It’s said to be unwise to discuss sex, religion, or politics with anyone other than close friends. That particularly applies in the workplace, where strong emotions can interfere with productivity. Apparently, however, the top officers of three companies either never heard that truism or decided to ignore it, judging by their recent politically oriented statements and actions. As a result, one of those companies could be in legal hot water, while the others may at least be guilty of alienating employees.
In the weeks leading up to the Presidential election, the CEOs of Westgate Resorts, Lacks Enterprises, and Murray Energy sent a clear message to employees: vote for Mitt Romney. Westgate’s David Siegel said in a memo that if Romney lost the election, the real estate and time-share company might lay off workers or shut down completely. At Lacks Enterprises, Richard Lacks advised the automobile-parts supplier’s 2,000 employees to vote for Romney, saying an Obama victory would result in higher employee contributions to health benefits. “It is important that in November you vote to improve your standard of living,” he wrote in a memo.
Robert Murray, CEO of privately held, 3,000-employee coal company Murray Energy, went even further. He required workers to attend a Romney campaign event in August at a company mine in Ohio. Hourly workers were not paid for the day; they were given a choice of making up the time during off-hours or losing the pay altogether.
Murray Energy’s political communications with employees are hardly limited to a single campaign event. Each month, workers are notified of the political causes and upcoming events that CEO Murray supports, and are given an opportunity to donate. The company encourages its 354 executive employees to contribute 1% of their salary to political causes through a payroll deduction, as permitted by Federal Election Commission regulations.
Murray Energy did not respond to CFO’s requests for comment. But in an interview with radio station WWVA in Wheeling, West Virginia, CFO Rob Moore may have set a new standard for walking on both sides of a fence. “Our managers communicated to our workforce that the attendance at the Romney event was mandatory,” he admitted. “But no one was forced to attend.” There were no repercussions for anyone who did not show up, he added.
Moore said attending Romney’s pro-coal events was in employees’ best interest. “When you think of how critical this election is [and] that we get someone into office who supports coal, to give up eight hours for a career — I just don’t believe there is anything negative about that,” he said.
An FLSA Violation?
But others might not share his belief. Under the federal Fair Labor Standards Act, an employee’s attendance at lectures, meetings, and training programs is compensable unless it is voluntary and outside normal working hours.
“Assuming that attendance at a political rally might be considered a lecture or meeting within the meaning of the FLSA, which I think is a reasonable and fair interpretation, a violation could have occurred,” says Margaret Paget, who typically represents companies as co-chair of the employment practice at law firm Sherin and Lodgen. Given Moore’s comments, it is unclear whether attendance was in fact voluntary, she says.
Robert Ottinger, a New York attorney whose eponymous firm represents employees in labor disputes, says Murray Energy workers could bring a class-action suit to recover their pay and legal costs, and they may also be entitled to penalties.
Further, the Ohio Democratic Party has requested a criminal investigation of Murray Energy, suggesting that its employee solicitations may have “involved extortion, money laundering, racketeering, and other violations of Title 18 of the United States Criminal Code.” Under Title 18, anyone who intimidates, threatens, or coerces another person, so as to interfere with that person’s right to vote for whomever he or she chooses, is subject to fines and up to a year in prison.
Like Robert Murray, the chief executives of Westgate Resorts and Lacks Enterprises may have violated the spirit of the law, if not its letter, in their memos to employees.
“If any new taxes are levied on me or my company, as our current President plans, I will have no choice but to reduce the size of the company,” wrote Westgate Resorts CEO David Siegel in an October 8 memo to employees. “My motivation to work and to provide jobs will be destroyed, and so will your opportunities.”
Siegel later made a perhaps odder bid for sympathy. “Every dime I earn goes back into this company,” he wrote. “Over the past four years I have had to stop building my dream house, cut back on all of my expenses, and take my kids out of private schools simply to keep this company strong and to keep you employed. . . . I eat, live, and breathe this company every minute of the day, every day of the week.”
That message makes the note from Richard Lacks sound relatively tame. The CEO reportedly wrote that if the Affordable Care Act stays in place, Lacks Enterprises’s health-insurance costs will go up by an additional 2% per year. “You will receive no direct benefit other than you will have to pay for it,” he reportedly said in a memo obtained by MLive .com, a website devoted to Michigan news. (Lacks did not respond to CFO’s requests for comment.)
Attorney Ottinger notes that aside from any applicable federal laws, attempting to coerce employees to vote for a candidate is specifically illegal in California and perhaps other states. There is also a statute prohibiting such activity in Broward County, Florida, where Westgate operates two resorts.
Legalities aside, “these CEOs obviously have little respect for their employees and an inflated sense of their own importance,” says Ottinger.