Joint Employment
A little over a year ago, we wrote about the concept of joint employment and its impact on the retail industry, particularly as it related to franchisors and franchisees. At the time of publication (August 2016), the National Labor Relations Board was taking a very expansive view of the concept of joint employment, meaning more companies could potentially be targets for union elections and collective bargaining by individuals with whom they had no direct employment relationship.
With the advent of the new administration, however, the Department of Labor withdrew the previous guidance and its overly expansive view of joint employment. Congress also began work on a proposed law that would scale back the new standards to a less expansive legal test. Then, in December 2017, the newly constituted National Labor Relations Board overruled a 2015 decision that had expanded the concept of joint employment, returning the analysis to a traditional and reasonable interpretation.
Specifically, the Board held that two different companies would be considered joint employers for purposes of the National Labor Relations Act (NLRA) only when each entity has exercised control over essential employment terms of another entity’s employees (rather than merely having reserved the right to exercise control) and has done so directly and immediately (rather than indirectly) in a manner that is not limited and routine. This was a welcome change for businesses that had operated under these standards for thirty years.
These changes do not, however, signal an end to the joint employment doctrine. To the contrary, even after retreating to the more conservative joint employer standard, the NLRB concluded that the two employers involved in the specific case were joint employers under the narrower standard. Nor do these changes under the NLRA change the law in every arena. Retailers will continue to see plaintiffs in employment lawsuits attempting to add them as defendants under a variety of laws. There is more than just one joint employment standard. Two examples of this doctrine are also found under the Fair Labor Standards Act (FLSA) and Title VII.
Joint Employment Under Wage And Hour Law
The FLSA – the nation’s primary wage and hour law – expressly recognizes the concept of joint employment. The regulations interpreting the Act provide that “a single individual may stand in the relation of an employee to two or more employers at the same time under The Fair Labor Standards Act of 1938 . . . .” When determining whether two entities are joint employers under the FLSA, courts consider the economic realities of the relationship and apply a multi-factor test known as the “economic realities” test. For the most part, the various economic realities tests rely on the traditional common law test for employment with various economic considerations incorporated.
These economic considerations focus primarily on financial dependency. In other words, courts look to see whether the employee depends on the alleged employer for his economic livelihood based upon the parties’ actual working relationship. Whether or not the parties intended to create a joint employment relationship is irrelevant for purposes of the FLSA.
If a joint employment relationship is found to exist under the FLSA, both employers are responsible for compliance with the Act. For example, if a temporary employment agency supplies an employee to your company but fails to pay proper overtime compensation, the temporary agency and your company could both be held liable for the amount of overtime pay owed to the employee.
Joint Employment Under Discrimination Law
There is no clearly defined standard for determining whether a joint employment relationship exists for the purposes of Title VII, which is the primary federal antidiscrimination law. Nevertheless, for the purpose of Title VII liability, courts treat independent entities as joint employers if they share or co-determine matters that affect the essential terms and conditions of employment. Generally, the key issues examined by courts are whether the alleged employer has the right to hire, supervise, and fire employees.
It is important to note that a joint employment relationship is not always necessary for a finding of joint liability under Title VII. Federal regulations written by the Equal Employment Opportunity Commission (EEOC) provide that an employer may also be responsible for the acts of nonemployees with respect to sexual harassment. The EEOC will consider the employer’s degree of control and other legal responsibility with respect to the conduct of the nonemployee. Thus, regardless of whether an actual joint employment relationship exists, so long as you have some control over a contingent worker, you should take immediate corrective action if you become aware of harassing conduct.
Direct Causes Of Action
Furthermore, there are also employment-related claims that can be brought directly against you by individuals on your worksite who are performing employment duties for another employer. These claims generally arise either from direct interactions between your employees and the vendor’s employees at the worksite, or from communications between you and a vendor concerning employee performance.
Tort claims under state law are the most common source of these liabilities. For example, let’s say a worker loses their job because of negative information you reported to the direct employer. That worker might bring a defamation claim against you. This could easily arise from a situation where you accuse the individual of theft or some other criminal conduct (which could be considered defamation per se). In fact, even if you do not communicate negative information, but simply advise the direct employer that the individual is no longer welcome on your premises, the employee could bring a claim against you for intentional interference with a contract. While the premises for and viability of these claims differ among states, they do provide a means by which nonemployees can seek to punish the company that, in their minds, cost them their jobs.
Individuals may also have claims based on the conduct of one of your employees. For example, if your employee makes derogatory comments to the individual, a claim for intentional infliction of emotional distress could arise, and there is little doubt that the plaintiff’s attorney will name your company as a defendant. While one of the most difficult torts to prove, such allegations can pull your company into costly litigation.
Independent Contractors
Another problem area exists when contracting directly with an individual for services pertaining to functions commonly performed in the business. If your company identifies such an individual as an independent contractor, and therefore makes no withholding from their pay, you may run afoul of tax laws, as well as workers’ compensation, wage and hour, and unemployment insurance laws.
There is no single test for determining independent contractor status. Rather, the definition varies depending on the legal issue and the enforcement agency involved. For instance, you will find different definitions and tests for independent contractors in the IRS Code, the state unemployment insurance codes, federal and state wage hour laws, and state workers’ compensation statutes.
In the retail world, the question of whether to designate an individual as an independent contractor appears most often in situations that call for part-time employees. For example, if your store hires a janitor to clean the store twice a week, one of your managers might assume the individual is an independent contractor because they are not working full time. However, the number of hours an individual works is generally less important than the type of work being performed. Here, cleaning is a task for which most retail employees have some responsibility to oversee, which might categorize that individual as an employee in the eyes of the law. It is much safer to avoid the question by simply classifying the janitor as a part-time employee who is paid on a W-2 hourly basis.
Our Advice
No one can stop an individual from filing suit, no matter how frivolous. So your first step should be to obtain whatever protections are available before a suit is ever filed. If contracting with a company whose employees will be performing work on your premises, it is critical to negotiate for indemnification. While this won’t prevent your company from getting sued, it will put the burden of defense and associated costs on the contracted company.
Next, never sign a contract with a labor agency without a thorough review of the agreement. Oftentimes these contracts are written to assign responsibility to the retailer, indemnifying the labor provider for any event occurring on the premises that gives rise to litigation. Additionally, employment practices liability insurance policies should be reviewed with an eye toward whether they cover employment-related claims made by individuals who are not your direct employees. It’s important for your company to have this coverage.
When contracting for services, another important piece of the puzzle is to make sure the vendor supplies onsite supervision. While it isn’t necessary for these supervisors to be onsite 100 percent of the time, they should be visiting the workplace to check on their employees’ performance and to address any issues with a particular employee.
Once protections are in place, there are internal measures you should address. In-store management must understand that they are not to fill the role of supervisor to the other company’s employees. You need to conduct training identifying the individuals who fall into this category and the necessary procedures to follow for handling problems associated with these individuals. There should also be a stop-and-check mandate before a manager asks to have another company’s employee removed from your premises. While there will certainly be times when an individual’s misconduct means such action is appropriate, supervisors are often unaware of any risk in removing another company’s employee, and therefore act with little thought.
Conclusion
Hiring employees is not easy, and using another company to handle the administrative aspects of hiring can certainly be beneficial. But before traveling this road, you should take stock of where issues might arise and be prepared to address those risks.
For more information, contact the author at EHarold@fisherphillips.com or 504.592.3801.
]]>Who does Title III apply to?
Title III of the ADA applies to private entities and covers:
(1) places of public accommodation;
(2) commercial facilities; and
(3) examinations and courses related to applications, licensing, certification or credentialing for secondary or postsecondary education, professional, or trade purposes.
A place of public accommodation is defined as a place maintained by a private entity whose operations affect commerce, and that falls within one of twelve enumerated categories (not discussed here).
There are inconsistent interpretations among courts regarding whether private websites are considered places of public accommodation subject to the accessibility requirements of Title III and if so, to what standard they are subject. While more specific criteria for accessibility of websites are expected next year, the DOJ has not yet published any clear regulations on the issue.
The court’s decision in Gil v. Winn-Dixie Stores, Inc. offers insight into the direction that the law may be heading. The plaintiff, a visually impaired individual, alleged that the defendant food store’s website was inaccessible to him. The court undertook to determine if the website was subject to the requirements of the ADA. If the website was a place of public accommodation, the court reasoned that it would be subject to the ADA. Although Winn-Dixie does not offer any products for sale directly through its website, the website does permit customers the opportunity to access digital coupons and refill prescriptions.
Many individuals with auditory, visual, or other related disabilities often use assistive technology to help them operate computers and mobile devices and easily access the same information that is available to users without disabilities. The plaintiff in the Winn-Dixie case used assistive software, but he was still unable to access 90% of the tabs on Winn-Dixie’s website, including information such as store locations and hours.
Ultimately the court determined that since the website is “heavily integrated” with Winn-Dixie’s physical store locations and operates as a gateway to them, the website constituted a place of public accommodation and is subject to the requirements of the ADA. The court determined that the online pharmacy, access to digital coupons, and ability to locate stores and hours were considered “services, privileges, advantages, and accommodations” offered by Winn-Dixie’s physical store locations, and as such, the ADA requires that disabled individuals are provided “full and equal enjoyment” of both the website and the stores.
The court’s decision confirms that websites with any public interaction will be considered a place of public accommodation and thus subject to the ADA. Essentially, if a website interacts with the public, it is likely a place of public accommodation. These interactions may be direct, such as e-commerce sales. As in the Winn-Dixie case they may also be less direct such as access to coupons, information regarding store locations and hours, and access to any other tab or page found on the website containing information about products or services that are associated with the physical store.
What is Required?
The court adopted the Web Content Accessibility Guidelines (WCAG) as the accessibility standard for websites. The WCAG is a set of accessibility guidelines created by the World Wide Web Consortium (W3C) which is the primary international standards organization for the Internet. It was compiled based on the expert opinions of the W3C staff, member organizations, and interest groups. The consortium is led by Tim Berners-Lee, the inventor of the World Wide Web, and W3C CEO, Jeffrey Jaffe. The court noted that the internet provides the public with information that is easily accessible to viewers at any time. The ADA’s purpose is to ensure disabled users are afforded an opportunity, equal to that of users without disabilities, to access the goods, services, facilities, privileges, advantages, or accommodations provided on websites.
So How Does a Business with a Website Comply?
There are several steps a business can take to protect itself. The first is to make sure its website is accessible. Acknowledge the potential use of assistive technology by disabled viewers and create websites that are compatible by doing things such as:
Businesses should be aware that these suggestions may be referred to for guidance, but do not encompass the entirety of the accommodations Title III of the ADA may require. It is strongly recommended that businesses operating websites conform with the WCAG in an effort to ensure that disabled individuals receive the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of a website.
What Happens if a Website Does Not Comply?
Businesses should be proactive in bringing their website into compliance despite the current lack of formal regulations. Disabled persons encountering an inaccessible website may retain counsel to send out threatening demand letters to a website operator or file a lawsuit. As one of few decisions on the issue, Gil v. Winn-Dixie Stores, Inc. will serve as persuasive precedent to courts confronted with the issue in the near future.
Websites that fail to comply may find themselves:
In addition to protecting against the risk of liability, modifying websites to increase accessibility to disabled viewers potentially expands a business’ market to promote its products or services to new customers who previously could not adequately access information about the business.
For any questions, feel free to contact Hillary Hughes at hhughes@gsblaw.com or at 212.965.4527, Nancy Cooper at ncooper@gsblaw.com or at 503.553.3174, or your attorney for more information on the applicability and requirements of these new guidelines.
This alert was prepared with the assistance of Meghan O’Brien, a legal extern and law student at New York Law School.
Author Pages
Hillary Hughes – Owner, Garvey Schubert Barer
Nancy Cooper – Owner, Garvey Schubert Barer
MOSTLY HISPANIC KITCHEN STAFF
Mark Austin began working as a cook in the kitchen of Bonefish Grill in April 2015. He was one of two African-Americans working full-time in the kitchen. The other eight kitchen employees were all Hispanic. Kevin Rothery was the restaurant’s on-site manager. When Austin began working in Bonefish’s kitchen, he observed the Hispanic staff would routinely “rub, pinch or smack one another’s backsides as they moved past one another, massage one another’s shoulders and put their arms around one another.” The Hispanic staff also refused to answer Austin’s questions or assist him when he spoke in English. He reported these issues throughout the first few months of his employment without resolution.
A few months after beginning, Austin complained about the kitchen staff’s behavior in touching one another, claiming that both he and the other non-Hispanic employee felt “sexually harassed.” Rothery told Austin that he would “talk to the guys” about the harassment but the behavior did not stop. In fact, Austin’s co-workers began to “look at him and smile” while putting their hands into each other’s pants. Austin voiced his complaints to other managers throughout his employment. He found that “the more he complained, the more vulgar the kitchen staff would get.” He alleged that Rothery was not only aware of the behavior but was “present while the employees mimicked sexual acts.”
COMPLAINTS IGNORED
In September 2015, Austin put his complaints in writing, including the kitchen staff’s “inappropriate sexual games.” Rothery did not follow up on Austin’s written complaint. After Austin complained about a specific employee inappropriately pinching him, Rothery placed that particular employee directly next to Austin on the food prep line.
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]]>This settlement brings to light the “predictive scheduling” trend that is occurring throughout the nation. Historically, restaurants and retailers have used on-call scheduling to help control labor costs. But as workers began claiming that the daily unpredictability of on-call scheduling hindered their ability to earn a living, hold more than one job, arrange reliable child care, and attend classes, this practice began to change.
Now, to combat worker uncertainty, numerous states and municipalities have begun passing these types of laws, referred to as “predictive scheduling,” “fair scheduling,” “secure scheduling,” and “fair workweek.” For the most part, predictive scheduling laws typically require employers to provide employees (i) with their schedules two to four weeks in advance; and (ii) with predictable pay if changes to work schedules are made within this window. Most of these laws contain exceptions to these requirements where an employer’s inability or failure to provide an employee with scheduled work results from specific causes beyond its control.
While San Francisco was the first locality to pass predictive scheduling legislation in the form of a “Retail Workers Bill of Rights” in November 2014, these types of laws are now becoming much more commonplace.
For example, in May 2017 New York City passed a law requiring fast food employers to schedule non-salaried workers for their shifts at least two weeks in advance, provide workers with good faith estimates of their hours, and pay workers extra when they work closing and then opening shifts back-to-back. The law also creates a private right of action for employees who seek to enforce their rights.
Similarly, a new comprehensive predictive scheduling law took effect for Seattle in July 2017, pursuant to which employers are required, among other things, to provide (i) new employees with a written good faith estimate of their work schedule, including the average number of hours the employee should expect to work as well as the employer’s expectations that an employee will be on call; and (ii) existing employees with a written work schedule, posted in a conspicuous and accessible location, at least 14 days before the first day of the work schedule.
As of August 2017, Connecticut, Illinois, Indiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, Oregon, and Rhode Island, as well as numerous municipalities, are considering enacting some type of predictive scheduling laws.
Thus, employers in all states, and in particular those in the retail and food service industries, should closely monitor state and local legislation developments on this issue. In any location in which legislation has been proposed, employers must educate themselves about and prepare themselves for both the practical and legal challenges that changes in these scheduling laws will present to their businesses. However, employers should not wait for predictive scheduling laws to pass in their city or state before updating work scheduling policies, as a quick examination of laws in other jurisdictions provides an outline for what to expect.
Although predictive scheduling laws are designed to benefit employees, employers can, with careful planning, make changes in a way that is least disruptive to their businesses. Further, implementing predictive scheduling changes that incorporate varied work shifts, straightforward schedule changes, and an effective communication process could help employers stay compliant with these evolving laws.
Finally, even if the state or municipality in which you do business is not affected, predictive scheduling could become a practice that improves employee relations and/or employee morale. Thus, employers should evaluate their existing workforce and scheduling practices and consider whether moving toward predictive scheduling may be beneficial for their businesses.
]]>1. Compliance with Chapter 22 of the Texas Labor Code: This law protects from discrimination employees who are absent because if an evacuation order. This law has certain exceptions, including emergency services personnel or those required to provide services for the general public during emergency situations. That said, companies who require such employees to work during a storm must provide emergency shelter.
2. Payment for Employees Who Are Absent Due to Weather: The FLSA treats exempt employees differently from non-exempt. Non-exempt employees must only be paid for actual hours worked. Exempt employees, however, must be paid if the work site is closed or unable to open because of weather for less than a full workweek.
3. On-Call/Waiting Time: Weather events often create unique circumstances that don’t fall neatly into existing policies. Employees may be stuck at work waiting for the weather to clear before they go home – is this compensable time? What if employees are on-call to return to the office after the storm has passed. Is this compensable “on-call time?”
4. Protected Leave Under FMLA: Disasters often create family issues, especially where there are elderly or sick family members who must be moved or cared for during such an event. These situations could trigger protection for absences under the FMLA.
5. Payday: No one wants to miss a paycheck. Make sure your company has a contingency plan in place to communicate with employees and maintain personnel functions like payroll and benefits processing even during a disaster.
]]>Last year, Massachusetts passed the nation’s first law prohibiting employers from asking job applicants for their current salaries or salary history. Pro employee groups praised this law as a way to counter the pay discrimination that can follow a woman throughout her career when the salary bump she gets with each job move is based on pay that is already less than her male peers. Many advocates for women believe that by basing future salaries on previous wages, employers are perpetuating the long-standing gender based pay gap. Indeed, some argue that the widening of the gender pay gap as women age supports the theory that employers are relying too heavily on previous salaries. Companies and business groups, on the other hand, have expressed their views that this new law is misguided and represents yet another government-mandated intrusion into the way they conduct their businesses. Employers further argue that these laws could have a negative impact on job growth and, in addition, there is nothing unlawful or unfair about using salary history to set pay and manage their costs.
Following the passage of this law in Massachusetts, California enacted a similar ban in January as an amendment to an existing fair pay law and, within the past two months, New York City and Philadelphia each have enacted bans on salary history inquiries (although the Philadelphia ban is currently being challenged in court by the Chamber of Commerce of Greater Philadelphia on the grounds that the ban deprives businesses of their First Amendment rights).
At least eight other states, including Illinois, Maine, Maryland, New Jersey, New York, Pennsylvania, Rhode Island and Vermont currently are considering similar measures. Moreover, Washington D.C.’s city council is considering a similar bill that would require employers to publish salary ranges for open positions. These salary history bans generally are part of broader laws that are attempting to prevent employers from underpaying women. The legislation in Massachusetts and proposed legislation in some other states also prohibit employers from instructing employees not to discuss their wages, although such an instruction would already arguably be prohibited by the National Labor Relations Act, which allows all employees (not just union members) the right to engage in concerted activities relating to terms and conditions of their employment. Generally, the laws allow employers to rely on salary information if/when the job candidate volunteers such information. Employers, however, must be careful to stay clear of claims that the interviewer encouraged the candidate to share his or her salary history.
If this law becomes reality in a state or city in which you operate, you will need to remove salary inquiries from both paper and online application forms. You also will need to update your policies and hiring procedures to ensure that questions regarding salary history are eliminated and that the written policies comply with the law. Ensure all interviewers are instructed as to the new prohibition on such inquiries during the interview process. Importantly, since you will not be able to use previous compensation levels to determine whether a candidate is worth pursuing, it will be critical to include the company’s salary range in a job posting or share that information orally with a candidate early in the interview process, to avoid wasting time and resources pursuing an individual who is not on the same page in terms of their financial expectations.
]]>Led by the National Labor Relations Board, there is a trend to hold multiple parties accountable, not only for their own employees, but also for the employees of their contractors, franchisees and others with whom they do business. This results from an apparent shift in public policy, and the corresponding expanding definition of and greater reliance on “joint employer liability” across administrative agencies, legislative bodies and the courts.
In August 2015, the NLRB issued a decision in Browning-Ferris Industries of California, et al. v. Sanitary Truck Drivers, 362 holding that it was no longer necessary to exercise direct, immediate control over workers to be deemed a joint employer. Rather, if an employer exercises “indirect control” over working conditions or if it has “reserved authority” to do so, it is the joint employer, even over a staffing agency’s employees.
Some states like California have gone even further expanding the scope of liability for employers who contract with temporary staffing agencies. Under California Labor Code Section 2810.3, affected California employers now “share” civil responsibility and liability with their “labor contractors” regarding wages and workers compensation coverage of assigned temporary workers.
Even though the Browning-Ferris ruling involved a contractual relationship between a staffing agency and an employer and not a franchisor-franchisee relationship, there are many parallels between the two. In fact, using similar reasoning, the NLRB has filed complaints against McDonald’s USA with respect to employees of certain of its franchisees, contending that McDonald’s should be held to be a joint employer.
Employees of McDonald’s franchisees have also sued McDonald’s Corporation and McDonald’s USA alleging joint employment liability. While typically relying on traditional common law theories of joint employment liability, these cases are surviving summary judgment under the ostensible agency theory: “Ostensible agency exists where (1) the person dealing with the agent does so with reasonable belief in the agent’s authority; (2) that belief is ‘generated by some act or neglect of the principal sought to be charged’; and (3) the relying party is not negligent.”
There are a number of steps hotel owners, franchisors and managers can take to reduce the risk of liability. In the next part of this series, we address some of these steps.
Arthur Chinski and Ruth L. Seroussi are attorneys with Buchalter Nemer in Los Angeles.
]]>Uncertain global markets … cybersecurity … tightening credit sources … increasing regulatory demands … antitrust. Obstacles to business success have never loomed larger. And corporate legal departments have never played a larger role in addressing them. As general counsel and other corporate attorneys move beyond strictly law-related duties, expanding their scope of influence to overall business affairs, the need for nimble, talent-rich, business minded legal departments rises in turn. We reached out to five skilled practitioners who have helped their companies prevail despite shifting market conditions. They generously and enthusiastically shared their formulas for success. Their passion for the work, and for the development of the individuals on their teams, came through loud and clear. We greatly appreciate the candor and perspective offered by a group intimately familiar with what it takes to build a truly world-class law department.
“We are what we repeatedly do. Excellence, then, is not an act, but a habit.” ~ Aristotle
The experts share the view that a superior law department should be comprised of skilled legal experts who possess an equally well-honed understanding of business in general, and their business in particular.
David Hill of NRG Energy describes this dynamic as being “sewn into the business.” Whether it’s M&A, litigation, deal work, contracts, regulatory strategy or other matters, David sees himself and his teammates as partners with his company’s non-legal executives.
“I operate the law department as a service organization. We’re not there to give answers, then fold our arms and expect somebody else to accept the business consequences. We own the problem equally. Lawyers who point out the potential problems, then sit back and say ‘I told you so’ when the business gets sued are basically worthless,” he adds.
Amy Olli of Avaya adds, “Besides having the right level of skill and insight, lawyers really need to understand the business. This includes the competition, the market, and the company’s financials, which helps you better understand the risks.” She envisions a fusion of this knowledge with a clear view of legal limitations, synthesized and presented in pragmatic fashion.
Sometimes the need for pragmatism necessitates that lawyers temper their tendency to overthink a situation, says Amy. The nature of legal training leads some attorneys to immerse themselves in the deepest level of detail on every matter, David adds. This can be at odds with the quicker pace business decision-making requires.
Bjarne Tellmann considers the following elements essential for a world-class legal department:
• Focus on the structure of the organization and make sure lawyers have a seat at the table, preferably one close to the client. • Look for cultural alignment within the legal department based on mission, values and strategic priorities.
• Mindfully manage costs with appropriate policies and e-billing tools, and consider alternative legal-service providers.
• Leverage technology such as electronic and self-servicing solutions that allow you, for example, to structure memos and other documents from the cloud, reducing cost and boosting productivity.
• Identify the core risks within the business and strategies for addressing them, for example by bringing in specialists or outsourcing.
According to Bill Solomon of Ally Financial, structuring a superior law department starts with finding and hiring the best lawyers.
• Empower them to use their judgment and act decisively. Make sure they know they have your trust.
• Seek out the best data and analyze it rigorously.
• Set clear, yet achievable stretch goals.
• Address departmental problems promptly.
• Communicate regularly with your team to build culture and foster collaboration.
“Great leaders are almost always great simplifiers, who can cut through
argument, debate and doubt to offer a solution everybody can understand.”
~ Colin Powell
For David Hill, the role of legal leaders is to empower people within their organizations, rather than get mired in the daily details. “As the General Counsel, you can’t be expected to know all the facts, all the arguments and all the provisions. That is where the lawyers on your team come in. High performers are perfectly happy to be held accountable.”
Hubris and Humility
But taking a back seat can be difficult for legal superstars accustomed to being in the spotlight—and being in control. When David assumed the post of General Counsel at NRG Energy, he set himself to the task of learning all he could about the company’s processes and culture. “Sometimes GCs feel they need to come in and completely remake the law department just so they can put it on their résumé.” However, adding a notch to the belt is not true leadership, he says.
This balance between hubris and humility is expressed by Sabine Chalmers of AnheuserBusch InBev as the need for both IQ (traditional intelligence) and EQ (emotional intelligence), which is the capacity to understand, empathize, and connect with others. Leaders must be willing to grow and develop as much as they seek this trait in their team members. In Sabine’s experience, those who experience the most growth are those who constantly seek feedback.
Individuals who aspire to leader status must have the self-awareness to acknowledge the things they do well, the things they do less well, and the things for which they’re not yet ready. “They need to surround themselves with people who are interested in their growth,” says Sabine. “And that means being able to hear the good, the bad, and the ugly, and do something about it.”
The Heat of Battle
While steady, solid leadership is the daily expectation of a General Counsel, a world-class legal leader must also be able to perform at the highest levels under pressure, or even in a crisis. “In difficult situations, you don’t need someone who will only remain calm and keep perspective, but also someone who brings energy and positive thinking to the situation,” notes Sabine. At some point the time for assessing the risk of a given action is over. Then it’s a matter of accepting the facts of the situation and moving quickly and decisively toward action. The best leaders involve others in crisis response, not only to share the burden, “but to build a sense of camaraderie.”
Sabine maintains perspective in the most challenging situations by reminding herself that, “The only real crisis in life is loss of life – when someone loses a loved one. For most of the matters we deal with as lawyers, be it high stakes litigation or regulatory risk, there is always a solution. It might be more or less expensive, but there’s always a solution.”
“Alone we can do so little, together we can do so much.” ~ Helen Keller
For Amy Olli, successful collaboration with a company’s board and CEO starts with mastering an understanding of the organization, its nature and its personality. Failure to recognize differences in culture can be dangerous, even fatal.
“When I went to CA Technologies after 18 years at IBM, I realized I had walked into a very different culture,” she recalls. Successfully navigating the unfamiliar waters meant not only learning the current culture, but also perceiving what company leaders wanted the culture to become, and ferreting out her role in that process.
Sometimes the key to succeeding with those in the C-suite and around the board table comes down to ensuring that your communication style aligns with those on the receiving end of your message. Amy offers this example: “I’m very passionate and engaged. I’ve always known that this set me apart, and I really enjoy that about myself. But at one point I was working with executives who just couldn’t hear me because all they could see was my hands moving when I talked.”
The passion and engagement that had defined and served Amy successfully in the past were not resonating with this board. Amy acknowledged that on one side of her strength lay a liability; being able to alter her style while remaining true to herself was essential to Amy’s ability to succeed. She uses the analogy of a dimmer switch to describe the way she learned to “tone and tune my message” to maximize her impact and effectiveness.
Our experts acknowledge a need for General Counsel to be sensitive and responsive to executive preferences in their interaction. Examples might be a CEO who is conflict-adverse, a COO who prefers electronic to face-to-face communication, or a board member who likes being apprised of the smallest legal details of a particular matter.
General Counsel who earn the highest levels of respect and reputation must stand up for who they are and what they believe, while communicating their positions in a way that will be best received by those in the highest echelons of the corporation.
David Hill agrees that the most direct path to a positive and productive relationship with corporate leadership is through understanding the organization. He adds, “The CEO needs to have absolute confidence in the legal function— secure in the knowledge that the GC has absolute responsibility and has smart, competent people who have the best interests of the company at heart.”
At the end of the day, that confidence comes from knowing the GC will deliver thoughtful, defensible solutions. “The CEO and board are not interested in problems without accompanying solutions,” David offers.
“Talent hits a target no one else can hit. Genius hits a target no one else can see.” ~ Albert Schopenhauer
In that vein, Bill Solomon reflects that, “The best lawyers I’ve hired are inquisitive, creative and determined about solving problems. Give me somebody with the right attitude and aptitude, as long as they are bright enough, over somebody with experience any day. Experience can be developed.”
Bill looks for passion—passion for the law and passion for learning. He notes an important distinction between attorneys who love the law and those who are intrigued by how the law works and how to use it to solve problems.“The best lawyers are also self-starters,” he says. “They need to be ambitious and competitive, but also collaborative.” He seeks lawyers who want to win, but not at any price.
Bjarne Tellmann of Pearson PLC shares Bill’s appreciation for best-in-class lawyers who are intellectually curious and think creatively, beyond the typical strictures of the law. “I think you can get some of the most interesting information from disciplines that have nothing to do with the law. So I encourage my people to be out there networking, blogging, reading, listening to podcasts, and thinking about things.”
Bjarne has instituted a popular policy within his department that allows members of the legal department to invite anyone they’d like to a monthly lunch, paid for by Bjarne. The only caveat is that they share with him three things they learned from the guest upon their return.
During interviews, which he prefers to conduct at a Starbucks or other informal off-site location, Bjarne often asks what gets the candidate out of bed in the morning and, conversely, what makes him or her roll over and hit the snooze button.
And he likes to close with a question he says is best answered once the candidate has had a chance to relax: “Why should I hire you? What can you do for me?” A thoughtful response suggests that the individual has prepared for the question and has “connected the dots,” linking their personal skill set to what Bjarne and Pearson are looking for.
Sabine Chalmers agrees with Bill Solomon regarding the role of experience in hiring members of the legal team. “We tend to index in favor of less experienced lawyers who come from top law firms, assuming that with such a pedigree they know what they’re doing.” Once hired, what matters most, she says, is making the transition to the Anheuser-Busch InBev culture.
During the interview process, about 90 percent of the conversation focuses on cultural fit, and 10 percent addresses technical ability. Sabine says, “Our culture is very informal—it’s jeans and t-shirts and open spaces—no traditional offices. And we tend to be extremely high-energy, so we look for that.”
She also seeks a quality not always associated with lawyers—optimism. Not, she clarifies, a blind-to-reality Pollyanna approach, “but someone who is highly optimistic about solving problems and about the future of the organization. We ask a lot of questions to find out if they’ve done their homework to know what our culture is about, and if they’re excited about what we’re trying to achieve.”
And of course, whether the company produces beer or anything else, the ideal candidate is one who demonstrates a passion for the product or organizational purpose.
“Not everything that counts can be counted, and not everything that can be counted counts.” ~ Albert Einstein
Determining the success and value of a company’s legal department can take on the character of art or science, explains Amy Olli. “Some people go to the extreme of measuring everything, while others take a more visceral approach to whether you’re providing value or not. I’ve worked in organizations at both ends of the spectrum.” Wherever they fall on that continuum, Amy believes most good lawyers can find ways to justify their existence, using metrics to demonstrate a desired result.
At Anheuser-Busch InBev, Sabine Chalmers uses a formalized 360 feedback process with highly specific talking points and data points to assess success and identify areas where people may be struggling. “We also have a very robust target-setting process, which starts with our CEO.” Throughout the year, personnel work toward three or four performance targets that are strongly correlated to bonus achievement. Within the law department, the targets address both legal achievements and overall business performance.
Anheuser-Busch InBev also gauges individual growth by moving team members geographically and among functions. “This gives us additional opportunities to test their capabilities and growth potential,” adds Sabine.
Echoing Amy’s “art and science” perspective, Bjarne Tellmann concurs regarding the need for both qualitative and quantitative metrics. “Demonstrating the value of the law department is a tricky thing to do. You need to use a variety of metrics and align with clients on the measures that are most relevant to them.”
Categories of quantitative measurement can include overall legal spend and how those funds are being deployed, contract turnaround time, successful outcomes of litigation or other disputes and additional metrics depending on the industry. Among qualitative assessment methods, Bjarne favors annual anonymous client surveys.
In order to help members of his department assess their own performance, Bjarne partners with them to create a personalized roadmap that reflects personal aspirations and values. He also hosts informal, unplugged sessions with team members.
During his travels to Pearson locations across the globe, Bjarne frequently selects a small group to meet for coffee. “There’s no script and no agenda, just coffee with five or six people in on off-the-record conversation.” These intimate dialogues have been a rich source of feedback. Bjarne also conducts a quarterly town hall-style videoconference with the company’s worldwide legal department members. He also advocates using diverse approaches to gain a clear line of sight into how team members are thinking, and how well the department is meeting their needs.
As for evaluating the effectiveness of outside counsel, Bill Solomon uses the same data-driven approach that guides his management of internal resources. “We used to look at virtually every law firm, which was painful and not particularly effective. We now pick the firms that represent about 80 percent of our spend a year.” For each of these, he examines everything from docket numbers to case count, settlements, counsel fees and other key metrics.
“The leading role for the lawyer… is diligence. Leave nothing for tomorrow, which can be done today. Never let your correspondence fall behind. Whatever piece of business you have in hand, before stopping, do all the labor pertaining to it which can then be done.” ~ Abraham Lincoln
Click here for the original article and quotes from an expert panel.
]]>Lyft and larger rival Uber are attempting to resolve lawsuits by drivers who contend they should be classified as employees and therefore entitled to reimbursement for expenses, including gasoline and vehicle maintenance. Drivers currently pay those costs themselves.
A determination that these workers are employees would affect the profits and valuations at so-called on-demand technology companies.
U.S. District Judge Vince Chhabria had said the previous Lyft deal “short-changed” drivers because it represented only 9 percent of the potential value of drivers’ reimbursement claims.
In the new deal, attorneys for drivers calculated that Lyft drivers could have recovered $156 million had they been classified as employees, based on a mileage reimbursement rate set by the U.S. government and data provided by Lyft.
The $27 million settlement represents about 17 percent of that amount, which Chhabria cited as a target in rejecting the previous deal.
Uber has agreed to settle a similar lawsuit involving California and Massachusetts drivers. The potential damages in that case was $852 million, more than the $732 million in commissions Uber earned in those two states, according to court filings.
The Uber settlement, worth up to $100 million, is about 12 percent of the potential damages. A separate U.S. judge is expected to review that deal in June.
One group of drivers has objected to the Uber deal, calling it unfair. Mark Geragos, a prominent Los Angeles attorney, formally entered the case on their behalf on Wednesday.
Drivers “deserve representation by lawyers willing to fight for them and take this case to trial to uphold the basic principles of employee rights,” they wrote in a court filing.
Shannon Liss-Riordan, the attorney who has represented drivers in both the Uber and Lyft cases, has praised the settlements for providing immediate benefits to drivers. Liss-Riordan said Lyft drivers who worked a significant amount of time could receive more than $10,000 under the deal, and full-time Uber drivers could get several thousand dollars as well.
Drivers would remain independent contractors under both deals, but Liss-Riordan said the cases faced significant risks going forward and drivers could end up with nothing.
“We are proud to have reached this new agreement, which will provide significant payments to Lyft drivers who have put a lot of their time into this company,” Liss-Riordan said.
In a statement, Lyft general counsel Kristin Sverchek said the increased payment reflected the company’s growth over the past several months and maintains driver flexibility. The previous deal had been based on data from earlier last year.
A hearing on the Lyft deal is scheduled for June.
Lyft has agreed to pay $27 million to settle a class action lawsuit brought by California drivers who claimed they should be deemed employees instead of independent contractors, after a U.S. judge rejected a previous $12.25 million deal as too small.
Lyft and larger rival Uber are attempting to resolve lawsuits by drivers who contend they should be classified as employees and therefore entitled to reimbursement for expenses, including gasoline and vehicle maintenance. Drivers currently pay those costs themselves.
A determination that these workers are employees would affect the profits and valuations at so-called on-demand technology companies.
U.S. District Judge Vince Chhabria had said the previous Lyft deal “short-changed” drivers because it represented only 9 percent of the potential value of drivers’ reimbursement claims.
In the new deal, attorneys for drivers calculated that Lyft drivers could have recovered $156 million had they been classified as employees, based on a mileage reimbursement rate set by the U.S. government and data provided by Lyft.
The $27 million settlement represents about 17 percent of that amount, which Chhabria cited as a target in rejecting the previous deal.
Uber has agreed to settle a similar lawsuit involving California and Massachusetts drivers. The potential damages in that case was $852 million, more than the $732 million in commissions Uber earned in those two states, according to court filings.
The Uber settlement, worth up to $100 million, is about 12 percent of the potential damages. A separate U.S. judge is expected to review that deal in June.
One group of drivers has objected to the Uber deal, calling it unfair. Mark Geragos, a prominent Los Angeles attorney, formally entered the case on their behalf on Wednesday.
Drivers “deserve representation by lawyers willing to fight for them and take this case to trial to uphold the basic principles of employee rights,” they wrote in a court filing.
Shannon Liss-Riordan, the attorney who has represented drivers in both the Uber and Lyft cases, has praised the settlements for providing immediate benefits to drivers. Liss-Riordan said Lyft drivers who worked a significant amount of time could receive more than $10,000 under the deal, and full-time Uber drivers could get several thousand dollars as well.
Drivers would remain independent contractors under both deals, but Liss-Riordan said the cases faced significant risks going forward and drivers could end up with nothing.
“We are proud to have reached this new agreement, which will provide significant payments to Lyft drivers who have put a lot of their time into this company,” Liss-Riordan said.
In a statement, Lyft general counsel Kristin Sverchek said the increased payment reflected the company’s growth over the past several months and maintains driver flexibility. The previous deal had been based on data from earlier last year.
A hearing on the Lyft deal is scheduled for June.
Click here for the original article.
]]>It almost sounds like the beginning of a low-budget horror movie. According to his claims, in 2008 Michael David Barrett gained access to a back-of-the-house phone in the Nashville Marriott at Vanderbilt University to learn sportscaster Erin Andrews’s room number. Without using Andrews’s name, he requested to be placed in the neighboring room, as his original room was not yet ready and he noticed the room next to hers was being cleaned. Barrett manipulated the peephole on her door, which allowed him to easily film Andrews as she undressed without showing signs that the door had been tampered with. This footage would later turn up on the Internet.
In March 2016, Andrews successfully sued hotel owner West End Hotel Partners, former operator Windsor Capital Group, and her stalker for a total of $55 million. The case gained national attention because of its high-profile plaintiff, but for the hospitality industry, it brings to light a crucial issue. The jurors on the Andrews case, widely mimicking public opinion splashed across newspapers and Facebook feeds, operated under the belief that it is legally a hotel’s responsibility to secure guest privacy and safety. But according to experts, it is not so simple.
“Clearly there is a disconnect between what guests expect from the hotel and what the law requires of a hotel to deliver,” explains Stephen Barth, a professor of hospitality law at the Conrad N. Hilton College of Hotel and Restaurant Management at the University of Houston and founder of hospitalitylawyer.com,who testified on behalf of the defense during the Andrews case. “I’ve seen that the public—or at least, part of it—feels differently; that a hotel should guarantee people’s safety in their hotels. And that’s just not the hotel’s obligation under the law.”
What hotels are obligated to do is provide guests with a duty of reasonable care to protect guest safety and privacy, a standard the industry as a whole has taken seriously for decades. Which entity is responsible for security measures depends on which group runs day-to-day operations, be it a management company or franchisee.
“Liability typically and historically in the law has followed control. The more control an entity or person exerts, the higher the probability is that they will be held liable if something goes wrong,” Barth says. He encourages hotel companies and owners with separate operators to provide these operators with the freedom to do what they were hired to do—oversee daily functions of the hotel.
Chad Callaghan, principal of Premises Liability Consultants and security consultant for the American Hotel & Lodging Association, has similar recommendations for hotel companies. He says any company that tries to require certain brand standards should not do so unless it has the means to enforce them. “That’s pretty much the standard in the hotel industry, but people shy away from doing that,” he says. “The expectation is the franchise company will have their own standards for safety and security, either through their insurer or a parent company.”
There is also the matter of guest responsibility. Even if a hotel feels like a home away from home, there is a level of expectation that guests, too, will take reasonable measures to ensure safety while on the road. “I’ve always thought of it as a partnership,” Callaghan says. “The hotel has their responsibilities, and the customer has their responsibilities. Most hotels put three locking latching devices on the door, but if the customer doesn’t use them, then they’re not necessarily getting full protection. A hotel can’t make sure every guest latches the door, but it can put the latch there for them.”
In the Andrews case, the plaintiff initially aimed to involve Marriott International in the lawsuit, but the Court of Tennessee did not find the company liable, and dismissed it early from the proceedings. As neither owner nor operator of the Marriott Nashville, Marriott International was involved with the property only for the name on the building. Despite this, Marriott had to work to clear its name in the court of public opinion, releasing a press release as the trial was broadcast to explain its involvement—or lack thereof—in the incident. “We continue to be sensitive to the serious nature of this matter and remain committed to the safety and comfort of our guests,” the company said in a statement on March 7.
“That is the conundrum for the franchise company. If you’re not the one requiring safety and security protocols, but security is violated and your name gets out there, how do you deal with that?” Callaghan asks. His concern, he says, is that the general public is more likely to see the videos and articles about Andrews’s ordeal linked with a Marriott hotel, and less likely to read the company’s press release explaining its innocence.
“Whether you’re a brand, a management company, or a real estate investment company, the person who’s getting the key to a hotel room or booking a hotel doesn’t know who owns it,” says Anthony Melchiorri, host and creator of Travel Channel’s Hotel Impossible
and Five-Star Secrets. “They see a brand on the building, and 90 percent of the people walking around think that hotel is owned by that brand. Whether it’s legally Marriott’s fault or whether it’s perceived, it’s not good for any brand’s reputation when something like that happens.”
Other than a good public relations team, Barth and Callaghan agree that the only way the industry can protect fellow companies and its guests is to continue improving communication and employee training.
“I’m sure [the Andrews case] will have a positive effect with more people doing something about privacy,” Callaghan says. Barth adds, “We have to break silos down and make sure that everyone involved in the industry is communicating in a cross-functional way.”.
Read the original article here.
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