Attorney Tamsin Kaplan featured in the Boston Business Journal's December 2011 article

When four exotic dancers at the Ten's Show Club in Salisbury sued last May to be classified as employees rather than independent contractors, the case caught the attention of the legal community — and not just because there were strippers involved.

The case tested the provisions of a 2004 law that strictly defines who is eligible for unemployment insurance, worker's compensation and tax witholdings. The club argued that the dancers paid a fee to the club, and earned only what they made in tips, and were therefore private contractors. But a Massachusetts Superior Court held that they are employees, sending a message to employers throughout the state who rely on independent workers to make sure their policies regarding those workers are on the right side of the law.

Such is the lay of the shifting land when it comes to employment law.

Other court decisions from 2011 will affect sex discrimination class action lawsuits, how social media policies must be crafted, what arbitration agreements can and cannot cover, and the legality of employers docking pay from employees.

Lawyers contacted for this story are Tamsin Kaplan of the McLane Law Firm; Jim Nicholas, a member of the employment, labor and benefits section at Mintz Levin Cohn Ferris Glovsky & Popeo PC; Gary Feldman of Davis, Malm and D'Agostine in Boston; and John Tocci of Tocci, Goss & Lee PC in Boston.

Sandoval v. MJF Bowery Corp., dba "Ten's Show Club" (Massachusetts Superior Court)
What happened: Four exotic dancers at a Salisbury bar that bills itself as an "upscale gentleman's club" sued to be classified as employees, rather than independent contractors. The women paid the club a fee to dance, and were compensated by tips only. But the court found the dancers did not satisfy two of the three prongs necessary under the state's independent contractor law. On the first prong, which is whether the person works under the control of the employer, the court did not rule definitively, but said many aspects of their employment – such as what they wear, what time they work, and what music they dance to – was controlled by the club. On the other two prongs, concerning whether they performed a service outside the scope of the employers normal course of business, and whether they indeed had a business independent of the club, the court ruled in the dancers' favor.

The takeaway: Most don't think the case was particularly groundbreaking, but was a reminder of the state's strict definition of independent contractors. Tasmin Kaplan of the McLane Law Firm said that misclassifying workers comes with substantial risk, including triple damages and attorney's fees, even for good faith mistakes. "In my practice, I find companies of various sizes treating employees as independent contractors," she said. Many of them have converted contractors to regular employees in recent years because of the state's laws, and she advises companies to "take a look at all independent contractors and make sure you are on the right side of the law." Gary Feldman of Davis, Malm and D'Agostine said companies should keep in mind that the state's definition of contractor is more strict than the IRS rules.

Wal-Mart v. Dukes (U.S. Supreme Court)

What happened: This was a class action lawsuit on behalf of all 1.6 million woman who've worked at Wal-Mart since Dec. 26, 1998. The plaintiffs claimed the retailer had an unconscious gender bias, resulting in unequal promotion, pay and job assignments. It began in 2000 in California when Betty Dukes, 54, of California filed a sex discrimination lawsuit. In 2001, a federal judge ruled in favor of the class action status, but Walmart appealed all the way up to the Supreme Court. In June 2011, that court ruled in favor of Walmart, saying the circumstances surrounding the plaintiffs were too varied for class action status, because pay and promotion decisions are made locally at Walmart stores.

The takeaway: The decision denied the class action status, but Kaplan said she's "100 percent sure" these women will be back in court. "I see this as a very strong warning to employers that they have to be aware of unconscious bias and employment actions based on it," she said. Kaplan recommends employers "track all employment actions and review their statistics internally to ferret out possible unconscious bias and address it." Jim Nicholas of Mintz Levin said he'll be interested to see how the decision will be applied to defenses in other cases. "Lawyers will try and apply principals of Dukes to wage and hour claims," he said. The lesson for employers is simply to keep appropriate policies in place which are not discriminatory. Feldman found no surprises in the decision. He said the plaintiffs were trying to advance an "academic theory of discrimination," based on statistics, but Walmart was able to show that there was no overarching discriminatory policy that caused it. And John Tocci of Tocci, Goss & Lee agreed with the court that sex discrimination suits are necessarily too fact- and situation-based for class action.

Thompson v. North American Stainless (U.S. Supreme Court)
What happened: The court ruled in January that the ban on retaliating against an employee who makes a discrimination complaint applies to other people who are close to that employee, such as family members. Eric Thompson argued that he was fired because three weeks earlier, his fiancée filed a complaint with the Equal Employment Opportunity Commission against the Kentucky company. The court agreed that Title VII of the Civil Rights Acts of 1964 protects not only the person making the claim, but those close to him or her.

The takeaway: Nicholas said that while retaliation against those close to an employee who makes a complaint is ruled illegal, "The court refused to establish a bright-line test" as to exactly whom that covers. He said he can envision an argument being made in the case of two people who worked together for many years, where one files a claim for harassment and the other gets fired. "We won't know, until these cases are litigated, how far this goes."

Tocci called this case with the biggest impact on employment law, nationally. The Massachusetts Commission Against Discrimination has already upheld protection of those by association, but this ruling makes the practice nationally recognized, he said. He also said it will be interesting to see how far the courts will go in extending Title VII. "If you're an employer, that's particularly concerning, because it's uncharted territory," he said. He says it could be applied to the burgeoning area of "caretaker discrimination," where an employee who takes care of a sick child or parent can be discriminated against.

Joule Technical Staffing v. Simmons (Mass. Supreme Judicial Court)
What happened: The case involves mandatory arbitration provisions in employment contracts, which stipulate that an employee must go through arbitration – rather that the courts – to resolve any disputes. In March, the SJC ruled that such agreements are enforceable as long as they are drafted specifically with respect to the type of claims that are required to be arbitrated. Also, where such agreements exist, the ruling said that complainants may still file a complaint with the Mass. Commission Against Discrimination, even though they can be barred from participating in the investigation.

The takeaway: Kaplan said that if the employee alleges discrimination, harassment or retaliation under the civil rights laws and files in the Mass. Commission Against Discrimination, the MCAD can still investigate the employee's claims on the agency's own behalf in the interest of its mission to reduce civil rights violations. That could result in a monetary award, and the court acknowledges the problem of double recovery if arbitration also results in an award, but it doesn't give a solution. "What I'm recommending to employers is that the arbitration agreement waive the employee's right to any MCAD awards," she said.

Nicholas said that the ruling indicates that the arbitration proceedings and the MCAD investigation cannot impact one another, but that means the employer may have to face both simultaneously. "Now, employers are going to have to consider, when facing an MCAD investigation, 'are we engaging in a two-front war?'"

Camara v. Attorney General (Massachusetts Supreme Judicial Court)
What happened: The state SJC held that an employer can't dock employees' pay based on its unilateral determination that employees are liable. The case came up regarding ABC Disposal Service Inc., a New Bedford-based trash and recycling pickup company that wanted to reduce damage to company trucks and other people's property by instituting a policy that if an employee was found to be at fault for such damage, the worker would have to pay for the damage through wage deduction or be disciplined. While the company said that the program caused a reduction in damage, the state's highest court said that under the Massachusetts Wage Act, employers are prohibited from making such deductions.

The takeaway: The ruling means that an employer who believes an employee owes it money will have to sue him or her in court, or else come to an agreement for repayment which does not include a reduction in pay. Nicholas said that in the past, there was an allowance for an employer to deduct what's known as a "valid setoff" to recoup money from employees. With this ruling, however, the SJC is saying an employer can't unilaterally determine that an employee owes money absent a due process. However, he points out, "they didn't say what that due process was."

The attorneys agree the ruling also renders illegal policies that deduct pay from cashiers if they end their shifts short of cash. Tocci says there are a lot of such policies in Massachusetts, particularly at some big box chain stores. "It's a very common policy in the retail world." He believes the only way an employer can collect from an employee it believes owes money is to come up with a separate agreement for repayment that does not involve wage deduction, and which can be challenged in court like any other contact.

Social media litigation (National Labor Relations Board report)
What happened: In October, the National Labor Relations Board issued a report based on several cases involving employees use of social media sites such as Facebook, Twitter and LinkedIn. The upshot is that it warns employers against any kind of discipline against employees who engage in "concerted activity" — discussion of workplace conditions and situations — over social media. While the NLRB usually gets involved with companies where there are unions, the report applies to unionized and nonunionized shops alike.

The takeaway: Attorneys agree that social media is among the most active areas of employment law today. Employers with social media policies need to review them to make sure they don't run afoul of the NLRB's rules. Even those without social media policies need to tread carefully when considering taking action against employees based on things posted on social media.

Nicholas said that "what's somewhat problematic is that some of these employees were actively disparaging their employer." The NLRB did suggest that companies that have social media policies include a disclaimer to say that nothing in the policy is meant to infringe on activity protected under section 7 of the National Labor Relations Act.

Feldman explained that "concerted activity" includes talking about terms and conditions of employment — especially speaking on behalf of co-workers, or inviting a discussion with them. For example, he said protected speech would be an employee who names her employer on Facebook, and says that she and her colleagues believe they're not being paid overtime like they should. On the other hand, an employee posting a personal gripe, saying he hates his boss because he smells bad, would not be protected.

Kaplan emphasized that "a lot of employers don't even realize this applies to them." She believes the NLRB's position is confusing, in that most people would agree that a company has the right to discipline employees who stand on a street corner with a bullhorn disparaging the company, but that the NLRB implies that saying that the same things over social media is OK.

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