How Can Employers Respond to Increased Risks of Well-Funded Harassment Litigation Stemming from the #MeToo Movement?

Cheryl Orr and Phil Lebel wrote an article for Risk & Compliance magazine titled “How Can Employers Respond to Increased Risks of Well-Funded Harassment Litigation Stemming from the #MeToo Movement?” They discuss the recent uptick in sexual harassment allegations in the wake of the #MeToo campaign, which began following allegations against producer Harvey Weinstein in October 2017.

Cheryl and Phil highlight litigation finance and funding firms that have invited individuals who believe they have been victims of sexual harassment in the workplace to share their stories, seek legal representation, and, in some cases, receive “angel” litigation funding. They state that “[i]f this is, in fact, the beginning of a groundswell of harassment claims, the impact to employers could be tremendous. An increase in sexual harassment claims…could mean rising litigation expenses. Moreover, in the current social and political climate, verdicts could be increasingly unpredictable as juries attempt to ‘correct’ larger social problems by punishing employers who are found liable.” The article also notes that lawmakers in several jurisdictions are facing voter pressure to address the perceived shortcomings in the current legal framework, as applied to sexual harassment cases.

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Could A Litigation Finance Initiative Capitalize On #MeToo?

Since early October 2017, when the allegations against film producer Harvey Weinstein first surfaced in The New York Times and The New Yorker, there has been a steady stream of allegations of sexual harassment against high-profile individuals in the media, entertainment and political industries. Now, a Bay Area startup backed by Peter Thiel is looking to take advantage of a potential new wave of sexual harassment lawsuits.

On November 8, 2017, San Francisco-based litigation finance firm Legalist, Inc. launched a new initiative dubbed #MeToo Tales (“M2T”). According to its website, M2T is “a collaboration between Legalist and community organizers working to help victims of sexual harassment get justice.” M2T invites individuals who believe that they have been victims of sexual harassment in the workplace to share their stories confidentially on the initiative’s website or via a toll-free hotline. Legalist offers to pair claimants with its partner law firms and, for “eligible” individuals, to provide “angel” litigation funding of up to $100,000. Legalist recoups its funding by taking a portion of the proceeds from any successful litigation or settlement.

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The Office of Management and Budget Hits the Brakes on the Revised EEO-1

Last year, the U.S. Equal Employment Opportunity Commission (EEOC) unveiled its proposed revisions to the Employer Information Report EEO-1 (EEO-1). Previously, the EEO-1 directed federal contractors and employers with 100 or more employees to report annually the number of individuals that they employ by job category, race, ethnicity and gender in 10 different job groupings. As part of the Obama administration’s enhanced focus on equal pay, the EEOC’s proposed EEO-1 revisions aimed to expand the information collected to include pay data and working hours to help the EEOC discover potential discrimination in employment and pay equity.

The EEOC finalized its new EEO-1 in September 2016, and the additional information was to be provided by employers by the next reporting deadline in March 2018. That was the plan until the Office of Management and Budget (OMB) stepped in.

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The Ninth Circuit Asks the California Supreme Court to Weigh in on Bag Checks

On August 16, 2017, the Ninth Circuit Court of Appeals issued an order certifying a question regarding an important wage and hour issue to the California Supreme Court: Is time spent on an employer’s premises waiting for and undergoing required exit searches of bags or packages voluntarily brought to work for purely personal convenience by employees compensable as “hours worked” under California law?

The question arose in Frlekin v. Apple, Inc., an appeal in a wage and hour class action brought against Apple, Inc., by current and former nonexempt California retail store employees. In the suit, the plaintiffs sought compensation for time that they spent waiting for and undergoing exit searches whenever they left Apple’s retail store locations, pursuant to the company’s Employee Package and Bag Searches policy. The at-issue policy, which is similar to ones in place at many other large retailers, required that employees undergo unpaid, manager-performed bag/package checks before leaving the stores—at breaks or at the end of their shifts.

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The Unanswered Question: Do “Call-In” Schedules Trigger California Reporting Time Pay Obligations?

On June 8, 2017, plaintiffs Mayra Casas and Julio Fernandez (“Plaintiffs”) filed an unopposed motion seeking approval of a $12 million settlement reached against defendant Victoria’s Secret Stores, LLC (“Victoria’s Secret”) in a closely watched case challenging the legality of Victoria’s Secret’s “call-in” scheduling practices. The case, Casas v. Victoria’s Secret Stores, LLC, was pending before the Ninth Circuit Court of Appeals at the time the parties’ settled the case, and was one of many currently pending class action lawsuits challenging similar practices by retailers. As a result of the parties’ settlement, the ultimate question in Casas remains unanswered: Are employees who are required to call their employer to determine if they are required to show up for call-in shifts entitled to reporting time pay?

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Donald Trump’s Labor Secretary Revokes Obama-Era DOL Joint Employer and Independent Contractor Guidance

On June 7, 2017, U.S. Secretary of Labor Alexander Acosta announced that the U.S. Department of Labor (DOL) is withdrawing two major pieces of informal guidance issued during the Obama administration, pertaining to joint employment and independent contractors under the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201 et seq.

The two Administrator Interpretations Letters were issued by the former head of the DOL’s Wage and Hour Division, David Weil. The first guidance letter, Administrator’s Interpretation No. 2015-1, took an aggressive position regarding misclassification of employees as independent contractors. It stressed that the “economic realities” of worker-employer relationships were paramount—i.e., whether, as a matter of economic reality, a worker was dependent on the putative employer—and suggested that most workers should be classified as employees. Although it relied on case law, the Administrator Letter provided additional refinements and, significantly, de-emphasized consideration of “control”—a major element under most common law tests.

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