"What may be awesome punishment for an impecunious individual defendant may be wholly insufficient to influence the behavior of a prosperous corporation."

That's the 3rd Circuit, not me. And it's the whole ballgame in Holmes v. American HomePatient.

Here's what earned that line. Patricia Holmes was the only Black employee at AHOM's Penn State office. Her supervisor asked her, "what do you think about the N-word?" then Googled it—misspelling it "Niger"—while a coworker sounded it out for him like a grade-schooler. Both laughed. Weeks later, during a mask fit test that required a hood over Holmes's head, the same supervisor had a coworker film it, then joked it was "ironic to see a white woman putting a white hood on a black woman's head." He laughed in her face.

When Holmes reported it, HR investigated without ever interviewing the one coworker who'd witnessed the slur, then concluded McCoy hadn't said it himself and assigned him to counsel Holmes—the woman he'd allegedly called it—on workplace conduct. His only discipline, a written warning, wasn't for his own conduct. It was for failing to supervise the coworker who'd sounded it out.

A jury awarded $500,000 in compensatory damages and $20 million in punitives. The district court found the punitive award unconstitutional and cut it to $1 million—a 2:1 ratio. On appeal, the 3rd Circuit found AHOM's conduct "exceedingly reprehensible," set the ratio at 4:1, and doubled the punitive award to $2 million.

The reprehensibility call is spot on. A supervisor using slurs, a sham investigation, a company that let the harasser counsel the victim—that's about as bad as facts get.

But do the math. AHOM does more than half a billion dollars a year in revenue. Two million dollars is four-tenths of one percent of that. It's not "awesome punishment." It's a line item.

I've spent my career on management's side of cases like this one, and I'm not saying this to hand the plaintiffs' bar a talking point. A lawyer who tells clients a ratio-capped award is real deterrence isn't doing them any favors. Under-deterrence doesn't just shortchange the plaintiff; it teaches the next AHOM the fine is affordable, and the misconduct excusable. 

That's not a flaw in this opinion. It's structural. Due process caps the ratio in the single digits regardless of size, and the bigger the company, the less any dollar figure tethered to compensatory damages can sting. Courts know it, they just can't fix it. The 3rd Circuit said as much, and still landed on 4:1.

You might not be wrong to think a $2 million verdict isn't material.

What should scare you is a supervisor who treats slurs as banter, an HR department that "resolves" a complaint by putting the accuser back under the accused's supervision, and a jury that reached for $20 million before any judge touched the number.

Ratios protect balance sheets. They don't protect you from twelve people who've had enough—or the reputational damage a verdict like this leaves behind.

"The inherent danger in well-timed increases in benefits is the suggestion of a fist inside the velvet glove."

That's the 5th Circuit, describing what Starbucks did to its Buffalo stores once a union showed up. The court's recent opinion in Starbucks Corp. v. NLRB reads like a playbook of exactly what not to do during an organizing campaign.

Here's what happened. In August 2021, employees at Starbucks's Buffalo stores posted an open letter to the CEO announcing a union drive. Within a week, Starbucks flew in a team of senior executives who had never set foot in a Buffalo store before, and parachuted in district managers from other regions to serve as "support managers" — something it had never done there. The day after that letter went public, Starbucks fired the district manager overseeing two of the affected stores.

Repairs that normally took 12 to 18 months of advance notice suddenly got done in weeks. Seniority pay expanded. A national wage increase got moved up. Managers started wearing headsets to monitor conversations they'd never bothered monitoring before. And after the union won at eight stores but narrowly lost at a ninth, Starbucks kept enforcing rules unevenly, then fired six employees for conduct it had tolerated from everyone else for years.

All told, the Board found 125 violations across 60 different ways of breaking the law, and the 5th Circuit affirmed most of them.

The legal rule is simple. A benefit granted, or a rule enforced, isn't illegal on its own. Timed to a union campaign, however, with no explanation for why it never happened before, it's evidence of exactly what an employer isn't allowed to say out loud — "Vote no, or else!"

Here's what Starbucks should have done differently, and you should, too, if a union comes knocking on your door.

1. Fix problems on your normal schedule. If your stores had "widespread facilities issues" for years, suddenly finding the money and the urgency the week cards start circulating doesn't read as generosity. It reads as a bribe.

2. Avoid conferring unexpected benefits. Speeding up a wage increase, expanding seniority pay, and adding hours look generous. Benefits timed to a union campaign, with no explanation for why they couldn't have waited, looks like a quid pro quo for a "no" vote.

3. Don't flood the zone with strangers. Sending in executives and out-of-town managers who've never been there before, the moment organizing starts, creates the impression of surveillance even if you call it operational support.

4. Discipline consistently, or don't discipline at all. If tardiness, dress code, and other violations were tolerated for years and suddenly become fireable offenses the same month a petition gets filed, that inconsistency is the union's best exhibit.

The velvet may fool some of the organizing employees. It never, however, fools the Board.

Boeing built its overtime checks on base hourly rate alone. Nothing else. Not the bonus. Not the incentive pay. Just the base rate, run through a straight 1.5x multiplier.

That's the allegation, at least, in a proposed class action Boeing just removed to federal court. Plaintiff Jerry Belmonte Llarenas, a former quality assurance inspector, says the company's Aerospace Incentive Plan bonuses should have been folded into his "regular rate of pay" before Boeing calculated overtime. They weren't.

The numbers are specific. In a February 2024 pay period, for example, Belmonte Llarenas alleges that he received an incentive bonus of just under $5,000. That same period, he worked 18 hours of overtime paid at a premium multiplier of his base rate. No bonus in the math anywhere.

But if the bonus was non-discretionary, it absolutely should have been included in the regular rate of pay for overtime-calculation purposes.

If you pay incentive or bonus comp to your employees, here is a handy FAQ that explains all of the ins and out of legally paying bonus and incentive comp to your non-exempt employees without running afoul of the FLSA.

1. What is the "regular rate of pay," and why isn't it just the hourly rate?
Under the FLSA, overtime has to be paid at 1.5x the employee's "regular rate," and that rate is broader than the number on the offer letter. It includes nearly all compensation for the workweek — base pay, shift differentials, commissions, and most bonuses — divided by hours worked. Employers who overtime-check only the base hourly rate are almost always underpaying.

2. Are all bonuses included in the regular rate?
No, and this is where the whole case turns. The FLSA splits bonuses into two buckets: discretionary and nondiscretionary. Discretionary bonuses get excluded from the regular rate. Nondiscretionary ones don't.

3. What actually makes a bonus "discretionary"?
Two things have to both be true. The employer has to retain discretion over both whether to pay it and how much, and that discretion has to last until at or near the end of the period it covers. A holiday bonus you decide to hand out on a whim in December, amount unannounced in advance, is discretionary. A bonus promised up front, tied to preset performance metrics or attendance targets, is not — even if the employer calls it "discretionary" in the plan document. Courts look at how the bonus actually works, not what the plan calls itself.

4. So what kind of bonus lands in the nondiscretionary column?
Production bonuses. Attendance bonuses. Quality or safety incentive bonuses. Anything promised to employees in advance to encourage them to work more efficiently, stay longer, or hit a target. That's exactly what Belmonte Llarenas alleges about Boeing's incentive plan — eligibility and performance measures "established in advance," not doled out at Boeing's sole discretion at the end of the period. If that's accurate, the bonus was nondiscretionary from day one, and it belonged in the regular rate.

5. If a bonus is nondiscretionary, how do you spread it across the pay periods it covers?
This is the part employers usually get wrong the most, more than the classification question. A nondiscretionary bonus covering multiple workweeks has to be allocated back across those workweeks — you can't just dump the whole thing into the pay period where the check lands. If the bonus can reasonably be attributed to specific weeks, do that. If it can't be broken out that precisely, DOL regulations let you allocate it equally across the workweeks in the bonus period as a reasonable proxy. Either way, you then recompute the regular rate for each of those workweeks, refigure the overtime owed, and pay the difference. One lump-sum bonus check can trigger a whole quarter, or a whole year, of overtime corrections. 

6. What should employers actually do about this?
Pull every bonus, incentive, and award program you run and ask one question: is it promised in advance based on a preset formula, or is it a genuine surprise decided at the end? If it's the former, it's nondiscretionary, and your payroll system needs to be recalculating overtime every time one of those bonuses pays out. If your system currently runs overtime off base rate alone and treats every bonus as an afterthought, you don't have a compliance risk. You have two lawsuits already proving it's a real one.

My son is a high school senior. His school has a tradition called the Senior Corner — a spot in the Upper School commons, television included, that seniors earn as a rite of passage.

Not anymore.

The TV is gone this year, and the explanation is that last year's seniors were too loud and disturbed nearby classrooms.

Last year's seniors. Not this year's. The kids who caused the problem graduated. The kids paying for it did nothing wrong.

That's not discipline. That's an institution that didn't want to do the harder work of identifying who was actually being disruptive, so it punished everyone instead.

Sound familiar?

It's the same move John Morgan, of the law firm Morgan & Morgan, bragged about on video — describing how he monitors remote employees by, in his words, "putting cameras up employees' backsides."

Watch everyone. Make sure nobody's slacking.

That's not oversight. It's an admission that he doesn't know which employees are the problem, so he's decided to treat all of them as suspects.

Blanket discipline or surveillance is the corporate version of taking away the TV. It's what a manager reaches for when identifying and addressing the two or three underperforming employees feels like more work than monitoring everyone.

It's not a performance-management strategy. It's an avoidance strategy masquerading as one.

And it backfires in the workplace for the same reason it backfires in a school commons.

Your best employees notice.

They notice that their discipline, output, and integrity bought them nothing. That they're being treated exactly like the person who actually earned the scrutiny.

Once people figure that out, you've traded a performance problem for a morale problem. And morale problems are much harder to solve. Once you've killed morale, it's incredibly difficult to win it back.

If you've got employees who aren't working while remote, that's a real issue. Address it with them. Directly. Personally. Document it, manage it, and if it doesn't improve, part ways with them.

What you don't do is turn your entire workforce into a surveillance target because two people gave you a headache.

That's not management. That's giving every employee a reason to wonder why they bothered being good at their job in the first place.

Punish the offender. Not the workplace. 

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Here's what I read this week that you should read, too.

HR Needs an AI Workforce Strategy Before the Layoffs — via EntertainHR

The AI and Communications Blueprint: 4 Things Every Comms Leader Needs to Get Right — via Ragan.com 

Why Every Employer Now Needs an AI Policy (Even If You Think You Don't Use AI) — via Employment & Human Rights Law In Canada 

How Do I Handle an Anonymous Complaint? — via Improve Your HR by Suzanne Lucas, the Evil HR Lady 

My coworker exposed our boss's affair with secret videos — via Ask a Manager

Wheel Of Fortune Announcer Suspended After Alleged Incident; Role Will Be Recast During Investigation — via TVLine

Alanis Morissette Accuses Ex-Tour Manager of Extortion Scheme in Lawsuit — via Consequence

Biglaw Firm's Emails Casually Insult 'Dumb Judge' And 'Poop Man' — via Above the Law

A False Cancer Diagnosis Could Not Cure the Employer’s Very Real ADA Problem — via Eric Meyer's Employer Handbook Blog

You Need to Understand Your Employees' Caregiving Responsibilities — via Harvard Business Review

Business owners, officers, and managers, this is why you need to pay attention to wage and hour issues. 

Tow truck driver Marquis Mariscal sued JLS Towing, alleging the company misclassified him and other drivers as independent contractors and paid them a flat rate per vehicle towed, no matter how many hours they worked. No overtime, ever, even past 40 hours a week. 

He not only sued the company, but also its president, Summer Settle, personally, claiming she directed the company's operations, set schedules, made hiring and firing calls, and controlled how drivers got paid.

Settle moved to dismiss the claims against her individually, arguing Texas law shields corporate officers from LLC liability. The court disagreed.

In wage and hour cases, the corporate shell is not a liability force field. The Fair Labor Standards Act doesn't care what your state's business code says. The FLSA defines "employer" to include any person acting in the interest of an employer, and courts have long held that a corporate officer with operational control over the workforce can be personally liable, jointly and severally, right alongside the company.

Liability is not absolute, and depends on the balancing of these four factors: 

1. Power to hire and fire. Not just a vote at the board table, but the actual authority to bring someone on or let them go.

2. Control over schedules and working conditions. Did this person set hours, assign shifts, or supervise day-to-day work?

3. Control over pay. Did they decide the rate, the method, or whether overtime got paid at all?

4. Maintenance of employment records. Someone has to keep the books on hours and pay. If it's you, that's evidence of control.

Mariscal alleged Settle checked every one of those boxes. That was enough to survive dismissal.

Being a co-owner who occasionally weighs in isn't enough on its own. Someone actually has to run the operation for liability to trigger. If you set the pay structure, sign off on schedules, and decide who gets hired or fired, an LLC or other corporate form won't save you when the overtime math goes wrong.

Titles don't create liability. Control does, and control doesn't come with a shield. If compliance isn't reason enough to get your wage and hour house in order, personal liability should be.

The EEOC has lost the plot The 8th nominee for the Worst Employer of 2026 is … The Passport Pilferer Hiring isn't a numbers game. It's a standards game. WIRTW #808 (the 'document, document, document' edition) Why employers shouldn't mine employees' social media accounts