1. How can an employee ensure that she or he

1. How can an employee ensure that she or he knows all of the facts relevant to a question such as the one present in the case?

2. Why do you think Varity handled this in the way that it did?

Issue: Did Varity breach its fiduciary duty in leading the employees to believe that their funds would be secure?

Facts: Two classes of former employees (appellees) and retirees brought Employee Retirement Income Security Act (ERISA) action against the owner of Varity and a subsidiary (appellant). At the time employer Varity transferred its money-losing divisions in its subsidiary Massey-Ferguson, Inc. to Massey Combines, a separate firm (they called the transfer “Project Sunshine”), it held a meeting to persuade its employees of theses failing divisions to change benefit plans. Varity conveyed the impression that the employees’ benefits would remain secure when transferred. In fact, Massey Combines was insolvent from the day it was created and, by the end of its receivership the employees who had transferred lost all of their non-pension benefits.

Decision: The Court of Appeals held for the employees. The Court held that (1) employer was acting as ERISA fiduciary when it misled employees regarding security of their benefits if they transferred; (2) employer violated fiduciary obligations of ERISA in misleading employees and (3) ERISA authorized lawsuit for individualized equitable relief.

1. Does any of this case surprise you? Explain.2. If

1. Does any of this case surprise you? Explain.

2. If you were the club owner and did not want the dancers to be employees, after receiving this decision how would you change things?

3. Do you think the dancers should have been considered employees? Why or why not?

Issue: Whether topless nightclub dancers receiving only tips are subject to FLSA or are “business women renting space, stages, music, dressing rooms and lights from the club,” not subject to FLSA.

Facts: The topless dancers receive no compensation from the club. Their only compensation is the tips they receive from customers for performing on stage and performing private “table dances” and “couch dances.” At the end of each night, each of the dancers were required to pay the club a $20 “tip out” regardless of how much they made in tips. The club says this is for stage rental and argues that the dancers are tenants renting space, stages, music, dressing rooms and lights from the club. The club says the dancers are not employees or independent contractors.

Decision: The court said to determine employee status under FLSA the focus is on whether the alleged employee is economically dependent upon the business to which she renders her services or is in business for herself. Five factors are analyzed: the degree of control exercised by the alleged employer, the extent of the relative investment of the employer and alleged employee, the degree to which the workers’ opportunity for profit and loss is determined by the alleged employer, the skill and initiative needed for performing the job, and the permanency of the relationship. Here, the court found that the club exercised a great deal of control over the dancers by requiring them to comply with weekly work schedules compiled by the club with input from the dancers, fining the dancers for tardiness, instructing the dancers what to charge for their services, dictating behavior such as no flat heels, no more than 15 minutes at one time in the dressing room, only one dancer in the restroom at a time, etc. The club argued that the rules were only for maintaining decorum and keeping the club legal, but the court determined it exercised significant control. The dancer’s investment is limited to costumes and the padlock. The costume prices can vary and some are quite expensive. As for the worker’s opportunity for profit and loss, the club has significant control over drawing customers, though once customers arrive at the club, a dancer’s initiative, hustle and costume significantly contribute to the amount of her tips. The skill and initiative required in performing varies, as many of the dancers did not have any prior experience with topless dancing before coming to work at the club. They do not need long training or highly developed skills to dance at the club. The dancer’s initiative is essentially limited to decisions involving costumes and dance routines, which is not indicative of persons in business for themselves. Most dancers have short-term relationships with the club, so the relationship is not very permanent. Based on the analysis of the factors, the dancers are subject to the Fair Labor Standards Act.

If this case were tried as a disparate impact case,

If this case were tried as a disparate impact case, as discussed by the court, how would you balance the advantages of word-of-mouth recruiting against the possibility of a discriminatory impact?

Issue: Whether a word-of-mouth recruiting effort, which resulted in 81 percent of hires being of Korean descent in a work force which is only 1 percent Korean, is a discriminatory practice.

Facts: Consolidated Services System is a small janitorial firm in Chicago owned by Mr. Hwang, a Korean immigrant, and staffed mostly by Koreans. The firm relied mainly on word-of-mouth recruiting. Between 1983 and 1987, 73 percent of the applicants for jobs and 81 percent of hires were Korean, while less than 1 percent of the work force in the Chicago area is Korean. Mr. Hwang claims he relies on word-of-mouth to obtain employees because it is the cheapest method of employment. Hwang did buy newspaper advertisements on three occasions—once in a Korean-language newspaper and twice in the Chicago Tribune—but these ads resulted in zero hires.

Decision: The hiring discrepancies were not due to discrimination. If an employer can obtain all the competent workers he wants, at wages no higher than the minimum that he expects to have to pay, without beating the bushes for workers—without in fact spending a cent on recruitment—he can reduce his cost of doing business by adopting the stance taken by Mr. Hwang.

Of course, if the employer is a member of an ethnic community, especially an immigrant one, this stance is likely to result in the perpetuation of an ethnically imbalanced workforce. Discrimination is not preference or aversion; it is acting on the preference or aversion. If the most efficient method of hiring adopted because it is the most efficient, just happens to produce a workforce whose race pleases the employer, this is not intentional discrimination.

A staffing firm provides landscaping services for clients on an

A staffing firm provides landscaping services for clients on an ongoing basis. The staffing firm selects and pays the workers, provides health insurance and withholds taxes. The firm provides the equipment and supplies necessary to do the work. It also supervises the workers on the clients’ premises. Client A reserves the right to direct the staffing-firm workers to perform particular tasks at particular times or in a specified manner, although it does not generally exercise that authority. Client A evaluates the quality of the workers’ performance and regularly reports its findings to the firm. It can require the firm to remove a worker from the job assignment it if is dissatisfied. Who is the employer of the workers?

Why do you think an employer must follow such strict

Why do you think an employer must follow such strict guidelines when creating a waiver? Do you think the guidelines are correct? How would you change them?

Issue: Whether the receipt of any consideration given in exchange for the waiver must be returned in order to pursue a valid claim under the ADEA and whether the waiver, signed by the employer was valid under the OWBPA to prevent a claim under the ADEA.

Facts: Oubre who, as part of termination agreement, signed release of all claims against employer in exchange for severance pay, subsequently sued employer for age discrimination in violation of the Age Discrimination in Employment Act (ADEA). Entergy moved for summary judgment, claiming Oubre had ratified the defective release by failing to return or offer to return the monies she had received. The United States District Court for the Eastern District of Louisiana    granted summary judgment in favor of employer, and employee appealed. The Court of Appeals for the Fifth Circuit affirmed, and certiorari was granted.

Decision: As the release did not comply with the OWBPA’s requirements, it cannot bar Oubre’s ADEA claim. The OWBPA provides: “An individual may not waive any [ADEA] claim… unless the waiver is knowing and voluntary …. [A] waiver may not be considered knowing and voluntary unless at a minimum” it satisfies certain enumerated requirements, including the three listed above. Thus, the OWBPA implements Congress’ policy of protecting older workers’ rights and benefits via a strict, unqualified statutory stricture on waivers, and this Court is bound to take Congress at its word. By imposing specific duties on employers seeking releases of ADEA claims and delineating these duties with precision and without exception or qualification, the statute makes its command clear: An employee “may not waive” an ADEA claim unless the waiver or release satisfies the OWBPA’s requirements. Oubre’s release does not do so. Nor did her mere retention of monies amount to a ratification equivalent to a valid release of her ADEA claims, since the retention did not comply with the OWBPA any more than the original release did. Accordingly, even if Entergy has correctly stated the contract ratification and equitable estoppel principles on which it relies, its argument is unavailing because the authorities it cites do not consider the OWBPA’s commands. Moreover, Entergy’s proposed rule would frustrate the statute’s practical operation as well as its formal command. A discharged employee often will have spent the monies received and will lack the means to tender their return. These realities might tempt employers to risk noncompliance with the OWBPA’s waiver provisions, knowing that it will be difficult to repay the monies and relying on ratification.