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Once, the holiday season started on Christmas Eve and ended the day after New Year’s. Now, it starts around Halloween and ends on Jan. 6 with Thanksgiving just a buffet in between. The bottom line: As the holiday season has lengthened, work-matter challenges for corporate counsel offices have increased. Some of the challenges include bonus and commission payments, the timing of terminations, holiday parties and religious discrimination. Let’s take on the money issue first. Companies invariably give bonuses and commissions to employees at the end of the year. But, it’s a generous and benign gesture fraught with dangers. Just ask Schenker International Inc. According to 2003′s Jourdan v. Schenker International, 71 Fed.App. 308, Hilda Jourdan worked as a saleswoman for the company. She claimed she was entitled to a bonus, 10 percent of the gross profits of the company she was servicing. The commission’s policy provided that: “sales incentives were paid quarterly.” That’s it. Jourdan worked hard on one account. At first, the company lost money on the account (not because of Jourdan), but by July 1999 the account was turning a gross profit of more than $1 million. A nifty $100,000 for Jourdan. But according to the opinion, she was fired for poor performance in November 1999, and the company refused to pay the commission when the quarter ended. The Fifth Circuit U.S. Court of Appeals looked at the policy and noted that it was silent on when Jourdan’s right to the commission accrued. The company said that its promise to pay Jourdan’s commission was conditional based on her continued employment at the time the company calculated and paid sales commissions. She was not employed when it calculated and paid the commissions, so she gets zip, or so argued the company. According to the opinion, she basically said, “No. The right to my sales commissions accrues when the account begins to show a profit with only the payment delayed until a future date.” Equally plausible interpretations, correct? But what does a court do in that situation? Here’s the rule: The language is ambiguous, and the benefit of the doubt is given to the employee. Because there were two reasonable possibilities, it is up to a jury to decide which one prevails. So, as year end approaches, a GC should review his company’s bonus and commission policies and make sure that they require that the employee be employed at the time the bonus is to be paid, making sure that the company policy is clear not only about how much must be paid but also when it’s to be paid. If it’s a yearly bonus or commission, write the policy to say that the employee must be employed as of the last day of the calendar year. A court will look to the employer to make it clear; after all, it’s the employer who drafts the language. Doing so now ensures a pleasant holiday for employees as well as a lawsuit-free start to the new year for employers. To make sure that its generosity doesn’t come back to bite the company, a refresher on the U.S. Department of Labor regulations on bonuses is a real stocking stuffer. Here goes: Under the Fair Labor Standards Act, a company must take certain kinds of bonuses into account when determining an employee’s regular rate of pay, which is, in turn, used to calculate the overtime rate. The math is simple. The greater the regular rate of pay, the greater the amount of overtime paid. If a year-end bonus is based on performance or used to encourage productivity, then it’s counted as earnings and must be included in determining the employee’s regular rate of pay for that pay period. By contrast, the typical holiday gift bonus ordinarily can be excluded from an employee’s regular rate of pay. Several caveats to remember, though: A bonus can’t be so substantial that the employee considers it a component of his annual income; otherwise, it must be included in the regular rate of pay. In addition, a bonus can’t be excluded if it’s made in accordance with an employment contract because it isn’t a discretionary bonus. Also, don’t announce gifts or bonuses until the time they are to be paid, otherwise the DOL may deem the announcement a promise and the DOL will then require the bonus to be figured into the employee’s regular rate of pay. Finally, as long as the bonus is meant to be a gift and its value isn’t measured by or directly dependent on the hours, production or efficiency of the employee or a group of employees, then it doesn’t need to be included in the regular rate. So, an employer can give the bonus without having to look back and recompute overtime. The bottom line: From a practical view, a company’s overall profitability probably will be a critical factor in whether a bonus is paid and how much it will be, but don’t directly tie the bonus to performance or profitability. Any bonus announcement should not include any direct references to corporate profitability, efficiency, production or the like. By the way, the rules are different for exempt employees. Because they’re not entitled to overtime, a company may directly reference productivity, hours worked, efficiency and other performance-weighted factors while announcing or calculating bonuses. PARTY TIME Now let’s go from money to parties. During the holiday season, the general counsel’s office is party central. Legal questions flood in on the do’s and don’ts of holiday parties. Here’s a checklist for general counsel to think about: • Distribute a memo or e-mail before the activity or event. Send an officewide memo or e-mail reminding employees not to drink to excess and never to drink and drive. Advise them not to drink if they’re taking allergy or other medication. (We know this seems self-evident, but consider we live in a world where Viagra ads warn those taking it to go to a hospital if it works too well.) Appeal to their angelic sides, and tell employees that they are expected to behave in a sensible manner at the event. Consider telling employees that attendance is voluntary. • Provide transportation. Provide cab vouchers from the event. Alternatively, provide designated drivers. In some circumstances, public transportation may be appropriate. • Address harassment. Harassment can become a problem at parties where employees consume alcohol. Before the event, reinforce the company’s strict policy against harassment on the job — and at employer-sponsored events. And don’t forget that women can be perpetrators of harassment just as easily as men. That takes care of the employees. What about taking proactive measures at the event itself? Here are some thoughts: • Shift liability via contract. If an event is taking place at a hotel or restaurant, think about inserting a contract provision requiring the facility to identify — and not serve — intoxicated employees and instructing them to report those employees to company representatives. • Hire a bartender and use bar tickets. Hire a professional bartender to monitor the amount of alcohol employees consume. Limit the amount served at the function by using “bar tickets” and discourage the trading of tickets. • Serve food. Throw the low-carb diet into the waste basket, at least for holiday parties. Only serve alcohol while you’re serving food, and make those foods rich in starch and protein. These foods are best because they stay in the stomach longer and slow the absorption of alcohol. • Don’t announce last call and close the bar. Don’t announce last call because there will be employees that like to tank up before they hit the road. And, stop serving alcohol at least one hour before the end of the event. • Place keys in a basket. No, we’re not talking about turning the holiday party into a spouse-swapping event. Ask employees to place keys in a basket when they first arrive. At the end of the night, insist that intoxicated employees leave keys with the company and then provide alternate transportation. What about holiday gift-giving in the workplace? Frankly, there are some gifts we can do without. Here’s a cautionary tale: The chief executive officer of a company in Florida doesn’t just sing in the shower. At a company event, he sang a song he penned, “Do it Again,” in honor of the employees achieving sales goals. Perhaps interpreting the polite applause for acoustic appreciation, he hit upon what he thought was a great holiday gift as well as an inspirational one — he gave a CD of his performance to all 5,500 employees. A CEO crooning on a CD is an acceptable gift, although we doubt if a universally desired one. What about the other rules about gift-giving in the workplace? Here are some ideas: Give clothes, jewelry, perfume and cologne to significant others — not co-workers. These types of gifts are simply too personal to give to someone you work with, unless you’re having an affair, which is a whole other column. Also, even if they appear to be wanted at the time, life changes; the form-fitting sweater the chief financial officer gave his secretary last Christmas could turn into Exhibit I at the sexual harassment trial next Christmas. What is acceptable? Think about gift certificates to book stores or well-known coffee shops. Also, gift certificates to a general merchandise catalog are appropriate. RELIGIOUS ISSUES Although some would argue that the “Christ” was taken out of “Christmas” a long time ago, there’s still a heavy component of religious issues affecting the holiday season. What about Christmas decorations? One police department in another state had to face that issue when it received a religious discrimination complaint filed by a Jewish employee. The employee complained that the display of Christian-related holiday decorations (in this case, a nativity scene) violated his religious beliefs. As a result, the department banned all decorations with a Christmas theme, resulting in no Christmas tree, no Santas, no lights — nothing associated with the holiday season. Companies need to think long and hard about any decoration with a nexus to a particular religion, such as a nativity scene, because employees may argue that it creates a hostile environment based upon religion. When in doubt, go secular with decorations. Now, let’s look at the flip side, where the employee’s actions triggered a religious issue. Let’s take a Catholic employee requesting time off on Christmas Eve to attend mass. She is entitled to an accommodation of a seriously held religious belief, and a company may be obligated to provide the time off. Otherwise, it needs to show that it would be an undue hardship to allow the person to take time off. But push the scenario a littler further. Let’s say there are multiple requests for accommodations based on religious practices or observances. Say a Buddhist employee requests time off on Dec. 8 to observe Bodhi Day and the company grants the request. Subsequently, a Catholic employee requests time off on Dec. 8 to observe the Feast of the Immaculate Conception. Giving them both time off causes an undue hardship to the company. What does the GC do? Here’s a way of looking at it. First, remember that any request for accommodation for religious practice must be based on a sincerely held religious belief — and a company may need to consider whether attending the religious observance is required by the religious tenets or beliefs. So, does the Buddhist faith require followers to observe Bodhi Day by attending religious services? If so, can the employee attend a service that doesn’t conflict with the work day? Likewise, consider whether the Catholic faith requires followers to observe holy days by attending mass. If so, can the employee attend mass at a time that doesn’t conflict with the Buddhist service or outside work hours? There’s no formula for resolving concerns. The most important thing is to listen and not make a quick judgment. In one case we handled, we had the client consult with a minister of a particular faith to educate the company on what was and was not required. Doing so empowered our client to engage in a dialogue with the employee and to avoid a dispute over something that didn’t need to be a dispute. And speaking of religious beliefs, what happens at the holiday party when the employee comes and says that he’s a vegan, his religion is veganism and objects to a holiday party buffet line only having ham, turkey and roast beef? Well, rest easy, the Temple of Weird Opinions, otherwise known as the state of California, has found that veganism is not a religion. Here’s the case in a nutshell — well, eggshell. According to Friedman v. Merck, 107 Cal.App.4th 454, Jerold Friedman wanted to work in a pharmaceutical warehouse for Southern California Permanente Medical Group and was offered a job — provided he was vaccinated for mumps to safeguard the drugs. He refused, since the vaccine is grown in chicken embryos and his vegan beliefs — that all living beings must be valued equally, so it’s immoral to exploit animals — would be violated. In short, “I’ll take the job, but hold the chicken embryos please.” He sued, and the Second District Court of Appeal in Los Angeles asked the following questions: 1. Does the belief in question address fundamental and ultimate questions? 2. Is there a comprehensive belief system? 3. Are there formal, external or surface signs that may be analogized to accept the religion? Because veganism didn’t pass this test, it wasn’t a religion, and Friedman wasn’t discriminated against, according to the opinion. Now, let’s transition to two questions we get every holiday season. First, how should paid holidays be accounted for with respect to the Family and Medical Leave Act? Does the employer count the holidays against an employee’s FMLA leave? Here’s the answer: If a paid holiday occurs during an employee’s FMLA leave, a company may count the holiday as a day of FMLA leave. If the company temporarily ceases business and generally doesn’t expect employees to report for one or more weeks — for example, the period during a companywide holiday shutdown — the period during which work is ceased cannot be counted as FMLA leave. And what about terminations? If a company is about ready to terminate an employee, should it terminate during the holidays or wait until the new year? Our advice: Don’t wait. Look what happened to West Publishing Co. According to the Sixth Circuit U.S. Court of Appeals’ 2003 decision in Arban v. West Publishing, 345 F.3d 390, one of West’s sales representatives, Daniel Arban, was a poor performer. His write-ups for poor performance were piling up like Christmas presents under the tree. On Dec. 16, the company decided to fire him. But it decided to postpone the termination until after the holidays. Well, Arban, a few days later, became ill, put in a request for a FMLA leave, and when he was let go after the holidays he screamed FMLA retaliation. The Sixth Circuit said there was enough evidence to support the jury’s verdict for Arban. So, Holiday Past mutates to Holiday Present with heaven knows what Holiday Future will bring. One thing, though, is assured: The GC’s office will be in the thick of it, utilizing the corporate counsel’s special blend of legal knowledge, corporate savvy and good sense to provide a legally smart holiday season. Michael Maslanka, co-chairman of the labor and employment section at Godwin Gruber in Dallas, can be reached at [email protected]. Maslanka writes the Texas Employment Law Letter and Texas Workers’ Comp Reporter, which can be viewed at HRhero.com. Burton Brillhart is a partner in the firm. • Practice Center articles inform readers on developments in substantive law, practice issues or law firm management. Contact News Editor Candice McFarland with submissions or questions at [email protected]or go to www.therecorder.com/submissions.html.

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