Employment Law Update

Michael Patrick O’Brien
November 16, 2006

In past updates, you have read about one of my recommended training programs for supervisors. The ad for another training program by HR Hero is, in and of itself, very informative, providing a list of the things you need to ensure supervisors know. Here is the list:

1. The six primary types of unlawful discrimination (or the six so-called protected classes).

2. What notes to take in the interview and how to assess an applicant’s credentials.

3. The difference between exempt and nonexempt employees.

4. How working a nonexempt employee ‘off the clock’ or during an ‘unpaid lunch break or meal period’ can violate the Fair Labor Standards Act.

5. That each time supervisors prepare a performance evaluation, they are preparing a piece of evidence that could be used in a lawsuit.

6. How to deal with a problem employee when he/she begins to be a problem.

7. What to do when you inherit a group of poorly performing employees.

8. Why it’s so important that supervisors document all interaction with subordinates.

9. Why discharge is the employment action most likely to result in an employment lawsuit.

10. How the ‘replacement factor’ affects the discharge of an employee in a protected class.

11. The difference between a whistleblower and a troublemaker.

12. How banter or jokes based on a protected class can result in valid harassment charges, even if the banter and jokes are between people of the same race, sex, etc.

13. While discrimination on the basis of sexual orientation or sexual preference may not be against federal law (although it is against the law in some states and municipalities), harassment can be.

14. How to avoid the next big lawsuit wave: retaliation.

15. What to do when an employee says she wants to take leave under the Family and Medical Leave Act.

16. Appropriate action to take when an employee claims a disability under the Americans with Disabilities Act and requests a reasonable accommodation.

17. What to do when an employee makes a request for religious accommodation.

18. How to handle a workplace violence situation.

19. Understanding employee privacy rights (monitoring emails, telephone conversations, etc.).

20. How to know when to go to HR for help.

Loan Officers and Overtime Exemptions

The United States Department of Labor (DOL) has issued an opinion letter providing useful guidelines for when loan officers can, and cannot, be classified as exempt (using the administrative exemption) from the overtime pay requirements of the Fair Labor Standards Act (FLSA). The opinion involved duties of mortgage loan outlined as "as collecting and analyzing the customer’s financial information and assessing the customer’s financial circumstances to determine whether the customer and the property qualify for a particular loan. This involves inquiries into the customer’s income, assets, investments, debt, credit history, prior bankruptcies, judgments, and liens, as well as characteristics of the property and similar information. The loan officer will also advise the customer about the risks and benefits of the loan alternatives, including the options and variables involved. The mortgage loan officer must analyze the information provided by the customer and advise on an array of options and variables, all of which make up the various components of the loan." 

Based on this description of duties, DOL concluded, "Your description of the duties of these mortgage loan officers suggests that they have a primary duty other than sales, as their work includes collecting and analyzing a customer’s financial information, advising the customer about the risks and benefits of various mortgage loan alternatives in light of their individual financial circumstances, and advising the customer about avenues to obtain a more advantageous loan program. Based upon the foregoing, we conclude that these mortgage loan officers satisfy the duties requirement under [the administrative exemption]." DOL also concluded, "The mortgage loan officers also satisfy the traditional duties requirements of the administrative exemption by performing office or non-manual work directly related to the management or general business operations of the employer, and by performing duties that include the exercise of discretion and independent judgment with respect to matters of significance. See 29 C.F.R. § 541.200(a)(2)-(3).

Similar to the employees discussed in the 2004 preamble in the John Alden, Hogan, and Wilshin cases—all of whom were found to satisfy the duties requirements of the administrative exemption—the employees here service their employer’s financial services business by marketing, servicing, and promoting the employer’s financial products. See John Alden, 126 F.3d at 8-14 (administrative exemption applied to insurance marketing representatives who represented the company to third party agents, promoted sales, and kept informed about the market to help match products with customer needs); Hogan, 361 F.3d at 626-28 (insurance agents administratively exempt who serviced and advised existing customers, adapted customer’s policies to their needs, promoted sales, and hired and trained staff among other duties); Wilshin, 212 F. Supp. 2d at 1376-79 (administrative exemption applied to insurance agent who stayed knowledgeable about the market and needs of customers, recommended products to clients, provided claims help, promoted the company, and directed the day-to-day affairs of the office)." This opinion will be very helpful to any employer employing loan officers. You can read the full opinion at: http://www.dol.gov/esa/whd/opinion/FLSA/2006/2006_09_08_31_FLSA.htm

Age Bias Disparate Impact Ruling

A Missouri federal court recently ruled that an insurance company's nationwide policy imposing a one-year moratorium on rehiring former sales agents adversely impacted older employees, in part because it did not appear to be based on factors beyond age. The lawsuit alleged that the employer fired its sales agents, offered to make them independent contractors, and refused to rehire them as employees in other positions for one year. The EEOC claimed that because more than 90% of the agents were over 40 years old, the no-rehire policy was age discrimination. The court agreed the EEOC had provided sufficient evidence to show a disparate impact on older workers. This is one of the first trial court cases applying a recent United States Supreme Court ruling that the Age Discrimination in Employment Act (ADEA) applies to disparate impact cases.

Interesting Current Articles

For your November reading, here are some links to interesting articles on brewing issues of employment law:

1. New York Times article on the impact on food service industries from proposed minimum wage increases: http://www.nytimes.com/2006/11/02/business/02sbiz.html?_r=1&ref=business&oref=slogin.

2. Associated Press article on labor group criticism of a national retailer’s attendance policy (involving penalty points for various attendance problems): http://www.washingtonpost.com/wp-dyn/content/article/2006/11/01/AR2006110102864.html.

The Employment Law Update is a legal and legislative update service sent out about twice a month to various members of the Utah League of Credit Unions HR Council. The author, Utah law attorney Michael Patrick O'Brien, is also the Legal and Legislative Director for Utah SHRM (Society for Human Resource Management). Contact him at 801-534-7315 or mobrien@joneswaldo.com or visit www.joneswaldo.com. Reprinted with permission.