As the recent front page news about Nike’s one-million dollar settlement for not paying overtime to its Indonesian workers makes clear, there are employers who take regular short cuts in the wage context by not fully paying employees for all hours worked. Examples of these short cuts include situations where employers simply refuse to pay all wages for hours worked, pay below minimum wage, or intentionally misclassify employees as independent contractors. Some of the worst examples occur against “undocumented workers, with the biggest dollar values being stolen from native born workers.” See, Kim Bobi, Author of Wage Theft In America – Why millions of Workers are not getting paid – and what we can do about it.
However, taking short cuts in the wage context is not the answer for most sensible California employers whom have gone through Olympian like contortions to follow the mandates of the Labor Code in relationship to the payment of wages. For many employers, a single employee’s success with the Labor Commissioner has been sufficient to cause an extensive overhaul of polices and practices related to the payment of wages – and for other employers, the threat of costly, practically door-closing litigation has resulted in the same extensive overhaul.
So after nearly a decade of fierce litigation in the wage context, could it be possible to further burden employers with new legislation regarding the payment of wages? Apparently the answer is a resounding “yes,” as legislation to address wage theft took effect on January 1, 2011 which applies to California’s private employers: the Wage Theft Prevention Act of 2011. The legislation must be broken down in three separate parts in order to digest:
First, five sections of the Labor Code have been amended: Section 98 (allows an employee to recover liquidated damages in hearing with the Labor Commissioner, i.e., a pre-determined sum that must be paid if a party fails to perform – pay wages and the damages are difficult to quantify); 226, Section 240 (extends time required for an employer who fails to satisfy a judgment, to maintain a bond from six months to two years, and allows the Labor Commissioner to seek an accounting of assets if the bond is not maintained); Section 243 (an employer convicted of a second violation under this section will be liable for wages, interest, or damages, an accounting of assets may be required and the employer may be subject to additional sanctions); Section 1174 (extends time an employer is required to maintain payroll records from two years to three years and an employer may not prevent an employee from maintaining a personal record of his hours worked); Section 1197 (provides that an employer who fails to pay the required minimum wage must pay restitution to the employee in the amount of unpaid wages in addition to a penalty or penalties).
Second, five sections of the Labor Code have been added: Section 200.5 (requires the DLSE file a request for entry of judgment on a civil penalty or fee against an employer within three years from the date the penalty or fee became final. Once the DLSE begins such an action, the judgment must be entered immediately); Section 1194.3 (allows an employee to recover attorney’s fees and costs incurred in enforcing a court judgment for unpaid wages); Section 1197.2 (increases sanctions for wage violations by imposing new civil and criminal penalties against noncompliant employers. The severity of penalties, both criminal and civil are linked to the amount of the wages owing and to the number of employees that are owed wages); Section 1206 (provides that, notwithstanding any other provisions of law, the Labor Code establishes minimum penalties for failure to comply with wage-related statues and regulations).
Third, and addressed separately as it is the most comprehensive addition to the Labor Code, is Section 2810.5 which essentially requires that employers provide non-exempt employees with a written statement at the time of hiring. The information required to be provided to new hires has been standardized in template form, which can be found on the DLSE webpage. See, www.dir.ca.gov/dlse/LC_2810.5_Notice.pdf. Employers do not need to rely on the template, but must include in any individualized model all the information contained within the DLSE template. Much of the new information required to be provided to new employees resembles the original requirements of a good wage statement pursuant to Labor Code 226 by requiring that new employees are provided the rate or rates of pay, the basis for the rate of pay, i.e., commission, overtime, piece rate, allowances claimed for meal or lodging, regular paydays, the employer’s legal name and contact information. However, this mimicry of Labor Code 226 is not all that the new provision requires and employers should seek a more comprehensive review by, at minimum, examining the DLSE template.
Also new on the DLSE webpage which supports amended Labor Code Section 1174, is a smart phone application created for those employees who have invested in iphone/ipad technology. But there is nothing smart about this: although the application provides employees a tool to keep track of their working hours, the utility is really nothing more than a simple time tracker, as subject to human error as writing down one’s hours on a pad of paper. However, what’s really troubling about the application is that it appears to be sanctioned by the DLSE, potentially lending records credibility which have otherwise been falsified or carelessly maintained. The only true accomplishment of the publication of the smart phone application is the warning it poses for employers to be more diligent than ever in recording and maintaining employees’ work hours. In the event that a dispute over work hours does arise, employers should require that employees regularly review and sign that their employer recorded work hours are accurate.
But in spite of the increased burden to private employers, with the passing of AB 469, it remains to be seen whether the legislation will be just another employer burden to bear – or will accomplish it’s goal – the protection of California workers from employer wage theft.
Thursday, January 26, 2012
Tuesday, January 3, 2012
Employers Can't Afford to Ignore Malicious Office Gossip
According to conventional wisdom, office gossip is an essentially harmless fixture of the workplace. Employers often ignore gossip because it is so pervasive; and managers, too, can get caught up in the chatter because everyone has a basic curiosity about people with whom they come in regular contact. Although some forms of gossip may be innocent, there is no question that when gossip is malicious, it has crossed a dangerous line. Malicious gossip destroys employees’ morale and productivity and exposes both individuals and employers to liability on several fronts.
Malicious Gossip – What is it?
Even though there may not be a strict legal definition of “malicious gossip,” employers should be aware of the characteristics that make gossip pernicious and that lead to the legal claims discussed below. An employee who communicates information about another employee with the desire to inflict injury or harm on the other is engaging in malicious gossip. The same is true of an employee who spreads rumors about a coworker’s personal or professional life that are untrue.
Why do people engage in malicious gossip?
Employees who traffic in malicious rumors and gossip are, in effect, workplace “bullies.” Bullies behave in an aggressive, hurtful manner to compensate for feelings of inferiority, powerlessness and fear. By denigrating others, the gossipmonger hopes to gain a sense of power and control over others.
What liability may result from malicious gossip?
Harassment under FEHA and Title VII
Malicious gossip may be actionable under laws protecting employees from workplace harassment. Under the California Fair Employment and Housing Act (FEHA) and Title VII of the Civil Rights Act, a plaintiff may recover for workplace harassment if he or she were subjected to conduct based on plaintiff’s protected status, the conduct was unwelcome and the conduct was sufficiently severe or pervasive to alter the conditions of employment and create an abusive work environment. (Cozzi v. County of Marin (N.D. Cal. 2011) 787 F. Supp. 2d 1047, 1069-70.) Thus, for example, if an employee rejects the romantic advances of a coworker, and the coworker then repeatedly spreads false information in the workplace about the employee’s personal life, the employee may have a claim for sexual harassment. Further, the coworker may be personally liable for harassment under FEHA, and the employer strictly liable if the coworker is a supervisor. (Cal. Gov. Code 12940(j)(1), (3).)
Defamation
Malicious gossip in the workplace may lead to a claim for defamation. To state a claim for defamation per se, the plaintiff must show the intentional publication of a statement of fact that is false, unprivileged and has a natural tendency to injure or which causes special damage. (Reese v. Barton Healthcare Systems (E.D. Cal. 2010) 693 F. Supp. 2d 1170, 1188-89.)
Take, for example, a recent case in which a plaintiff alleged that she had been defamed when a coworker referred to her as a “pole dancer” while discussing plaintiff’s worker’s compensation claim with the third party claims administrator. The court held that plaintiff’s suit for defamation against her employer survived a motion for summary judgment. Because the coworker’s statement was made during the course of her employment, and was not privileged under California Civil Code section 47(c), the employer could be held liable for the statement under the doctrine of respondeat superior. (Reese v. Barton Healthcare Systems, supra, 693 F. Supp. 2d 1170, 1191-92.)
Invasion of Privacy
Gossip in the workplace may give rise to the tort of invasion of privacy under the California Constitution. To prevail, a plaintiff must show the following: (1) a legally protected privacy interest; (2) a reasonable expectation of privacy; and (3) a serious invasion of the privacy interest. (Hernandez v. Hillsides, Inc. (2009) 47 Cal. 4th 272, 287.) For example, an employee who has access to confidential personnel records and who gossips with coworkers about the information in those records may be found to have invaded the privacy of those persons whose records were disclosed.
National Labor Relations Board Prohibits Restraint of Employees’ Discussion of Terms and Conditions of Employment
Notwithstanding the potential for liability inherent in workplace gossip, employers must refrain from issuing broad restrictions on employees’ work related gossip. To comply with recent direction provided by the National Labor Relations Board on employees’ use of social media, employers generally may not prohibit employees from making disparaging remarks about the employer or a supervisor if the remarks are made in the course of “protected, concerted activity” with other coworkers concerning the terms and conditions of employment. (See Office of the General Counsel, Memorandum OM 11-74 (August 18, 2011).) Thus, it is permissible, for example, for employees to discuss, through social media, coworkers’ job performance and company staffing levels if done in preparation for a meeting with management to discuss working conditions.
Recommendations for Employers to Address Malicious Gossip
Workplace Policies and Practices
• Seek the advice of legal counsel to craft a carefully drawn policy defining unacceptable gossip, and imposing discipline, including termination, for violation of the policy. The policy should also include narrowly tailored parameters for the use of social media as it relates to the workplace, in compliance with NLRB dictates and First Amendment protections.
• Encourage employees to vent frustrations in an appropriate manner.
• Managers should model appropriate behavior by not engaging in gossip themselves.
Investigation
• If gossip has crossed the line and may violate applicable policies or law, promptly initiate an investigation into the matter.
• Interim measures should also immediately be instituted to prevent any further offending conduct while the matter is being investigated.
Malicious Gossip – What is it?
Even though there may not be a strict legal definition of “malicious gossip,” employers should be aware of the characteristics that make gossip pernicious and that lead to the legal claims discussed below. An employee who communicates information about another employee with the desire to inflict injury or harm on the other is engaging in malicious gossip. The same is true of an employee who spreads rumors about a coworker’s personal or professional life that are untrue.
Why do people engage in malicious gossip?
Employees who traffic in malicious rumors and gossip are, in effect, workplace “bullies.” Bullies behave in an aggressive, hurtful manner to compensate for feelings of inferiority, powerlessness and fear. By denigrating others, the gossipmonger hopes to gain a sense of power and control over others.
What liability may result from malicious gossip?
Harassment under FEHA and Title VII
Malicious gossip may be actionable under laws protecting employees from workplace harassment. Under the California Fair Employment and Housing Act (FEHA) and Title VII of the Civil Rights Act, a plaintiff may recover for workplace harassment if he or she were subjected to conduct based on plaintiff’s protected status, the conduct was unwelcome and the conduct was sufficiently severe or pervasive to alter the conditions of employment and create an abusive work environment. (Cozzi v. County of Marin (N.D. Cal. 2011) 787 F. Supp. 2d 1047, 1069-70.) Thus, for example, if an employee rejects the romantic advances of a coworker, and the coworker then repeatedly spreads false information in the workplace about the employee’s personal life, the employee may have a claim for sexual harassment. Further, the coworker may be personally liable for harassment under FEHA, and the employer strictly liable if the coworker is a supervisor. (Cal. Gov. Code 12940(j)(1), (3).)
Defamation
Malicious gossip in the workplace may lead to a claim for defamation. To state a claim for defamation per se, the plaintiff must show the intentional publication of a statement of fact that is false, unprivileged and has a natural tendency to injure or which causes special damage. (Reese v. Barton Healthcare Systems (E.D. Cal. 2010) 693 F. Supp. 2d 1170, 1188-89.)
Take, for example, a recent case in which a plaintiff alleged that she had been defamed when a coworker referred to her as a “pole dancer” while discussing plaintiff’s worker’s compensation claim with the third party claims administrator. The court held that plaintiff’s suit for defamation against her employer survived a motion for summary judgment. Because the coworker’s statement was made during the course of her employment, and was not privileged under California Civil Code section 47(c), the employer could be held liable for the statement under the doctrine of respondeat superior. (Reese v. Barton Healthcare Systems, supra, 693 F. Supp. 2d 1170, 1191-92.)
Invasion of Privacy
Gossip in the workplace may give rise to the tort of invasion of privacy under the California Constitution. To prevail, a plaintiff must show the following: (1) a legally protected privacy interest; (2) a reasonable expectation of privacy; and (3) a serious invasion of the privacy interest. (Hernandez v. Hillsides, Inc. (2009) 47 Cal. 4th 272, 287.) For example, an employee who has access to confidential personnel records and who gossips with coworkers about the information in those records may be found to have invaded the privacy of those persons whose records were disclosed.
National Labor Relations Board Prohibits Restraint of Employees’ Discussion of Terms and Conditions of Employment
Notwithstanding the potential for liability inherent in workplace gossip, employers must refrain from issuing broad restrictions on employees’ work related gossip. To comply with recent direction provided by the National Labor Relations Board on employees’ use of social media, employers generally may not prohibit employees from making disparaging remarks about the employer or a supervisor if the remarks are made in the course of “protected, concerted activity” with other coworkers concerning the terms and conditions of employment. (See Office of the General Counsel, Memorandum OM 11-74 (August 18, 2011).) Thus, it is permissible, for example, for employees to discuss, through social media, coworkers’ job performance and company staffing levels if done in preparation for a meeting with management to discuss working conditions.
Recommendations for Employers to Address Malicious Gossip
Workplace Policies and Practices
• Seek the advice of legal counsel to craft a carefully drawn policy defining unacceptable gossip, and imposing discipline, including termination, for violation of the policy. The policy should also include narrowly tailored parameters for the use of social media as it relates to the workplace, in compliance with NLRB dictates and First Amendment protections.
• Encourage employees to vent frustrations in an appropriate manner.
• Managers should model appropriate behavior by not engaging in gossip themselves.
Investigation
• If gossip has crossed the line and may violate applicable policies or law, promptly initiate an investigation into the matter.
• Interim measures should also immediately be instituted to prevent any further offending conduct while the matter is being investigated.
California Labor Commissioner Posts New Hire Notice Template Regarding Wage Theft Prevention Act Compliance
In our last posting we told you about California's new Wage Theft Prevention Act that took effect January 1, 2012. The new law requires employers to provide new employees, upon hire, with a written disclosure regarding wages and other matters.
The California Labor Commissioner has now prepared a template that employers may use to comply with the notice requirement. The template is available online at http://www.dir.ca.gov/dlse/LC_2810.5_Notice.doc. The Labor Commissioner will issue more guidance on this new law so we will keep you informed.
Employers should note that the new disclosure is not required for new hires who: 1) are directly employed by the state or any political subdivision, 2) are exempt from the payment of overtime wages by statute or wage order, or 3) are covered by a collective bargaining agreement that expressly provides for wages, hours of work and working conditions, and provides for premium wage rates for all overtime worked.
The California Labor Commissioner has now prepared a template that employers may use to comply with the notice requirement. The template is available online at http://www.dir.ca.gov/dlse/LC_2810.5_Notice.doc. The Labor Commissioner will issue more guidance on this new law so we will keep you informed.
Employers should note that the new disclosure is not required for new hires who: 1) are directly employed by the state or any political subdivision, 2) are exempt from the payment of overtime wages by statute or wage order, or 3) are covered by a collective bargaining agreement that expressly provides for wages, hours of work and working conditions, and provides for premium wage rates for all overtime worked.
The Ison Law Group January 2012 Newsletter
Released January 3, 2012. Featured articles include: Employers Can't Afford to Ignore Malicious Office Gossip and California Labor Commissioner Posts New Hire Notice Template Regarding Wage Theft Prevention Act Compliance.
Tuesday, November 22, 2011
‘TIS THE SEASON TO LIMIT LIABILITY: PLANNING A NON-LITIGIOUS COMPANY HOLIDAY PARTY
With another holiday season approaching, companies nationwide are busy planning parties. Holiday socials are longstanding company traditions to thank employees and celebrate annual accomplishments. They can also be a breeding ground for employer liability -- especially when alcohol is served.
A 2000 survey conducted by Vault.com found that 44% of employers had to reprimand an employee for behavior at a company holiday party. A 2010 poll by HR firm Adecco corroborate these findings: 40% of people surveyed saw or suffered a major indiscretion at a work-sponsored holiday event and 14% knew someone who was fired for bad behavior at a company holiday party.
Employers have a duty to their employees to prevent harassment, discrimination and other unlawful behavior from occurring. Employers also have a duty to prevent foreseeable risks to their employees and third parties. Holiday parties, whether onsite or off-site, should be treated as extensions of the workplace.
Sexual Harassment is the Chief Complaint
Every year countless sexual harassment complaints are filed based in part on behavior that occurs, at least in part, during the annual holiday party. Employees may be less careful at a holiday party than they would be in the office. The celebratory, relaxed environment combined with alcohol causes inhibitions to fade and revelry to ensue. In Russ v. Van Scoyoc Associates, Inc., 122 F. Supp.2d 29 (D.D.C. 2000), several people became very intoxicated during a holiday office party. After the party, some employees went to another bar to continue socializing. A supervisor made sexually explicit and offensive remarks to plaintiff, telling her that he admired her breasts, that he wanted to have sex with her, that he wanted to perform oral sex upon her, and that she could make more money working at Hooters than at the company. A holiday party “after party” was the source of Ashlee Ilewicz’ recent complaint against the Los Angeles law firm Glancy Binkow & Goldberg (L.A. Superior Court 2010). The lawsuit alleged that, at the conclusion of the firm’s holiday party, founding partner Glancy took employees to a “bikini bar,” paid for their admissions and bought a lap dance for at least one employee.
Generally, conduct must be "severe and pervasive" to constitute sexual harassment. An isolated comment at an office party will not usually meet this test. However, when office party conduct is coupled with other harassment, a hostile work environment may result. For example, in Stathatos v. Gala Resources, LLC, No. 06 Civ. 13138 (S.D.N.Y. 2010), during an office holiday party, a client of defendant became aggressive toward plaintiff, grabbed her repeatedly, and chased her all night. When plaintiff approached defendant at the party for help, defendant teased her instead. Plaintiff had also been subjected to various sexist comments and incidents in the office. The Court found that these facts were sufficient to overcome defendant’s motion for summary judgment. Similarly, in Carver v. Waste Connections of TN, Inc., No. 3:10-cv-00501 (E.D. Tenn. 2006), plaintiff claimed she was sexually harassed by her supervisor after a holiday party at that supervisor’s home where a group gift exchange occurred. Some of the gifts were of a sexual nature, including edible underwear and a blow-up doll. While this conduct alone may not have risen to the level of severe and pervasive, when coupled with other workplace conduct it was sufficient to overcome a motion for summary judgment.
Sometimes a one-time physical occurrence is so egregious that it alone can constitute sexual harassment. See, e.g., Barrett v. Omaha National Bank, 584 F. Supp. 22 (D. Neb. 1983). Physical incidents are all too common at holiday parties. In King v. Board of Regents of University of Wisconsin System, 898 F.2d 533 (7th Cir.1990), an assistant dean followed plaintiff into a bathroom at an office holiday party, saying he "had to have her" and "he would have her." Despite plaintiff’s protests, he kissed and fondled her. While there was other conduct at issue in this case, this conduct on its own could be sufficient to support a sexual harassment claim. Egregious conduct also occurred in EEOC v. Rose Casual Dining, L.P., No. 02-cv-7485 (E.D. Pa. 2004). At the company holiday party, a manager approached plaintiff and fondled her backside while commenting on how good she looked. He then removed her nametag and dropped it down her cleavage. The manager continued to pursue plaintiff throughout the night, grabbing her and making sexual comments towards her.
It comes as no surprise that alcohol is a contributing factor in the vast majority of holiday party sexual harassment claims. Although the law only prohibits unwelcome sexual advances, alcohol skews the judgment of harassers and victims alike, and conduct that seemed acceptable during a period of intoxication may be unacceptable in retrospect.
Alcohol-Related Physical Injuries are Common
Every December, anywhere from 2,000 to 3,000 persons are injured or killed in California in alcohol-involved collisions.1 A 2000 Vault.com survey found that 44% of respondents became drunk at a work holiday party. In Adecco’s 2010 poll, 20% of respondents reported drinking too much at a work holiday party. It does not require great imagination to picture an employee overindulging at a holiday party, getting behind the wheel and causing physical harm.
Liability to Nonemployee Third Parties
California employers may be liable to third parties for damages caused by drunken employees. Liability is imposed by Cal. Civ. Code § 2338, which incorporates the common-law doctrine of respondeat superior.2 Respondeat superior imposes vicarious liability on an employer for the torts of an employee acting within the “scope of employment,” whether or not the employer is negligent or has control over the employee.
California has allowed nonemployee third parties to recover from employers for the tortious conduct of employees, where the tortious conduct was a foreseeable risk of the employee's consumption of alcohol occurring after ordinary working hours but within the scope of employment. See, e.g., Harris v. Trojan Fireworks Co. (1981) 120 Cal.App.3d 157 (complaint against employer survived demurrer where it alleged employee became intoxicated at company holiday party and caused automobile accident.)
Where social or recreational pursuits are endorsed by the express or implied permission of the employer and are conceivably of some benefit to the employer or, even in the absence of proof of benefit, if such activities have become a customary incident of the employment relationship, an employee engaged in such pursuits after hours is still acting within the scope of his employment. “It may be inferred that the party was for the benefit of the employer. It may be argued that the purpose of the party was to improve employer/employee relations or to increase the continuity of employment by providing employees with the fringe benefit of a party, or to improve relations between the employees by providing them with this opportunity for social contact.” Harris 120 Cal.App.3d at 164, referencing Boynton v. McKales, (1956) 139 Cal.App.2d 777, 789.
In Childers v. Shasta Livestock Auction Yard (1987) 190 Cal.App.3d. 792, an employee got into an accident on the way home after drinking at work with a supervisor's permission. The appellate court found the accident was foreseeable. “[The foreseeability] test has been applied to employees who got into car accidents on the way home after drinking alcohol at work. Courts have found a sufficient link between the drinking and the accidents to make the collisions neither startling nor unusual, and thus foreseeable under respondeat superior.” Bussard v. Minimed, Inc., (2003) 105 Cal.App.4th 798, 805.
Employee Injuries
Ordinarily, employees who are injured in the “course of employment” are entitled to workers’ compensation benefits. Cal. Lab. Code 3600(a)(9) excludes from coverage those injuries "arising out of voluntary participation in any off-duty recreational, social or athletic activity not constituting part of the employee's work-related duties, except where those duties are a reasonable expectancy of, or are expressly or impliedly required by, the employment." However, as discussed above in the respondeat superior context, employees can successfully assert in some cases that attendance at a company holiday party is within the course of employment and not truly a voluntary, off-duty activity.3
One of the rules the courts have fashioned to aid in determining whether an injury occurred in the course of employment is the “going and coming” rule. This rule “prohibits compensation for injuries received by an employee while traveling to and from work.” Parks v. Workers' Comp. Appeals Bd. (1983) 33 Cal.3d 585, 588. However, the going and coming rule itself is subject to exceptions. For example, the California Supreme Court allowed the wife of an employee to seek workers' compensation benefits for her husband's death after he attended the office holiday party, got drunk and collided with a railroad signal pole on the way home. McCarty v. Workmen's Comp. Appeals Bd. (1974) 12 Cal.3d 677.
Planning Tips
Given the myriad of risks facing employers, the safest option is to forego the holiday party altogether. But, for the most part, employers still want to have holiday parties. Employers should therefore consider the following options to reduce the risk of liability:
• Consider an alcohol-free function in light of the extremely high coincidence of alcohol consumption and holiday party litigation.
• If you plan to offer alcohol, consider an off-site function. Have a bartender to monitor consumption and check identification. Instead of an open bar, have a cash bar. If you have an open bar, hand out a limited number of drink tickets to attendees and close the bar well before the party ends. Make certain there are plenty of non-alcoholic drinks available and serve plenty of food. Consider providing transportation such as a shuttle service.
• Employees, and especially managers, should be reminded of company policy and expectations and that normal workplace behavior and conduct is expected at the holiday party. Managers need to know that the company expects them to set an example of professionalism. Remind employees of the company’s alcohol and substance abuse policy.
• Re-publish the sexual harassment policy in the days before the holiday party takes place. Attach the policy to a memorandum that reemphasizes the company's zero tolerance policy for harassment. Make sure everyone knows how to report unwanted or unwelcome behavior. Make sure all supervisors have received sexual harassment training.
• Consider making the office party truly voluntary and avoid all “work-related” activities such as employee recognition and client/customer attendance. Otherwise employees may think the event has a business purpose and attendance is required.
• Consider inviting spouses and significant others. This may reduce overindulgence and incidences of sexual harassment.
• Do not pay employees for attendance at company party.
• Take a close look at the venue and the entertainment provided to avoid a sexually charged atmosphere.
• Consider holding a midday lunch party instead of a late afternoon, evening or nighttime party.4
Elizabeth Ison is an employment attorney in Sacramento whose mission is to work with employers to create a healthy workplace and reduce employee claims, litigation, attorneys’ fees and costs.
__________________________
1 - 2009 Annual Report of Fatal and Injury Motor Vehicle Traffic Collisions, California Highway Patrol.
2 - Except in the case of serving alcohol to minors as codified in Civ. Code 1714(d), liability in California is not typically based on “dram shop” laws. Civ. Code 1714(c) and Cal. Bus. & Prof. Code 25602(b) immunize “social hosts” who sell, furnish, give or cause to be sold, furnished, or given away alcoholic beverages. However, some California local governments have enacted municipal social host ordinances.
3 - While the workers compensation “course of employment” rule and respondeat superior “scope of employment” rule are not identical, a principal consideration to both is benefit to the employer. As noted by the California Supreme Court, “[b]oth fields of law are concerned with the allocation of the cost of industrial injury; and the two tests are closely related." Hinman v. Westinghouse Elec. Co. (1970) 2 Cal.3d 956, 962.
4 - Alcohol-involved injury collisions are more likely to happen on Fridays and Saturdays in the evening or nighttime. 2009 Annual Report of Fatal and Injury Motor Vehicle Traffic Collisions, California Highway Patrol.
A 2000 survey conducted by Vault.com found that 44% of employers had to reprimand an employee for behavior at a company holiday party. A 2010 poll by HR firm Adecco corroborate these findings: 40% of people surveyed saw or suffered a major indiscretion at a work-sponsored holiday event and 14% knew someone who was fired for bad behavior at a company holiday party.
Employers have a duty to their employees to prevent harassment, discrimination and other unlawful behavior from occurring. Employers also have a duty to prevent foreseeable risks to their employees and third parties. Holiday parties, whether onsite or off-site, should be treated as extensions of the workplace.
Sexual Harassment is the Chief Complaint
Every year countless sexual harassment complaints are filed based in part on behavior that occurs, at least in part, during the annual holiday party. Employees may be less careful at a holiday party than they would be in the office. The celebratory, relaxed environment combined with alcohol causes inhibitions to fade and revelry to ensue. In Russ v. Van Scoyoc Associates, Inc., 122 F. Supp.2d 29 (D.D.C. 2000), several people became very intoxicated during a holiday office party. After the party, some employees went to another bar to continue socializing. A supervisor made sexually explicit and offensive remarks to plaintiff, telling her that he admired her breasts, that he wanted to have sex with her, that he wanted to perform oral sex upon her, and that she could make more money working at Hooters than at the company. A holiday party “after party” was the source of Ashlee Ilewicz’ recent complaint against the Los Angeles law firm Glancy Binkow & Goldberg (L.A. Superior Court 2010). The lawsuit alleged that, at the conclusion of the firm’s holiday party, founding partner Glancy took employees to a “bikini bar,” paid for their admissions and bought a lap dance for at least one employee.
Generally, conduct must be "severe and pervasive" to constitute sexual harassment. An isolated comment at an office party will not usually meet this test. However, when office party conduct is coupled with other harassment, a hostile work environment may result. For example, in Stathatos v. Gala Resources, LLC, No. 06 Civ. 13138 (S.D.N.Y. 2010), during an office holiday party, a client of defendant became aggressive toward plaintiff, grabbed her repeatedly, and chased her all night. When plaintiff approached defendant at the party for help, defendant teased her instead. Plaintiff had also been subjected to various sexist comments and incidents in the office. The Court found that these facts were sufficient to overcome defendant’s motion for summary judgment. Similarly, in Carver v. Waste Connections of TN, Inc., No. 3:10-cv-00501 (E.D. Tenn. 2006), plaintiff claimed she was sexually harassed by her supervisor after a holiday party at that supervisor’s home where a group gift exchange occurred. Some of the gifts were of a sexual nature, including edible underwear and a blow-up doll. While this conduct alone may not have risen to the level of severe and pervasive, when coupled with other workplace conduct it was sufficient to overcome a motion for summary judgment.
Sometimes a one-time physical occurrence is so egregious that it alone can constitute sexual harassment. See, e.g., Barrett v. Omaha National Bank, 584 F. Supp. 22 (D. Neb. 1983). Physical incidents are all too common at holiday parties. In King v. Board of Regents of University of Wisconsin System, 898 F.2d 533 (7th Cir.1990), an assistant dean followed plaintiff into a bathroom at an office holiday party, saying he "had to have her" and "he would have her." Despite plaintiff’s protests, he kissed and fondled her. While there was other conduct at issue in this case, this conduct on its own could be sufficient to support a sexual harassment claim. Egregious conduct also occurred in EEOC v. Rose Casual Dining, L.P., No. 02-cv-7485 (E.D. Pa. 2004). At the company holiday party, a manager approached plaintiff and fondled her backside while commenting on how good she looked. He then removed her nametag and dropped it down her cleavage. The manager continued to pursue plaintiff throughout the night, grabbing her and making sexual comments towards her.
It comes as no surprise that alcohol is a contributing factor in the vast majority of holiday party sexual harassment claims. Although the law only prohibits unwelcome sexual advances, alcohol skews the judgment of harassers and victims alike, and conduct that seemed acceptable during a period of intoxication may be unacceptable in retrospect.
Alcohol-Related Physical Injuries are Common
Every December, anywhere from 2,000 to 3,000 persons are injured or killed in California in alcohol-involved collisions.1 A 2000 Vault.com survey found that 44% of respondents became drunk at a work holiday party. In Adecco’s 2010 poll, 20% of respondents reported drinking too much at a work holiday party. It does not require great imagination to picture an employee overindulging at a holiday party, getting behind the wheel and causing physical harm.
Liability to Nonemployee Third Parties
California employers may be liable to third parties for damages caused by drunken employees. Liability is imposed by Cal. Civ. Code § 2338, which incorporates the common-law doctrine of respondeat superior.2 Respondeat superior imposes vicarious liability on an employer for the torts of an employee acting within the “scope of employment,” whether or not the employer is negligent or has control over the employee.
California has allowed nonemployee third parties to recover from employers for the tortious conduct of employees, where the tortious conduct was a foreseeable risk of the employee's consumption of alcohol occurring after ordinary working hours but within the scope of employment. See, e.g., Harris v. Trojan Fireworks Co. (1981) 120 Cal.App.3d 157 (complaint against employer survived demurrer where it alleged employee became intoxicated at company holiday party and caused automobile accident.)
Where social or recreational pursuits are endorsed by the express or implied permission of the employer and are conceivably of some benefit to the employer or, even in the absence of proof of benefit, if such activities have become a customary incident of the employment relationship, an employee engaged in such pursuits after hours is still acting within the scope of his employment. “It may be inferred that the party was for the benefit of the employer. It may be argued that the purpose of the party was to improve employer/employee relations or to increase the continuity of employment by providing employees with the fringe benefit of a party, or to improve relations between the employees by providing them with this opportunity for social contact.” Harris 120 Cal.App.3d at 164, referencing Boynton v. McKales, (1956) 139 Cal.App.2d 777, 789.
In Childers v. Shasta Livestock Auction Yard (1987) 190 Cal.App.3d. 792, an employee got into an accident on the way home after drinking at work with a supervisor's permission. The appellate court found the accident was foreseeable. “[The foreseeability] test has been applied to employees who got into car accidents on the way home after drinking alcohol at work. Courts have found a sufficient link between the drinking and the accidents to make the collisions neither startling nor unusual, and thus foreseeable under respondeat superior.” Bussard v. Minimed, Inc., (2003) 105 Cal.App.4th 798, 805.
Employee Injuries
Ordinarily, employees who are injured in the “course of employment” are entitled to workers’ compensation benefits. Cal. Lab. Code 3600(a)(9) excludes from coverage those injuries "arising out of voluntary participation in any off-duty recreational, social or athletic activity not constituting part of the employee's work-related duties, except where those duties are a reasonable expectancy of, or are expressly or impliedly required by, the employment." However, as discussed above in the respondeat superior context, employees can successfully assert in some cases that attendance at a company holiday party is within the course of employment and not truly a voluntary, off-duty activity.3
One of the rules the courts have fashioned to aid in determining whether an injury occurred in the course of employment is the “going and coming” rule. This rule “prohibits compensation for injuries received by an employee while traveling to and from work.” Parks v. Workers' Comp. Appeals Bd. (1983) 33 Cal.3d 585, 588. However, the going and coming rule itself is subject to exceptions. For example, the California Supreme Court allowed the wife of an employee to seek workers' compensation benefits for her husband's death after he attended the office holiday party, got drunk and collided with a railroad signal pole on the way home. McCarty v. Workmen's Comp. Appeals Bd. (1974) 12 Cal.3d 677.
Planning Tips
Given the myriad of risks facing employers, the safest option is to forego the holiday party altogether. But, for the most part, employers still want to have holiday parties. Employers should therefore consider the following options to reduce the risk of liability:
• Consider an alcohol-free function in light of the extremely high coincidence of alcohol consumption and holiday party litigation.
• If you plan to offer alcohol, consider an off-site function. Have a bartender to monitor consumption and check identification. Instead of an open bar, have a cash bar. If you have an open bar, hand out a limited number of drink tickets to attendees and close the bar well before the party ends. Make certain there are plenty of non-alcoholic drinks available and serve plenty of food. Consider providing transportation such as a shuttle service.
• Employees, and especially managers, should be reminded of company policy and expectations and that normal workplace behavior and conduct is expected at the holiday party. Managers need to know that the company expects them to set an example of professionalism. Remind employees of the company’s alcohol and substance abuse policy.
• Re-publish the sexual harassment policy in the days before the holiday party takes place. Attach the policy to a memorandum that reemphasizes the company's zero tolerance policy for harassment. Make sure everyone knows how to report unwanted or unwelcome behavior. Make sure all supervisors have received sexual harassment training.
• Consider making the office party truly voluntary and avoid all “work-related” activities such as employee recognition and client/customer attendance. Otherwise employees may think the event has a business purpose and attendance is required.
• Consider inviting spouses and significant others. This may reduce overindulgence and incidences of sexual harassment.
• Do not pay employees for attendance at company party.
• Take a close look at the venue and the entertainment provided to avoid a sexually charged atmosphere.
• Consider holding a midday lunch party instead of a late afternoon, evening or nighttime party.4
Elizabeth Ison is an employment attorney in Sacramento whose mission is to work with employers to create a healthy workplace and reduce employee claims, litigation, attorneys’ fees and costs.
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1 - 2009 Annual Report of Fatal and Injury Motor Vehicle Traffic Collisions, California Highway Patrol.
2 - Except in the case of serving alcohol to minors as codified in Civ. Code 1714(d), liability in California is not typically based on “dram shop” laws. Civ. Code 1714(c) and Cal. Bus. & Prof. Code 25602(b) immunize “social hosts” who sell, furnish, give or cause to be sold, furnished, or given away alcoholic beverages. However, some California local governments have enacted municipal social host ordinances.
3 - While the workers compensation “course of employment” rule and respondeat superior “scope of employment” rule are not identical, a principal consideration to both is benefit to the employer. As noted by the California Supreme Court, “[b]oth fields of law are concerned with the allocation of the cost of industrial injury; and the two tests are closely related." Hinman v. Westinghouse Elec. Co. (1970) 2 Cal.3d 956, 962.
4 - Alcohol-involved injury collisions are more likely to happen on Fridays and Saturdays in the evening or nighttime. 2009 Annual Report of Fatal and Injury Motor Vehicle Traffic Collisions, California Highway Patrol.
Tuesday, November 15, 2011
2011/2012 Employment Law Update
The Ison Law Group just released its 2011/2012 Employment Law Update. Read up on employment law news, case law and new legislation. Click the link to be directed to the ebulletin.
Well-Crafted Arbitration Agreements With Your Workforce May Reduce Exposure To Class Action Lawsuits
Class actions brought under California or federal labor laws are among employers’ most dreaded legal claims. A single disgruntled employee can subject your business to costly and uncertain class-wide litigation, effectively holding it hostage for years. Two recent United States Supreme Court cases provide hope to employers.
In April 2010, in Stolt-Nielsen v. AnimalFeeds, the United States Supreme Court held that the Federal Arbitration Act prohibits arbitrators from imposing class arbitration on parties who have not agreed to authorize class arbitration. Thus, absent an express agreement to arbitrate claims on a class-wide basis, private arbitrations must proceed on an individual basis.
In April 2011, in AT&T Mobility v. Concepcion, the United States Supreme Court overruled California case law invalidating “class action waiver” provisions in consumer contracts. (A class action waiver requires that claims be brought in an individual capacity instead of a representative capacity on behalf of others.) Courts have begun to apply Concepcion in the employment context, requiring that workers arbitrate their disputes on an individual basis.
By including a class action waiver provision within a well-crafted and enforceable arbitration agreement, employers may be able to reduce exposure to class actions in court and in private arbitration. Please contact The Ison Law Group for more information and for assistance in implementing cutting-edge arbitration agreements with your workforce.
In April 2010, in Stolt-Nielsen v. AnimalFeeds, the United States Supreme Court held that the Federal Arbitration Act prohibits arbitrators from imposing class arbitration on parties who have not agreed to authorize class arbitration. Thus, absent an express agreement to arbitrate claims on a class-wide basis, private arbitrations must proceed on an individual basis.
In April 2011, in AT&T Mobility v. Concepcion, the United States Supreme Court overruled California case law invalidating “class action waiver” provisions in consumer contracts. (A class action waiver requires that claims be brought in an individual capacity instead of a representative capacity on behalf of others.) Courts have begun to apply Concepcion in the employment context, requiring that workers arbitrate their disputes on an individual basis.
By including a class action waiver provision within a well-crafted and enforceable arbitration agreement, employers may be able to reduce exposure to class actions in court and in private arbitration. Please contact The Ison Law Group for more information and for assistance in implementing cutting-edge arbitration agreements with your workforce.
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