U.S. SUPREME COURT

June marked the end of the Supreme Court's 2005-2006 term, and unfortunately, rulings in the area of labor and employment law may result in future increases in litigation costs for employers.

E-mail Etiquette: Employers may want to think twice before picking up the phone to call an employee or shooting an e-mail his way.  In IBP, Inc. v. Alvarez, the Supreme Court ruled that time spent by workers either putting on or taking off protective gear and walking to and from a job site was compensable under the Fair Labor Standards Act.  In other words, in instances when an employee engages in a principal work activity, or an act that is indispensable to a principal work activity, an employer must compensate an employee for his actions.  Therefore, if an employee is answering phone calls by a manager or reading company e-mail messages prior to or after completing a normal work day, the employer may be on the hook for paying his employee extra wages.

Discrimination Downfall:  According to Title VII, the American Disability Act and the Age Discrimination Employment Act, only those employers that employ at least 15 employees for a 20 or more week period in the present or preceding calendar year may be subject to a federal cause of action under Title VII for discrimination.  Such a computation becomes difficult when independent contractors, part-time employees, and seasonal workers are among the employees.  Unfortunately for the small business owner, the Supreme Court ruled unanimously that the 15-employee threshold for determining whether an employer is covered by Title VII is an element of a plaintiff's claim to be decided by a jury; not a judge.  Ultimately, this means that juries will get to decide on a case-by-case basis who qualifies as an employee, providing less certainty and higher litigation costs in discrimination cases.

Harass and Get Hit:  The Supreme Court's recent decision in Burlington Northern and Santa Fe Railway Co. v. White, just made the ticket price for defending a sexual harassment claim an expensive trip to court.  Instead of adopting a clear standard for what constitutes a retaliatory action, such as hiring, granting leave, discharging, and promoting, each potentially actionable act will need to be litigated in court to determine whether it passes or fails the "materially adverse to a reasonable person" standard.  The implications of this individual basis evaluation will become extremely burdensome to small employers, as the costs associated with potential litigation will begin to skyrocket.

TALLYING TAXES

What's Taxable and How Much?  The New York State Department of Taxation & Finance has recently published two reference guides to help businesses meet their New York sales and use tax obligations.  The first guide, Publication 850, simplifies a business' ability to determine if a particular good or service is taxable and under what conditions, as well as how to avoid common errors when filing a sales tax return.  The second guide is a Sales and Use Tax Jurisdiction and Rate Work-Up Service, which will help businesses determine which local sales tax jurisdictions should receive revenue from certain sales tax transactions and the correct sales tax rate to apply to those transactions.  This guide is meant to resolve the problems encountered when a customer's mailing address is not indicative of the local taxing jurisdiction where the individual resides, thus simplifying the process for charging and reporting the proper amount of local sales tax.

USE IT OR LOSE IT

If an employer is serious about wanting to enforce an arbitration clause found within an employment contract, the employer had better speak up.  In a recent decision, 11 months had elapsed between the time the employer was served with an employment discrimination action and its filing the motion to compel arbitration.  During that time frame, the plaintiff/employee retained counsel who took on the expense and effort of being admitted in New York and beginning fact discovery.  The court concluded that the employer waived his right to enforce arbitration due to the time and effort advanced by the plaintiff in the interim.

Kristen M. Walder