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Tuesday, February 23, 2010

Logo Work Clothes May not be Taxable

By: Tommy Eden, Attorney

On February 5, 2010 - The Internal Revenue Service (IRS) released a private letter ruling that the value of small items such as shirts, gloves, and hats provided by employers can be excluded from workers' taxable income. The exemption for the clothing items falls under an IRS rule allowing an income exclusion for benefits of minimal value where determining that value is "unreasonable or administratively impracticable," the de minimus fringe benefit rule in Code Section 132(a)(4)states: “The term “de minimis fringe” means any property or service the value of which is (after taking into account the frequency with which similar fringes are provided by the employer to the employer's employees) so small as to make accounting for it unreasonable or administratively impracticable. Section 1.132-6(b)(1) of the Treasury Regulations states:

Generally, the frequency with which similar fringes are provided by the employer to the employer's employees is determined by reference to the frequency with which the employer provides the fringes to each individual.“

According to the letter, the employer provides items such as tee shirts, polo shirts, sweaters, jackets, swimsuits, socks, sweatshirts, coats, pants, jeans, shorts, gloves, hats, fanny packs, belts, clip-on ties, and equipment bags bearing the employer's logo. The employer said it provided the items twice annually at the most.

In the Analysis portion of the letter the IRS stated: “The Code and Regulations require Taxpayer to establish that the value of the items it seeks to exclude as de minimis fringes is so low as to make accounting for them administratively impracticable. Neither the Code nor the Regulations specify a particular value above which an item can no longer be considered a de minimis fringe.” On the issue of the difficulty of accounting for the gifts, generally an "objective guidepost" would be if the cost of determining an item's value would be greater than the cost of the benefit.”

The IRS ultimately agreed that the employer's provision of logo work clothing items would qualify for the income tax exemption. The IRS cited the lack of precise cost information from vendors, the difficulty of establishing fair market value, and the costs that would have to be incurred to track the value received by each employee given the employer's large and decentralized structure.

Ruling is available at

Common Sense Counsel: if you give any of the logo items to your employee listed above, you need to read this IRS letter and give your accountant a copy. Otherwise your employees may have a taxing problem when they wear your stuff.

Tommy Eden is a Lee County native, an attorney with the local office of Capell & Howard, P.C. and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-501-1540.

Saturday, February 20, 2010

A Boom Time for Employee Protections

A Boom Time for Employee Protections

In an article posted on line on January 1, 2010, SAPAA Board Member Tommy Eden, an attorney with Capell & Howard, P.C., was quoted extensively in Addition Professional Magazine about Workplace Drug Testing and the ADA

Issue Date: January-February 2010, Posted On: 1/1/2010

by Gary A. Enos, Editor

The online article can be viewed at:

Friday, February 19, 2010

EEOC hit with $4.5 million in attorney fees after dismissal of sexual harassment suit against trucking company

By: Tommy Eden, Attorney

A federal judge in Cedar Rapids Iowa ordered the Equal Employment Opportunity Commission (EEOC) to pay $4.56 million in attorneys' fees and expenses to CRST Van Expedited Inc. trucking company after the judge dismissed the EEOC's sexual harassment lawsuit. EEOC v. CRST Van Expedited, Inc. (N.D. Iowa). The EEOC claimed in its Complaint that CRST's lead drivers or team drivers had subjected 270 female drivers to sexual harassment and created a sexually hostile work environment. In her 67 page Order of April 3, 2009 she blistered the EEOC with criticism in granted summary judgment on the claim that CRST tolerated a "pattern and practice" of sexual harassment against female drivers, dismissing all such claims. On February 9, 2010 she again picked up her poison pin in a 39 page Order to award $4.56 million to the defendant in accordance with the Court’s authority to award attorney fees, expenses and tax cost under 28 U.S.C. Sec. 1920 to the prevailing party. The Case shows well over 320 Court filings. Expect the EEOC to appeal.

Common Sense Counsel: justice is alive and well in one Iowa federal court. In the words of Winton Churchill, “never, never, never give up” when you know you are right.

Tommy Eden is a Lee County native, an attorney with the local office of Constangy, Brooks & Smith, LLP and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-246-2901. Blog at

Thursday, February 18, 2010

ERISA Is Complicated so says the 11th Circuit

By Tommy Eden, Attorney

In Lanfear v. Home Depot Inc., (11th Cir. July 31, 2008) the 11th Circuit agreed with the 3rd, 6th and 7th Circuits in ruling that former Home Depot employees qualified as ERISA participants eligible to sue for benefits lost in the decline in value of a defined contribution plan, even though the exact amount lost by them might not be readily ascertainable.

The suit claimed that Home Depot violated its fiduciary duty under the Employee Retirement Income Security Act of 1974 (ERISA) by allowing a defined contribution plan to invest its assets in Home Depot’s stock when backdated stock options to high level executives and other alleged fraudulent transactions artificially inflated the stock’s value. The district court had followed another Circuits’ precedent and held that it lacked subject-matter jurisdiction over the former employees’ claim for breach of fiduciary duty or, alternatively, that the former employees lacked standing to sue for the fiduciary breach because the court could not readily ascertain the impact on individual employees’ benefits of the reduction in plan asset value by reason of the challenged investment, or, alternatively, because the plaintiffs failed to exhaust administrative remedies.

ERISA §502(a)(3) proves a mechanism whereby participants may sue fiduciaries for benefits lost by reason of a breach of fiduciary duty. The appeals court ruled that the district court had mistakenly dismissed for lack of subject-matter jurisdiction because the former employees were participants impacted by a reduction in asset value, even though precise amount lost was still to be determined, by reason of the fraudulent actions by plan fiduciaries. And to sustain the equitable nature of the ERISA claim, the court further ruled that the former employees had standing to bring the action because a complaint “for the decrease in value of a defined contribution account due to a breach in fiduciary duty is not for damages because it is limited to the difference between the benefits actually received and the benefits that would have been received if the plan management had fulfilled its statutory obligations.”

The 11th Circuit did affirm that the former employees were required to exhaust plan administrative remedies, when such remedies were available, and failed to do so. They must do so before bringing a claim for lost benefits under ERISA. The 11th Circuit remanded the action to the district court rather than affirming dismissal for failure to exhaust, reasoning that the district court did not decide whether it would have stayed the proceedings or dismissed without prejudice and allowed the plaintiffs the chance to exhaust administrative remedies.

Common Sense Counsel: if you are an ERISA Plan fiduciary do not invest plan assets in the company stock. There is specific discretionary language, and plan exhaustion requirements, which should not only appear in your ERISA Plan documents, but also in your Employee Handbook. Handbooks should be reviewed by your employment law counsel every 2 years, or every 1 year during a Democratic Administration.

Tommy Eden is a Lee County native, an attorney with the local office of Constangy, Brooks & Smith, LLP and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-246-2901. Blog at

Wednesday, February 17, 2010

DOT Proposes Sweeping Workplace Drug Testing Changes

Alabama @ Work
By Tommy Eden

On February 4, 2010, the U.S. Department of Transportation (“DOT”) published a Notice of Proposed Rulemaking making a host of changes to 49 CFR Part 40 to bring consistency between the DOT’s drug testing procedures with new U.S. Department of Health and Human Services’ (“HHS”) requirements scheduled to take effect on May 1, 2010. The proposed changes are as follows:

• Require testing for Ecstasy (MDMA) under the DOT drug panel and require testing for 6-acetylmorphine (a unique metabolite of heroin, considered to be definitive proof of heroin use).

• For amphetamines, to lower the initial test cutoff concentration from 1,000 ng/ml to 500 ng/ml, and the confirmatory test cutoff concentration from 500 ng/ml to 250 ng/ml.
• For cocaine, lower the initial test cutoff concentration from 300 ng/ml to 150 ng/ml, and the confirmatory test cutoff concentration from 150 ng/ml to 100 ng/ml.
• For cocaine and amphetamines, this will increase the number of hours after a drug is ingested by an individual that the concentration of the drug or drug metabolite in urine will likely remain above the cutoff concentration.
• DOT will authorize employers to choose between a full service laboratory and an Instrumental Initial Test Facilities (“IITF”) which conducts initial tests only. The IITF would only be authorized to provide results to employers for negative and negative dilute specimens, as well as specimens they reject for testing.
• All other specimens would be forwarded by the IITF to a HHS-certified laboratory.
• Some definitions will change, and others added, to make them consistent with the HHS Guidelines for Federal Workplace Drug Testing Programs.
• Comments must be submitted by April 5, 2010.
• The full 11 pages of proposed regulations on the fast track to approval can be downloaded at

Common Sense Counsel. These proposed changes are huge for all Alabama employers based upon the fact that the both the Alabama workers compensation disqualification statute and unemployment compensation disqualification statute reference the DOT regulations found at 49 CFR Part 40. Once these regulations become effective, it is highly advised that all current federal DOT and Alabama drug-free workplace policies be reviewed by experienced drug testing counsel. These regulations should make it easier to catch the drug testing cheats.

Tommy Eden is a Lee County native, an attorney with the local office of Constangy, Brooks & Smith, LLP and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-246-2901. Blog at

Tuesday, February 16, 2010

Hostile Environment Claim not Taken Seriously

By Tommy Eden, Attorney

In Reeves v. C.H. Robinson Worldwide Inc., (11th Circuit Jan. 20, 2010), Court of vacated summary judgment and remanded for trial a Title VII claim that generalized hostility to women may create a hostile work environment, even though not specifically targeted at a particular female employee.

Ingrid Reeves was employed as a transportation sales representative for C.H. Robinson, a shipping company. She worked the telephones setting up sales appointments and managed shipping freight. Reeves was the only woman working sales in an open floor area with cubicles with six male co-workers. There were no large barriers between the cubicles and she would often hear her male co-workers as they spoke over the phone or with each other.

Use of vulgar and generally offensive language by these male employees was commonplace at C.H. Robinson; everyday referred to female co-workers with derogatory language throughout the day; frequently viewed pornography and frequently tuned the office radio to a crude morning show. Reeves verbally objected to the crude language, conduct and radio station to her male co-workers and would change the radio station when she heard offensive topics on the radio. Reeves said that she told them that their language was offensive, first orally and then by e-mail. In spite of her pleas, the male co-workers’ offensive behavior persisted unabated. On a number of occasions Reeves also formally complained to upper management.

Reeves later resigned and filed an EEOC complaint, alleging that the sexually offensive language created a hostile work environment. The federal district judge granted summary judgment to C.H. Robinson, dismissing the case finding that the offensive conduct was not motivated by Reeves’ sex, because the derogatory language was not directed at her in particular.

The 11th Circuit overturned the federal judge and said Reeves is entitled to have her claims heard by a jury, reasoning that a member of a protected group cannot be forced to endure pervasive, derogatory conduct and references that are gender-specific in the workplace just because the workplace may be otherwise rife with generally indiscriminate vulgar conduct. The evidence supported both general indiscriminate vulgarity and gender-specific derogatory comments made about women on account of their sex. The 11th Circuit held that a jury reasonably could find that it was a workplace that exposed Reeves to disadvantageous terms or conditions of employment to which members of the other sex were not exposed.

Common Sense Counsel: It is well settled that hostile work environment harassment occurs when unwelcome comments or conduct based on sex unreasonably interferes with an employee’s work performance or creates an intimidating, hostile or offensive work environment. Having a well written anti-harassment and professional conduct policy, annual company wide employee training on that policy, prompt and effective investigation of complaints and taking proper remedial action are all keys to a good HR risk reduction program.

Tommy Eden is a Lee County native, an attorney with the local office of Constangy, Brooks & Smith, LLP and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-246-2901. Blog at

Monday, February 15, 2010

ADA Interactive Process-Employee’s Burden to Show Reasonable Accommodation

By Tommy Eden, Attorney

In McKane v. UBS Financial Services Inc., (11th Cir. Jan. 21, 2010) the Court held that an employer who failed to grant a requested accommodation did not violate the Americans with Disabilities Act (ADA) where the employee could not demonstrate that a reasonable accommodation existed. In such a circumstance the employer’s failure to engage in an interactive discussion was excused.

Tim McKane was terminated by UBS Financial Services Inc. for verbally abusing his co-workers in a meeting which occurred inside McKane’s office. UBS had previously denied McKane’s request to relocate his office away from others. He claimed that UBS had failed to engage in the interactive process regarding his requested accommodation and unsuccessfully arguing to the district court judge that by relocating his office he would have been able to perform an essential function of his job, which was to peacefully interact with his co-workers.

Under the EEOC guidelines, an employee with a disability is not entitled to the accommodation of his choice but only to a reasonable accommodation. An accommodation is reasonable and required only if it enables the employee to perform an essential function of the job and the employee bears the burden of identifying an accommodation and of demonstrating that the accommodation allows him to perform the job’s essential functions. Here McKane failed to demonstrate how moving his office to a remote location was a reasonable accommodation since he still needed to peacefully interact with co-workers. If an employee is unable to perform an essential job function, even with an accommodation, he is not an ADA qualified individual.

In a ruling that would mostly likely be different under the ADA Amendments Act of 2008, the 11th Circuit held that even if UBS failed to engage in an interactive process, McKane would not be relieved of his burden of demonstrating the availability of a reasonable accommodation, writing as follows: “Where a plaintiff cannot demonstrate a reasonable accommodation, the employer’s lack of investigation into reasonable accommodation is unimportant. Although McKane offered specific and concrete evidence of his request for accommodation, the issue was not whether an employee made a request for a specific accommodation but whether a reasonable accommodation even existed. The ADA provides no cause of action for failure to investigate possible accommodations. A contrary holding would mean that an employee has an ADA cause even though there was no possible way for the employer to accommodate the employee’s disability.”

Because the Court found that the employee was unable to demonstrate that he was a qualified individual under the ADA, it affirmed the district court’s grant of summary judgment in favor of UBS on his failure to accommodate claim.

Common Sense Counsel: This is a risky course of action. Employers should be careful when declining to engage in the ADA interactive process. The interactive process can uncover potential accommodations, and good-faith participation in the process can strengthen an employer’s position against an ADA claim. Remember to always make the employee go first. Also, make sure in every job description you include as essential functions “the ability to work cooperatively with supervision and co-workers” and “the ability to work in a constant state of alertness.” From the language of the opinion, this employee most likely would not be able to pass either test.

Tommy Eden is a Lee County native, an attorney with the local office of Constangy, Brooks & Smith, LLP and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-246-2901. Blog at

Saturday, February 13, 2010

Call to Police Reporting Harassment Protected


By Tommy Eden, Attorney

In Scarbrough v. Board of Trustees Fla. A&M Univ., (11th Cir. Oct. 22, 2007) the Court determined that an employee who called campus police when his supervisor allegedly threatened him after he rejected the female supervisor’s advances may have been engaged in protected activity under Title VII of the 1964 Civil Rights Act and were issue for a jury to decide.

Dushun Scarbrough was hired on Aug. 10, 2004 to work for Florida A&M University as an academic advisor for student affairs in the School of Nursing. Shortly after he was hired, he claimed that his female supervisor made inappropriate and unwanted advances toward him. He also claims that he consistently rebuffed those advances. During September 2004 she allegedly made an overt sexual advance toward him during a “mandatory meeting” where she required him to attend at her home. He then immediately left her home. The alleged retribution for his hasty departure consisted of his boss overloading Scarbrough with work responsibilities and verbally accosting him in the workplace.

Scarbrough discussed the incident at his bosses home and the ensuing maltreatment with the dean of the nursing school. He met with the dean on numerous occasions and during the fall semester of 2004, when she represented to Scarbrough that she had spoken with his boss and that her attitude should improve. Scarbrough then interviewed with the Dean for an available student coordinator position in the nursing school and the dean recommended that he be hired for the position.

A short time later, Scarbrough claims that his boss verbally attacked him with abusive and profane language, spat in his face and knocked papers out of his hand. Scarbrough reported this incident to university administration, at which time he was granted permission to take the remainder of the year off (approximately two weeks). Scarbrough believed that his bosses outrageous behavior stemmed from his rejection of her earlier advances. He filed a formal discrimination complaint against his boss and the university with the Florida EEO Agency.

Shortly after filing the complaint, Scarbrough’s tire was slashed. Scarbrough’s neighbor provided a description of the car that drove away from Scarbrough’s home at the time of the incident and that description resembled his boss’ car. Then his boss allegedly confronted Scarbrough in a vulgar manner a second time and threatened him with violence over an office telephone bill.

In response to this alleged behavior, Scarbrough called the university campus police and sought a court injunction against his boss. The next day, the dean withdrew her recommendation that Scarbrough transfer to the student affairs coordinator position and discharged him for “unprofessionalism.” The dean incidentally received a copy of Scarbrough’s formal discrimination complaint the day before she discharged him from the university’s employ. The university maintained that Scarbrough’s involvement of the campus police was “unnecessarily disruptive.” It therefore determined that Scarbrough’s termination was warranted.

The 11th Circuit held that where, as here, involving the police allegedly derived from an effort to protect against actions that are intertwined and interrelated with alleged sexual harassment; it cannot be deemed “unprofessional” conduct for which an employee can be terminated. An employee has a right to police protection irrespective of whether it may cause some disruption in the workplace. Furthermore, Scarbrough’s call to the police may be deemed protected activity under Title VII of the 1964 Civil Rights Act if he was threatened and physically accosted for rejecting his bosses’ sexual advances. If involving the police is protected activity, then Scarbrough’s discharge was retaliatory and therefore unlawful. The 11th Circuit Panel vacated the District Court’s summary judgment and found that all of the issues were left for a jury to decide.

Common Sense Counsel: The broad range of behavior that may be deemed “protected activity” under the anti-retaliation provision of Title VII of the 1964 Civil Rights Act has widened considerably over the past few years. To the degree conduct (even disruptive conduct) could reasonably be perceived as intertwined and interrelated with alleged harassment, an employer should not use that conduct as the basis for an employee discharge. See the EEOC Website for detailed guidance on the subject of unlawful retaliation

Tommy Eden is a Lee County native, an attorney with the local office of Capell & Howard, P.C. and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-501-1540.