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Employment law is a unique area of the law. While the black letter law has basically remained the same, the passage of time and human events often change the focus to a particular law or issue. The most obvious result of this changed focus is increased litigation about that law or issue. The other result, not as obvious to the outside world, is increased counseling on scenarios that implicate these laws and issues. The goal, of course, is to keep the employer from becoming part of the “trendy” litigation. Below are a few of the likely trends in employment law for 2004 on which general counsel and outside counsel likely will spend a significant amount of time counseling and litigating. � Fair Labor Standards Act class actions. The number of class actions regarding who is entitled to overtime pay under the Fair Labor Standards Act (FLSA) will continue to grow. Over the past year, many employment lawyers, and even plaintiffs class action lawyers, began to devote their entire practice to seeking out and suing employers over FLSA violations. The prevalence of these suits likely stems from two issues: 1. the standards for determining which employees are exempt from overtime pay requirements are less than clear; and 2. the damages in these suits can be astonishingly high. Although ascertaining whether a job is exempt seems simple, the FLSA’s description of exempt categories of employees is vague enough that nearly any exempt classification can be challenged. For instance, an employee who regularly exercises discretion and control may be exempt as an administrative employee. However, it is unclear precisely how much discretion and control is necessary to meet this standard. Consequently, this classification easily could become the source of litigation. Although the new regulations proposed by President George W. Bush’s administration may help with the classification issue, litigation likely will continue in this area because defining exemptions with precision is so difficult. These suits are attractive to employees’ lawyers because of the amount of money at stake. To many, the potential exposure may seem small — two to three years of past-due overtime pay for a misclassified employee. However, an improper classification of a job as exempt can be a costly mistake — two to three years of past-due overtime pay for all persons in that job. Misclassifying 100 employees who earn a regular rate of $10 per hour and work five hours of overtime per week means minimum exposure of $780,000 to $1,170,000, since the FLSA also provides for the employees to recover double the amount of unpaid wages as liquidated damages. The liquidated damages provision must be awarded unless the employer proves that its failure to comply with the FLSA was in good faith and in reliance on an administrative ruling, regulation or interpretation. Given this trend, employers should be regularly reviewing jobs classified as exempt to ensure that the classifications are correct. The prudent employer’s review should include not only an analysis of the written job description, but also consideration of the actual duties performed by the employee, the payroll practices applicable to the classification and the percentage of time the employee performs duties that are nonexempt. � The end of arbitration clauses for employment-related claims. In the mid- to late-1990s, employers raced to place clauses in their handbooks and employment agreements that required employees to arbitrate, rather than litigate, all employment-related claims. The prevalent thinking was that neutral, professional arbitrators would render more employer-friendly decisions — in terms of liability and damages — than juries and in a more cost-efficient setting. This trend appears to be reversing. Although not public, word is spreading among employers and their lawyers about adverse arbitration awards. Employers have discovered that some arbitrators, whose employment depends on being selected by the employer and the employee, split their decision; they find against the employer on liability but only award modest damages in hopes of being perceived as fair. Employers also have learned that some arbitrators, just like juries, are moved by passion to award astronomical damages. Of course, a jury’s verdict is subject to review on appeal, but an arbitrator’s decision rarely is. Finally, employers have found that the arbitration process is no less expensive than a court proceeding. Typically, the parties serve the same discovery and file the same types of motions they would in a court proceeding. Consequently, many employers are rethinking their decision to require arbitration of employment disputes. � Leaves of absence under the FMLA and ADA. As the number of health issues employees face rises, so will the number of suits under the Family and Medical Leave Act (FMLA) and the Americans With Disabilities Act (ADA). The basic premise of both laws is quite simple. The FMLA provides up to 12 weeks’ unpaid leave if the employee, or a particular relative, has a serious health condition. The ADA protects those persons with a disability who can still do their jobs, with or without accommodation. As employees’ physical and mental health issues increase, so will the number of requests for leave; reviews of these requests, of course, requires interpretation of the FMLA and the ADA. The increased use of the FMLA and ADA leaves of absence is likely to result in increased litigation for two reasons. First, the relative newness of these laws results in employers often having little or no precedent upon which to rely in making leave decisions. Second, the facts in each particular leave situation tend to be unique. This means that an employee’s lawyer always can second-guess a decision about whether following a similar case was proper in this particular employee’s situation. These two areas of uncertainty require closer scrutiny of decisions involving leaves of absence. � Military leave issues. As uniformed service members and reservists return to their jobs after the war in Iraq, the number of questions about the Uniformed Services Employment and Reemployment Rights Act (USERRA) will quickly rise. USERRA sets forth specific requirements regarding how employers should handle the service member’s return to work after military duty ends. The USERRA’s basic principle is that the service member must be treated as if he had been continuously employed during the time he was on military leave. Of course, this principle leads to questions about to what position the employee should be returned, what benefits he should earn in his new position and what his new seniority level is. This statute also raises questions about an employer’s duty to retrain employees who can no longer perform their former jobs because technology or the jobs themselves have changed. Many of these questions will not lend themselves to certain answers, which means that USERRA will be a ripe area for litigation. Christie A. Newkirk is an attorney with the Dallas office of Hughes & Luce, practicing exclusively in labor and employment law and can be reached at [email protected].

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