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During the season most of the employees are between the ages of 18 and 25 years. Deb?s intentionally hires women and men that are extremely attractive. The uniforms (which are in essence swimsuits and t-shirts) worn by these young employees are very form fitting and somewhat revealing. Deb O?Nare is the owner, in her 40s and very attractive. She has a weakness for younger male employees and it is well known that she has had affairs with some. Her husband, Mark O?Nare, seems oblivious to Deb?s activities, although he seems to have an equal interest in the young women that work there. The young men and young women consider Mark and Deb?s interest in them as just ?part of the job.? In fact, they joke among themselves as to whose turn it is to provide sexual favors in order to ?keep them in a good mood.? It is also well known that Deb and Mark provide raises or promotions to the employees who regularly provide them sexual favors. One day Deb approached Greg Summers, a fit and attractive 21 year old employee. He refused to provide her with any sexual favors. Rather than fire Summers, Deb took him off his normal jobs supervising activities at the various rides at the waterpark and instead made him do the most menial work possible. Greg ultimately protested this behavior and was fired. At the same time, two additional year-round employees told Mark and Deb that this was not right and they should reinstate Greg. Both were instantly fired. One of them, an African-American female, LaFonda Young, was reinstated after yet another senior employee pointed out that she was the only African-American female that worked there. The other employee, Daryl Winchnew, who was a Caucasian male, was not reinstated. Around the same time Deb?s Waterpark started experiencing severe financial problems, in part due to Mark?s gambling habits, and Deb decided to sell her business to Big?s Waterparks, a chain. Deb merely sold the waterpark assets to Big?s Waterparks. Eight of Deb?s long-term employees had a contract with Deb?s that said that if they were laid off as a result of a reduction in the workforce, they would receive one year?s pay as severance. When Deb sold her waterpark to Big?s Waterparks, Big?s Waterparks did not employee any of these eight employees. These employees made claims for severance, but were told by Deb that their job loss was the result of a sale, not a reduction of the workforce and Deb refused to pay. All the permanent employees had received a letter from Deb 5 years ago telling them that they would have health and life insurance ?for life? so long as they were not terminated for cause. It turns out that about a year ago Mark changed the document and deleted the provision which formerly did provide for lifetime life and health insurance. The Employees also had a retirement savings plan into which they put 6 percent of their savings and which was matched by Deb?s each year. The money in the plan was managed by Mark, who gambled it all away. The only document evidencing the Retirement Savings plan was a year-end ?statement of account? typed by Deb and given to each employee.
Please describe all causes of action by any person against Deb?s Waterpark, Deb and Mark individually, and Big?s Waterpark, and any defenses thereto.
2. You are being engaged as counsel to review AA Plumbing?s (?AA?) Employment Procedures and Practices. A portion of its workforce is unionized. Despite that, AA regularly engaged in ?side deals? with certain favorite bargaining unit employees paying them more than the collective bargaining agreement requires, while refusing to pay the same benefits to other bargaining unit employees. It pays these hourly employees only minimum wage. It routinely asks its employees to come early or stay late, but pays them only for 40 hours regardless of how long they work.
Some, but not all Employees submit time sheets. Supervisors routinely admonish Employees for turning in more than 40 hours, even if they work far more than that. AA routinely deducts from all hourly employees? salary the cost of work materials, such as gloves, hats, goggles, laundering their company issued uniforms, various other items, deducts the cost of lost plumbing parts from Employees? pay if it thinks those employees are responsible. The company has never received written permission from any employee to make these deductions.
Some of its employees work at home and make specialized parts and are paid a flat rate for each part produced. If every employee was paid for all parts produced, each employee would make $10.00 an hour. But, AA regularly rejects substandard parts and fails to pay for them.
Sometimes this results in employees being paid less than minimum wage for the work that they do. They also pay for tools, and certain materials (cutters, glue, and sandpaper), out of their own pockets.
AA pays other ?supervisory? employees on ?salary?. It has made no effort to determine whether or not these employees engage in activities that are exempt under the applicable law. The employees who are on salary, supervise the work of the other employees, but do so according to strict guidelines from which they cannot deviate. They may not hire or fire the employees.
Their job requires no particular skill or training, other than knowing how to do the job and following the strict guidelines. Each of the employees is paid strictly on a percentage of what their departments produce rather than a specific salary. They routinely work in excess of 60 hours per week.
The supervisors do receive bonus payments in addition to their regular compensation of $100 to $300 per month on a periodic basis. The reason for payment of these bonuses is not stated, and follows no pattern.
Maintenance workers at AA are paid differently. The company runs three shifts and it is very important that the machines which the maintenance workers maintain are fully operational at all times. The maintenance workers are paid 40 hours per week, but are on call at all times during five-day periods. The maintenance workers must arrive at the plant within 7 minutes of receiving a page. They may not drink alcohol while on call and, since their homes are often
more than 7 minutes away, they must make arrangements to be close to the plant. Consequently, the maintenance workers have pooled their resources to rent what they affectionately call the ?flop house.? There are 8 maintenance employees. There are always 2-4 on call. So, the maintenance employees when on call, stay at the flop houses. They are free to come and go as they please while on call but tend to congregate at the flop house when not on duty. There is very little else to do because the flop houses are in an isolated area of town. Each of the employees receives $100 pay from AA to defer the cost of the flop houses. The flop houses cost each of the employees at least $200 per month.
All employees receive two 10 minute breaks in the morning and afternoon and a 20 minute meal break. They are docked for each of these breaks.
AA has a total of 3,000 employees in three different locations in Texas. All are at-will employees. Although they do distinctly different jobs at each of the three plants, all are subject to the same employment practices.
Recently, 10 employees who complained about these practices were fired for complaining. In addition, 10 others of the most senior employees were fired for inquiring about their pension benefits. It seems that each of them was close to vesting in the pension program of AA. The
pension program is surprisingly generous and self-funded by AA. As a result, AA?s bottom line
is directly affected by any pension payments. AA is not only the sponsor, but also the
administrator of the pension plan.
You are being engaged by AA to analyze, which of those employment practices violate the law,
and determine what its liabilities might be. Please advise AA fully on its employment
practices.
3. XYZ Corporation (?XYZ?) operates a variety of businesses at the same location in a very
rough neighborhood in Dallas. It provides routine outpatient surgery services, operates a
primary care clinic, and a payday loan facility. Because of its location, XYZ has difficulty
recruiting quality employees. Therefore, it uses Ranger Temp Services (?Ranger?) to recruit
employees for its medical operations. Ranger signed an agreement in which it promised XYZ that
it would conduct background checks ?consistent with the highest standards in the industry?.
Ranger was also allowed to advertise at the XYZ facilities that all medical care employees had
passed a background check by XYZ. Its signage boasted that Ranger engaged in the best screening
practices in the industry, and was visable to every patient as they walked in the door.
Unfortunately, shortly after the agreement was signed, XYZ changed hands, and the new
management completely ignored the agreement. Afterward, Ranger failed to conduct any background
checks on the employees it recruited for XYZ. Eventually, Brad Bully, who had previously been
convicted of rape, embezzlement and murder, was recruited by cowboy and hired by XYZ as an
orderly. Billy Bad Boy, as a part of his job, had access to all patient files, including their
home addresses. One night Brad Bully brutally assaulted and stole several thousand dollars from
Penelope Rose, an elderly patient, at her home, after copying her address from XYZ?s files.
XYZ did not use Ranger to recruit its employees for its payday loan operation. The payday loan
operation was managed almost autonomously by Bill Barkman. Barkman has a PH.D in English, but
has been unable to get a job in his field. Barkman made all the hiring and firing decisions and
received no training from XYZ. Barkman did a background check on every employee which included
their criminal history and credit history. He never asked any employee or his employer for
permission to do so and never disclosed to any employees that he was doing so. He never
disclosed the results of these background checks to anyone. Barkman?s mother was Swedish and a
blonde. She was very abusive and as a result, he hated Swedish people and blonde people. During
the hiring process, he would ask detailed questions about potential employees? religion, family
status, and of women, whether they were pregnant or intended to have children. He would also
ask employees whether or not they had received workers? compensation or disability income
payments. He also unilaterally excluded anyone who did not have a college education, although
the job could be done by anyone with a high school education or less, so long as they received
two days of training. Barkman always required every prospective employee to take a polygraph
examination and answer a battery of questions from the Minnesota Multi-Phasic Personality
Inventory (?MMPI?) as well as take a ?character test?, which he wrote and only he could score,
as well as a handwriting analysis. Barkman routinely made unilateral hiring decisions based on
any and all of these various tests and questions. Barkman would always ask about potential
employees? heritage and never hired anyone who was either of Swedish decent or blonde.
The clinic would routinely pay a local church a flat fee to staff non-medical aspects of its
operations, including greeting patients, assisting patients, when necessary, to and from their
cars, picking up trash, cleaning the facility and various other duties. The church did not pay
the employees because they were volunteers. Many of the people provided by the church were
between the ages of 8 and 80 and there was no limit on the amount of hours that any volunteer
could work.
Please comment on any causes of action or complaints any employees, potential employees, third
parties, or government agencies might have against XYZ or Ranger and any defenses thereto.
4. James Jones, Jonas Schmidt and Prissy Parsons started working at AMA Aeronautics Parts (?
AMA?) on January 1, 2005. They left there on the 5th day prior to your exam by resigning
without notice and leaving immediately. AMA is in the business of manufacturing aviation parts
for a number of airline applications. Their customers include virtually everyone in the
industry. Jones was the vice president of marketing and sales when he left. He held that same
position at two other companies prior to starting with AMA. Schmidt and Parsons worked with him
at each of the prior companies and came to AMA because of their loyalty to Jones. Jones
actively recruited them for several months to come with him while still employed at AMA, making
promises of raises, bonuses, and better treatment.
Jones signed a broad form nondisclosure agreement and a covenant not to compete, which
prohibited him from, for two years after his employment ended, working for anyone in the
airline industry. Neither Schmidt nor Parsons ever signed an employment agreement with AMA but
did sign broad form nondisclosure agreements. Jones reported to the president of the company,
Phil flyer, the entire time he worked there, and was aware of every aspect of AMA?s business,
including its marketing and business plans. Jones also agreed that he would not resign without
one years? notice, and failure to give notice would subject him to a $100,000 fee.
Six months prior to the date Jones, Schmidt and Parsons resigned from the company, the company
instituted a new drug testing program and required everyone except for Flyer to be subject to
it. The drug testing program required surprise drug testing and required the employee to
urinate in a bottle with a security officer of the same sex watching. This enraged Jones,
Schmidt and Parsons and after Flyer refused to exempt them from the policy, they met and
decided to form their own company called MNO Aeronautics. AMA owes Jones $50,000 and Schmidt
and Parsons each $25,000, but has refused to pay it, because of the way they left AMA.
Their intention was to compete head to head with AMA but they wanted to wait six months to make
certain that they were fully prepared to ?hit the ground running.? Over the next six months,
Jones rented space, bought computer equipment, and software, purchased machines, and generally
set up an office a few blocks away from AMA that had identical capabilities as did AMA. Jones,
Schmidt and Parsons began sending secret company information including customer lists, a
proprietary summary of customers and their buying habits, parts diagrams, forms, memos
regarding manufacturing process, payroll records, vendor records, and other information about
virtually every aspect of AMA?s business to their personal email addresses. Jones took his
entire customer list to AMA. They secretly told customers and vendors what they were going to
do, and tried to persuade them to do business with JSP when it started. They started competing
immediately after resigning using all this information.
Jones was an ex officio member of the board and sat in on all the highest level strategy
meetings throughout his tenure there. At the time of his resignation, and six months prior
thereto, the company was preparing a new product rollout which was secret, revolutionary, and
unknown to anyone outside of AAA. The company spent over $1,000,000 to develop it, and Jones
knew more about it than anyone else. Although Schmidt was an accomplished parts maker, he
received a substantial amount of training in a particular aspect of parts making (internet on
demand and other electronics deployment) about which he knew nothing prior to coming to AMA. By
the time he resigned, he was an expert in this aspect of the business and in fact, developed a
product, which he patented, which increased the efficiency of Wi-Fi delivery on commercial
airplanes dramatically. AMA paid for all aspects of the development of this product. Deployment
of this technology is a significant part of MNO?s business plan. Schmidt has demanded a 20%
royalty from AMA on all revenues it receives from the product.
Please analyze the claims of AMA against Jones, Schmidt and Parsons and whether Jones, Schmidt
or Parsons have any counterclaims, and defenses to any claims or counterclaims.
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