment of the FAA’s commitment to overrule the judiciary’s longstanding refusal to enforce agreements to arbitrate and to place such agreements upon the same footing as other contracts.” Granite Rock Co. v. Teamsters, 561 U.S. 287, 302, 130 S.Ct. 2847 (2010) (internal quotation marks omitted). 142 S. Ct. at 1712–1714.

The Morgan Court therefore held that a court must hold a party to its arbitration contract just as the court would to any other kind. But a court may not devise novel rules to favor arbitration over litigation. The Court emphasized that the federal policy is about treating arbitration contracts like all others, not about fostering arbitration. 142 S. Ct. at 1712–1714.

Supporting this conclusion, the Court observed that the text of the FAA makes clear that courts are not to create arbitration-specific procedural rules like the one the Eight Circuit applied. For example, Section 6 of the FAA provides that any application under the FAA — including an application to stay litigation or compel arbitration — “shall be made and heard in the manner provided by law for the making and hearing of motions” (unless the statute says otherwise). The Court noted that this directive to treat arbitration applications “in the manner provided by law” for all other motions is simply a command to apply the usual federal procedural rules, including any rules relating to a motion’s timeliness. Therefore, the Court reasoned, because the usual federal rule of waiver does not require prejudice, Section 6 of the FAA supports the conclusion that prejudice is not a condition of finding that a party waived its right to stay litigation or compel arbitration under the FAA. 142 S. Ct. at 1712–1714.

The Court then concluded that after eliminating the prejudice requirement, the waiver inquiry would focus on Sundance’s conduct: for example, whether Sundance knowingly relinquished the right to arbitrate by acting inconsistently with that right. The Court noted that on remand, the Court of Appeals could resolve that question, or could determine that a different procedural framework was appropriate. The Court’s sole holding was that courts were not permitted to make up a new procedural rule based on the FAA’s “policy favoring arbitration.” 142 S. Ct. at 1712–1714.

Analysis

In sum, Morgan held that prejudice is not a condition of finding that a party, by litigating too long, waived its right to stay litigation or compel arbitration under the Federal Arbitration Act. This is because courts are not permitted to make up new arbitration-specific procedural rules based on the FAA’s “policy favoring arbitration.”

This site is intended to provide general information only. The information you obtain at this site is not legal advice and does not create an attorney-client relationship between you and attorney Tim Coffield or Coffield PLC. Parts of this site may be considered attorney advertising. If you have questions about any particular issue or problem, you should contact your attorney. Please view the full disclaimer. If you would like to request a consultation with attorney Tim Coffield, you may call 1–434–218–3133 or send an email to info@coffieldlaw.com.

Originally published on Tim Coffield Attorney’s website.

Cruz v. Maypa: Equitable Tolling in FLSA Cases

In Cruz v. Maypa, 773 F.3d 138 (4th Cir. 2014), the Fourth Circuit held that the limitations period for claims under the Fair Labor Standards Act was equitably tolled because the employer failed to post the required notice explaining workers’ rights under the FLSA. The decision is important because it means an employer who fails to post the required notice may lose its ability to assert a statute of limitations defense in FLSA cases.

Statutory Background

Relevant to the decision in Cruz, the FLSA also requires employers to “post and keep posted a notice explaining the [FLSA] … in conspicuous places”:

Every employer employing any employees subject to the Act’s minimum wage provisions shall post and keep posted a notice explaining the [FLSA], as prescribed by the Wage and Hour Division, in conspicuous places in every establishment where such employees are employed so as to permit them to observe readily a copy.…

29 C.F.R. § 516.4.

Claims for violations of the minimum wage or overtime provisions of the FLSA have a 2- or 3-year statute of limitations. 29 U.S.C. § 255(a).

Facts

This case involved a horrible story of forced labor and human trafficking. Cruz was a citizen of the Philippines. She spoke Tagalog and Kapampangan fluently, and spoke limited English. In 2001, a friend told Cruz about an opportunity to travel to the United States to work for Maypa, who at the time was employed by the World Bank. Cruz submitted her resume. Maypa later faxed Cruz an employment contract. The contract said Cruz would be employed as a domestic employee at Maypa’s house for two years where she would work 35-40 hours per week for $6.50 an hour. Cruz, 773 F.3d at 139-43

Cruz reviewed the contract with the help of friends who were more fluent in English. She was excited about the terms. But before Cruz could sign, Maypa told her over the phone that she would actually be paying Cruz only $250 a month rather than the $6.50 per hour. Cruz did not know that the FLSA required a much higher minimum wage. On January 17, 2002, she signed the contract. Shortly thereafter she left the Philippines for the first time and flew to the United States. Id.

Soon after Cruz arrived in Virginia, the Maypas began subjecting her to inhumane working and living conditions. Cruz was required to work seven days a week for 17 to 18 hours per day. She was expected to remain on call at night. In the six years she remained under the family’s control, Cruz was never allowed to take a day off, even when she was ill. She was expected to provide 24–hour care for all four of the family’s children. She was directed to maintain two separate family homes by mowing the lawns, trimming trees, shoveling snow, cleaning the pool, and performing other landscaping duties. For this labor, Cruz initially was initially paid just $250 per month, or approximately $8 per day. By the time of her escape six years later, Cruz was making $450 per month, which amounted to about $15 per day. Id.

Maypa used Cruz’s immigration status and vulnerable situation to keep her from leaving. Within hours of Cruz’s arrival at Maypa’s home, Maypa confiscated Cruz’s passport. The Maypas never permitted Cruz to return to the Philippines to visit her family, even when relatives died and when her daughter and father suffered life-threatening health events. The Maypas also prohibited Cruz from leaving their homes alone except to walk their dog. Cruz did not know anyone in Virginia besides the family, and they lived in rural areas with no sidewalks and no access to public transportation. She was “effectively trapped in their homes.” In 2008, with the help of a friend in another state,, she escaped. Cruz, 773 F.3d at 139-43.

At no point did the Maypas post the required notice of employees’ rights to minimum wages and overtime wages under the FLSA regulation cited above.

In 2013, more than 5 years after escaping, Cruz filed suit asserting various causes of action, including claims for violation of the FLSA. As noted above, FLSA claims have a 2- or 3-year statute of limitations. 29 U.S.C. § 255(a).

The district court declined to equitably toll Cruz’s claims and therefore dismissed Cruz’s FLSA claims as time-barred because she had not brought them within the FLSA’s maximum three-year limitations period for willful violations. Cruz, 773 F.3d at 142-43.

The Court’s Decision

The Fourth Circuit held that Cruz’s FLSA claims should be equitably tolled due to the defendants’ failure to post the required notice under the FLSA.

In reaching this conclusion, the Court first noted that equitable tolling is generally available when 1) “the plaintiffs were prevented from asserting their claims by some kind of wrongful conduct on the part of the defendant,” or 2) “extraordinary circumstances beyond plaintiffs’ control made it impossible to file the claims on time.” Cruz at 146 (quoting Harris v. Hutchinson, 209 F.3d 325, 330 (4th Cir. 2000) (internal quotation marks omitted)).

The Court evaluated this rule in light of its earlier decision in Vance v. Whirlpool Corp., 716 F.2d 1010 (4th Cir. 1983), which held that the 180–day filing requirement of the Age Discrimination in Employment Act (“ADEA”) was tolled because the plaintiff’s employer failed to post statutory notice of workers’ rights under the ADEA. Cruz at 146 (discussing Vance at 1013).

The Court noted that it made good sense to extend Vance’s reasoning to the FLSA. After all, the notice requirements in the ADEA and the FLSA are almost identical. The ADEA regulation, 29 C.F.R. § 1627.10, requires employers to “post and keep posted in conspicuous places … the notice pertaining to the applicability of the [ADEA]”). Similarly, the FLSA regulation, 29 C.F.R. § 516.4, requires employers to “post and keep posted a notice explaining the [FLSA] … in conspicuous places[.]” The Court pointed out that the purpose of these requirements is to ensure that those protected under the laws are aware of and able to assert their rights.

The Court further observed that neither the ADEA nor the FLSA imposed statutory penalties for failure to comply with the notice requirements. Cruz at 147 (citing Cortez v. Medina’s Landscaping, Inc., No. 00 C 6320, 2002 WL 31175471, at *5 (N.D.Ill. Sept. 30, 2002) (extending an actual notice tolling rule similar to Vance from the ADEA to the FLSA). “Therefore, absent a tolling rule, employers would have no incentive to post notice since they could hide the fact of their violations from employees until any relevant claims expired.” Cruz at 147.

The Court therefore held that its analysis in Vance applied with equal force to the notice requirement of the FLSA. Id.

The Court observed that under Vance, “tolling based on lack of notice continues until the claimant retains an attorney or obtains actual knowledge of her rights.” Cruz at 147 (citing 716 F.2d at 1013). The Fourth Circuit therefore instructed the district court to allow discovery on remand to determine whether Cruz’s FLSA claim was time-barred despite being equitably tolled. Id.

Analysis

In sum, Cruz held that that the limitations period for FLSA claims can be equitably tolled if the employer failed to post the required notice explaining workers’ rights under the FLSA. The decision is important because it means an employer who fails to post the required notice may lose its ability to assert a statute of limitations defense in FLSA cases.

Virginia Whistleblower Protection Law: Broad Protections for Whistleblowers

Virginia’s Whistleblower Protection Law (“VWPL”) offers strong protections for Virginia workers who report unlawful practices or refuse an employer’s order to engage in unlawful practices. The law protects a wider range of conduct than that protected under Virginia’s Bowman claim jurisprudence. It covers both internal and external whistleblower activities. It allows courts to award aggrieved employees injunctive relief and reinstatement, compensation for lost wages, benefits, and other remuneration, as well as interest, reasonable attorneys’ fees, and costs. In short, the VWPL t is a powerful law for protecting the rights of Virginia employees who stand up and “blow the whistle” on unlawful practices by their employers.

Types of Retaliation Prohibited

The VWPL protects employees who engage in protected whistleblower activities from retaliation in most aspects of the employment relationship. Specifically, the law prohibits employers from discharging, disciplining, threatening, discriminating against, or penalizing an employee, or from taking other retaliatory action with respect to the employee’s compensation, terms, conditions, location, or privileges of employment, because the employee engages in a protected activity. VA Code § 40.1-27.3(A).

Protected Activities Under the VWPL

The VWPL includes a list of employee whistleblower activities that it protects from employer retaliation. These “protected activities” are:

The employee, or a person acting on behalf of the employee, in good faith reports a violation of any federal or state law or regulation to a supervisor or to any governmental body or law-enforcement official;
The employee is requested by a governmental body or law-enforcement official to participate in an investigation, hearing, or inquiry;
The employee refuses to engage in a criminal act that would subject the employee to criminal liability;
The employee refuses an employer’s order to perform an action that violates any federal or state law or regulation and the employee informs the employer that the order is being refused for that reason; or
The employee provides information to or testifies before any governmental body or law-enforcement official conducting an investigation, hearing, or inquiry into any alleged violation by the employer of a federal or state law or regulation.

VA Code § 40.1-27.3(A)(1)-(5) (emphasis added). The law prohibits employers from retaliating against employees for engaging in any of these activities.

Learn more about Virginia’s whistleblower updates at TimCoffieldAttorney.net.

Garcetti v. Ceballos: Private Citizen Speech, Public Employment, and the First Amendment

In Garcetti v. Ceballos, 547 U.S. 410 (2006), the Supreme Court reaffirmed its prior decisions that the First Amendment to the U.S. Constitution protects government employees from retaliation for speaking out as private citizens on matters of public concern. But when public employees make statements pursuant to their official duties, they are not speaking as private citizens for First Amendment purposes, and the Constitution does not protect their communications from employer discipline.

Facts

Ceballos was a supervising deputy district attorney for the Los Angeles County District Attorney’s Office, also known as a “calendar deputy.” A defense attorney asked Ceballos to review a case in which, the defense attorney claimed, police obtained a search warrant using an inaccurate affidavit. After examining the affidavit and visiting the location it described, Ceballos determined the affidavit contained serious misrepresentations.

After relaying his findings to his supervisors at the District Attorney’s Office, Ceballos followed up with a disposition memorandum recommending that the case be dismissed. The District Attorney’s Office nevertheless moved forward with prosecuting the case.

At a court hearing on the defendant’s motion to challenge the search warrant, Ceballos repeated his observations about the inaccurate affidavit. The trial court rejected the challenge.

Ceballos claimed that in the aftermath of these events, he was subjected to a series of retaliatory employment actions. These actions included reassignment from his calendar deputy position to a trial deputy position, transfer to another courthouse, and denial of a promotion.

Claiming that his supervisors at the District Attorney’s Office retaliated against him for his memorandum, in violation of his First Amendment and Fourteenth Amendment free speech rights, Ceballos filed suit. The District Court granted summary judgment against Ceballos, ruling, among other things, that the memo was not protected speech because Ceballos wrote it pursuant to his employment duties. The Ninth Circuit reversed, holding that the memo’s allegations were protected under the First Amendment analysis in Pickering v. Board of Ed. of Township High School Dist. 205, Will Cty., 391 U.S. 563 (1968), and Connick v. Myers, 461 U.S. 138 (1983). The District Attorney’s Office appealed. Garcetti at 413-417.

The Court’s Decision

The Garcetti Court held that when public employees make statements pursuant to their official duties, they are not speaking as citizens for First Amendment purposes, and therefore the Constitution does not insulate their communications from employer discipline. The Court then determined that Ceballos did not speak as a citizen when he wrote his memo and, therefore, his speech was not protected by the First Amendment.

Read more about the case at TimCoffieldAttorney.com.

Comcast v. NAAAM: Law of Causation in 1981 Claims

In Comcast Corp. v. National Association of African American-Owned Media, No. 18-1171, __ U.S. __ (March 23, 2020), the Supreme Court held that race-discrimination claims brought under the Civil Rights Act of 1886, 42 U.S.C. § 1981, are subject to a but-for standard of causation.

Background

The Civil Rights Act of 1886, now codified at 42 U.S.C. § 1981, provides that “[a]ll persons … shall have the same right … to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens[.]” The law has been interpreted as, inter alia, prohibiting discrimination because of race in employment and other kinds of contractual relationships.

A similar discrimination law, Title VII of the Civil Rights Act, specifically provides for a “motivating factor” causation standard — that is, an employee can prevail on a Title VII race discrimination claim by proving that her race was a “motivating factor for any employment practice, even though other factors also motivated that practice.” 42 U.S.C. § 2000e-2(m).

The statutory language of 42 U.S.C. § 1981, however, does not specify the causation standard for proving race discrimination under § 1981.

The causation standard under § 1981 is important for employees because this law is, in some ways, more powerful than Title VII. For example, while Title VII race discrimination claims are subject to caps on compensatory and punitive damages, see 42 U.S.C. § 1981a, race discrimination claims under § 1981 are not subject to damages caps.

Read about this case’s facts at TimCoffieldAttorney.com.