Update: Soup, Salvation and Overtime – Sixth Circuit Reverses $400,000 FLSA VerdictApparently if you are doing the Lord’s work and seek only treasures in heaven, the Fair Labor Standards Act will not guarantee that you receive an earthly reward as well. In a significant ruling that impacts religious organizations, the Sixth Circuit reversed a nearly $400,000 FLSA verdict based on the fact that the volunteers did not expect payment.

We previously described how Cathedral Buffet and Rev. Ernest Angley cast a wing and prayer to the Sixth Circuit to undo the district court’s verdict. In that order, the district court ruled in favor of the Department of Labor finding that unpaid volunteers were employees entitled to wages.

The Sixth Circuit, however, threw the reverend manna from heaven when it found the district court’s logic wanting. The volunteers at Cathedral Buffet did not expect to receive compensation – a threshold requirement for any FLSA claim — according to the appellate court. Although the common “economic realities” inquiry is used to analyze whether the person was an actual employee entitled to compensation, the court emphasized that binding law “plainly requires us to first ask whether Cathedral Buffet’s volunteers worked in ‘expectation of compensation.’ They did not.” The court went on to chronicle that the volunteers did not expect or receive any wages or in-kind benefits, and were not even allowed to accept tips. The district court had reached a different conclusion on the volunteers’ expectations.

The appellate court also found — in stark contrast to the district court — that there was not a sufficient showing of economic coercion by Cathedral Buffet to warrant FLSA protection. While circumstances can establish that an organization coerced a volunteer to not expect compensation, the court found that was not the case here as the “type of coercion with which the FLSA is concerned is economic in nature, not societal or spiritual.”

Religious and volunteer-based organizations should take special note, and evaluate what their volunteers/employees expect regarding being financially compensated. “[A]lthough the FLSA might aim to curb the societal ills caused by low wages, it does so through a comprehensive system of economic regulations. The Act does not go so far as to regulate when, where, and how a person may volunteer her time to her church. After all, the giving of one’s time and money through religious obligation is a common tenet of many faiths.”

Two Guys Walk into a Wine Bar… Not a Joke as Another Court Recognizes Claim for Harassment Based on Sexual OrientationI have told clients for years that they ignore claims based on sexual orientation at their peril, and another court is backing me up. An Arizona federal district court just ordered a wine bar to pay real money ($100,000) to two servers based on claims about sexual orientation harassment and retaliation.

Curiously, this was a default judgment, so we have no idea what the employer’s side of this story is. With that caveat, two servers, Wyatt Lupton and Jared Bahnick, filed charges with the EEOC claiming that 5th & Wine allowed its management and employees to harass them because they are gay. According to Lupton, he was fired after he said he planned on taking legal action. The EEOC found cause and ultimately filed a lawsuit on their behalf. The company did not answer, and the EEOC obtained a default judgment—money for Lupton and Bahnick, as well as injunctive relief.

Regardless of what actually happened at this wine bar, employers should be careful when confronted with claims of discrimination or harassment based on sexual orientation or transgender status. Even though Congress has not added these as protected categories under Title VII, many courts are treating them as covered. In light of that trend, cautious employers should consider the following:

  • If an employee reports that he or she is being harassed because of sexual orientation or transgender status, treat it like you would any other harassment complaint.
  • Consider revising EEO and harassment policies to explicitly include sexual orientation and transgender status as protected categories.
  • Make sure supervisors and managers understand that ignoring these issues could land the company in court.

Making Sure Your Company Is Not the Next Harassment HashtagLike every other employment lawyer in America, I have been giving a good bit of thought to #MeToo and what it means for my clients. Many (although certainly not all) of the stories under this hashtag are about unreported harassment—egregious behavior that people did not feel comfortable reporting. My clients want to hear about a problem (and be given a chance to remedy it) before it hits Twitter or Facebook or whatever.

So, once a company has a good, solid policy prohibiting harassment (and I like to think that all of my clients do), what else should we be doing to encourage internal complaints? While this is not an exhaustive list, here are a few ideas:

  • Make sure employees know how to raise a complaint. The hotline number/email helpline/HR contact information should be widely publicized and easy to use. Make sure it is accessible to employees with disabilities or for whom English is not their first language.
  • If you haven’t done training in a while, do some. I am refocusing my training a little to talk about respect in the workplace rather than just illegal harassment prevention. Maybe the supervisor doesn’t know that it creeps his secretary out when he leans over her to look at her computer screen—but if no one tells him, he will probably keep doing it. We need to encourage employees to raise concerns before they reach a legal threshold. On the flip side, encourage supervisors to be respectful of employees’ sensibilities and not overreact if someone raises a concern.
  • Recirculate your policy and take that opportunity to personalize it a little. I had one client whose president sent an email distributing the policy, reinforcing the company culture, and encouraging people to raise concerns (even about him). They got great, supportive responses from the employees saying how much they appreciated the message. It doesn’t have to be much but should convey the following:

Our culture is that we work hard and collaboratively, and we respect our coworkers. We will not tolerate disrespectful treatment, whether it is based on sex, race or anything else. If you are experiencing a different culture, let us know.

If behavior makes you uncomfortable at work, even if you don’t think it is “harassment,” let us know so we can address it. This is true no matter who it is—coworker, boss, vendor, client, anyone. Please don’t let someone’s behavior escalate before you complain. We will handle each complaint appropriately and as confidentially as possible.

  • When you get a complaint, investigate it to the extent you can. I have had two situations in which after raising a verbal complaint, the complaining party refused to talk to our investigator. We investigated what we could and took action on what we found.
  • Don’t dismiss complaints about conduct from years ago. If someone is raising it now, you need to be sure you don’t have a current problem.
  • When people cross the line, take appropriate and decisive action to stop any harassing behavior. If you can do so with disciplinary action short of termination, that’s fine. However, if the alleged behavior is egregious and you believe it happened, you may need to fire someone.

We all think we have a good workplace culture. Now is the time to make sure our employees agree.