Virginia Federal Jury Rules on Virginia Tech Equal Pay Case
A Virginia Federal Court jury recently determined that Virginia Tech violated the Equal Pay Act, and awarded back pay to two women employees of its fundraising office. The Equal Pay Act is a federal law amending the Fair Labor Standards Act, which prohibits employers from paying unequal wages to women and men for doing the same or substantially similar work.
To establish a case under the Equal Pay Act, an employee must establish that:
- different wages are paid to employees of the opposite sex;
- the employees perform substantially equal work on jobs requiring equal skill, effort and responsibility; and
- the jobs are performed under similar working conditions.
However, an employee who proves all the above elements may still not prevail. A business may avoid liability if it establishes that such payment was made pursuant to a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or a differential based on any other factor other than gender.
In the Virginia Tech cases, the two women claimed their starting salaries were lower than the men who did the same work. In its defense, Virginia Tech countered that the men had more experience when hired.
Both sides presented extensive statistical evidence. According to the plaintiff’s economist, men’s salaries involved with Virginia Tech’s fundraising were an average of 15% higher. Virginia Tech’s expert analyzed the experience and duties of the employees, and determined there was only an 8% difference. Tech's expert concluded that this difference could be linked to gender, but opined that there was a chance it occurred randomly since the disparity was not statistically significant.
Notably, one of the women testified that when she inquired about the pay differential between her and her male predecessor, the senior regional director of major gifts replied that her predecessor had a family to support. In addition, the Judge identified other statements that tend to show Virginia Tech's animus toward the women when he previously denied Virginia Tech's motion for summary judgment.
How does your company prevent potential liability under the Equal Pay Act? Businesses should evaluate its pay structure, including policies regarding seniority systems, merit systems and incentive systems in light of the prohibition of gender pay disparity. An effective way to prevent managers and supervisors from making compensation decisions based on a protected category under the discrimination laws is to establish and implement a comprehensive job evaluation system. As the lawyers for the women argued during the trial in this matter - if Virginia Tech "had good policies, we wouldn't be here."
FLSA Compliance for Company's Unpaid Interns
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As summer quickly approaches, businesses begin receiving an increasing number of offers for unpaid internships. As many businesses already know, there are many advantages to using an intern – unpaid internships may help fuel growth for your company and also provide an opportunity to mentor young professionals. However, unpaid interns can create legal troubles for the unwary business owner. Federal labor laws governing internships provide that the relationship has to benefit the intern more than the company. If it doesn’t, then the business must comply with the Fair Labor Standards Act (“FLSA”) by paying minimum wages and possibly overtime.
The U.S. Department of Labor’s Wage and Hour Division outlined a list of criteria to determine whether a trainee or intern is an “employee” under the FLSA, and thus, must comply with Federal wage laws.
The following criteria provide guidance in evaluating internship programs for for-profit organizations, but it is important to note that each program is unique and must be carefully examined:
- the training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;
- the training is for the benefit of the trainee;
- the trainees do not displace regular employees, but work under close observation;
- that the employer that provides the training derives no immediate advantage from the activities of the trainees and on occasion the employer’s operations may actually be impeded;
- the trainees are not necessarily entitled to a job at the completion of the training period; and
- the employer and the trainee understand that the trainees are not entitled to wages for the time spent in training.
If your company’s internship program does not satisfy all of the above criteria, your interns may be considered “employees” under the FLSA. Hiring an intern, which qualifies as an “employee” may cost your company thousands in unpaid wages and legal fines!
So, how do you ensure compliance? Establish a written internship program outlining the terms and structure of the relationship in a way that the intern is receiving the full benefit of the learning experience, and ensure that your managers and other employees properly implement it.
Tips for Saving Money on Initial Patent and Trademark Services
It is clear that the economic downturn has lessened the appetite for companies to spend money on anything not perceived as a “necessary business expense.” The importance of intellectual property (IP) rights in a 21st century, knowledge economy, however, dictates that individual inventors and small- and medium-sized businesses (“SMBs”) find capital to file for patents and trademarks relating to their truly innovative products and services.
The above then begs the question: How can SMBs save money in hiring and engaging IP legal counsel? Well, the answer to this question contains many variables related to the specific IP attorney being hired. Such variables include the region where the IP attorney works, the size of law firm in which they practice, their level of experience, the complexity of the IP involved, etc.
The above variables aside, there is one constant in the price equation that I consistently advise SMBs to pay attention to – the preparation of their disclosure materials BEFORE meeting with any newly-engaged IP counsel. That is, SMBs (and individual entrepreneurs) can directly and significantly control their IP legal cost through careful preparation of their disclosure materials. I have seen $5000 legal bills turned into $15000 legal bills through the needless “back and forth” between an IP attorney who is “on the clock” and a client who has prematurely engaged such IP attorney. So, what do I mean by disclosure materials and how should an SMB prepare them? Well, I answer in two parts:
With respect to an invention needing a patent application, disclosure materials means an SMB gathering and organizing all relevant papers, sketches, drawings, notes, software code, formulations, etc. that provide the IP attorney with the following information:
- Title of the invention
- The full legal names, addresses and citizenship of all inventors
- The full name, address and state of incorporation of the company who will own the patent (if any)
- A description of the problem solved by the invention
- A description of how long the problem has been around and how have others tried to solve the problem
- A description of how the invention solves the problem differently than past solutions or attempted solutions
- System diagrams showing all hardware/software components of the invention
- Flowcharts illustrating the steps of the invention
- A list any known websites, publications, patents, products, services, etc. that are relevant to the subject matter of the invention
- A description of how the invention relates to the launch of a new product or service
- Dates the invention was (or will be): first conceived; implemented as a pilot or otherwise used in the public domain; reduced to actual practice; the subject of a publication or public disclosure; sold or offered for sale; and/or internally exploited
With respect to a mark or logo needing a trademark application, disclosure materials means an SMB gathering and organizing the following information to provide to the IP attorney:
- A description of the mark
- The full name, address and state of incorporation of the entity who will own the trademark
- A description of all the types of products and/or services with which the mark is actually used or will be used
- Date of any first sale of goods bearing the mark in interstate commerce
- Copies of any specimens showing the mark as it is currently (or will be) used on or in connection with the goods or services
- A description of how the mark is actually used or intended to be used
A prepared and organized client is one who receives efficient IP legal services and a reasonable legal bill from their IP attorney, and is consequently glad to pay that reasonable bill!
Who Owns Newly-Created IP within a University Community?
I was recently contacted by a professor who was seeking advice about a piece of intellectually property (IP) he created, and that his university was profitably exploiting. Who owned the IP? Can he exploit it himself? Was he entitled to share in the proceeds above and beyond his university (base) salary? Not surprisingly, these questions are not rare. After all, universities, colleges and research institutions are hot beds of creativity. In 2008, U.S. universities and research institutions spent over $51.47B in R&D and received 3,280 issued U.S. patents, all while forming 595 new companies in IP “spin-outs.” [1]
Given this setting, who then owns the IP created by someone within a university community? Intuitively, the answer seems simple in the case of a tenured, research professor who develops IP related to their university research duties – the university owns it! But how about the case of an undergraduate student who creates IP totally unrelated to any of her coursework!? The student? How about certain university community citizens, such as university executives, administrators, (exempt or nonexempt) staff, graduate students, postdoctoral fellows, wage payroll employees, adjunct faculty, emeritus or retired faculty, visiting scholars and others? The analysis for those university community citizens is often a fact-intensive endeavor.
In general, under varying applicable state and federal laws where the university employs the individual in question, there is a presumption that the employee owns the rights to their IP, even though it may have been created during the course of their employment. This general rule, however, has two exceptions and one limitation.
- First Exception: If the employee has an express employment agreement, stating the contrary (i.e., an employee agreement assigning all IP to the employer/university), then the general rule does not apply.
- Second Exception: If the employee was specifically “hired to invent,” later directed to solve a specific problem, or his employment requires that he exercise his “inventive faculties,” then the above-stated general rule also does not apply.
- Limitation: Even when none of the two exceptions to the above-stated general rule apply, the employer – in the case of patented inventions – may have a non-exclusive, non-transferable, royalty-free license to practice the employee’s patented invention if it was made using the resources of the employer. This is known as an employer’s “shop right.”
An overwhelming majority of universities have an “official intellectual property policy” that requires employees, as a condition to employment, to assign their IP rights under certain circumstances (e.g., when university funds or facilities are involved in the creation of the IP). Thus, most situations fall under the above-stated first exception even though many professors and postdoctoral fellows fail to read such policies when they sign their employment agreements!
So what about the case of the undergraduate student who created IP totally unrelated to any of her coursework? What if that IP was created without a professor’s help? Well, in a recent reported case having those exact facts, a university’s lawyers demanded a 25% ownership stake and two-thirds of any profits from four undergraduate students who created a popular iPhone® application in their dorm room! Although the university eventually backed down, one campus technology transfer expert has observed that many universities “generally seek to retain ownership, or at least have a formalized mechanism for assessing ownership of a student’s work in much the same way they would regarding a faculty member’s work.”
In sum, those working/learning/creating within a university community should become familiar with their university’s intellectual property policy at the start of their affiliation, and pay attention to the agreements they sign as a part of the new university employee “on-boarding” process. And, when potentially valuable new IP is created, be vigilant about asserting their rights in such IP.
[1] Association of University Technology Managers, AUTM U.S. Licensing Activity Survey, FY2008: Survey Summary.
$3 Million Personal Injury Claim Against Virginia Business Dismissed
We have all been there. Walking through the aisle of a store and some store personnel who was stocking a shelf has left a ladder or some supplies right in the middle of the aisle, obstructing the path. Well, the Plaintiff in this case did what most of us would do. She attempted to walk around the ladder, but when she did -- bam! – she hit her head on a metal shelf that was on the other side of ladder, and she (sadly) suffered significant, and likely permanent, brain injury.
In this diversity jurisdiction personal injury case, Zankow v. Sears Holding Corp., et al., Plaintiff claimed that Sears was negligent because the placement of the ladder combined with the shelves in the narrow aisle created an unreasonably dangerous condition that caused her serious and permanent injuries. The shelves were 1 to 1.5 inches thick and were connected to the back of a shelving unit with no side walls. While trying to get around the ladder, Plaintiff apparently did not notice the shelves as she was focused on the ladder – the original obstruction.
For its part, Defendant claimed that it should not be held liable as the ladder and the shelves were in plain sight; and, in any event, because Plaintiff failed to use ordinary and reasonable care in walking around the ladder, she was contributorily negligent and barred from recovery.
On summary judgment, the Court dismissed Plaintiff’s claims. The Court ruled that from the pictures submitted by the Plaintiff of the scene (which were attached to the Opinion) and the description provided, the shelf and the ladder were “open and obvious” conditions from which Plaintiff had a duty to use reasonable care to avoid. The court rejected Plaintiff’s argument that the shelf she hit her head on was protruding, because the evidence showed that no one shelf stuck out further than the others. Further, the Court did not find that the combination of the ladder and the shelves rendered either of the hazards “latent” such that Plaintiff would not have been expected to notice and avoid the open and obvious hazards. Citing Virginia Supreme Court precedent, the Court ruled that once a hazard is deemed to be open and obvious, an injured plaintiff’s claim must fail as a matter of law since she will be deemed to have failed to exercise reasonable care, and will thus be found contributorily negligent.
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