Pepsi Beverages pays $3.1M in racial bias case

WASHINGTON (AP) — Pepsi Beverages Co. will pay $3.1 million to settle federal charges of race discrimination for using criminal background checks to screen out job applicants — even if they weren't convicted of a crime.

The settlement announced Wednesday with the Equal Employment Opportunity Commission is part of a national government crackdown on hiring policies that can hurt blacks and Hispanics.

EEOC officials said the company's policy of not hiring workers with arrest records disproportionately excluded more than 300 black applicants. The policy barred applicants who had been arrested, but not convicted of a crime, and denied employment to others who were convicted of minor offenses.

Using arrest and conviction records to deny employment can be illegal if it's irrelevant for the job, according to the EEOC, which enforces the nation's employment discrimination laws. The agency says such blanket policies can limit job opportunities for minorities with higher arrest and conviction rates than whites.

The company has since adopted a new criminal background policy and plans to make jobs available to victims of the old policy if they are still interested in jobs at Pepsi and are qualified for the openings.

"I commend Pepsi's willingness to reexamine its policy and modify it to ensure that unwarranted roadblocks to employment are removed," EEOC Chairwoman Jacqueline Berrien said in a statement.

Pepsi Beverage spokesman Dave DeCecco said the company's criminal background check policy has always been neutral and that the EEOC did not find any intentional discrimination. He said after the issue was first raised in 2006, the company worked with the EEOC to revise its background check process "to create a workplace that is as diverse and inclusive as possible."

"We are committed to promoting diversity and inclusion and we have been widely recognized for our efforts for decades," DeCecco said.

He said the new policy would take a more "individualized approach" in considering the applicant's criminal history against the particular job being sought.

Pepsi Beverages is PepsiCo's beverage manufacturing, sales and distribution operating unit in the United States, Canada and Mexico.

Under the settlement, the company will provide the EEOC with regular reports on its hiring practices and offer antidiscrimination training to its hiring personnel and managers.

About 73 percent of major employers report that they always check on applicants' criminal records, while 19 percent do so for select job candidates, according to a 2010 survey by the Society for Human Resource Management.

But increased federal scrutiny of such policies has led some companies to reevaluate their hiring process. Pamela Devata, a Chicago employment lawyer who has represented companies trying to comply with EEOC's requirements, said there has been an uptick over the past year in EEOC charges over the use of background checks.

"The EEOC has taken a very aggressive enforcement posture on the use of criminal background and criminal history," Devata said.

The commission held a special meeting on the topic last summer, and Devata said employers have been expecting the EEOC to issue more specific guidance.

EEOC officials have said, for example, that an old drunken driving conviction may not be relevant to a clerical job, but a theft conviction may disqualify someone from working at a bank.

Julie Schmid, acting director of the EEOC's Minneapolis office, said the EEOC recommends that employers consider the nature and gravity of offenses, the time that has passed since conviction or completion of a sentence, and the nature of the job sought.

"We hope that employers with unnecessarily broad criminal background check policies take note of this agreement and reassess their policies to ensure compliance" with antidiscrimination laws, Schmid said in a written statement.

Rare but Grudging Judicial About-Face in Bias Case

“It’s a nice Christmas present, isn’t it?” said U. W. Clemon, Alabama’s first black federal judge.

Mr. Clemon, who stepped down from the bench in 2009 after three decades of service, was talking about an extraordinary about-face this month from the federal appeals court in Atlanta. He was home with a cold, but he sounded delighted to have played a part in persuading the court that some words still carry the sting of oppression, even in the modern South.

“The court now understands,” Mr. Clemon said, “the unwillingness of black men to go back to being called ‘boy.’ ”

Last year, the United States Court of Appeals for the 11th Circuit ruled that there were no racial overtones when a white manager at a Tyson chicken plant in Gadsden, Ala., called adult black men working there “boy.”

“The usages were conversational” and “nonracial in context,” the majority wrote in a 2-to-1 decision that overturned a jury verdict of about $1.4 million in an employment discrimination case brought by a black Tyson employee, John Hithon.

The decision prompted Mr. Clemon and 10 other civil rights leaders to file a brief. Among the signatories were giants of the civil rights movement like the Rev. Fred L. Shuttlesworth, who survived beatings and bombings in Alabama and who died in October, and Andrew Young, a former mayor of Atlanta and ambassador to the United Nations.

The brief urged the court to reconsider, making the case that “boy” retains its venom. For evidence, the brief drew on personal experiences, history, literary classics like “To Kill a Mockingbird” and “Native Son,” and the writings of the Rev. Dr. Martin Luther King Jr.

“Boy,” the brief said, is either a proxy for or “at the very least a close cousin” of the most charged racial epithet.

On Dec. 16, more than a year after the initial decision, the appeals court reversed course. The new ruling was opaque and grudging, but Mr. Clemon said he welcomed it, particularly since it is very unusual for a federal appeals court panel simply to change its mind. “I don’t recall it ever happening,” said Mr. Clemon, who graduated from law school in 1968.

Judge Edward E. Carnes wrote the new decision, now for a unanimous panel. He said the court had reconsidered the evidence in the case and “we now reach a different conclusion.”

Stephen B. Bright, the president of the Southern Center for Human Rights, was less magnanimous than Mr. Clemon. He said the case demonstrated “how judges manipulate facts and law to make a case come out the way they want it to.”

“The new opinion flatly contradicts the first one in several places,” Mr. Bright said.

The new decision followed unflattering news coverage of the earlier one and might have been prompted by the possibility of a rebuke from the full 11th Circuit.

On the other hand, the panel had dug in its heels in the face of earlier criticism in the long-running case, including from the Supreme Court.

In 2005, for instance, the appeals court said the meaning of “boy” depended on whether there was an adjective attached.

“The use of ‘boy’ when modified by a racial classification like ‘black’ or ‘white’ is evidence of discriminatory intent,” the court said. But “the use of ‘boy ’alone is not evidence of discrimination.”

The Supreme Court unanimously reversed the 2005 decision the following year. “The speaker’s meaning may depend on various factors including context, inflection, tone of voice, local custom and historical usage,” the justices said in an unsigned opinion.

That admonition was rejected by the 11th Circuit panel last year. Then it was embraced this month, though with little enthusiasm.

“The verdict could have gone either way,” Judge Carnes wrote, “and it went Hithon’s way.”

In the end, the new decision upheld a compensatory award to Mr. Hithon of about $365,000. But the decision struck down a $1 million award of punitive damages, saying the manager in question, who supervised 1,400 workers, was not high enough in Tyson’s corporate hierarchy for his actions to be attributed to the company, which in any event had a policy against discrimination.

A Tyson spokesman did not respond to two requests for comment.

Judge Carnes thought it worthwhile to drop a footnote criticizing the civil rights leaders’ brief, saying it had made a minor error in reciting the facts of the case. “Although we welcome amicus curiae briefs that are helpful, misstatements of fact are not helpful,” Judge Carnes wrote, using the Latin term for friend of the court.

Judge Carnes also took a swipe at Mr. Hithon’s trial lawyer, who had elicited testimony at trial about the meaning of “boy.”

“You know,” Anthony Ash, a black Tyson worker, testified in 2007, “being in the South, and everybody know being in the South, a white man says ‘boy’ to a black man, that’s an offensive word.”

“You might as well use the N-word if you are going to say that,” Mr. Ash added.

Then the lawyer uttered the word itself. Saying it, Judge Carnes wrote, was “an improper attempt to inflame the jury.”

There are classier ways to own up to mistakes. Some judges like to quote Justice Felix Frankfurter, as Judge Harry T. Edwards of the United States Court of Appeals for the District of Columbia Circuit did when he changed his mind in 1994 in a libel suit against this newspaper.

“Wisdom too often never comes,” Justice Frankfurter wrote, “and so one ought not to reject it merely because it comes late.”

By ADAM LIPTAK NYT

Exempt Employees Are Many Times Not "Exempt"

The Consequences of Misclassifying Employees: Comments from a Labor and Employment Lawyer

There are two types of classification disputes that can involve employers and their employees. The first is whether the workers are bona fide independent contractors. The second is whether the workers are bona fide exempt employees under the wage and hour laws. This article briefly examines the two areas.

The IRS has a 20 question test it has adopted to determine if workers are independent contractors or employees. The answer to these questions can impact the employer's obligation to withhold taxes and pay payroll taxes like FICA and FUTA. Similar issues arise under state worker's compensation and unemployment tax laws. Misclassification of employees as independent contractors can have both financial and legal repercussions. Nevertheless, failure to properly characterize workers is extremely commonplace in the U.S. The IRS estimates the underreporting of self-employment taxes due to misclassification of employees accounts for $148,000,000,000 per year and 43 percent of the gross tax gap. Since misclassifying employees can cost a company a devastating loss of time, effort and money, it is essential that companies are educated on the causes and how it can be prevented.

The other type of misclassification is of employees to determine whether they are entitled to minimum wages and overtime compensation. The most important statute here is the Fair labor Standards Act (FLSA). We interviewed Daniel Abrahams, Partner at Epstein, Becker & Green, P.C., to learn more about the consequences of improperly classifying as employees as "exempt" from federal and state wage laws and what companies can do to avoid this costly mistake.

According to the Law Office of Lowell J. Kuvin, LLC, the most common reason for misclassifying employees is misunderstanding the law and not knowing what makes an employee exempt. While a non-exempt employee is entitled to be paid minimum wages and overtime, an exempt employee is excused from minimum wage and overtime provisions of law. In order for a position to be exempt, employers must pay a salary rather than an hourly wage and typically only executive, administrative, and professional fit this criteria. The Law Office of Lowell J. Kuvin, LLC also points out that even though only about 10% - 20% of the United States workforce is excused from the coverage of the federal wage laws, a much larger percentage is classified as exempt from the minimum wage and/or overtime provisions.

Employers often mistake workers as exempt because they are salaried. However, in addition to being salaried, the employee must also perform a certain high level of duties. For example, an exempt bona fide executive would include any employee who has the authority to hire or fire other employees or whose suggestions and recommendations in regards to hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight. To be a bona fide independent contractor some of the issues the IRS would look at are whether the worker manages and invests in his/her business and/or whether they have an opportunity for profit or loss. The second cause for misclassification is for financial considerations. Sometimes employers will classify employees as exempt purposely, so they don't have to pay them overtime.

Depending on the size of the organization, employee classification is either handled by human resources or in the case of a smaller company, the controller or CFO. The employer makes judgments upon hiring an employee and often classifies his or her workforce as a group.

Misclassifying employees is critical, and for many companies it can mean the difference of thousands of dollars. The Law Office of Lowell J. Kuvin, LLC offers the following suggestions to ensure that companies are properly identifying employees:

Read over the legal regulations for exemptions and devise a clear job description for each job classification. Based on these explanations, you can make reasonable determinations as to whether the employee is exempt or non-exempt.

Review personnel manuals and payroll practices to ensure you're not making improper deductions in the salary of otherwise exempt employees. Under the Fair Labor Standards (FSLA) there are complicated rules that regulate deductions in pay to be made to the salary of an exempt worker. Making the wrong deduction will turn workers into non-exempt employees.

Visit the Department of Labor and the IRS websites. The IRS offers an in-depth review of how to correct the reporting of misclassified employees.

Attend workshops to gain an understanding of the financial impact of misclassifying employees.

Seek professional advice. If you're unsure about how to classify an employee, consult a professional. Although their services may include a fee, this is sure to save you money in the long run.

According to the Law Office of Lowell J. Kuvin, LLC, there were 4,500 Fair Labor Standards Act (FLSA) lawsuits filed last year. Additionally, numerous legal actions were made by the U.S. Department of Labor, along with thousands of labor investigations. As an employer you are required to post a notice in your workspace, notifying employees of the right to file a complaint through the U.S. Department of Labor. The department currently employs close to 1,000 U.S. Department of Labor investigators scattered around 150+ offices that take complaints.

Misclassifying workers can have tremendous financial consequences for companies. If it is an independent contractor situation, they may have to endure an audit from the IRS or a state department of taxation. If it is a wage and hour matter, they may find themselves in class action and individual lawsuits and be taken to court. The organization will not only have to pay back wages and overtime owed, but a variety of penalties and in many cases, attorney fees. Non-complying employers may also be required to pay amounts that should have been withheld or paid on the employees' behalf. For example, taxes, FICA, FUTA, benefit contributions or the value of lost benefits, plus penalties, interest, other damages, and/or attorney fees. Employees who are misclassified as independent contractors and who have work-related injuries and would normally rely solely on workers' compensation benefits, may be able to file a negligence claim against the employer.

Misclassifying employees is a costly-mistake that can happen to any company. However, by taking the right preventative measures, you can save yourself and your company a great deal of money and negative exposure in the long run.

Supreme Court Denies U.S. Country Wide Class Action - Cases Can Proceed Individually

The US supreme court has rejected the biggest sex discrimination case in history, ruling that the claim against retail giant Walmart on behalf of as many as 1.6 million women was too big to bring to trial.

All the top US judges ruled that the 10-year-old gender bias case failed to meet the standard for class action cases, and a majority of conservative judges also ruled that the women did not have enough in common to pool their claims.

The judgment is a major victory for Walmart, which had faced billions of dollars in claims if it had lost.

The women are free to bring cases on an individual basis but legal experts said they may be unwilling to do so. The decision was also described as a blow to all future class action law suits against companies or anyone trying to use the courts to push for systemic change.

The suit was originally filed in 2001 on behalf of Walmart employee Betty Dukes and five of her co-workers, who claimed they had been passed over for promotions and were paid less than male co-workers.

Their lawyers had provided statistical evidence that women earned less and were promoted less often. They alleged that Walmart's corporate culture and employment policies fostered gender stereotyping across the company and that Walmart knew of discrimination but failed to act.

The retailer's lawyers argued that the firm had no case to answer and had a stated anti-discrimination policy.

A lower US court ruled that the case could go to trial, but Walmart appealed to the supreme court. If the class action had been accepted it could have set a precedent for gender discrimination at many corporations, with companies such as Microsoft and General Electric writing to the court expressing their concern.

Led by conservative supreme court justice Antonin Scalia, the court found several problems with the law suit. All the judges agreed that it failed to meet a technical requirement for its type of class action primarily concerned with monetary claims.

Scalia and the conservative judges on the supreme court went further and argued the women did not have enough in common to represent a class of people. Scalia sided with Walmart's argument that there would need to be common elements tying together "literally millions of employment decisions at once" to make the basis for a class action case. He said that such a common element was "entirely absent here."

Legal expert Stuart Slotnick of New York law firm Buchanan Ingersoll and Rooney said the ruling "changes everything in Walmart's favour".

He said large-scale class actions would now be far harder to bring against other companies as greater proof of system-wide discrimination would be needed. Often such proof is only available after a case has been granted class action status and the process of discovery – where lawyers can demand access to sensitive internal documents – begins.

"Walmart was facing tremendous pressure from a case where so many claims were being made against it in one case before one judge," said Slotnick. "Now each individual will have to find a lawyer to fight their case and I would question whether most individuals will want to do that," he added.

Melissa Hart, a constitutional law expert at the University of Colorado school of law, said the US courts were increasingly "hostile" to cases that seemed to be pushing for systemic change.

"It's another signal from the courts that they are not going to let you push for change through the court. The courts are saying they are about individual harm, not systemic change," she said. "In the 1970s and 1980s there was a lot of hope that a law suit could change the world. This court is saying: 'No, it can't'."

Lowell J. Kuvin is a Labor and Employment Lawyer

Lowell J. Kuvin is a Labor and Employment Attorney

Restaurant Chain Using Tip Sharing To Curb Payroll Costs

With the Great Recession pinching profits, restaurant chains both big and small are searching for every way possible to trim costs and boost profits.

Wait staff tips have become one target of such efforts.

While most patrons, it seems safe to assume, still view tips as a way of rewarding good service, restaurants are increasingly viewing those tips as a way of reducing payroll costs.

Darden Restaurants, one of the largest restaurant companies in the U.S., recently began rolling out a mandatory tip-sharing scheme in its Olive Garden and Red Lobster Restaurants. 

Part of an initiative to reduce the company's annual wage costs by around $40 million, the plan, which was detailed in a recent article in the Orlando Sentinel, establishes percentages that servers are required to share with others. This new "tip-out" percent is, in turn, being used to justify reductions in hourly wage rates paid to busboys and bartenders.

Though Darden's official spokesman was reluctant to share details with the media, employees at locations where the plan has already been implemented complain that their earnings have been substantially curtailed by this new approach.

Such mandatory tip sharing stratagems have become easy to implement now that most guests pay with "plastic." Restaurants retain tips received as digital tender, then subsequently divide up and disburse the tip monies through their payroll systems.

Darden is also reportedly looking to reduce the number of full-time employees in its restaurants, replacing them instead with less expensive part-time associates.

Some in the industry have speculated that such cost cutting is shortsighted, since it reduces the financial incentive that otherwise encourages wait staff to deliver top quality service.

Muslim Woman Sues Abercrombie & Fitch Over Hijab

SAN FRANCISCO (AP) — A former stockroom worker for Abercrombie & Fitch Co. sued the clothing retailer in federal court Monday, saying she was illegally fired after refusing to remove her Muslim headscarf while on the job.

Hani Khan said a manager at the company's Hollister Co. store at the Hillsdale Mall in San Mateo hired her while she was wearing her hijab. The manager said it was OK to wear it as long as it was in company colors, Khan said.

Four months later, the 20-year-old says a district manager and human resources manager asked if she could remove the hijab while working, and she was suspended and then fired for refusing to do so.
It's the latest employment discrimination charge against the company's so-called "look policy," which critics say means images of mostly white, young, athletic-looking people. The New Albany, Ohio-based company has said it does not tolerate discrimination.

Still, Abercrombie has been the target of numerous discrimination lawsuits, including a federal class action brought by black, Hispanic and Asian employees and job applicants that was settled for $40 million in 2004. The company admitted no wrongdoing, though it was forced to implement new programs and policies to increase diversity.

"Growing up in this country where the Bill of Rights guarantees freedom of religion, I felt let down," Khan, now a college student studying political science, said at a news conference. "This case is about principles, the right to be able to express your religion freely and be able to work in this country."

Abercrombie defended its record in a comment provided to The Associated Press, saying diversity in its stores "far exceeds the diversity in the population of the United States."

"We comply with the law regarding reasonable religious accommodation, and we will continue to do so," said Rocky Robbins, the company's general counsel. "We are confident that when this matter is tried, a jury will find that we have fully complied with the law."

The lawsuit filed in U.S. District Court in San Francisco comes after the Equal Employment Opportunity Commission ruled in September that Khan was fired illegally. Khan's lawsuit was filed in conjunction with the EEOC's lawsuit.

It is not the first time the company has been charged with discriminating against Muslim women over the wearing of a hijab.

In 2009, Samantha Elauf, who was 17 at the time, filed a federal lawsuit in Tulsa, Okla., alleging the company rejected her for a job because she was wearing a hijab. That case is still ongoing.

The EEOC filed another lawsuit for the same reason, saying the company denied work to a hijab-wearing woman who applied for a stocking position in 2008 at an Abercrombie Kids store at the Great Mall in Milpitas, Calif.

Khan's attorney said her client is looking to get Abercrombie to change its "look policy" to allow religious headscarves to be worn by employees, and for unspecified damages. The lawsuit alleges violations of federal and state civil rights and employment laws.

"Abercrombie prides itself on requiring what it calls a natural classic American style. But there's nothing American about discriminating against someone because of their religion," said Araceli Martinez-Olguin, an attorney with the Legal Aid Society-Employment Law Center.

"Such a look policy cannot be squared with our shared values. No worker should have to choose between their religion and their job."

Florida's New Minimum Wage June 1, 2011

Florida's new minimum wage is $7.31 an hour, up from $7.25, takes effect on Wednesday. That's the minimum amount employers must pay employees, including domestic workers.

The state's minimum wage was increased after a successful Constitutional challenge by the National Employment Law Project and Florida Legal Services. The worker advocacy groups sought to correct an error in the method used by the state work force agency in calculating an adjustment in the minimum wage for inflation.

For tipped workers, the increase is from $4.23 an hour to $4.29 an hour, with the remaining $3.02 to made up by tips.

If your employer is not paying you properly, contact my office at 305.358.6800.