Court Report

Jul 1, 2006

HR Magazine, July 2006 Payroll errors did not amount to FLSA violation; sex-specific dress and grooming policy examined; more.

Employer Didn’t Accommodate Religious Belief
Baker v. The Home Depot, 2nd Cir., No. 05-1069-cv (April 19, 2006).

An employer’s failure to fully accommodate an employee’s request to have Sundays off precluded summary judgment for the employer, the 2nd U.S. Circuit Court of Appeals decided in a Title VII case.

When Bradley Baker began working in sales at Home Depot’s Henrietta, N.Y., store, he told the store manager that his soon-to-be wife and he had become congregants of the Gospel Fellowship Church, which observed Sunday as the Sabbath and stressed the importance of Sunday as “a day of rest and meditation.”

Baker stated that he could not work on Sundays and made it clear that if he was required to work then, he could not work at the Henrietta store.

For one year, Baker was not required to work on Sundays.

In September 2002, Colleen Vorndran became the new store manager and asked Baker to be available for work on Sundays. When Baker explained that he could not work on Sundays because of religious reasons, Vorndran insisted that Baker needed to be “fully flexible,” and that if he could not work on Sundays, he could not work at that store.

She offered to let Baker work part time, but he refused, as he needed the health benefits available only to full-time employees. Vorndran also offered to let Baker work on Sunday afternoons or evenings, allowing him time for church services on Sunday morning.

Baker declined this offer, as he believed that his religion did not let him work at all on Sundays.

After that meeting, Baker was scheduled to work on a Sunday. When Baker failed to appear for work that day, his employment was terminated. Baker filed a lawsuit alleging religious discrimination.

The district court ruled for Home Depot, determining that it avoided liability for religious discrimination by offering to accommodate him to let him work Sunday afternoons or evenings.

The 2nd Circuit disagreed, reversing that decision and remanding the case to the lower court for further proceedings. The appeals court held that an employer “does not fulfill its obligation to reasonably accommodate a religious belief when it is confronted with two religious objections and offers an accommodation which completely ignores one.”

The offer to let Baker work on Sunday afternoons or evenings addressed his ability to attend church services, but ignored his basic objection to working on Sundays. The court found that, in essence, the accommodation could not be considered reasonable because it did not eliminate the conflict between the employment requirement and the religious practice.

By Maria Greco Danaher, an attorney with the firm of Dickie, McCamey & Chilcote in Pittsburgh.

Payroll Errors Were Not Unlawful Docking
ACS v. Detroit Edison Co., 6th Cir., No. 05-1042 (April 14, 2006).

The payment of additional compensation at an exempt employee’s “hourly” rate for hours worked beyond 40 in a workweek and occasional underpayments of salary made in error do not violate the salary-basis test under the Fair Labor Standards Act (FLSA), the 6th U.S. Circuit Court of Appeals ruled.

Detroit Edison employees sued the company, claiming they were entitled to overtime pay even though the company characterized them as salaried exempt employees under the FLSA. They claimed that they actually were paid on an hourly basis because when they underreported their hours, they received less than their predetermined salary, thereby violating the salary-basis test.

The company uses a payroll system that requires all employees (exempt and nonexempt) to report hours worked each week, and every two weeks a paycheck is generated based on the reported hours. Salaried employees’ annual salary is converted to a weekly salaried amount by dividing the annual salary by 52, and many salaried employees receive hourly payments for hours worked over 40 in a workweek.

To receive their full salary each pay period, salaried employees must report at least 40 hours each week. If they fail to report at least 40 hours, they receive a corresponding reduction in their salary; however, the company’s pay policy states that “an exempt employee’s pay may not be reduced because of an absence of less than one full day.”

The district court held that Detroit Edison properly paid the employees on a salary basis, and the 6th Circuit affirmed. Pay variations caused by sporadic underreporting of hours worked did not alter the employees’ exempt status, the court found. Further, the court held that tracking actual hours worked by exempt employees and paying additional compensation at a salaried exempt employee’s “hourly” rate for hours worked over 40 in a workweek did not violate the salary-basis test.

The appeals court relied heavily on a U.S. Department of Labor opinion letter that concluded that employee time-entry errors or omissions or other clerical or mechanical errors that result in an initial payment of less than 1/26th of an employee’s annual salary is not considered unlawful docking, does not call into question the employer’s intention to pay on a salary basis and does not affect exempt status.

Significantly, any paycheck shortage that resulted from employee error or omission could be adjusted by completing an adjustment form, a process consistent with the “window of correction” provided for by the FLSA regulations. The appeals court also pointed to the plaintiffs’ inability to show that the payroll shortfalls were anything other than mistakes or human error.

By Melanie L. Webber, an attorney with the firm of Millisor & Nobil Co. LPA, an affiliate of Worklaw® Network, in Cleveland.

Cosmetics Cause of Action Cleared
Jespersen v. Harrah’s Operating Co., 9th Cir., No. 03-15045 (April 14, 2006).

An employer’s dress and grooming policy that has different requirements for men and women may be challenged because the requirements for one sex are based on stereotypes, and the requirements for one sex are more burdensome than those for the other, according to the 9th U.S. Circuit Court of Appeals. It held that a female bartender who quit rather than wear makeup as required by her employer could sue for gender discrimination, but the employer nevertheless prevailed.

Darlene Jespersen had been employed as a bartender at the Harrah’s casino in Reno, Nev., for 20 years. An outstanding employee, she earned consistently high ratings both in performance evaluations by her supervisors and in customer surveys. Her problems began when Harrah’s embarked on its “Beverage Department Image Transformation,” which included a detailed dress and grooming code.

All employees had to look “well groomed, appealing to the eye.” Both male and female employees were required to wear the same uniform (black pants, white shirt, black vest and bow tie); both could wear tasteful jewelry but not outlandish hairstyles. However, there were additional, separate requirements for each gender. Men had to keep their hair short and their fingernails trimmed, and were specifically not allowed to wear makeup.

The requirements for women were more extensive with respect to hair (teased, curled or styled), stockings and fingernails. The last straw for Jespersen was that female employees were required to wear face powder, blush, mascara and lipstick. Because her past experiences with makeup had left her feeling “demeaned” and “degraded,” Jespersen refused to wear it and lost her job.

Jespersen filed a sex discrimination lawsuit, claiming that the makeup policy was discriminatory because women were subjected to terms and conditions of employment to which men were not subjected, and women were required to conform to sex-based stereotypes.

The district court granted Harrah’s motion for summary judgment. On appeal, the 9th Circuit held that dress and grooming policies could be challenged for sex stereotyping, for instance, if a dress requirement treated women as sex objects.

Nevertheless, it affirmed the district court’s dismissal of Jespersen’s case, because she had not provided any evidence that the policy was motivated by sex stereotyping. Observing that the overall image was the same for men and women, the court held that one individual’s personal reaction to one part of a mostly gender-neutral policy cannot form the basis for a sex stereotyping claim.

By Judith A. Moldover, an attorney in the New York office of Ford & Harrison.

Web Extras

Professional Pointers 

Employers are constrained by law to make “reasonable accommodation” for bona fide religious beliefs. Ordinarily, an accommodation will be found to be unreasonable if it causes the employee to suffer a diminution in his or her employment benefits or status, or imposes a ​significant work-related burden on the individual without justification. However, an accommodation of religious beliefs that would create an “undue hardship” for the employer—for instance, one that creates more than a de minimis cost—does not have to be implemented.

This case reinforces the need not only to classify employees as exempt or nonexempt, but also to establish a pay policy that both prohibits improper deductions and has adequate mechanisms to identify and correct improper pay deductions consistent with the “window of correction” afforded by the FLSA.

Although Harrah’s won, grooming policies are now subject to claims of stereotyping in the 9th Circuit. To avoid the risk of large legal fees, not to mention losing outstanding employees, employers should adopt flexible grooming policies that can be enforced without resort to termination.  


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