by Richard J. Morgan
Employers and employees often struggle with wages and workplace injuries. Questions such as "Is this work time that must be paid?" and "Did the employee really get hurt at work?" are common. The U.S. 4th Circuit Court of Appeals (whose rulings cover South Carolina employers) recently addressed two cases that dealt with pay issues under the federal Fair Labor Standards Act (FLSA) and the South Carolina Payment of Wages Act (PWA) and retaliation under the South Carolina Workers' Compensation Retaliation Act (SCWCRA).
Former and current employees of House of Raeford Farms, Inc., d/b/a Columbia Farms, Inc., a chicken processor in Greenville, filed three separate lawsuits against the company. The employees asserted two claims. The first claim was for the payment of unpaid wages that were withheld in violation of the FLSA and the PWA, and the second claim alleged that Columbia Farms retaliated against the employees for instituting workers' compensation proceedings in violation of S.C. Code Ann. § 41-1-80 (workers' compensation statute). The court's analysis is instructive.
The wages paid to production and maintenance employees at Columbia Farms' Greenville plant were governed by a collective bargaining agreement (CBA) between the company and the United Food and Commercial Workers International Union, Local No. 1996, CLC. The CBA provided that a basic workday was eight hours and a basic workweek was 40 hours. The contract also spelled out hourly rates of pay for different classes of employees.
The CBA noted that in November 2004, Columbia Farms and the union negotiated a change to the company's "meal and rest policy" in exchange for a one-time 3.1 percent raise in employees' hourly rates. Under the revised policy, instead of receiving "an unpaid lunch period and paid breaks," employees would receive one "unpaid meal period and [one] unpaid rest period per day, totaling approximately sixty (60) minutes, [with] the allocation between the meal and rest periods to be allocated by the company."
The CBA specified that Columbia Farms would maintain "a daily record . . . with the use of adequate time clocks at each plant" and that "the union [would] have the right to examine time sheets and any other records pertaining to the computation of compensation of any employee whose pay [was] in dispute."
Columbia Farms agreed "not to enter into any other agreement or contract with its employees, individually or collectively, [that would] in any way conflict with the terms and provisions of [the CBA]." Finally, the CBA established a grievance procedure for disputes "aris[ing] over the interpretation" of the contract and provided for arbitration for grievances that could not be settled.
The CBA did not specify how employees' compensable work time would be calculated, but Columbia Farms had a long-standing practice of paying production employees based on "line time" (i.e., the time employees spent processing chickens on the production line). "Line time" did not include time spent donning and doffing protective gear, walking to and from the production area, or washing gear before and after work. Columbia Farms stopped the production line for two 30-minute periods per shift to provide employees with meal breaks, which were not considered compensable time under the CBA.
In 2009, a group of current and former employees who were members of the bargaining unit sued Columbia Farms for wages due under the FLSA and the PWA. The employees asserted that they should have been paid for the time they spent donning and doffing protective gear and preparing for work.
They also claimed that because their break periods were actually less than 20 minutes, Columbia Farms was required to compensate them for that time under federal regulations. The lawsuit included an allegation that the company failed to notify the employees in writing of the hours they would work when they were hired.
Before trial, the trial court dismissed the FLSA claims but permitted the PWA claim to go forward. A jury returned a verdict in favor of the employees and awarded them $16,583 in the aggregate, which the trial court tripled to $49,749. The court also awarded them $227,640 in attorneys' fees and costs.
In another lawsuit, eight former employees alleged that Columbia Farms violated their rights under the workers' comp statute, which prohibits employers from retaliating against employees for instituting workers' comp proceedings.
Columbia Farms used a "point system" to enforce its attendance policy at the Greenville plant. Under the system, employees who accumulated five points were fired. Points were issued when an employee failed to follow the attendance policy, and they were subtracted when an employee had 30 days with no new points. Employees who arrived to work late, returned from a break late, or left work early were issued half a point. Employees who missed work Tuesday through Friday received one point, and employees who missed work Saturday through Monday received 1½ points.
If an employee provided Columbia Farms with two days' notice and a medical excuse for an absence, he accumulated no points. If an employee provided a medical excuse but not advance notice, he received one point for each medically excused absence, even if it was longer than one day. Employees received no points for workers' comp injuries, absences, or approved doctor's visits if they visited the company doctor.
Teresa Taylor, Columbia Farms' plant nurse, decided whether to send employees to the company doctor for medical treatment, but she would not send employees if she thought their injuries required only first aid or were non-work-related. For example, she concluded that an employee overusing her hands on the production line caused "sore hands," which were treated with first aid. Accordingly, she did not complete a workers' comp form for some complaints.
While employees with workers' comp injuries or restrictions received accommodations such as light-duty work, employees with injuries or restrictions that weren't related to workers' comp were not permitted to return to work until they provided Columbia Farms with a doctor's note stating they had no medical restrictions.
Six employees — Natasha Atkinson, Anna Edens, Shiren Johnson, Shirley Baisey, Tamortha Bruster, and Steven Case — testified that they visited the nurse's station and complained of sore or injured hands. They were given first aid treatment such as gauze, topical pain reliever, ibuprofen, and hand massages.
Five of the employees asked to visit the company doctor, but Taylor denied their requests. Instead, they visited private doctors or emergency rooms. The employees received notes that stated they were unable to work for a period of time and placed other restrictions on their ability to work.
Taylor told several of the employees that they would not be allowed to return to work until they provided a doctor's note saying they could work without restrictions. When Atkinson, Edens, and Johnson were unable to obtain such notes, their employment was terminated. Baisey, Bruster, and Case were issued attendance points for absences for which they had doctor's notes. When the points were combined with points Baisey, Bruster, and Case had previously accumulated, they totaled at least five points, leading to the employees' discharge.
Two other employees, Billy Harris and Lisa Jamison, sustained injuries that Columbia Farms acknowledged as work-related. Harris fell down some stairs at work and injured his back, while Jamison slipped and fell, injuring her back, hip, neck, and shoulder. Both employees were seen by the company doctor.
The doctor placed Harris on light duty for several weeks, and Columbia Farms accommodated his restrictions by giving him different job responsibilities. The doctor eventually released Harris to return to full duty but told him to visit the nurse's station if his back began to hurt. While working on the production line, Harris began to experience pain and told his supervisor. The trial court believed Harris' testimony that he eventually received permission to leave the line and visit the nurse's station.
However, when Harris reached the nurse's station, the plant's HR manager was waiting for him. The HR manager told him that he was being fired for leaving the line without permission. After Harris was fired, he continued to receive treatment from the company doctor, and an MRI showed that he had a bulging disk. Harris acknowledged that from the time of his discharge in July 2009 until at least February 2010, he could not perform his job because of the medical restrictions the company doctor had placed on him.
In May 2009, Columbia Farms' doctor placed Jamison on light duty after her fall at work. Jamison testified that "a supervisor at Columbia Farms told her that Taylor was going to get her fired because of her injury." Jamison provided Taylor with the doctor's notes setting forth her work restrictions and advising her to take frequent breaks from using her shoulder, which she understood to mean that she should walk around to loosen up her shoulder or go to the nurse's station when she started having pain. Taylor called the company doctor in Jamison's presence to verify that she could take breaks as needed.
A few weeks after Jamison filed a workers' comp claim, the HR manager found her outside her assigned work area on three occasions and fired her, stating she had taken an excessive number of breaks. The trial court believed Jamison's testimony that each time the HR manager saw her, she was on her way back from the nurse's station.
Following a trial, the court found in favor of the employees. The court ordered that five of the employees be reinstated and awarded $131,742 in back pay. Columbia Farms appealed the jury's verdict on the wage claims and the trial court's decision on the retaliation claims.
4th Circuit's analysis and decision
PWA claims. A jury found in favor of the employees on the issue of whether they were given proper written notice of how breaks and noncompensable time would be handled. The 4th Circuit reviewed Columbia Farms' claim that the wage payment issue was improperly presented to the jury.
Columbia Farms contended that the employees' PWA claims were preempted by § 301 of the Labor Management Relations Act (LMRA) and should have been dismissed. The company argued that the PWA provides for an enforcement mechanism to ensure that employees timely receive all wages to which they are entitled under an employment contract.
Thus, the employer contended that the employees' entitlement to unpaid wages turned on the application and construction of the CBA, which established the terms and conditions of employment at the Greenville plant through its express terms and the customs and practices developed under it.
Columbia Farms argued that instead of ruling that the PWA claims were preempted, the trial court improperly allowed the jury to find that the employees entered into separate agreements regarding how their compensable time would be calculated, even though the CBA explicitly prohibited such agreements.
The employees argued that they didn't receive proper written notice of their wages or how they would be paid for breaks. In essence, their PWA claims were based on their argument that Columbia Farms owed them unpaid wages because of its failure to calculate their hours under separate employment contracts that were based on what the employer told them when they were hired.
The employees were owed only wages that were agreed to in the CBA between the union and Columbia Farms. The CBA was the only contract on which the employees' PWA claims could be based because it stated that it was the exclusive employment contract with Columbia Farms.
The employer agreed that it would not "enter into any other agreement or contract with its employees, individually or collectively, [that would] in any way conflict with the terms and provisions of [the CBA]." The CBA's terms were binding on the employees because they were members of the bargaining unit.
The 4th Circuit noted that the employees' PWA claims were nothing more than a disagreement with Columbia Farms' interpretation of how to calculate their hours worked under the CBA, including the two unpaid breaks that were required by the contract. Therefore, the court reversed the jury's award to the employees, concluding that their PWA claims were preempted by § 301 of the LMRA and should have been dismissed.
The SCWCRA generally prohibits employers from discharging or demoting employees who "institute" a good-faith "proceeding under the South Carolina Workers' Compensation Law." In finding in the employees' favor, the trial court used the following standard to determine whether they "instituted" a workers' comp proceeding:
While the mere seeking and receiving of medical treatment is not sufficient to constitute the institution of a workers' compensation claim, an employee's seeking or receiving of medical treatment from the employer accompanied by circumstances [that] would lead the employer to infer that a workers' compensation claim is likely to be filed is sufficient to institute a workers' compensation proceeding for the purposes of [the workers' comp statute].
Atkinson, Edens, Johnson, Baisey, Bruster, and Case did not file workers' comp claims before they were terminated. The 4th Circuit noted that the South Carolina Supreme Court has recognized only two forms of conduct that satisfy the statutory definition of "instituted": "(1) the employer's agreement to pay for medical care and (2) the employer's receipt of a bill from an independent healthcare provider for medical services rendered to an injured employee." Those types of conduct constitute instituting a proceeding under the statute.
The 4th Circuit agreed with Columbia Farms' argument that the trial court erred in concluding that the employees' termination resulted from the institution of workers' comp proceedings. The record showed that they were terminated under an established point system.
Regardless of whether the system was administered fairly, the employees did not establish that it was used as a mechanism to retaliate against them for instituting workers' comp proceedings. To the contrary, the trial court found that the employees were terminated because of Taylor's erroneous classification of their injuries.
The trial court suggested that it could be argued that Taylor misclassified the employees' injuries, which meant they failed to benefit from Columbia Farms' more lenient policies for employees with work-related injuries. However, without more, that did not establish that Columbia Farms discharged the employees for exercising their statutory rights under the workers' comp law.
Because the trial court applied the wrong test to determine whether the employees "instituted proceedings" under the workers' comp statute and failed to demand proof that satisfied South Carolina's test for causation, the 4th Circuit reversed the jury's award in favor of Atkinson, Edens, Johnson, Baisey, Bruster, and Case. However, the appeals court let the trial court's decisions in favor of Harris and Jamison stand.
Lessons for South Carolina employers
When wages are concerned, nonunion employers need to make sure they meet the PWA's written notice requirements. The requirements include the time-of-hire notice and notices for changes in normal work hours, wages (not increases) paid, time and place of payment, day of the week wages are paid, and deductions from wages.
Those notices must be provided at least seven days in advance. Employers with union employees should closely examine their CBAs to determine whether other notices are required.
When dealing with injured employees, review the facts and circumstances of each case. A requirement of a retaliation claim is the "institution of a workers' comp claim." The best practice is to gather all the information and consult legal counsel because the "instituting" of a workers' comp claim can be a close call. Making a decision without all the information can result in liability.
Richard J. Morgan, an editor of South Carolina Employment Law Letter, may be reached at firstname.lastname@example.org.