Displaying 6 category results for August 2009.x

Proposed changes to federal time computation rules

By Matt Hedberg
August 22, 2009

The U. S. Supreme Court has approved proposed amendments on the computation of time under the Federal Rules of Appellate, Bankruptcy, Civil, and Criminal Procedure.  The amendments will take effect on December 1, 2009, unless Congress unexpectedly enacts legislation to reject, modify, or defer them.

The amendments are designed to simplify the time computation rules by counting intermediate weekend days and holidays. Under the present rules these days are sometimes counted and sometimes not.  In addition, most time periods shorter than 30 days are changed to multiples of 7 days so that deadlines will usually fall on weekdays.  The amendments also address electronic filing issues, such as the "inaccessibility" of the clerk's office and when a day "ends."

The Local Rules for the United States District Court for the District of Oregon are expected to change to conform to the new rules.  The changes to the Local Rules are expected to go into effect on or around December 1, 2009.

Retaliatory firing does not support a wrongful termination claim, Oregon Court of Appeals holds

By Matt Hedberg
August 21, 2009

Earlier this week, the Oregon Court of Appeals affirmed that a plaintiff alleging retaliatory termination may not maintain a common law claim if an adequate remedy is available under either a federal or state statute.

In Deatherage v. Johnson, the plaintiff appealed the dismissal of her common law claim for wrongful discharge.  Plaintiff claimed that her employer fired her in retaliation for contacting the Oregon Occupational Safety and Health Division to report health and safety violations at the employer's place of business.  The trial court granted the employer's motion to dismiss on the ground that plaintiff had an adequate statutory remedy.

The Court of Appeals observed that in Walsh v. Consolidated Freightways, 278 Or 347, 563 P2d 1205 (1977), the Oregon Supreme Court held that a plaintiff alleging retaliatory termination has an adequate remedy under federal and state laws for workplace health and safety violations.  See, e.g., 29 U.S.C. 660, ORS 654.062(5) and (6).  Accordingly, the Court of Appeals held that an employee has no common law claim of retaliatory termination for reporting employer violations of workplace health and safety laws.

Oregon Supreme Court affirms limitation on wrongful termination claim

By Lori Bauman
August 21, 2009

Yesterday the Oregon Supreme Court held that a terminated employee has no wrongful termination claim after being fired for making internal complaints about unlawful and unethical sales practices.  In Lamson v. Crater Lake Motors, Inc., the Court affirmed the Court of Appeals and reversed a jury verdict in favor of the employee.  See our earlier coverage of the December 2007 Court of Appeals opinion here.

"Emergency" bills get an early start

By Lori Bauman
August 12, 2009
Hundreds of bills passed the Oregon legislature this session with an "emergency" designation, meaning that they became, or will become, effective earlier than January 1, 2010.  The Oregon State Bar Professional Liability Fund posted this list summarizing a number of those bills, grouped by subject matter.

Managers found independently liable for unpaid wages under the FLSA

By Stacey Mark
August 6, 2009

So you thought only a corporation could be liable for corporate debts?  Not when the debt is unpaid wages.

In Boucher v. Shaw, the Ninth Circuit last week confirmed that individuals may be liable for unpaid wages as "employers" under the Fair Labor Standards Act (FLSA).  The court also found that the bankruptcy of the corporate employer had no effect on the claims against the individual managers of the corporation.

According to the complaint, the three defendant managers in Shaw had varying responsibilities: (1) one was responsible for handling labor and employment matters at the Castaways Hotel, Casino and Bowling Center (Castaways); (2) one was Chairman and CEO and had a 70% ownership interest in Castaways; and (3) one was CFO, with financial supervision and oversight over Castaways' cash management and a 30% ownership interest.  All three defendants were alleged to have had control and custody of the plaintiff employees, their employment, and their place of employment. The defendants did not challenge their status as employers under the FLSA, but instead sought to assert the protection afforded to the corporation, which had filed for bankruptcy. 

The Ninth Circuit held that the bankruptcy protects only the debtor, Castaways.  The plaintiffs were not seeking to recover property of the managers that had been pledged to secure Castaways' debts or that would otherwise impact property of the bankruptcy estate.  Castaways had no obligation to indemnify the managers for legal expenses or any judgment issued against them.  To the contrary, the managers were independently liable under the FLSA and the automatic bankruptcy stay had no effect on that liability.  Accordingly, the Ninth Circuit allowed the case against the individual managers to proceed.

Whether an individual is an "employer" under the FLSA is determined by an "economic realities" test.  In addition to a significant ownership interest, assertion of operational control over the major aspects of a corporation's day-to-day functions and its employment relationships (e.g., hiring, firing, setting compensation, maintaining employment records) has resulted in a finding of "employer" status under the FLSA.

The lesson here?  Employees who get shortchanged on their pay are going to look to every possible resource to get paid.  There are many options for reducing payroll besides not paying employees.  Companies with cash flow problems should consult financial and legal advisors early -- before defaulting on payroll obligations.

IRS allows "safe harbor" plan cutbacks

By John Walch
August 5, 2009

Recently, the IRS proposed amendments to the 401(k) "safe harbor" plan regulations.  A "safe harbor" plan is one that complies with certain mandatory employer contribution, vesting and notice requirements.  Safe harbor plans are not subject to many of the discrimination rules that apply to 401(k) plans.  One condition of safe harbor status is the employer must make a mandatory matching contribution to all plan participants that defer, or a 3% of pay contribution on behalf of all eligible employees.  Previous IRS rules allowed employers to drop out of the matching arrangement mid-year.

Until the recent proposal, the IRS refused to allow employers to drop out of the 3% safe harbor arrangement mid-year.  Now, in recognition of the severe economic hardship most businesses are facing, the IRS proposes to allow employers to eliminate the safe harbor contribution mid-year.  The proposal requires the employer to provide notice to plan participants at least 30 days before the contribution will cease to allow them to make any changes to their deferral elections.  The plan will then have to comply with the discrimination requirements for the entire year, not just the post-change period.

The IRS is accepting comments on the proposal through August 18, and expects to issue final regulations shortly thereafter, which allow plan amendments back through May 18.  Employers therefore do not need to wait for the final regulations to implement the proposal.