IHOPe You Brought Your Checkbook!


Two IHOP Restaurants to Pay Nearly $1 Million to Settle Sexual Harassment Suit

Teens Among Victims of Misconduct Including Simulated Sex Acts, Sexual Contact, Unwanted Sexual Comments and Physical Threats, Federal Agency Charged

Two southern Illinois International House of Pancakes (IHOP) franchises will pay $975,000 and furnish other relief to settle a systemic sexual harassment lawsuit filed by the U.S. Equal Employment Opportunity Commission (EEOC), the federal agency announced today.

The EEOC had charged that numerous employees at the locally owned Glen Carbon and Alton, Ill., restaurants were routinely sexually harassed by coworkers and managers, including offensive sexual comments, groping, physical threats, and, in one instance, attempted forced oral sex with a management employee.

The EEOC filed its lawsuit in September 2017 (Equal Employment Opportunity Commis­sion et al. v. 2098 Restaurant Group, LLC et al., Civil Action No. 3:17-cv-1002-DRH) in U.S. District Court for the Southern District of Illinois, seeking relief for more than 11 female employ­ees at the Glen Carbon IHOP and one male employee at the Alton IHOP. Some of the female employees were teenagers at the time of the alleged harassment.

The consent decree settling the suit, entered today by Judge David R. Herndon, requires the defendants to pay compensatory damages to 16 harassment victims. The decree also requires the com­panies to implement, distribute and enforce tougher policies prohibiting sexual harassment and establish procedures for promptly investigating and addressing sexual harassment complaints. The decree also requires the owner to be directly involved in preventing and correcting sexual harassment. The four-year decree further requires the defendants to provide sexual harassment training to employees, create and maintain documents regarding sexual harassment complaints, and post notices at their facilities. It also enables the EEOC to monitor the restaurants to determine whether harassment recurs, and, if so, that it is dealt with effectively. All the measures are intended to prevent further incidents of harassment.

The EEOC's Youth@Work website (at https://www.eeoc.gov/youth/ ) presents information for teens and other young workers about employment discrimination, including curriculum guides for students and teachers and videos to help young workers learn about their rights and responsibilities.

Do I Need to Hire a Lawyer to Review My Severance Agreement?

In a word, Yes.

As an employment lawyer, I spend a considerable amount of time reviewing severance agreements for clients.  Severance agreements are often filled with complicated legal issues and can be challenging to understand and properly navigate. Besides the dollar value of the package, there are several types of clauses in most severance agreements that employees should be aware of.  While situations differ as to how negotiable a severance agreement is in once case versus another, it is always advisable to have a board certified employment lawyer review the document with you so that, at the the very least, you understand all of the ramifications of the agreement you are signing.

Here are a few of the clauses that clients often need assistance with:

1. The Severance Payment: If an employee is already entitled to receive a severance payment, whether pursuant to an employment contract or company policy, there is no need to sign a severance agreement to get that money. An attorney can help ensure that if the employee does sign an agreement, it provides more than any severance payment the worker was already entitled to. An experienced employment lawyer may also have a sense of whether the amount being offered is within the usual range for the relevant industry.

2. Money the Employee is Already Owed: An employer who owes an employee money –  for unused vacation time or unreimbursed expenses, etc – must pay it regardless of whether a severance agreement is signed. 

3. Benefits: A severance agreement should explain what benefits the employee will receive upon separating from the employer and deal with continuation of health care benefits (if applicable) or with COBRA notice requirements.

4. Release of Claims: Employers usually want a full legal release from the employee as a part of any severance agreement.  Several issues can drop up here, including the effect of the release on benefit plans and/or on existing claims (workers compensation, disability claim, etc).  This release will usually cover all claims regardless of whether the employee even knows the potential claim exists.  So it is important to speak with an attorney so that you know if you actually have any claims and whether they should be released in return for the severance being offered by the employer.

5. Non-Disparagement and References: Severance agreements often forbid employees from speaking badly about their employer even after they leave the company.  Sometimes the agreement contains language dealing with how the company will respond to future inquires regarding the employee from prospective employers.  

6. Restrictive Covenants & Noncompete Agreements: Many employees are bound by non-compete and non-solicit agreements created in employment contracts or other documents they have signed. These agreements prohibit the employee from competing with the employer in certain areas for a specific amount of time, and from hiring other workers away from the employer. Where these restrictions already exist, a lawyer should ensure that the severance agreement does not expand them. Where the employee has not already entered agreements on these topics, the attorney can work to limit the time and scope of restrictions the separation agreement imposes.


These are just a few of the myriad issues that might need to be addressed as a part of a severance agreement review.  If you are offered a severance agreement, it is important to hire an attorney to review it BEFORE you sign. But not just any attorney -- just as you would probably not hire a real estate lawyer to defend you in a criminal proceeding, you should make sure to seek out an employment law specialist when hiring an attorney to review a separation agreement. An experienced employment attorney can help protect employees, including executives and professionals, from the risk of waiving rights unnecessarily or leaving severance money on the table.


California Considering Ban on Employer Forced Arbitration


Last year, a bipartisan coalition in the United States Senate sponsored legislation to ban the use of mandatory arbitration agreements with regard to claims of sexual harassment and sex discrimination. The federal bill is still pending. 

Now, a similar bill has been filed in the California legislature. If it passes, the California bill would prohibit employers from requiring mandatory arbitration agreements as a condition of employment. And unlike the federal bill mentioned above, the California bill would prohibit arbitration clauses as a condition of employment as to all types of employment claims—not just sexual harassment and sex discrimination claims.

If passed, the California law would be an important start to a movement to get rid of employer-based, forced arbitration. Statistics show that arbitration is unfair to employees and is used by some employers to effectively opt out of the judicial system into a rigged, pseudo-court where wrongdoing can be effectively covered up by companies. 

And claims that arbitrating claims is more cost-effective than traditional adjudication in court are are not supported by the available statistical data. Many employment corporate defense lawyers point out that research shows arbitration is neither faster nor less expensive than litigation

There has long been data showing that a solid majority of Americans oppose forced arbitration in the employment context.  If this bill passes and becomes law in California, perhaps it will be the beginning of a nation-wide movement to allow employees back into the courtroom. 


Read More: National Law Review

The Rise of Digital Wage Theft


The days of punching a manual time-clock when you arrive at work are all but over. Digital time tracking systems now use things like facial recognition to monitor when a worker arrives and has finished for the day. However, the software that’s replaced the 19th century time-clock technology is helping some employers steal workers’ hourly pay.

This so-called wage theft is a problem for many healthcare workers, drivers, and food-service and factory employees, according to a study by Elizabeth Tippett, associate professor at the University of Oregon School of Law, published in the American Business Law Journal. An earlier report from the Economic Policy Institute found that wage theft in the US may account for more than $15 billion each year.

How digital wage theft works

Tippett’s study of 330 cases litigated in state and federal courts found three main types of digital wage theft:

  • Rounding, which happens when the software is set to alter an employee’s starting and finishing times to pre-defined increments
  • Automatic break deductions, which deduct preset time increments (for lunch or other breaks) from pay, regardless of whether the break was taken
  • Time shaving, which takes place when managers alter time records to pare down the number of hours worked

Read more about this study in this article by John Detrixhe. 

Supreme Court Denies Overtime Pay to Service Advisors at Auto Shops & Dealerships

This week in Encino Motorcars, LLC v. Navarro, the Supreme Court limited overtime pay for service advisors at car dealerships nationwide, ruling that those employees are primarily salespeople who sell brake jobs, oil changes and other service work. Encino Motorcars' current and former service advisors sought backpay under the Fair Labor Standards Act (FLSA) overtime-pay requirement, 29 U.S.C. 213(b)(10)(A). The requirement exempts “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements.”

The Supreme Court, in an 5-4 opinion authored by Justice Thomas, reinstated the dismissal of the suit. According to the Court, service advisors are “salesm[e]n . . . primarily engaged in . . . servicing automobiles." The ordinary meaning of “salesman” is someone who sells goods or services, and service advisors “sell [customers] services for their vehicles,” Service advisors are also “primarily engaged in . . . servicing automobiles.” “Servicing” can mean either “the action of maintaining or repairing” or “[t]he action of providing a service.” Service advisors satisfy both definitions. They meet customers; listen to their concerns; suggest repair and maintenance services; sell new accessories or replacement parts; record service orders; follow up with customers as services are performed; and explain the work when customers return for their vehicles. While service advisors do not spend most of their time physically repairing automobiles, neither do partsmen, who are “primarily engaged in . . . servicing automobiles.”

The Court rejected giving Chevron deference to the federal agency and rejected the interpretation of the Department of Labor and the Ninth Circuit Court of Appeals, who had both relied on matching “salesman” with “selling” and “partsman [and] mechanic” with “[servicing]”. The but the word “or” is “almost always disjunctive.” Using “or” to join “selling” and “servicing” suggests that the exemption covers a salesman primarily engaged in either activity. The Court held that the FLSA gives no textual indication that its exemptions should be construed narrowly, thus ignoring the long-standing precedent that remedial statutes should be interpreted in order to provide broad protections to the individuals they seek to protect. 

Writing in dissent, Justice Ruth Bader Ginsburg said the service advisors at Encino Motorcars "work regular hours, 7 a.m. to 6 p.m., at least five days per week, on the dealership premises. Their weekly minimum is 55 hours." Federal law calls for a time-and-a-half pay after 40 hours in a week, she noted. "Because service advisers neither sell nor repair automobiles, they should remain outside the exemption and within the act's coverage," she said. Justices Stephen G. Breyer, Sonia Sotomayor and Elena Kagan agreed.

This is but one of many examples to come that will demonstrate the importance of elections on the Court. The election of Trump coupled with the Senate's highly questionable antics used to nab a seat for Justice Gorsuch has led to the elimination of overtime protections for thousands of workers across the country. Many will never see Justice Gorsuch as a legitimate member of the Court. However, his votes (expected to be 100% anti-worker) on the Court will be powerful all the same.

Read the Opinion

New Expert Report Offers Policy Recommendations for Non-compete Agreements

As this blog has discussed before, non-compete agreements are a real problem. A new report from the Brookings Institution’s Hamilton Project seeks does a deep dive on this nationwide problem, compiling the most comprehensive recent studies on non-compete agreements. The report’s author, Matt Marx, has several key policy recommendations for lawmakers who want to promote economic growth rather than stifle it:

  • Employers should inform employees if they will be required to sign a non-compete agreement before they accept the job. Employers routinely hide the fact that employees are required to agree to a non-compete until after an employee has accepted a position and presumably turned down other offers. (This takes away employees' negotiating power and hurts the economy.)
  • If existing employees are asked to sign new non-compete agreement, employers should be required to compensate them. (In Texas, employers often require long-time employees to sign new non-compete agreements with the promise of nothing more than continued at-will employment.)
  • Allow judges to rewrite overreaching non-compete agreements so that they are in-line with state law. (In Texas, judges already have this power. The problem is that in order to get the issue to a judge, a lawsuit needs to be filed by either the employer or employee, taking time and costing legal fees.)
  • Give attorneys general the power to go after firms that require workers to sign predatory non-competes. (This could be helpful in some states. Unfortunately in Texas our current Attorney General would have no interest in helping Texas workers in this way.)
  • Bolster non-disclosure agreements so that they make a better substitute for non-competes. (This sounds good but I'm not sure how much stronger they could be without creating a real imbalance of power in the workplace.)

You can read the entire report here.

Non-Compete agreements are not evil per se. In fact in some cases they make sense. But companies have gone way beyond using non-competes to protect legitimate trade secrets and now routinely abuse them in attempt to gain a competitive advantage over other businesses by keeping employees out of the labor pool.