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Serving Two Masters Can Trigger Overtime
Gregory W. McClune
While it has been said that "no one can serve two
masters," in our modern society many people work for two or more employers at
the same time. This multiple employment can have significant consequences under
state and federal wage and hour laws and other areas. Thus, without realizing
it, under the Fair Labor Standards Act (http://tinyurl.com/kvq99x),
an employer may become liable financially for the unpaid or underpaid wages of
an employee, or for a discrimination claim brought by an employee under Title VII
because of the employee's connections to a second or third employer.
In managing their employment risks, employers should be
aware of the joint employment doctrine, which says that two or more related
companies may - independently and together - be liable for the total hours of
an employee who works for both of them. Thus, the hours of an employee who
works at multiple, related employers may be aggregated and, thereby, exceed
daily or weekly overtime thresholds. This can mean not only that the companies
have joint liability for employment claims, but also that liability could be
created that would not exist at all if they were wholly separate entities.
There is no "magic formula" for determining when joint
employment has arisen. Instead, the courts or the governmental agencies will
examine the facts in each case and apply one of more of the commonly used
factors, often focusing on the "economic realities" of the relationship between
the multiple employers. Here are some of the commonly used factors:
Employers should be aware that the precise factors may
differ from state to state, and from agency to agency. Unfortunately for
employers, they cannot use labels - such as an employee's job title - or the
terms of the contract to protect themselves against such statutory claims.
Employers who have direct or indirect relationships with
other employers, or who are planning changes that will result in such
relationships, should keep these factors in mind to avoid facing unanticipated,
and unbudgeted, liability for employment claims.
Will Your Separation Agreement Pass
Kristy Kunisaki Marino
While separation agreements are one way that an employer
can effectively manage its post-employment litigation risks, the validity of a
poorly drafted agreement could be contested in court. A recent decision serves
as a reminder of the importance of drafting separation agreements in a clear
manner that will survive legal scrutiny.
In Ridinger v. Dow Jones & Co. [an enhanced version of this opinion is available to lexis.com
subscribers / unenhanced version available from lexisONE Free Case Law] ,
a 62-year-old magazine photo editor was terminated and sued his former
employer, Dow Jones, for age discrimination. At the time of his termination,
Mr. Ridinger accepted a severance package that included 20 weeks' salary and
other benefits in exchange for a separation agreement waiving any claims under
the federal Age
Discrimination in Employment Act (ADEA) (http://tinyurl.com/2uam6yl).
Specifically, in one section of the document titled, "Waiver of Claims Against
Employer," the separation agreement stated, "This waiver and release does not
apply to any claim that may arise under the ADEA after the date that Employee
signs this Agreement." Another section of the agreement, "Limitation on Promise
Not to Sue" stated, "Therefore, the financial obligations of paragraph 4(b)
would not apply to a suit filed solely under the ADEA, but Employee
nevertheless understands that the waivers and releases contained in paragraph
4(a) still apply to ADEA claims and that he has waived all ADEA claims as part
of this Agreement..."
Although he had signed a separation agreement, Mr.
Ridinger sued Dow Jones for age discrimination and argued that the waiver
provision concerning ADEA claims was unclear in violation of the Older
Workers Benefit Protection Act (OWBPA) (http://tinyurl.com/3kes6ek), which requires that an
employee waive his or her ADEA claim in a "knowing and voluntary" way and that
a separation agreement be "written in a manner calculated to be understood."
(29 U.S.C. § 626(f)(1).) Mr. Ridinger also argued that the waiver provision
violated Equal Employment Opportunity Commission (EEOC) regulations
which require a waiver to be drafted in plain language, not using "technical
jargon" or "long, complex sentences," and "geared to the level of
understanding" of the employee, taking into consideration the typical
employee's education level. (29 C.F.R. § 1625.22(b))
The Second Circuit Court of Appeals rejected Mr.
Ridinger's arguments and agreed with Dow Jones that it had written the
separation agreement in a way so that it could be understood by its employees.
The court looked at other cases that invalidated the company's separation
agreements because they contained technical legal terms that were not easily
understood or parsed by a layperson and in combinations that could easily be
misunderstood. In those cases, the companies required an employee to release
all ADEA claims, but also stated that the employee's "covenant not to sue" did
not apply to actions "based solely under the ADEA." Those courts found that it
would not be easy for a layperson to distinguish between a release and a
covenant not to sue, and thus, reasonable persons could conclude that they had
not waived their right to bring forth an ADEA claim. However, in this case, the
court found that Dow Jones' terms in its separation agreement were sufficiently
The bottom line is that courts will protect employers who
take care to draft their separation agreements in plain English. Accordingly,
employers should periodically review their separation agreements, especially if
they include provisions related to age discrimination.
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