News

Chicken Plant Rejected by Kansas Town Finds New Home in Gibson County

A chicken plant originally planned and rejected by a Kansas town has found a new home in Gibson County, reports The Tennessean. Tyson Foods, the world's largest processor and marketer of chicken, beef and pork, has announced that the plant will be located at the Gibson County Industrial Site with close proximity to rail and Interstate 40. As part of the deal, Tyson has been awarded $18 million in incentives through the state's FastTrack grants that will go toward additional infrastructure, and the county has offered a tax abatement deal estimated to total $16 million over the next 20 years. 
 
Gibson County Economic Development Director Kingsley Brock says he and other local officials were aware of the Kansas pushback and vetted Arkansas-based Tyson accordingly. "I knew we had something good. It was just a matter of time," said Brock. "It turned out we were at the right place at the right time." Tyson said it was drawn to the available workforce in Gibson County, proximity to grain and available infrastructure. Jobs will have wages ranging from $13 to $20 an hour, plus benefits. Many management and administrative jobs also will be offered. 
 
One of the biggest complaints about the Tyson project in Kansas was the infrastructure needed to accommodate both the plant and an expected to be an influx of new residents taking jobs there. Roads would need upgrades to support the heavy trucks, the sewer system would need to be extended and schools could be overwhelmed, residents said. The county had planned to issue $500 million in industrial bond revenue to support the facility, along with $7 million for utilities and another $1 million for sewer lines. Residents also objected to the perceived secrecy surrounding the project prior to the announcement and raised concerns about smells associated with chicken farms, possible exposure to ammonia and the potential for water pollution. The debate came to a head at a crowded town hall meeting in September, drawing about 2,000 people, according to media reports.
 
Other concerns raised involve reports of the company releasing more than 20 million pounds of toxic chemicals into U.S. waterways in 2014, more than any other agricultural company, according to a 2016 report from Environment America Research & Policy Center. Tyson spokesman Worth Sparkman disputed the report as inaccurate and misleading. Water from plants is returned to streams after it is treated by government-regulated systems and most farmers raising animals are required to follow nutrient management plans, he said. Tyson was also among chicken companies sued in 2005 for polluting the Illinois River with chicken waste. In 2015, the company settled a case in Missouri for chemical releases that killed more than 100,000 fish in a Missouri creek. 
 
Regarding water concerns, Gibson County Mayor Tom Witherspoon says he has full confidence in the Tennessee Department of Environment and Conservation (TDEC) to regulate the chicken plant and contributing farms. But, under new legislation signed into law in February, chicken farmers raising poultry for Tyson will no longer be required to obtain TDEC permits. TDEC spokeswoman Kim Schofinski said the state can still enforce against water quality violations, mostly identified through complaint investigations or TDEC's routine sampling. "Our investigative process, as well as routine water quality monitoring, can potentially identify a link between an impact and a specific activity or source," she said in an emailed statement.
 
Having watched what unfolded in Kansas, Witherspoon said local officials sought to engage the community and involve them in the process early on. They held meetings with area farmers and talked with community leaders about the Tyson prospect ahead of the announcement, made in November, and the project has been well-received by farmers and the business community. Any pushback Witherspoon said he has received has been from a handful of residents who fear the jobs will attract an influx of immigrants to the area, a concern he brushes off. "Anybody who wants to come to Gibson County, get here legally, get up and go to work every day, pay their bills, provide for their families and obey our laws and keep their yard picked up, they are welcome," he said.
 
Tyson currently maintains a plant in Obion County, employing 1,000 people in Obion County's Union City and is adding 300 more jobs as part of an $84 million expansion “They have been a blessing to Obion County and surrounding counties with their employment," Obion County Mayor Benny McGuire said.  “The company's presence has sustained Obion County’s tax base, paying for schools and roads.” In Gibson County, officials are optimistic the plant will trigger new business creation and help them lure more companies to the area and to the industrial site, once Tyson is established.
 
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Tennessee House Approves Bill Seeking Work Requirements for Some TennCare Recipients

A bill seeking to implement work requirements for "able-bodied" TennCare recipients was overwhelmingly approved by the state House on Monday, reports The Tennessean. The proposal, sponsored by House Speaker Beth Harwell, R-Nashville, directs the state Department of Finance and Administration to seek a federal waiver to impose work requirements for able-bodied, working-age TennCare recipients without dependent children under 6 years old.
 
As the chamber discussed the bill Monday, several Democrats unsuccessfully introduced amendments seeking to change the measure. One amendment, sponsored by House Minority Leader and gubernatorial candidate Craig Fitzhugh, D-Ripley, would have directed the state to submit a waiver to expand Medicaid, however, this amendment was voted down. "The problem with this bill as a whole," said Rep. Mike Stewart, D-Nashville, "is that poor mothers will have less and less access to health care. This movement to take health care away from Tennesseans will not stop with these disadvantaged individuals.”
 
Gov. Bill Haslam has voiced support for the bill, telling the Knoxville Chamber, “We have Tennessee Reconnect. Anybody can go back to school for free… and then actually we’re really short on workforce folks now.”
 
“We have thousands of unmet job needs in Tennessee right now. So this is an environment where people can go fairly easily and meet those qualifications," Haslam said.
 
The House voted 72-23 in favor of the measure. The Senate is expected to take up its version of the bill in the coming days.

–Here is a recent amendment to SB1728 /HB1551

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Bill to Classify ‘Gig’ Workers as Contractors Advances

A controversial bill that would classify workers in the “gig economy” as independent contractors has passed the Tennessee House Consumer and Human Resources Committee, the Nashville Post reports. The online app Handy, which connects people with household workers and handymen, is pushing for the legislation, which would allow these workers to avoid the classification of “employee,” thereby bypassing many regulations. The bill has already passed in the Tennessee Senate and is expected to pass in the full House.
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Tennessee Infrastructure Needs $45 Billion for Next 5 Years

Tennessee's annual estimate of costs for needed roads, schools, parks and other infrastructure is now $45 billion in the five years between 2016 and 2021 reports the Chattanooga Times Free Press. This is an increase of about $2 billion, or 4.7 percent, from last year, according to the Tennessee Advisory Commission on Intergovernmental Relations, or TACIR, a research institution that explores solutions for state and local governments.
 
In its latest report issued Monday, TACIR hopes that the infrastructure inventory could help local communities to woo federal dollars under President Donald Trump's pending infrastructure plan. The report includes a statewide overview chapter with information by type of infrastructure, the condition and needs of our public-school facilities, the availability of funding to meet reported needs and a comparison of county-area need, including one-page summaries for each Tennessee county.
 
Costs for current infrastructure needs fall into six general categories:
  • Transportation and utilities: $24.8 billion
  • Education: $10.4 billion
  • Health, safety, and welfare: $6.9 billion
  • Recreation and culture: $1.8 billion
  • General government: $767 million
  • Economic development: $360 million
Preliminary discussions of Trump's infrastructure plan indicate states could receive rural infrastructure funds if they have plans for investing the money. The TACIR news release said the report "could provide a foundation for meeting this or similar requirements." The report in its entirety can be found here.
 
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Attorneys General to Congress: End Arbitration Requirements for Sexual Harassment Victims

Fifty-six attorneys general, including Tennessee AG Herbert Slatery, signed a letter calling on Congress to end secret, forced arbitration for victims of sexual harassment, the ABA Journal reports. The AGs expressed their support for new legislation to aid victims. “These arbitration requirements often are set forth in clauses found within the ‘fine print’ of lengthy employment contracts,” the letter says. “Many employees will not even recognize that they are bound by arbitration clauses until they have been sexually harassed and attempt to bring suit.”
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The Protest Movement as a Tool for Social Change: Fifty Years Post-King

The Ben F. Jones Chapter of the National Bar Association presents a dynamic day of programming in recognition of 50th anniversary of the death of Dr. Martin Luther King in Memphis. This program explores the protest that brought Dr. King to Memphis in 1968 and the legacy that his untimely death has left on the fabric of the city. The event will focus on the protest movement in its current state as well as provide updated information on the law surrounding assembly, protest and municipal responsibility.
 
The program features local historical figures who worked with Dr. King, representatives of the media, City of Memphis, local activists, attorneys and judges.
 
Speakers and producers include:
  • Barbara Arnwine, Esq., CEO and Founder of the Transformative Justice Coalition, Washington, D.C. 
  • Judge Earnestine Hunt Dorse, Municipal Court Judge, Memphis
  • Bill Cody, Burch, Porter and Johnson, Memphis
  • Earle Schwartz, Memphis Bar Association President, Memphis
  • Judge Bernice Bouie Donald, United States Circuit Judge of the United States Court of Appeals for the Sixth Circuit, Memphis
When: Feb. 23, 9 a.m. CST
 
Where: Fogleman Business Center, First Floor Amphitheater, 330 Innovation Dr., Memphis, Tennessee 38152
 
Contact Florence Johnson by email or call her at 901-725-7520 for more information.
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The Pendulum Swings: Trump Labor Board Overturns Several Key Obama Era Decisions

President Trump’s Senate confirmed appointments to the National Labor Relations Board (“NLRB” or “Board”),Marvin E. Kaplan and William J. Emanuel, recently joined with now former Chairman Philip A. Miscimarra to overturn several important Obama-era NLRB decisions. While more Obama-era NLRB precedents are expected to be reversed, this article will examine four NLRB decisions issued in December 2017 that changed the labor landscape in a positive way for employers.

 

1. UPMC Presbyterian Hospital, 365 NLRB No. 153 (Dec. 11, 2017)

InUPMC Presbyterian Hospital, the Board revisited the issue of whether an administrative law judge (ALJ”) could accept a partial settlement offer made by a respondent to resolve an important issue in the case where the NLRB’s general counsel and/or the charging party objected to the settlement offer. One of the respondents (“respondent 1”) in the case was alleged to be a single employer and responsible for alleged unfair labor practices committed by a subsidiary (“respondent 2”). Respondent 1 made a settlement offer to the ALJ to resolve the single employer issue by agreeing to guarantee any remedy ultimately awarded based on the conduct of respondent 2. The ALJ agreed to accept the offer over the objections of the general counsel and charging party. The ALJ’s decision to accept the settlement offer was appealed to the Board.

 

In finding that the ALJ acted properly in accepting the settlement offer, the Board reversed its prior decision in United States Postal Service, 364 NLRB No. 116 (2016), which held “judges are no longer permitted to accept a respondent’s offered settlement terms, over the objection of the General Counsel and charging party or parties, unless the offer constitutes ‘a full remedy for all of the violations alleged in the complaint.’”[i] The NLRB agreed with Chairman Miscimarra’s dissenting opinion in United States Postal Servicewhich argued the holding “imposed an unacceptable constraint on the Board itself, which retained the right under prior law to review the reasonableness of any respondent’s offered settle­ment terms that were accepted by the judge.”[ii]In overruling United States Postal Service  the Board “return[ed] to the Board’s prior practice of analyzing all settlement agreements, including consent settlement agreements, under the “reasonableness” standard set forth in Independent Stave, 287 NLRB 740 (1987).”[iii]

 

2. Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (Dec. 14, 2017)

The Board revisited its decision in Browning-Ferris Industries of California, Inc. (Browning-Ferris), 362 NLRB No. 186 (2015) which held “even when two entities have never exercised joint control over essential terms and conditions of employment, and even when any joint control is not ‘direct and immediate,’ the two enti­ties will still be joint employers based on the mere exist­ence of ‘reserved’ joint control, or based on indirect control or control that is ‘limited and routine.’” [iv] The Board “concluded that the common law and numerous policy considerations favor abandoning the Browning-Ferris joint-employer standard [and]… reinstate[d] the joint-employer standard that existed prior to the Brown­ing-Ferris decision.”[v] In place of the standard announced in Browning-Ferris, the Board held “a find­ing of joint-employer status requires proof that the al­leged joint-employer entities have actually exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise con­trol), the control must be ‘direct and immediate’ (rather than indirect), and joint-employer status will not result from control that is ‘limited and routine.’”[vi]

 

3. PCC Structurals, Inc., 365 NLRB No. 160 (Dec. 15, 2017)

The Board overruled the so-called “micro-unit” bargaining unit test established in Specialty Healthcare & Rehabilitation Center of Mobile, 357 NLRB 934 (2011) (“Specialty Healthcare”) and “reinstate[d] the traditional community-of interest standard as articulated in United Operations, Inc., 338 NLRB 123 (2002).” Under the Specialty Healthcare standard, “when a union seeks to repre­sent a unit of employees ‘who are readily identifiable as a group (based on job classifications, departments, func­tions, work locations, skills, or similar factors), and the Board finds that the employees in the group share a community of interest after considering the traditional criteria, the Board will find the petitioned-for unit to be an appropriate unit’ for bargaining.”[vii] If the employer seeks to add additional employees to the unit found to be appropriate by the Board, the employer has the burden “to demonstrate that the additional employees the proponent seeks to include ‘share “an overwhelming community of interest”’ with the petitioned-for employees, ‘such that there “is no legitimate basis upon which to exclude cer­tain employees from”’ the petitioned-for unit because the traditional community-of-interest factors ‘overlap al­most completely.’”[viii] In abandoning the Specialty Healthcare standard, the NLRB reaffirmed the community of interest test noting that the Board in each case must determine:

whether the employees are organized into a separate department; have distinct skills and training; have dis­tinct job functions and perform distinct work, including inquiry into the amount and type of job overlap be­tween classifications; are functionally integrated with the Employer’s other employees; have frequent contact with other employees; interchange with other employ­ees; have distinct terms and conditions of employment; and are separately supervised.[ix]

In making a determination on the appropriateness of a petitioned-for unit, the Board further stated that it was “not constrained by whether or not an ‘overwhelming’ community of interest exists be­tween petitioned-for employees and those excluded from that unit [and noted]…, where applicable, the analysis must con­sider guidelines that the Board has established for specific industries with regard to appropriate unit configurations.”[x]

 

4. Raytheon Network Centric Systems, 365 NLRB No. 161 (Dec. 15, 2017)

In Raytheon, the Board overruled its decision in E.I. DuPont de Nemours, 364 NLRB No. 113 (2016) (“DuPont”), which prohibited unilateral changes after the expiration of a collective bargaining agreement (“CBA”) where the CBA or a past practice allowed the employer to take unilateral action. In DuPont, the Board held “even if an employer continues to do precisely what it had done many times previously—for years or even decades—taking the same actions consti­tutes a ‘change,’ which must be preceded by notice to the union and the opportunity for bargaining, if a CBA permitted the employer’s past actions and the CBA is no longer in effect.”[xi] In overruling DuPont, the NLRB explained the basis for its decison:

 

Under Katz, an employer must provide notice and the opportunity for bargaining before making a “change” in employment matters. It is equally clear, as demonstrated by innumerable Board and court decisions interpreting Katz, that bargaining is not required when no “change” has occurred. Where, as here, the employer takes actions that are not materially different from what it has done in the past, no “change” has occurred and the employer’s unilateral actions do not violate Section 8(a)(5) of the Act.[xii]

 

5. Takeaways.

 The recent NLRB decisions discussed above reflect the Trump Board’s interest in reviewing and overturning significant Obama-era decisions that departed from established precedents. This is welcomed news for employers. All four decisions issued prior to the December 16 departure of Republican Member Chairman Miscimarra upon the expiration of his term. President Trump has nominated management-side attorney John Ring to fill the current Board vacancy.Once Ring is confirmed by the Senate, the 3 to 2 Republican majority on the Board will no doubt continue to look for opportunities to overturn additional Obama-era Board decisions which will likely further benefit employers.

______________________

J. Gregory Grisham is a Partner in the Nashville and Memphis Offices of Ford Harrison, LLP and focuses his practice on the representation of employers in all aspects of labor and employment law. He received his JD, with honors, from the University of Memphis, Cecil C. Humphreys School of Law in 1989. Greg may be reached at ggrisham@fordharrison.com

 or 615-574-6707.


[i] UPMC Presbyterian Hospital, 365 NLRB No. 153, at p. 1.

[ii] Id.

[iii] Id. The Board in Independent Stave[page 743] stated it “will evaluate the settlement in light of all factors present in the case to determine whether it will effectuate the purposes and policies of the Act to give effect to the settlement.”

[iv] Hy-Brand Industrial Contractors, Ltd.,365 NLRB No. 156, at p. 1 (citations and footnotes omitted).

[v] Id. at p. 33.

[vi] Id. at p. 35.

[vii] PCC Structurals, Inc., 365 NLRB No. 160 (quoting Specialty Healthcare, 357 NLRB at 945–946).

[viii] Id. (quoting Specialty Healthcare, 357 NLRB at 944, additional citation omitted).

[ix] Id. at p. 11.

[x] Id.

[xi] Raytheon, 365 NLRB No.161, at p. 1.

[xii] Id. at p. 20 (citing NLRB v. Katz, 369 U.S. 736 (1962)).The employer in Raytheon “was alleged to have violated Section 8(a)(5) of the National Labor Relations Act (NLRA or Act) in 2013, following expiration of its collective-bargaining agreement (CBA), when it unilat­erally modified employee medical benefits and related costs consistent with what it had done in the past.” Id.at p. 1.

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Board Reverses Standard of Review for Facially Neutral Workplace Rules

In a 3-2 decision, the National Labor Relations Board (NLRB) in The Boeing Co., 365 NLRB No. 154 (2017), overruled Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004), where the Board found an employer violated the National Labor Relations Act (NLRA) by maintaining workplace rules that do not explicitly prohibit protected activities, were not adopted in response to such activities, and were not applied to restrict such activities, if the rules would be “reasonably construed” by an employee to prohibit the exercise of NLRA rights. 

Boeing challenged the Lutheran Heritage standard based primarily on its singular focus on rights protected by the NLRA and ignoring the legitimate justifications associated with employer rules. In so doing, it prevents the Board from balancing their impact on employee rights and conflicts with U.S. Supreme Court rulings and the Board’s own precedents.

In Boeing Co., the Board established a new test: when evaluating a facially neutral policy, rule or handbook provision that, when reasonably interpreted, would potentially interfere with the exercise of NLRA rights, the Board will evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.  When legitimate justifications outweigh a rule’s potential impact on protected rights, it will be found lawful.

 The Board announced, prospectively, three categories of rules will be delineated to provide greater clarity and certainty to employees, employers, and unions.

  • Category 1- includes rules that the Board designates as lawful to maintain, either because (i) the rule, when reasonably interpreted, does not prohibit or interfere with the exercise of NLRA rights; or (ii) the potential adverse impact on protected rights is outweighed by justifications associated with the rule.  Examples of Category 1 rules are the no-camera requirement maintained by Boeing, and rules requiring employees to abide by basic standards of civility.  Thus, the Board overruled past cases in which the Board held that employers violated the NLRA by maintaining rules requiring employees to foster “harmonious interactions and relationships” or to maintain basic standards of civility in the workplace.
  • Category 2- includes rules that warrant individualized scrutiny in each case as to whether the rule would prohibit or interfere with NLRA rights, and if so, whether any adverse impact on NLRA-protected conduct is outweighed by legitimate justifications.
  • Category 3- includes rules that the Board will designate as unlawful to maintain because they would prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights is not outweighed by justifications associated with the rule. An example would be a rule that prohibits employees from discussing wages or benefits with one another.

Applying the new standard, the Board concluded Boeing lawfully maintained a no-camera rule that prohibited employees from using camera-enabled devices to capture images or video without a valid business need and an approved camera permit. The evidence established the rule was justified by the need to maintain confidentiality of the work performed at its facilities, some of which is classified, and by the need to secure the facilities and work performed there against espionage by competitors, foreign governments and international terrorists.  

The Board majority, NLRB Chairman Miscimarra and members Marvin E. Kaplan and William J. Emanuel, reasoned the rule potentially affected the exercise of NLRA rights, but that the impact was comparatively slight and outweighed by important justifications, including national security concerns. 


Bruce E. Buchanan is a founding partner of Sebelist Buchanan Law PLLC located in Nashville and Atlanta, where he practices immigration law and employment/labor law. He is also “Of Counsel” to Siskind Susser, P.C. on employer immigration compliance matters. Bruce is a graduate of Vanderbilt University School of Law and a former Senior Trial Specialist with the NLRB. Bruce is the co-author of the book, I-9 and E-Verify Handbook, 2d edition, concerning employer immigration compliance. He may be reached at bbuchanan@sblimmigration.com or (615) 345-0266. 

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Sixth Circuit and Tennessee Appellate Court Update

Title VII and ADEA Retaliation: Watford v. Jefferson County Public Schools, 870 F.3d 448 (6th Cir. 2017) 
 
Watford sued the Jefferson County, Kentucky Board of Education ("JCBE") and the Jefferson County Teachers Association ("JCTA") alleging they retaliated against her for filing an EEOC charge. The trial court granted summary judgment against Watford. The Sixth Circuit reversed. With the parties' collective bargaining agreement (CBA) providing for abeyance of grievance procedures if the employee opted to pursue a complaint using another agency, the court identified the central question as whether JCBE and JCTA's conduct amounted to an adverse employment action - i.e., was it a materially adverse action if a CBA required grievance proceedings be held in abeyance upon the filing of an EEOC charge? 
 
The court noted that Watford filed a grievance based on race, sex, and age discrimination on the day she was discharged, and those proceedings were still in abeyance. The court cited to its precedent and that of other federal courts which have characterized the termination of grievance proceedings as an adverse employment action. The court held that there was not a material difference between terminating a grievance and holding it in abeyance. The court determined that Title VII and the ADEA protect employees from employers and labor organizations who would restrict the employee's ability to file EEOC charges, and because the CBA did just that, the court held it violated the anti-retaliatory provisions of those statutes. 
 
A dissent disagreed with the weight of authority placed on precedent, the conclusion that Watford suffered an adverse action, and the finding that the CBA was facially retaliatory. The dissent would affirm by finding that staying a grievance when an employee filed an EEOC charge or discrimination lawsuit did not constitute retaliation under Title VII or the ADEA.
 
FMLA Interference: Mullendore v. City of Belding, Michigan, et al., 872 F.3d 322 (6th Cir. 2017)
 
Mullendore served as the city manager for the city of Belding, Michigan. In January 2015, she notified the members of Belding's City Council - all five of whom were defendants in this case - that she would be taking time off due to surgery and indicated that she would be able to work remotely while recovering. While she was away from the office, the City Council voted to terminate her employment, citing her role in causing political strife in the community. She sued under the FMLA. 
 
The trial court granted summary judgment to the defendants, holding that Mullendore had not given sufficient notice that she would be taking FMLA leave, and that, in any event, the defendants provided a non-discriminatory reason for the termination. The Sixth Circuit affirmed. The court found that, even assuming, Mullendore had notified the City Council that she was taking FMLA leave, the City Council could terminate her without violating the interference provision of the FMLA, as long as the reason for termination was not because she was on leave. The court held the city demonstrated a legitimate reason for terminating her, and she could not show it was pretext.
 
FLSA - Draw/Commission Compensation: Stein v. HH Gregg, Inc. and Gregg Appliances, Inc., 873 F.3d 523 (6th Cir. 2017)
 
The employer had a uniform compensation policy whereby their retail and sales employees, who are paid solely on the basis of commission, are advanced a "draw" to meet the minimum-wage requirements whenever their commissions fall below minimum wage. The amount of the draw is then deducted from future earnings in weeks when the employees' commissions exceed the minimum-wage requirements. Stein and Beck, on behalf of themselves and all other former and current employees sued the employer claiming violations of the FLSA and state law, to include that they worked off the clock without compensation and failed to pay overtime. 
 
The trial court found that the employer's compensation policy was legal, and that plaintiffs therefore could not state a claim on which relief could be granted. The trial court dismissed all of plaintiffs' federal claims and declined to exercise supplemental jurisdiction over their remaining state-law claim. 
 
The Sixth Circuit reversed and remanded and found: (1) the retail or service establishment exemption did not apply; (2) plaintiffs alleged sufficient facts to demonstrate that the draw policy violated the FLSA; (3) plaintiffs alleged sufficient facts to support a claim that the employer's policies and practices encouraged employees to work off the clock without compensation; (4) plaintiffs alleged sufficient facts to support a claim that the employer failed to pay overtime properly; and (5) the trial court erred in dismissing plaintiffs' remaining claims. 
 
FLSA - Administrative Exemption: Perry, et al. v. Randstad General Partner (US) LLC, 876 F.3d 191 (6th Cir. 2017)
 
Perry, in a putative class action, sued the employer alleging violation of the FLSA for improperly classifying them as exempt employees not entitled to overtime pay. The trial court granted the employer's motion for summary judgment. The Sixth Circuit affirmed in part and reversed in part. The plaintiffs contended the trial court erred in both finding the employer eligible for the good-faith reliance defense and in finding the FLSA's administrative exemption applicable. 
 
The court observed neither it nor any other U.S. Court of Appeals had addressed the question whether staffing company employees fell within the administrative exemption; although several federal trial courts and the Department of Labor Wage and Hour Division ("WHD") had addressed the question, with the WHD issuing an opinion letter in 2005 about whether "staffing managers" at a particular "temporary staffing agency" qualified for the administrative exemption. 
 
The court found:  (a) account manager/senior account manager - the primary duties as account managers involved the exercise of sufficient discretion and independent judgment such that the administrative exemption applied; (b) staffing consultant/senior staffing consultant - a reasonable trier of fact could find the primary duties were the non-exempt sales and routine recruiting tasks, not the exempt matchmaking duties, the administrative exemption did not apply; and (c) assistant branch manager - the duties primarily consisted of exempt work for which the administrative exemption applied. 
 
With respect to the good-faith reliance defense, relating to employee Lane's time as a talent acquisition specialist, employee Dooling's time as a staff consultant, or employee Perry's time as a staff consultant and senior staff consultant, the court found the employer's reliance was not "in conformity with" the 2005 WHD letter because certain "specified circumstances and facts" cited in the 2005 letter were absent, at least as to talent acquisition specialists and staffing consultants/senior staffing consultants. Additionally, the employer had not shown its reliance was in "good faith" as a matter of law because the employer arguably had "knowledge of circumstances which ought to" have caused it to inquire further. 
 
The Sixth Circuit affirmed the trial court's grant of summary judgment to the employer as to: (1) Dooling's claim arising out of her time as an account manager; (2) Lane's claims arising out of her time as an account manager and senior account manager; and (3) Lane's claim arising out of her time as an assistant branch manager. The court reversed the trial court's grant of summary judgment as to: (1) Lane's claim arising out of her time as a talent acquisition specialist; (2) Dooling's claim arising out of her time as a staffing consultant, and (3) Perry's claims arising out of her time as a staffing consultant and a senior staffing consultant. 
 
One dissenter agreed that the sales duties fell outside the administrative exemption but disagreed the matchmaker duties fall within the exemption; and the other agreed the match-making duties fell within the administrative exemption but disagreed that the sales duties did not.
 
FLSA - Highly Compensated Employees/Salary Basis Test: Hughes v. Gulf Interstate Field Services, Inc. 878 F.3d 183 (6th Cir. 2017)
 
Hughes, a welding inspector, sued the employer for violation of the FLSA and state law asserting overtime claims. The trial court granted the employer's motion for summary judgment on the basis the employees were exempt as highly compensated employees under the governing regulations. The Sixth Circuit reversed.
 
Under the circumstances of this case, the sole issue was whether Hughes met the "salary basis" test. Hughes introduced evidence that he was paid a "day rate" and his salary was calculated at the rate of "$337.00/day worked." The text of 29 CFR § 602(a) did not tell the court what to do when an employee's salary was not clearly calculated "on a weekly, or less frequent basis." Hughes pointed the court to a neighboring provision, § 541.604(b), which stated: 
 
"An exempt employee's earnings may be computed on an hourly, a daily or a shift basis, without losing the exemption or violating the salary basis requirement, if the employment arrangement also includes a guarantee of at least the minimum weekly required amount paid on a salary basis regardless of the number of hours, days or shifts worked, and a reasonable relationship exists between the guaranteed amount and the amount actually earned." 
 
The court distinguished cases cited by the employer and those decided by sister circuits. The court simply ruled the threshold question of whether there was a guarantee - not at issue in those cases, but very much disputed here - mattered for determining whether employees whose pay was at least arguably calculated on a daily basis qualified as exempt. 
 
The court observed the operative idea behind a guarantee was in the context that the employer was contractually obligated not to change its mind and reduce whatever amount it previously determined to provide. Because a reasonable trier of fact could conclude that Hughes received no such guarantee from the employer, the court determined the employer could not prevail on summary judgment.
 
Non-Competition Agreements: ADP, LLC v. Manchir, 2017 WL 5185458 (Tenn. App. 11/08/2017)
 
Manchir worked as a sales manager for ADP, LLC, a company that deals in human resources and business outsourcing matters. As a prerequisite to obtaining restricted stock options from ADP, Manchir consented to a restrictive covenant agreement. The Agreement contained, among other things, a non-competition clause extending to 12 months after Manchir left ADP. New Jersey law governed the Agreement. 
 
Manchir later resigned from ADP and went to work for an ADP competitor, Paycor, Inc. ADP sued Manchir for breach of contract and sought specific enforcement of the Agreement. The trial court granted ADP summary judgment. The trial court also awarded ADP, pursuant to a provision in the Agreement, attorney's fees and costs. The Tennessee Court of Appeals, Middle Section affirmed the trial court judgment and held, inter alia, that the Agreement was reasonable and enforceable under New Jersey law, that Manchir breached the Agreement, and specific performance was an appropriate remedy.

Mark Travis is a full-time mediator and arbitrator, practicing exclusively in the area of labor and employment cases. He graduated from the Brandeis School of Law at the University of Louisville and holds a Master of Laws in Dispute Resolution from the Straus Institute at Pepperdine School of Law. He may be reached at (931)252-9123 and by email at mtravis@travisadr.com
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Back To The Future; DOL Reinstates Bush Era Opinion Letters

Your brother’s administration gave us Barack Obama, because it was such a disaster … that Abraham Lincoln couldn’t have been elected.

-Donald Trump to Jeb Bush in a Republican primary debate, 2015

How do you like me now, huh? The prodigal son has returned. I don’t know what that means, but it’s positive.

-Will Ferrell, as George W. Bush, on Full Frontal with Samantha Bee

Despite President Trump’s criticism of “W,” Trump’s Department of Labor (DOL) recently reinstated 17 Bush-era Wage and Hour Division opinion letters. While none of these letters dramatically changes substantive law, the move signals a reversal of course in interpreting and enforcing the Fair Labor Standards Act (FLSA). This article discusses the importance of opinion letters, summarizes some of the more notable letters, and highlights other policy shifts under the current DOL.

What Are Opinion Letters?

For years, the DOL issued opinion letters in response to anonymous employer inquiries based on facts represented by the employers. Employers could then model their practices based on the letters to avoid liability or, at least, hope to avoid liquidated damages and the extension of the statute of limitations period from two to three years.

In the last days of “W,” the DOL issued a flurry of opinion letters as a housewarming gift for President Obama’s administration. President Obama returned the gift faster than an ill-fitting Christmas sweater by having DOL rescind multiple opinion letters “for further consideration,” which never occurred. Instead, the DOL stopped issuing opinion letters and shifted to a series of administrator interpretations that pushed broader, employee-friendly policies. 

Enter President Trump. In 2000, George W. Bush stated, “Rarely is the question asked, ‘Is our children learning?’” In the absence of opinion letters, Trump may have questioned, “Is our employers learning?” On June 27, 2017, the DOL announced that it would resume the practice of issuing opinion letters. Then, on January 5, 2018, it reissued 17 opinion letters that Obama had rescinded. 

Reissued Opinion Letters

None of the reinstated opinion letters radically reinterpret the FLSA. As was the case when Obama rescinded the letters, the reinstatement reflects more of a change of direction.  Below is an overview of some of the reinstated letters. The DOL lists all of the letters at https://www.dol.gov/whd/opinion/flsa.htm

“It was my understanding that there would be no math.” [i] Many employers fail to factor non-discretionary bonuses into overtime pay. FLSA regulations require employers to include such bonuses as part of an employee’s “regular rate.” 29 C.F.R. §§ 778.208-778.210. The employee will already have received the increased regular rate, but is entitled to additional “half-time” premium for overtime hours.

One letter describes the calculations these regulations can require. If a $100 bonus is a non-discretionary, flat dollar amount per day, the employer must include that bonus in the regular rate, which, in turn, increases the overtime premium. See FLSA2018-11. 

Another letter outlines an alternative approach that can simplify the math. See FLSA2018-9. If the employer bases a non-discretionary bonus on a predetermined percentage of an employee’s straight time and overtime compensation, it does not have to recalculate the regular and premium rates. Instead, the increase is already “in the sauce,” since the bonus includes the increase in the overtime premium. The letter provides the following example:

Straight-time compensation (50 × $10)

$500.00

Overtime compensation (10 × $5)

  $50.00

Non-discretionary bonus (10% × $550)

  $55.00

Discretionary bonus

  $50.00

Total compensation

$655.00

 

(Extra Tip:  Remember that a bonus increases overtime pay for all work weeks over which it was earned, not just the week when it was paid.)

Volunteers: A Gift beyond Price … Almost Free [ii]

In one letter, a private, non-profit volunteer fire company ("VFC") contracted with a private, for-profit company to provide EMTs. The VFC asked if those EMTs could “volunteer” to work for it without pay, while still performing the same services for the for-profit company. The DOL noted that the FLSA only allows “volunteering” if the volunteers provide a different type of service than that for which they are employed. For example, an office employee can volunteer to provide firefighting services during off-duty hours but cannot volunteer to perform office work. Because the EMTs wished to volunteer the same types of services they performed for the for-profit company for pay, the question came down to whether the VFC was a joint employer with the for-profit company under the “economic realities” test. The DOL could not answer this question based on the facts provided. See FLSA2018-17.

(Extra Tip:  Unpaid volunteers are for non-profits companies.)

Holy Overtime, Batman! Is Bat Signal On-Call Time Compensable?

One letter addressed whether the on-call hours of ambulance service personnel are compensable. A county ambulance had a non-written policy that on-call employees should arrive at the garage within five minutes if called. The employer, though, did not discipline employees who fail to respond in that time, and employees could spend time at a location of their choosing. The employer was in a small town, and travel time from anywhere in the city to the garage would only take a few minutes. The employees were on call 40 hours per week but only called in approximately three times per week. The DOL found the requirements were “not a significant hindrance” so as to convert on-call time into hours worked. It noted that the outcome could be different in a big city or if the employees had to respond more frequently. In support, the DOL cited Renfro v. City of Emporia, 948 F.2d 1529 (10th Cir. 1991), which concluded that firefighters’ on-call time was compensable because they responded to an average of three to five calls per shift. See FLSA2018-1.

(Extra Tip: Make sure you have a system for reporting work outside of regular shift hours. Also, time worked away from the office at the beginning or end of the day can make travel time compensable.)

An Administrative Oversight?

A number of letters address the Administrative exemption. One letter found that project supervisors in the residential homebuilding industry were exempt. Critically, they used independent judgment in performing most of their duties, including coordinating and representing the employer at the worksite in dealing with subcontractors, suppliers, customers, and government, and adjusting the construction process. See FLSA2018-17. Another letter concluded that an insurance company could classify client service managers as Administrative employees. These employees exercised independent judgment in advising and consulting with clients without prior approval and were free from immediate supervision. See FLSA2018-8.

The Power of Deduction

Generally, an employee is paid on a salary basis if he or she “regularly receives each pay period … a predetermined amount constituting all or part of the employee’s compensation, which amount is not subject to reduction because of variations in the quality and quantity of the work performed.”  29 C.F.R. § 541.602(a). Naturally, there are exceptions, two of which the letters addressed. 

Exception 1:  An employer may make deductions when the employee is absent from work for one or more full days for personal reasons (other than sickness or disability). For example, if an employee is absent for two full days due to personal reasons, the employer may deduct for these absences and retain the employee’s exempt status. However, if the employee is absent for one and one-half days for personal reasons, then the employer may only deduct for the one full-day absence (i.e., deductions may not be made for partial day absences).

Exception 2:  An employer may deduct for absences of one or more full days occasioned by sickness or disability, including work-related injuries, if it does so “in accordance with a bona fide plan, policy or practice of providing compensation for loss of salary occasioned by such sickness or disability.”  29 C.F.R. § 541.602(b)(2). Thus, if the employer has a plan that provides compensation for absences due to sickness or disability, it may deduct for one or more full days before the employee has qualified for the plan and after the employee has exhausted leave under the plan. If an employee misses a full day of work, but only has time in the leave bank to cover part of the absence, the employer may deduct from his or her for just that portion of the absence that the leave bank does not cover. See FLSA2018-14 and FLSA2018-7.

(Extra Tip:  Include a “Safe Harbor” policy for deductions in your Employee Handbook and check with counsel before making a deduction for an exempt employee.)

Other Policy Shifts

            Previously, Trump’s DOL retracted Obama-era administration interpretations relating to joint employer status and misclassification of employees as independent contractors. As a word of caution, these shifts represent more of a change in focus than an overhaul of substantive law.

            Most significantly, Trump’s DOL (along with a Texas district court judge) has halted the Final Rule that would have increased the minimum salary for the Executive, Administrative, and Professional exemptions from $23,660 to $47,000. DOL Secretary Alexander Acosta has hinted at a possible future minimum in the $33,000 range.

            Finally, Trump will re-nominate a new Wage and Hour Division Administrator this month, and employers can expect new opinion letters to follow. Make Opinion Letters Great Again! 


[i] Chevy Chase as President Gerald Ford on Saturday Night Live.

[ii] C.f. Neil Peart, Rush, “The Spirit of Radio.”


Bradford Harvey is a member of Miller & Martin at its Chattanooga office. Brad received his J.D., Order of the Coif, from Vanderbilt University School of Law in 1995. He concentrates his practice in labor and employment law and class and collective action defense. Brad may be reached at 423-785-8210 or brad.harvey@millermartin.com.

Megan Welton is an associate of Miller & Martin at its Chattanooga office. She focuses her area of practice on Labor & Employment law. Megan received her J.D. from University of Memphis Cecil C. Humphreys School of Law in 2015. She may be reached at 423-785-4326 or megan.welton@millermartin.com.

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Letter from the Editor

Here's the latest newsletter from TBA's Labor and Employment Section. I want to thank this issue's authors, all who have written multiple items for this newsletter, for their wonderful articles: Mark Travis, Brad Harvey, Megan Welton and Greg Grisham. If you have an article or an idea for an article, I invite you to e-mail me, Bruce Buchanan.

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TBA Gears Up for 2018 Mock Trial Tournament

The Tennessee Bar Association will host the upcoming Tennessee High School Mock Trial Tournament on March 23 and 24 in Nashville. The Mock Trial is a two-day, single-elimination bracket-style competition where 16 high schools face-off against each other in the Davidson County Courthouse. Each team is scored on their trial preparation and skills. 

We need TBA volunteers to help be bailiffs and jurors (scorers) for the event. After signing up, we will send you a Volunteer Memo with all the information you need for competition including; parking, hotel, downtown map, courthouse rules, and reimbursement information. Come be a part of the Young Lawyers Divisions’ March Madness! Feel free to contact YLD Director Stephanie Vonnahme with any questions.

To volunteer for this event, click here.

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New TBJ: Adverse Legal Authority, #MeToo, a Lewie Donelson Tribute and More

The February Tennessee Bar Journal has a lot packed into it, including an article by Nashville lawyer David Hudson Jr. about the duty to disclose adverse legal authority. Chattanooga lawyer Russell Fowler details the life of Tennessee lawyer and American President James K. Polk and Knoxville lawyers Edward Phillips and Brandon Morrow take an employment law look at the Faragher-Ellerth framework in the #MeToo Era. Learn from Knoxville lawyer Monica Franklin what it takes to be an elder law attorney, read a book review by Jackson attorney Mary Jo Middlebrooks of The Fight to Vote, as well as a touching tribute to Lewie Donelson, by Memphis lawyer Bill Haltom.

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Congress Delays 'Cadillac Tax' and Other ACA-Related Taxes and Fees

Congress on Monday passed the Federal Register Printing Savings Act, which temporarily continued funding federal government activity and appropriated funds to various health-related programs such as the Children's Health Insurance Program, Medicaid and childhood obesity programs.
 
The Act also addressed the effective date for the controversial 40 percent excise tax on high-cost health care, commonly referred to as the "Cadillac Tax," which has been delayed until 2022. At a minimum, the new two-year delay gives employers and plan sponsors more time to adjust health plan design to avoid the Cadillac Tax, legislation that has been unpopular on both sides of the aisle.
 
The Cadillac tax was created as part of the Affordable Care Act largely to help fund benefits to the uninsured under the law. The U.S. Joint Committee on Taxation estimates that delaying the medical device tax will lower revenue by $3.8 billion over a decade, delaying the Cadillac tax will cost $14.8 billion and suspending the health insurance tax will cost $12.7 billion.
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Memphis Landlord Trying to Save Shuttering Toys 'R' Us Location

A Memphis Toys R Us is among as many as 182 stores likely to close as part of its bankruptcy reorganization plan, but a local shopping center owner will try negotiating to keep it open. The beleaguered company announced its filing of Chapter 11 bankruptcy filing last September, acknowledging that it needed to revamp its long-term debt totaling more than $5 billion.
 
"I was a little surprised,'' Michael Lightman said of learning that the Toys R Us made the closure list. "I thought that store was doing just fine. I'm still trying to reach the right people at Toys R Us to find out more detail,'' he said.
 
The company noted that some closings may be avoided if it is able to negotiate more favorable lease terms. But most of the stores listed in the documents are expected to close as Toys R Us tries to reinvent itself as a leaner, smarter retailer. "The reinvention of our brands requires that we make tough decisions about our priorities and focus," Toys R Us chief executive Dave Brandon said in a letter posted on the company's website.
 
Toys R Us will shrink its store fleet by about 20 percent if all planned 182 stores are closed. Lightman's location is among two planned Tennessee closures for the company. Babies R Us on Nolensville Road in Nashville is also planned for closure. A complete list of closing stores can be found here.
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Construction Industry Faces Shortage of Workers Amid Unprecedented Growth

A recent WSMV story highlights concerns of builders in middle Tennessee regarding a shortage of construction workers. The area has seen unprecedented growth, with an estimated 75 people a day moving into the Nashville area alone.
 
"What used to take us about 120 days on average to build a house is now taking us 180 days plus," said Dave McGowan, the owner of Regent Homes, a locally owned home building company in Nashville. "There's a shortage of bricklayers. There's a shortage of different tradesmen from everything, from people who do our carpet work and do our floor work. All the people that really requires skill, there's a true shortage of those people," he continued.
 
This comes at a time when several planned, large-scale construction projects including repaving Interstate 440 and Nashville's proposed metro transit upgrade, will only further exacerbate the problem. Nashville is also on the short list of cities for Amazon's second headquarters, Amazon HQ2, an 8.1-million square foot campus that will create an estimated 50,000 new jobs for the area and a huge need for skilled construction laborers.
 
One way to build the workforce is through high school recruitment. Go Build Tennessee, a nonprofit comprehensive workforce development initiative that seeks to address the problem by getting teens interested in joining the construction workforce, routinely visits area schools to inform young people, parents, educators and influencers about shortages and opportunities in the various construction related trades.
 
"If they are able to go to trade schools and learn that skill set, they would be able to have a job," McGowan said. With only one person replacing every five leaving the construction field, Tennessee will certainly be tasked with finding new and novel ways to address these challenges.
 
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Don't Forget: Winter CLE Blast Tomorrow!

Need CLE hours fast? We can help! The annual Winter CLE Blast is less than a day away. With this program, you can complete up to 11 hours of Dual CLE credit on your own time. Our registration desk will be open from 7 a.m. to 6:45 p.m. on Feb. 21, providing you the flexibility to create your own schedule and take as many or as few hours as you need. Payment will be determined at checkout depending on the number of hours you attend. 

Highlights

  • Flexible to your schedule
  • Up to 11 Hours of CLE
  • Ethics Credits
  • Compliance CLE
  • Live Credit Hours

When: Feb. 21, registration begins at 7 a.m., CST

Where: Tennessee Bar Center, 221 4th Ave N., Nashville, TN 37219

 

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UTK Law Seeking Employer Relations Manager

The University of Tennessee College of Law is seeking to hire a Middle Tennessee Employer Relations Manager. This position is based in Nashville. The successful candidate will spend the majority of their time meeting with law firms, government agencies and judges. Some travel is required, primarily to Knoxville to spend three to five days per month at the University of Tennessee College of Law meeting with staff, faculty, and counseling students. For more information, contact Brad Morgan.
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Former Nashville Airport CEO Updates Employment Discrimination Lawsuit

Robert Wigington, the former president and CEO of the Metropolitan Nashville Airport Authority, has added two new defendants and allegations of defamation, the Nashville Post reports. Wigington originally sued MNAA with allegations that his firing last year violated the Family Medical Leave Act and the Tennessee Disability Act. The new complaint adds MNAA Board of Commissioners Chair Bobby Joslin and Vice Chair A. Dexter Samuels as defendants. It also includes new language claiming defamation, citing Wigington’s “for cause” firing and “releasing false and defamatory information to justify its decision.”
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Employment Case Discovery: Best Practices from the Plaintiff and Defense Perspective Webcast

John Gerth, Greg Grisham and Doug Hamill will present a special CLE webcast on employment case discovery on Jan. 16. Topics will include best practices in preparing and responding to interrogatories, requests for production, requests for admissions and deposition practice. If you are unavailable to attend on this date, the webcast will be available online for up to one year. 
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Age Bias Lawsuit With Rep. Duncan Settled Using ‘Hush Fund’

U.S. Rep. John J. Duncan Jr. was found to have settled an age bias lawsuit, first filed in 2009, using a fund that settles lawsuits on behalf of members of Congress and shields disclosure of settlements from the public, Knoxnews reports. The law that allows the fund’s existence, the Congressional Accountability Act, is under scrutiny by leaders in Washington, including U.S. Reps. Diane Black and Marsha Blackburn, given recent public outcry on behalf of sexual harassment victims.
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Solicitor General Examines Public Sector Union Case

Tennessee Solicitor General Andrée Blumstein recently served as a guest blogger for the Supreme Court of the United States Blog (SCOTUSblog). The post she wrote, "Symposium: Hijacked riders, not free riders," deals with Janus v. American Federation of State, County, and Municipal Employees, Council 31. The court will consider whether an Illinois law allowing public sector unions to charge nonmembers for collective-bargaining activities violates the First Amendment. Read the entire post at SCOTUSblog.
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Get Off that 'Naughty' List!

Want to end up on the “Nice” list this holiday season? Tennessee Court of Workers’ Compensation Claims Chief Judge Kenneth Switzer has some suggestions in the court's blog on how lawyers can do that. The main theme of his examples is that when lawyers take steps to save the parties and court time, it enables judges to streamline their decision making, shows consideration to others’ needs and conveys to the court that the lawyers know their cases well, which boosts their professional reputations. Not bad advice, whatever the season.

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Visitation Today, Services Tomorrow for Nashville Attorney

Nashville lawyer Thaddeus Earl Watkins died on Nov. 19. He was 60. Born in Memphis, Watkins earned his law degree from the University of Memphis Cecil C. Humphreys School of Law. During his 30-year career as an attorney for the State of Tennessee, he served as counsel for the State Fire Marshall’s Office, the State Board of Architectural and Engineering Examiners, the Tennessee State Capitol Commission and the Department of Commerce and Insurance before being appointed to the Tennessee Department of General Services. Visitation will be held tonight from 5 to 7 p.m. at Marshall Donnelly Combs Funeral Home, 201 25th Ave N. A second visitation will be held tomorrow at 10 a.m., with services to follow at 11 a.m. at Christ Church Cathedral, 900 Broadway. In lieu of flowers, please make donations to the National Alliance for the Mentally Ill (NAMI) or a charity of choice.
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