That’s what the courts are attempting to determine in a case involving three execs of the now-defunct Castaways Hotel, Casino and Bowling Center.

Here’s what happened:

After Castaways Hotel, Casino and Bowling Center filed for Chapter 11 bankruptcy, three former workers personally sued three Castaways managers (the chairman and CEO, the CFO and a third manager) for unpaid wages.

The three former employees filed a class action lawsuit on behalf of all Castaways’ employees who weren’t paid due wages under state and federal law.

A Federal Court of Appeals ruled that the managers did fit the FLSA definition of “employer” and, under that definition, they are required to pay the employees  their due wages.

The case has been remanded to a trial court for further proceedings. We’ll keep you posted on the outcome.

The scene:

The complaint HR manager Jean Ferdinand heard wasn’t a new one. Three times this week she’d heard the same thing from other supervisors in the company.

“How am I supposed to run my department when Tom keeps interfering?” accounting manager Carol Hardy fumed.

VP Tom Harper was known to have an open-door policy, and he was always encouraging employees to come in anytime.

Sometimes he encouraged them a little too much.

“Whenever someone has a problem with me, they think they can run in to Tom and complain,” Carol continued. “And they know he’s going to take their side. It undermines my authority.”

Jean didn’t mention the other supervisors’ complaints about Tom. “They’ve probably already talked among themselves about it,” he thought silently.

More than a suggestion
“You know how Tom is,” Jean responded. “He wants everyone to be happy here, and he just wants to help out.”

“Help out?” Carol gasped. “He’s driving us crazy. We know almost every time we get tough on an employee, Tom’s going to step in and tell us to let up.”

“He really orders you to do that?” Jean asked.

“Look, he’s the vice-president,” Carol noted. “When he says, ‘How ‘bout taking it easy on so-and-so?’ it’s more than just a suggestion.”

“Understood,” Jean said. “Let me think about how to handle this.”

If you were Jean, what would you do to deal with the problem?

Bobbi Strother, HR manager, Haymarket, VA
What Bobbi would do: With something like this, I think you have to go straight to the VP, explain the problem and ask him to stop. I’d suggest that he advise people to go back to their managers and work out the problem at that level. The only exception might be regarding sensitive personal issues that might make people uncomfortable when discussing with a supervisor.

Reason: It seems that everyone but the VP knows about the problem, so he should be made aware of it and why he has to change.

Tracy Philips, HR director, Shreveport, LA
What Tracy would do: I’d probably speak to the VP to explain the problem. I’d also make sure employees understand that the first priority is to work things out with the individual managers and not to run to a higher-up whenever a problem pops up. They need to be clear on how we conduct employee-boss relations.

Reason: Yes, the VP is causing a problem that you have to deal with, but you need to deal with the employees, too. If you can get them to understand how to settle disputes in a mature, businesslike way, they won’t bother going to the VP.

Tom Petersen, program manager, Eagle River, AK
What Tom would do: One thing you might want to look at is whether the managers are in fact doing all they can to bring about fair resolutions to disputes. I’m not saying you go into it thinking the managers are wrong, but you should take an objective look to see if there’s an underlying reason people keep going to the VP.

Reason: Sometimes you might find that in fact a manager didn’t properly address a problem. If so, you could address that with training and counseling, and possibly cut down on perceived need for the VP’s help.

The agency has proposed $1.7 billion for what it calls “worker protection” programs. That’s a 10% increase over the dollars designated for those programs in FY 2009, and the highest it’s been since FY 2001.

A big chunk of the money is earmarked for unemployment benefits and workers comp, but here’s where a lot of the rest is going:

• The Wage and Hour Division will receive $228 million, an increase of $35 million from the prior year, including funding to hire 200 new investigators. That signals greater focus on compliance with the Fair Labor Standards Act — meaning more investigations to ensure employees are properly classified as exempt and nonexempt for overtime purposes. Division investigators will also be looking at compliance with minimum-wage laws.
• $564 million will go to the department’s Occupational Safety and Health Administration. That’s $51 million more than  in FY 2009. Some of the money will go to hire 160 new OSHA enforcement staff, many of whom will be bilingual to communicate with immigrant workers when investigations are held.

Question:
We’re trying to prioritize our training on preventing sexual harassment. Can you give us an idea of where the biggest problem spot is for most companies?

Answer:

Of the roughly 5,000 sex-harassment complaints filed with EEOC last year, the majority of them were based on supervisors’ not responding to initial complaints. That comes from HR consultant Hunter Lott, who’s done harassment-prevention training for firms such as Anheuser-Busch and FedEx-Kinko’s.

Most firms get into trouble because supervisors don’t take complaints seriously, so employees feel forced to go outside the company to get someone to listen to them.

Suppose an angry employee uses a social-networking Web site to trash your company, your managers and even your customers. Can you legally take action against the employee? The results of a landmark federal-court case will provide the answer.

Combine the specter of layoffs, pay freezes and benefit cuts with the popularity of sites like MySpace and Facebook, and you have what’s become a not-uncommon situation: Employees — from home and on their own time — criticizing their employers for all the Internet world to see.

Could they be fired?
In the court case in New Jersey, two restaurant employees created and contributed to a forum about their workplace on MySpace.com. They e-mailed invitations to co-workers, who then had to log in using a personal e-mail address and a password.

The two employees criticized the restaurant’s decor, ridiculed its customers — including sex-laced jokes — and made harsh comments about their supervisors.

The employees charge that their managers illegally accessed their online communications in violation of federal wiretapping statutes and that the managers also violated their privacy under New Jersey law.

So, here’s what the court will decide:

• Are off-work Internet postings about employers grounds for discipline by the employers?
• Do password-only postings have special privacy protections that preclude any type of discipline by employers?
• Can employers establish policies about employee expression and attitude that extend to Web postings?

We’ll keep you posted on the outcome.

Note: Some states protect employees who engage in lawful, off-duty activities from being fired or disciplined. While private conversations might be covered under those laws, none of the statutes specifically addresses social networking or blogging.

How employers respond to an Equal Employment Opportunity Commission complaint often spells the difference between a speedy, successful defense and a nightmare investigation.

A disgruntled employee goes to the EEOC and files charges of bias. Here’s how to respond:

1. Tell the whole story. Because an EEOC charge often contains just one or two paragraphs, companies tend to respond in a similar, brief way. Don’t.

Put together a comprehensive response, detailing the circumstances surrounding the employment relationship and the reasons for an adverse employment action. This is the time you cut the claim off at the knees, so don’t skimp on info.

2. Include documentation. If you have supporting documents, attach them in your response. What’s appropriate? You name it: time sheets, e-mails, performance evaluations — anything that supports your case.

3. Check and double-check your documentation. Then check it again, bringing in others to help. The documentation should be accurate and consistent. If it isn’t, a smart attorney will use glitches to show a judge that you’re not being honest.

4. Mention similar decisions. One of the best ways to demonstrate that a decision wasn’t motivated by unlawful discrimination is to point to the same actions being taken in similar situations against other employees.

For example, if you terminated a woman for misconduct and she says her termination was motivated by sex  discrimination, detail instances when you terminated men for the same misconduct.

5. Explain what your company does. Give an EEOC investigator a full picture of your business and how the employee’s behavior or conduct affected your business. For instance, if you fired someone for being late too many times, explain why punctuality is so important to your operation.

6. Let employees know only what they need to know. There’s a chance investigators will contact employees, and they should be prepared for it, without knowing all the details. A typical message to employees: “While we do not feel there is any merit to the allegations, we respect Employee X’s right to bring this charge. If you are contacted by the agency, you should cooperate and be completely honest with the investigator.”

7. Don’t delay. Putting off your response is never a good idea.

8. Contact a lawyer. It’s almost unavoidable. At the very least, you’ll want an attorney to review your response and be prepared for a legal chain of events.

9. Contact your insurer. Many employment-practices liability policies define claims to include discrimination charges. Failing to let your  insurer know about the charge could result in denial of coverage, not only for the charge but all subsequent legal claims.

10. Put all relevant documents in a “lock box.” When you receive a notice of a charge, collect and preserve all documents that could be relevant. That means you may want to let IT and other departments know that they have to suspend routine “cleaning out” procedures that could result in destruction of relevant records. If you don’t, your lawyer will have a hard time convincing a judge that the destruction of documents was all just a big, unintentional mistake.

OSHA could pop in on you because of an accident or just because your number happened to come up. An inspector who does show up is paying particular attention to two details that are highlighted in the Field Operations Manual (FOM):

• Recordkeeping. The FOM states that at the start of each inspection, an OSHA compliance officer must review an employer’s injury and illness logs for the three prior calendar years. Compliance officers are instructed to do this for all general industry, construction, maritime, and agriculture inspections and investigations. While a review of records at the start of an inspection used to be common, it’s now a requirement and a key part of every inspection. So the time is now to review your company’s  recordkeeping practices and logs to ensure that they are accurate and up to date — before OSHA shows up.
• Hazards. The new FOM also provides more detail on OSHA’s use of the General Duty Clause, which requires all employers to maintain a workplace free from recognized, serious hazards. To hit you with a General Duty Clause violation, an inspector must first show that you recognized the hazard involved. The FOM provides an expansive list of the types of documents that signify an employer’s awareness of the problem, including company memorandums, safety work rules and manuals, workers’ compensation reports and manufacturers’ warnings. When employers identify hazards through these or other means, they must take steps to address the hazards, if feasible, or risk an OSHA General Duty Clause citation.

The government’s watchdog agency got nabbed for giving some of its employees comp time instead of overtime pay for working more than 40 hours in a week.

Not only that, but a federal arbitrator in the case ruled that the violation wasn’t just some silly mistake by the EEOC. The arbitrator said the violation was “willful negligence.” In other words, the folks at EEOC knew they were circumventing the rules, and continued to do so anyway.

Officials at the EEOC have vowed to straighten up and fly right, but all of this raises a question for private-employer HR managers:

Who’s watching the people who are supposed to be watching you?

The scenario:

“Cindy, we need to talk.” Supervisor Dan Winters sat down in the chair in front of the HR manager’s desk. “There’s an issue we need to discuss – now.”

“What’s the problem, Dan?”  Cindy asked.

“I think you know. The subject is the employee who just transferred to my department,” said Dan.

“John Costello,” Cindy nodded. “What about him?”

A question of religion
“Will you stop pretending you don’t know what I’m talking about?” Dan was getting steamed.

“I’m afraid I don’t,” Cindy said. “Why don’t you just come out and tell me what’s on your mind?”

“All right, all right,” Dan conceded.  “The problem is that John Costello is gay.”

“Why would that be any concern of yours?” Cindy asked. “He’s a skilled worker, your head count was down, and we moved him to a position where we felt  he could best help the company. What’s the problem?”

“You know – pretty much everyone around here knows – I’m a religious man. And my religion says that homosexuals are sinners. Do you really expect me to work  with somebody whose ‘alternative’ lifestyle is abhorrent to me?” Dan leaned forward to emphasize the question.

“If he’s not transferred out, I’m quitting.”

If you were Cindy, what would you do or say next?

Bill Williams, VP of HR, Blossburg, PA
What Bill would do: If it wouldn’t hurt production, I’d separate Dan and John into different departments. If, for some reason, it wasn’t feasible to separate them, I’d tell Dan he’d have to abide by the law and work with John.
Reason: We want to avoid lawsuits at all costs, so separating the workers would be the best option as long as production wouldn’t take a hit. No matter what, additional diversity training would be mandatory for Dan.

Joanne Wegener, HR manager, Bellevue, WA
What Joanne would do: I’d tell Dan that by law, we can’t grant his request to transfer John. Even if Dan’s been with us for a long time, I’d tell him he’ll have to find a way to co-exist with John. If he still thinks he can’t do that, he’ll have to take his services elsewhere.
Reason: We don’t look at sexual orientation or religion as a factor in transferring, promoting or firing employees. So unless John’s got a bona fide performance issue, we’re not going to transfer him.

Joyce Vondran, HR manager, Troy, AL
What Joyce would do: If Dan insisted his value system made working with John impossible, I’d temporarily reassign him, not John, to another department. I’d allow Dan to return to his old post and work with John only if Dan learned to accept our policy on such matters during his reassignment.
Reason: I wouldn’t make a quick  decision on a touchy matter like this. I
feel at least a temporary move for Dan would be best. I wouldn’t transfer John because I’d be afraid of a discrimination claim. But I’d also not want to let Dan go because he might turn around and sue us for religious discrimination.

First, the numbers. At the end of the last fiscal year, the EEOC reported 95,402 claims — a jump of 15% over the previous year and the most in the agency’s 44-year history. The agency said it recovered $376 million in settlements and judgments against employers as it filed 290 new lawsuits and resolved 339 suits and 81,081 non-court claims.

The EEOC doesn’t analyze the “why” but speculation rests on three main factors:

Economic conditions. When money’s tight at home or people lose their jobs or see a threat of job loss, they’re more likely to file complaints. That means companies that go through layoffs have to make sure every step of the process is buttoned up and can withstand a lawyer’s scrutiny.

Demographic changes in the workplace. This one’s tied to layoffs, too. A lot of companies have already laid off many of their younger, low-seniority workers, and now the ax is starting to hitting older workers with more seniority. They have grounds to sue — age discrimination — and often do so when they get a pink slip.

A change in complaint procedures. Last year, the U.S. Supreme Court ruled workers don’t have to file a formal complaint with the EEOC before suing an employer for age discrimination. In the particular case, the court’s 7-2 ruling upheld the right of FedEx employees to file legal claims against the company, assisted by EEOC,  even though the employees had never filed a formal charge with the agency.