Late last year, the EEOC settled a sexual harassment charge that reminds us that not all harassment is committed by men against women.

Six male employees of the  Cheesecake Factory received $345,000 in settlement of their claims that they were subjected to repeated sexual harassment at one of the company’s restaurant.  According to the EEOC, the evidence overwhelmingly showed that the men suffered sexually abusive behavior, including abusers directly touching victims’ genitals, making sexually charged remarks, grinding their genitals against them, and forcing victims into repeated episodes of simulated rape. Managers witnessed employees dragging their victims kicking and screaming into the refrigerator, the EEOC charged.  Complaints to virtually every manager at the restaurant were made, but they never put a stop to it.

Law professor Marcia k of St. Louis University had this to say about the case:  ”By exposing the men to taunts about their genitalia, sexually suggestive simulations, and lewd comments, the men perpetrating the harassment are seeking to embarrass and target the male victims—not sexually stimulate or “flirt” with them. Sexual harassment is about using power in a way to hurt somebody.”

Hat tip:  Workplace Prof Blog

The Department of Labor announced Friday that it has hired an additional 250 wage and hour investigators to respond more quickly to complaints and undertake more targeted enforcement of wage and hour laws.

In the past three months, the Labor Department has brought two enforcement cases that resulted in the recovery of nearly $2 million in back wages for 500 workers.

The Wage and Hour division administers the Fair Labor Act, which sets standards for minimum wages, overtime pay, recordkeeping, and child labor. The act applies to companies with at least $500,000 in annual business.

Of greatest concern to most employers is the complicated area of deciding which employees are exempt from receiving overtime pay and which are non-exempt.  The DOL’s website includes a tool to help employers make proper classifications.

Over the weekend I read a terrific article in Litigation, the Journal of the ABA’s Section of Litigation, called “Top Ten Tax Tenants for Trial Lawyers.“   (No, I usually don’t spend my weekends reading about tax policy, but I was out-of-town and had the magazine with me.)   The author, Robert W. Wood of Wood & Porter in San Francisco, did a nice job of summarizing issues to keep in mind when settling or trying cases, especially employment cases.  Among the things I learned (or was reminded of):

• Litigation recoveries, whether by settlement or or judgment, take their tax treatment from the origin and nature of the claim.   In other words, if the claim is for lost wages, any recovery will be taxed as wages, while a claim for lost profits will be treated and taxed as lost profits.   It is important, therefore, to have tax language in the settlement agreement that is consistent with the theory of the case.
• Section 104 of the Internal Revenue Code provides an income exclusion for recoveries by settlement or judgment for personal physical injuries or sickness.   Since 1996, the IRS has maintained that the exception is a limited one, and that the injury must be one that can be seen, like a broken bone.  (There is no case law on what constitutes a sickness).   If there is a legitimate physical injury, however, emotional distress damages flowing from that injury are also excludable.   This is a common source of contention between plaintiffs and defendants when settling a claim, and it is important to have researched and documented your position before the settlement conference or mediation.
• In employment cases, contingent-fee plaintiffs get an above-the-line deduction for legal fees that they paid.  Thus, if the settlement was for $100,000 and $40,000 of that went to the plaintiff’s attorney, the plaintiff only pays tax on the $60,000 that she receives even thought the entire $100,000 is treated as income to her.
• When settling a case, considering cutting separate checks to the plaintiff and her attorney.  The advantage is that the lawyer will get a 1099 only for the lawyer’s fee, although the plaintiff’s 1099 will reflect the entire settlement amount.    
• Anyone making payments in connection with a business must issue a 1099 for payments of $600 or more.   However, most lawyers do not issue 1099 to their clients for settlement proceeds initially deposited in the lawyer’s trust account on the theory that the lawyer is merely an intermediary.

As is always the case, especially when discussing an area I know nothing about like taxes, no one in their right mind should rely on the above as specific legal advice.  Instead, talk to someone who really knows this area.