The Ison Law Group - Employment Law News and Events

Wage Theft Prevention Act

2012-01-26T12:03:00.000-08:00

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.

Employers Can't Afford to Ignore Malicious Office Gossip

2012-01-03T17:11:00.000-08:00

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.

California Labor Commissioner Posts New Hire Notice Template Regarding Wage Theft Prevention Act Compliance

2012-01-03T17:06:00.000-08:00

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 Ison Law Group January 2012 Newsletter

2012-01-03T17:00:00.000-08:00

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.

‘TIS THE SEASON TO LIMIT LIABILITY: PLANNING A NON-LITIGIOUS COMPANY HOLIDAY PARTY

2011-11-22T10:17:00.000-08:00

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.
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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.

2011/2012 Employment Law Update

2011-11-15T15:16:00.000-08:00

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

2011-11-15T14:53:00.001-08:00

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.

New 2012 Exempt Classification Rates

2011-11-15T14:48:00.001-08:00

California’s Department of Industrial Relations (DIR) announced rate changes for the computer software employee exemption and the licensed physician or surgeon exemption. The new rates take effect January 1, 2012.

For the computer software employees exemption:

· The minimum hourly rate of pay exemption increased to $38.89 from its previous rate of $37.94.

· The minimum monthly salary increased to $6,752.19 from its previous rate of $6,587.50.

· The minimum annual salary exemption increased to $81,026.25 from its previous rate of $79,050.00.

For the licensed physician or surgeon exemption:

· The minimum hourly pay for licensed physicians and surgeons increased to $70.86 from $69.13.

These rates are tied to the California Consumer Price Index (CCPI) for Urban Wage Earners and Clerical Workers. The rates had not changed since 2008 because there was no net percentage increase in the CCPI. The 2012 rate changes reflect the 2.5 percent increase in the CCPI.

The Brinker Decision

2011-11-15T14:46:00.000-08:00

The California Supreme Court will soon issue its opinion in the widely talked about Brinker meal and rest periods case. A hearing is set for November 8, 2011, and a final decision is due within 90 days of that date.

In question are the meaning and requirements of California's rule on meal and rest breaks. The court's written opinion will decide:

• Whether employers must ensure employees take their meal and rest periods or simply make the breaks available

• When employees must take their meal break

• The number of required rest breaks during a shift and when they must occur

Lopez v. Pacific Maritime Association

2011-11-15T14:43:00.000-08:00

In Lopez v. Pacific Maritime Association, 2011 U.S. App. LEXIS 19620 (9th Cir. 2011) (unpublished), the Ninth Circuit Court of Appeals held that the employer could enforce its “one-strike” rule to permanently disqualify all applicants who failed the employer’s pre-employment drug screening. The Lopez court rejected the plaintiff’s argument that the “one-strike” rule discriminated against recovered drug addicts in violation of the federal Americans with Disabilities Act (ADA) and corresponding provisions of the California Fair Employment and Housing Act (FEHA).

Lopez is a pro-employer decision, and should be welcome news for California employers who have adopted similar one-strike rules. Although both the ADA and the FEHA protect recovered drug addicts from employment discrimination, Lopez makes it clear that permanent disqualification of an applicant who fails a drug test does not unfairly single out former addicts. As explained by the court, a uniformly applied one-strike rule eliminates all applicants who test positive for drug use, “whether they test positive because of a disabling drug addiction or because of an untimely decision to try drugs for the first time, recreationally, on the day before the drug test.” Conversely, as the court noted, a one-strike rule “allows a drug addicted applicant who happens to be sober at the time of the drug test to complete pre-employment processing successfully.”

Pantoja v. Anton

2011-11-15T14:35:00.001-08:00

In Pantoja v. Anton, a California Court of Appeal (Fifth Appellate District) overturned a trial court’s decision to exclude “me too” evidence presented by the plaintiff; that is, testimony from other employees that the person accused of sexual harassment also harassed them.

The appellate court found the lower court improperly excluded evidence of the defendant’s alleged gender bias, which took the form of harassing activity against female employees other than the plaintiff. The appellate court concluded that the evidence should have been admitted to attempt to prove discriminatory or biased intent or motive, as permitted by California Evidence Code § 1101(b), even though the excluded “me too” evidence related to alleged harassment that occurred outside the plaintiff's presence and when she was not an employee.

Pantoja v. Anton is undoubtedly a pro-employee decision. In fact, the appellate court’s expansive view of the admissibility of “me too” evidence should alarm California employers because it allows plaintiffs in sexual harassment cases to introduce evidence of unrelated incidents that did not occur in the plaintiff’s presence. The Pantoja court’s holding is inconsistent with prior court rulings that harassment against others in the workplace is only relevant if the plaintiff had personal knowledge of the harassment at the time it occurred. See Beyda v. City of Los Angeles (1998) 65 Cal.App.4th, 511, 520. The introduction of this type of “me too” evidence at trial creates a significant risk that jurors may be pre-disposed to judge the defendant by his or her “bad acts” in the past, separate and apart from the impact on the plaintiff’s work environment in the present.

From a risk management standpoint, the Pantoja decision also calls into question an employer’s ability to retain a manager with a history of sexual harassment complaints – even if prior complaints were resolved to the satisfaction of both the manager and the accuser.

At a minimum, Pantoja serves as a reminder of the importance of proactive training on the prevention of sexual harassment, and taking prompt corrective action to address acts of sexual harassment in the workplace.

Areso v. Carmax, Inc.

2011-09-06T13:02:00.000-07:00

In Areso v. Carmax, Inc., 195 Cal.App.4th 1996 (2011), a California Court of Appeals (Second Appellate District) held that Leena Areso, a Carmax salesperson, was properly classified as an exempt commissioned salesperson within the meaning of California Labor Code Section 204.1. The court rejected Areso’s argument that the flat $150 per sale incentive pay she received was not “commission wages” as defined by Section 204.1, because it was not calculated as a percentage of the sales price of vehicles sold. The court interpreted the term “commission wages,” as used in Section 204.1, to include uniform (flat) payments to salespersons based on the number of units sold.

Areso is a pro-employer opinion, expanding the definition of “commissions” and offering employers flexibility in developing incentive compensation plans. The interpretation of Labor Code Section 204.1 adopted by Areso permits employers to compensate sales staff on a flat, per unit basis without invalidating their overtime exemptions. It should be noted, however, that Areso is inconsistent with enforcement guidelines published by California Division of Labor Standards Enforcement (DLSE). In contrast to Areso, the DLSE limits the overtime exemptions for commissioned salespersons to employees compensated “based on a percentage of gross or net sales.” Although DLSE enforcement guidelines are not controlling as legal authority, the unresolved conflict between the DLSE and the Court of Appeals creates confusion. Until the DLSE adopts the Areso holding, or the California Supreme Court provides clear guidance, California employers should proceed with caution, and consult human resources professionals before changing their commission policies.

Gelson's Markets v. Workers' Compensation Appeals Board

2010-07-15T14:30:00.000-07:00

On November 13, 2009, the California Court of Appeal rendered its decision in Gelson’s Markets v. Workers’ Compensation Appeals Board, a workers’ compensation discrimination case. The Court clarified existing law with respect to the burden of proof in a claim for discrimination based on an employee’s claim for industrial injury. The Court explained that, to prove a workers’ compensation discrimination claim, a worker injured on the job must prove not only that he or she suffered a detriment, but also that the employer treated the worker differently than other workers because of the industrial injury. See Gelson’s Markets v. Workers’ Compensation Appeals Board, 179 Cal. App. 4th 201 (2009).

Paul Fowler worked as an order puller/machine operator for Gelson’s Markets. In 2004, he injured his neck while working. Fowler submitted a claim for benefits relating to his industrial injury. In 2007, his claim was resolved by a stipulation awarding him benefits for a 20 percent permanent disability, plus future medical treatment.

Eventually, Fowler desired to return to work. He submitted a release for activity permit from his doctor, authorizing Fowler to return to work but limiting his use of a forklift and reach-fork truck to one hour per day. Kelli Garcia, the Gelson’s Markets employee responsible for handling return to work issues, thought the release did not provide sufficient information regarding Fowler’s restrictions to permit Fowler to return to work. She telephoned Fowler’s doctor to find out whether the doctor had a description of Fowler’s job duties. The doctor said he thought so, but wasn’t sure, and went on to say that he did not feel Fowler should return to work, and thought Fowler should remain temporarily totally disabled. After her conversation with the doctor, Garcia told Fowler that Gelson’s could not accommodate the restrictions detailed in the release.

Fowler submitted a second release for activity from the same doctor, this time stating that Fowler could return to work with no restrictions. Garcia sent a letter to the doctor requesting more information because the release for activity forms were “confusing and inconsistent.” She asked the doctor to review the job description for Fowler’s position, and comment on Fowler’s ability to perform the essential functions of the job, with or without accommodation.

The doctor responded by letter, stating that he had reviewed the description of Fowler’s duties, and that “Mr. Fowler is of the impression that he can carry out his job duties.” Therefore, the doctor released him to return to work with no restrictions. Gelson’s did not return Fowler to work because the release stated only that Fowler thought he could perform his job duties, not that the doctor believed so.

Fowler and Gelson’s agreed to submit Fowler to an examination by an agreed-upon doctor. This doctor’s report stated that Fowler retained factors of permanent disability, such as pain and decreased range of motion, and that Fowler had lost 25% of his pre-injury capacity for lifting, pushing, pulling, prolonged motion of the spine, and overhead work activities. The report also stated, however, that the doctor did not believe that Fowler required formal work restrictions because Fowler presented as having good surgical results. Ultimately, the doctor concluded that Fowler should be given the option of returning to his usual and customary job duties.

Garcia determined the report was inconclusive, and asked for further clarification from the doctor. The doctor’s findings were not clarified until he was deposed some time later. Based upon that testimony, Fowler was returned to work in January 2007.

Fowler submitted a petition for benefits and compensation under California Labor Code section 132a, which prohibits an employer from discriminating against an employee because the employee filed a claim for worker’s compensation or received an award or settlement for an industrial injury. Employees who prove a claim for violation of Section 132a are entitled to reinstatement, lost pay and benefits, additional compensation, costs and benefits.

The workers’ compensation administrative law judge found in favor of Fowler, awarding Fowler increased compensation and back pay based upon Gelson’s failure to return Fowler to work following the report of the second doctor, which the judge found was not ambiguous. Gelson’s appealed.

The Court of Appeal set aside the WCAB decision in favor of Fowler. In reviewing the WCAB’s analysis of the evidence, the Court found that the WCAB made an error because it held Gelson’s liable for discrimination against Fowler without requiring Fowler to show that he was treated differently because of his industrial injury. In other words, there was no evidence that Fowler was treated differently by Gelson’s than Gelson’s would have treated someone returning to work after a non-work-related injury (for example, a car accident).

The Court explained that an employer can be held liable under Section 132a only if the “employer singles [the employee] out for disadvantageous treatment because of the industrial nature of [the] injury.” Provided that employers treat workers with industrial injuries in the same manner as they treat other injured workers, they cannot be subjected to liability.

The Gelson’s Markets case serves as a reminder to employers that it is important to handle employees’ requests to return to work in a uniform fashion. Wise employers can reduce their risk of liability for workers’ compensation discrimination claims by having standard procedures to follow in evaluating return to work requests. Employers should require the same form of release (in terms of detail and information) without regard to the type of injury suffered by the employee.

WRONGFUL TERMINATION (Barbosa v. IMPCO Technologies)

2010-07-15T14:27:00.000-07:00

In Barbosa v. IMPCO Technologies, Inc., the California Court of Appeal held that it is unlawful for an employer to terminate an employee because the employee made a reasonable, good faith claim for unpaid overtime wages where the claim is ultimately determined to be unfounded. In issuing its opinion, the Court emphasized California public policy, which encourages employees to assert claims with respect to matters of compensation without fear of retaliation, even if the employee is later proven incorrect. The Court explained that, because the payment of overtime wages is a matter of “public health and general welfare,” the discharge of an employee for exercising his or her right to claim overtime wages is a violation of public policy supporting a tort claim against the employer, so long as the employee acts in good faith. See Barbosa v. IMPCO Technologies, Inc., 179 Cal. App. 4th 1116 (2009).

Manuel Barbosa was employed as a “cell leader” supervising eight other employees whose job it was to assemble carburetors. Barbosa and his subordinates were all paid on an hourly basis. In June 2007, two of Barbosa’s subordinates told him they had not been paid for two hours overtime. Barbosa believed he also had not been paid for two hours overtime.

Barbosa told the payroll administrator about the error, and offered his opinion that the time clock was wrong. The payroll administrator requested that Barbosa obtain the approval of his supervisor for the payment of the overtime. The supervisor approved the overtime pay because he trusted Barbosa.

The payroll administrator and human resources manager compared the scan records from the company security gate against the hours for which the employees had been paid, and concluded that the employees could not have worked the overtime that had been claimed. One employee corroborated their suspicions.

A few days later, Barbosa was called to a meeting. When asked whether he was sure his group worked the overtime, Barbosa replied “yes.” After the meeting, the operations manager showed Barbosa the records from the security gate scans. Barbosa then said he was sorry, and that the people who came to him regarding the overtime discrepancy had confused him. Barbosa twice offered to pay the money back, but was terminated on June 19, 2007 for “cheating the company.” The other employees in Barbosa’s group were retained, but the overtime pay was taken back from them.

Barbosa filed suit in superior court alleging a claim for wrongful termination in violation of public policy. The common law recognizes an employee’s right to bring a tort action against his or her employer for a termination of employment that violates public policy. The public policies supporting such a claim may be reflected in statutes or court decisions. As the Court explained, “Determining whether a claim involves a matter of public policy as opposed to an ordinary dispute between the employer and employee depends on whether the matter affects society at large, whether the policy is sufficiently clear, and whether it is fundamental, substantial, and well established at the time of termination.”

In the Barbosa case, the public policy at issue was the law requiring payment of overtime wages to hourly employees, as reflected in Labor Code section 1199. Because the overtime laws apply to society at large, are sufficiently clear about what is required and who benefits, and are well established, Barbosa’s lawsuit arguably satisfied the legal requirements for a claim for wrongful termination in violation of public policy.

The trial court was not so sure. After hearing the evidence, IMPCO moved to dismiss Barbosa’s lawsuit claiming that public policy did not protect an employee’s right to bring non-meritorious claims for unpaid wages. As the trial court remarked, “It still comes down to a question of law. Good faith belief turns out to be wrong; termination thereafter of an at-will employee. We know the employer promptly paid the claim, thereafter, did an investigation, found out [Barbosa] was wrong. I don’t see that there’s a public policy that requires the employer to then make a determination whether this was good faith, not good faith, and require[s] the employer to then continue to employ this employee, who from [its] perspective made an unjustified claim for monies.” On this basis, the trial court dismissed Barbosa’s claim without allowing a jury to decide whether he should prevail against IMPCO.

Barbosa appealed. The Court of Appeal reversed the trial court’s decision, concluding that Barbosa’s claim was factually similar to other cases in which employees were protected from retaliation for making good faith, but mistaken, claims. The Barbosa Court opined that an employee should be permitted to exercise his statutory right to claim overtime wages, even if the employee is later determined to be incorrect. The Court noted, “Any other conclusion would open the door to employee intimidation and chill the exercise of statutory rights.” The Court of Appeal sent the case back to the trial court for further proceedings and evaluation by a jury.

The Barbosa decision means that employees are permitted to question their employers with regard to compensation-related issues, in court or otherwise, without fear of retaliation. It is irrelevant whether the employee’s claim has merit. It only matters that the employee believes, in good faith, that the claim is legitimate.

KIN CARE (McCarther v. Pacific Telesis Group)

2010-07-15T14:23:00.000-07:00

In McCarther v. Pacific Telesis Group, the California Supreme Court held that Labor Code Section 233, commonly known as the “kin care” statute, applies only to employer sick pay policies that provide employees with a “measureable, banked amount of sick leave.” In issuing its decision, the Court took into consideration the interest of the employee in having the ability to have paid time off work to care for family – while also recognizing that employers may wish to allow their employees unlimited paid sick leave, without being required to permit half of that paid time to be used for kin care. McCarther v. Pacific Telesis Group, 48 Cal. 4th 104 (2010).

The sick leave policy at issue allowed the employee to take up to five consecutive days of paid time off (in any seven day period) for the employee’s own injury or illness. Upon the employee’s return to work, the entitlement would renew, even if the employee had returned to work for only one day. Consequently, there was no limit to the number of paid sick days available under the policy, as long as the employee returned to work in between five-day sick periods. The sick leave policy did not allow employees to accrue unused sick days to be used all at once at a later date. Additionally, the five sick days per seven day period could not be used to care for sick family members. Employees did receive six “personal days” per year that could be used for any purpose, however.

In 2004, Plaintiff Kimberly McCarther was absent from work for seven days to care for her ill children. She was not paid for this time because she was not sick. Plaintiff Juan Huerta was absent from work for five days to care for his sick mother. He was not paid because he was not sick himself, although he did request that one day be paid as a personal day. Neither McCarther nor Huerta was disciplined for being absent from work.

Labor Code Section 233 requires employers who provide paid sick leave to allow employees to use up to one-half of their annual sick leave benefit to care for a sick child, parent, spouse or domestic partner. For example, if an employee receives four weeks paid sick time per year, he or she can use two weeks of that time (with pay) to care for a sick family member. The employer must pay the employee for these absences in “an amount not less than the sick leave that would be accrued during six months at the employee’s then current rate of entitlement.”

The employers in the McCarther case argued that Section 233 should not apply to the sick leave policy because sick days under the policy were potentially unlimited, so there wasn’t any way to determine how many days the employees should be permitted to use as paid “kin care.”

The California Supreme Court agreed with the employers. The Court concluded that Section 233 did not apply to the sick time policy at issue. The Court explained that, while it was true that the employees were entitled to compensation for time off for illness, the amount of compensated time off was not banked, nor could it be calculated in six-month periods. “[The employers’] sickness absence policy provides that employees may be compensated for time off due to illness for up to five consecutive days and must seek alternate forms of compensation under short- or long-term disability programs if the illness or injury lasts for more than seven days. Thus, an employee’s “current rate of entitlement” can be measured only in seven-day periods (in which an employee would be entitled to up to five days of compensated time off for illness), but cannot be measured in six-month periods as section 233 requires.” For this reason, the Court held that Section 233 was not applicable.

Few employers provide employees with unlimited, paid sick days for the employee’s own illness. The McCarther case appears to leave employers in somewhat of a “no-win” situation. An employer who provides a limited number of paid sick days must allow its employees to use half of those days (on an annual basis) to care for sick family members. Employers who provide employees unlimited paid sick time do not have to allow any paid sick time to be used for kin care – but the potential obligation to the employee for paid sick time for his or her own illness could be substantial and is unpredictable.

Avoid Pitfalls:

In consultation with an experienced employment law attorney, review your existing policy to determine whether it is subject to Labor Code Section 233.
Keep in mind that employers are not required to provide paid sick days. If the employer provides paid sick days, however, the employer must ensure that it follows state and federal law. Remember that whether an employee is entitled to leave to care for a family member is a question separate from whether the leave is compensated.
If the company’s policy provides for measurable, banked paid sick days, consider capping the maximum accrual at a level that, when measured in six-month periods, yields an obligation that the company is comfortable with and that it can afford.

FMLA-SERIOUS HEALTH CONDITIONS (Schaar v. Lehigh Valley Health Services)

2010-07-15T14:20:00.000-07:00

In Schaar v. Lehigh Valley Health Services, the Third Circuit Court of Appeals held that an employee’s own testimony that she was “incapacitated” due to illness for a period of three or more days could support a finding that her time off work was protected under the Family and Medical Leave Act (FMLA). According to the Court, the employee’s testimony about the length of her incapacitation, when coupled with medical evidence of the underlying illness, was sufficient to create a jury question as to whether she suffered from a “serious health condition” as defined by the FMLA. Schaar v. Lehigh Valley Health Services, Inc., 598 F.3d 156 (3rd Cir. 2010).

Many employers have written FMLA policies that require a certification from a healthcare provider verifying that the employee meets the eligibility requirements for an FMLA-qualified leave of absence. Schaar affords FMLA-protected status to an employee’s leave of absence despite the absence of verification from a healthcare provider that the employee was actually incapacitated from working for a period of three or more days.

The FMLA entitles employees to take reasonable leave for medical reasons in a manner that accommodates the legitimate interests of employers. An eligible employee is entitled to a total of twelve workweeks of leave during any twelve month period, but only if the employee has a “serious health condition” that makes the employee unable to perform his or her job. If an employee is entitled to leave, the FMLA prohibits an employer from interfering with it or retaliating against an employee for taking it.

The primary issue in Schaar was whether the employee was actually entitled to take an FMLA-protected leave of absence. FMLA eligibility requires, among other things, proof that the employee took (or requested to take) time off due to a “serious health condition,” defined as “illness, injury, impairment, or physical or mental condition that involves . . . continuing treatment by a health care provider.” A federal Department of Labor regulation further defines continuing treatment by a health care provider as a “period of incapacity… of three or more consecutive calendar days… that also involves… [t]reatment by a health care provider on at least one occasion… [and] a regimen of continuing treatment under the supervision of the health care provider.” 29 C.F.R. § 825.114(a) (2005). “Incapacity” is defined as the “inability to work, attend school or perform other regular daily activities due to the serious health condition, treatment therefore, or recovery therefrom.” Id.

Schaar was diagnosed with a urinary tract infection, fever and lower back pain. Her doctor wrote a note indicating that Schaar's illness would prevent her from working for two days. Schaar taped the doctor’s note to her supervisor’s door, and went home. She did not call in sick to work either day.

Six days after returning to work, Schaar was terminated. In a written explanation, her employer stated: “[o]n 9/21/05 Rachael brought a note from her doctor for a 2 day excuse from work. She taped the note to manager's door and left, never calling off from work.” The employer also listed several mistakes and performance issues relating to essential aspects of Schaar’s job. LVPBS did not treat Schaar’s leave of absence as FMLA-qualified, as it appeared she had only been “incapacitated” from work for a period two days. Schaar sued, claiming discrimination and interference with her FMLA rights.

The only issue in the case was whether Schaar presented competent evidence that she was incapacitated for three or more days. The trial court required Schaar to establish three or more days of incapacitation through expert medical evidence. Because Schaar presented a doctor's note that established incapacitation for only two days – and relied on her own testimony about the remaining days – the trial court granted summary judgment in favor of the employer.

The Third Circuit Court of Appeals reversed. The Court discussed cases from other appellate courts that have analyzed whether employees must establish “incapacitation” through medical evidence. Courts have answered the question in three ways: (1) the supporting evidence used to establish incapacity has to come exclusively through a medical provider; (2) the employee’s non-expert testimony, standing alone, is sufficient to establish incapacity; or (3) lay testimony can be used to supplement a medical professional’s testimony or evidence regarding incapacity. Ultimately, Schaar settles on the third option, holding that the employee’s non-expert testimony can be relied upon for the purpose of establishing a serious health condition, so long as expert medical evidence is offered to prove the underlying medical condition.

In reaching this conclusion, the Court noted that the FMLA regulations do not specifically address whether medical testimony is required to prove “incapacitation.”

The lesson of Schaar is that employers should regularly review their FMLA policies, and should analyze leave requests on a case-by-case basis to determine whether the leave is FMLA-qualified. In appropriate circumstances, employers should review and consider both expert medical information and the employee’s own statements to determine whether the FMLA applies. If specific situations raise questions about the employee’s eligibility, the employer may consider utilizing the FMLA second (and third) opinion provisions to obtain more information.

DEFINITION OF "EMPLOYER" FOR WAGE AND HOUR LIABILITY (Martinez v. Combs)

2010-07-15T14:13:00.000-07:00

In Martinez v. Combs, the California Supreme Court concluded that the definition of “employer” for purposes of wage and hour claims may extend beyond the worker’s employer to those companies with whom the employer does business, including their officers, directors and principals. Martinez v. Combs (S121552A, Cal. Sup. Ct., May 20, 2010).

The Court explained that an employer for purposes of wage and hour liability:

• exercises control over the wages, hours or working conditions of the worker, or
• suffers or permits the individual to work, or
• engages the worker, thereby creating a common law employment relationship.

The plaintiffs in Martinez were agricultural workers whose employer, Munoz & Sons, went bankrupt. Plaintiffs sued Munoz and the produce merchants (as an entity and as individuals) that sold Munoz’s harvest for failing to pay minimum wages, waiting time penalties, penalties for failure to provide wage statements and breach of contract.

The California Supreme Court evaluated whether the defendants were subject to suit under Labor Code section 1194, which authorizes any employee not paid minimum wages to sue to recover the money in a civil action. The statute does not identify who the employee can sue. The Court did not have any difficulty inferring that the liable party should be the employer. The Court had a more challenging time determining what “employer” meant for purposes of the statute.

The Court focused on legislative intent to determine who or what was an “employer” for purposes of the statute and related Wage Orders. The plaintiffs relied on two phrases used in the Wage Orders to argue that the merchants were their employers. First, the plaintiffs contended that the merchants “suffered or permitted” them to work because the merchants knew that Munoz would hire individuals to complete the work required by the contract between the merchants and Munoz. Second, the plaintiffs contended that the merchants controlled their wages and hours of work, because the merchants controlled what was paid to Munoz and, in turn, controlled what Munoz could pay his employees.

The Court concluded that the merchants did not “suffer or permit” the plaintiffs to work because the merchants could not prevent them from working. The Court also ruled that the evidence demonstrated that Munoz, and not the merchants, exercised control over the plaintiffs’ wages, hours and working conditions. Munoz was responsible for hiring/firing and training his employees. He also determined the employees’ wages, and told them when and where to report to work, when to start, stop and take breaks and provided their tools and equipment.

The Court found that the individuals sued by the plaintiffs were not employers because they did not offer the plaintiffs employment with the merchants, but instead made suggestions about what the plaintiffs could do to help Munoz in fulfilling his responsibilities under the contract.

California employers should be mindful of the potential for liability for wages earned by non-employees that, arguably, can make a co-employment argument. For instance, if the employer hires an independent contractor who should be classified as an employee, the employer may be responsible for wage claims asserted by the contractor’s employees.

Individual officers, directors and supervisors also face a risk of liability for unpaid wages. Under prior precedent, principals and supervisors were protected from personal liability unless they exceeded the boundaries of their employment. Post-Martinez, plaintiffs can use the broad definition of employer when alleging their claims (as an alternative to proving acts beyond the scope of employment).

To protect against these potential liabilities, employers should check their insurance coverage to make sure that claims for wages against principals and supervisors are covered by their policies. Employers should also confirm that their policy limits are sufficient to protect them from claims for premium wages and penalties that are available to employees who prevail.

TEXT MESSAGES-PRIVACY (City of Ontario v. Quon)

2010-07-15T14:08:00.000-07:00

In City of Ontario v. Quon, the United States Supreme Court found an employer had the right to review transcripts of text messages sent and received on the pager issued to its employee. The court acknowledged that the employee had a reasonable expectation of privacy in his text messages, and that the employer’s conduct constituted a “search” within the meaning of the Fourth Amendment. Ultimately, however, the court concluded that the search was limited in scope and reasonable under the circumstances.

According to the court, “[t]he search was justified at its inception because there were ‘reasonable grounds for suspecting that the search [was] necessary for a non-investigatory work-related purpose.’” The court also held that the scope of the search was reasonable, finding that reviewing the transcripts was “an efficient and expedient way to determine whether Quon’s overages were the result of work-related messaging or personal use.”

City of Ontario v. Quon reverses the decision of the Ninth Circuit Court of Appeals in Quon v. Arch Wireless, 528 F.3d 892 (9th Cir. 2008), which had held that the scope of the employer’s search of Quon’s text messages was unreasonable. In reaching this conclusion, the Supreme Court emphasized the following facts:

• The employer limited its review to two months of text messages
• The employer excluded all text messages sent by Quon during non-work hours
• Quon had been informed of the City’s Policy
• Quon, as a police officer, should have realized that his actions were subject to scrutiny, and,
• A reasonable employee should have expected a periodic audit of text messages on the police pager

Quon serves as a reminder to all employers about the importance of well-communicated policies that emphasize the employer's right to monitor employees' e-mails, text messages and Internet use.

DOL clarified FMLA definition of "son or daughter"

2010-07-15T14:03:00.000-07:00

On June 22, the U.S. Department of Labor (DOL) announced that it has clarified the definition of “son or daughter” under the Family and Medical Leave Act (FMLA). The new DOL administrative interpretation makes it clear that employees who assume the role of caring for children receive parental rights to family leave, regardless of the legal or biological relationship.

The FMLA entitles eligible employees to take up to 12 workweeks of protected leave to bond with a newborn, adopted child, or child placed for foster care or to care for a son or daughter with a serious health condition. The FMLA defines a “son or daughter” as a "biological, adopted, or foster child, a stepchild, a legal ward, or a child of a person standing in loco parentis, who is - (A) under 18 years of age; or (B) 18 years of age or older and incapable of self-care because of a mental or physical disability."

The new DOL administrative interpretation explains that the term “in loco parentis” extends beyond the traditional family to various non-traditional parenting models, including families in the lesbian-gay-bisexual-transgender community, who often in the past have been denied leave to care for their loved ones. As explained by Secretary of Labor Hilda L. Solis, “No one who loves and nurtures a child day-in and day-out should be unable to care for that child when he or she falls ill.”

The DOL press release and the underlying administrative interpretation can be found at: http://www.dol.gov/whd/Hightlights/archived.htm#June22_2010.

REMINDER: Update Your EEOC Poster

2009-11-30T15:38:00.000-08:00

The Equal Employment Opportunity Commission has released a new “Equal Employment Opportunity is the Law” poster. The poster includes updates from the Department of Labor, states current federal employment discrimination law, and adds information about the Genetic Information Nondiscrimination Act of 2008, which took effect November 21, 2009. All covered employers (those with 15 or more employees) are required to post the new poster on their premises, in an area visible to employees and applicants. Link to the new poster. If your company employs individuals that do not speak English, be sure to have posters in languages that can be read by your non-English speaking employees.

Military Family Leave Rights Under FMLA Expanded

2009-11-30T15:30:00.000-08:00

The October 2009 amendments to the Family Medical Leave Act override regulations that limited military family leave under the FMLA to family members of service members in the National Guard or Reserves. The new law expands military family leave for “qualified exigencies” under the FMLA to include the spouse, parent, son or daughter of a service member in the Regular Armed Forces who is deployed to a foreign country. So, for example, the spouse of a regular Army soldier deployed to a foreign country would be entitled to take FMLA leave while the soldier has rest and recuperation in the U.S. However, the spouse of a regular Army soldier assigned in the U.S. would not be entitled to FMLA leave during the soldier’s rest and recuperation unless another basis under the FMLA (e.g., caregiver leave) applies to the particular situation.

The new law also expands military family leave to cover specified military veterans. Prior to the October 2009 amendments, caregiver leave could only be used by an employee whose family member was presently a member of the Armed Forces, including the National Guard or Reserves, and who was injured in the line of duty while on active duty. The new law defines a "covered service member" to include (i) members of the Armed Forces, including members of the National Guard or Reserves, and (ii) certain veterans who were members of the Armed Forces, including a member of the National Guard or Reserves, who have undergone medical treatment, recuperation or therapy, are otherwise in outpatient status, or are otherwise on the temporary disability retired list, for a "serious injury or illness" incurred or aggravated by service in the line of duty while on active duty. Eligibility is limited to veterans who have served in the Armed Forces, the National Guard or Reserves during the five years preceding the date of the medical treatment, recuperation or therapy.

California employers should also keep in mind that state law creates an additional leave entitlement for military spouses in certain circumstances. California Military and Veterans Code Section 395.10, requires that employers provide up to 10 days of leave to a “qualified employee," defined as an employee who works an average of 20 or more hours per week and is the spouse of a “qualified member” of the United States Armed Forces, National Guard or Reserves. A “qualified member” is a member of the United States Armed Forces who has been deployed during a period of military conflict to an area designated as a combat theater or combat zone by the President of the United States, or a member of the National Guard or Reserves who has been deployed during a period of military conflict. To be eligible for leave, the employee must provide (1) notice of intention to take family military leave within two business days of receiving official notice that the employee’s military spouse will be on leave from deployment, and (2) documentation certifying that the employee’s military spouse will be on leave from deployment during the time that the employee requests leave.

The regulations implementing the new military family leave benefits under the FMLA, and the interaction of these regulations with federal and state laws, can create headaches for employers and their human resources managers. Employers are encouraged to consult with HR professionals or employment law counsel to ensure that their existing personnel policies are updated to reflect these recent changes.

New Legislation May Provide Paid Sick Leave for Individuals with H1N1

2009-11-30T15:29:00.000-08:00

Legislation has been introduced by House of Representatives Democrat George Miller that would require employers of more than 15 employees to pay for five days’ sick leave for employees who are sent home due to H1N1 infection. The law is being considered on an emergency basis and would take effect 15 days after being signed. Representative Miller introduced the law to benefit employees who can’t afford to take time off when they become ill. “Many of them are either afraid or cannot afford to take time off, especially if they don't have access to paid sick leave," he said. The law would expire automatically in two years.

Senator Chris Dodd intends to introduce and sponsor similar legislation in the Senate. His proposed bill would give employees seven paid sick days: (a) to care for a child who is sick with the H1N1 virus or has flu like symptoms; (b) to care for a child whose school or child care facility is closed because of the spread of contagious illness; and (c) for issues related to their own flu symptoms or care.

This federal legislation is still in the formative stages. The Ison Law Group will continue to monitor legislative developments, and will post an update when/if legislation is passed.

Non-compete Agreement Held Unenforceable

2009-11-30T15:27:00.000-08:00

In Dowell v. Pacesetter, Inc., a case involving complex claims and cross-claims between a biotech company and St. Jude, a California court once again declined to enforce a non-compete agreement between employer and employee. The employees working for the biotech company signed an agreement upon acceptance of employment that provided that they would not render services for a competitor if “confidential information” learned by the employee during his or her employment would be used to aid the competitor. The agreement covered a period of 18 months after termination from employment. “Confidential information” was defined to include “information disclosed to me or known by me as a result of my employment by the company, not generally known to the trade or industry in which the company is engaged, about products, processes, technologies, machines, customers, clients, employees, services and strategies . . . .” The agreement also contained a non-solicitation forbidding the employee from soliciting business from, selling to or rendering service to any customer with whom the employee had contact during the final 12 months of employment with the biotech company. This provision also was to remain in effect for 18 months following termination from employment.

The Court of Appeal determined that both provisions were void and unenforceable under California Business and Professions Code section 16600, which prohibits contracts in restraint of trade. The Court further found that the use of the agreements constituted unfair competition in violation of Business and Professions Code section 17200. The Court doubted the continuing validity of any “trade secret exception” to 16600’s prohibition on non-compete agreements, but stated that regardless of whether any trade secret exception still exists, it would not apply in this case because the agreement’s definition of “confidential information” was much broader than “trade secret” information as defined under California law. By defining “confidential information” so broadly and precluding former employees from using such “confidential information,” the employees were effectively precluded from competing altogether.

Dowell is just the latest example of the difficulty of creating and using enforceable non-competition agreements in California. Consultation with an experienced HR professional or a California employment law attorney with expertise in this area is essential to drafting a non-competition agreement that can survive judicial scrutiny.

I-9 Audit Notices Coming

2009-11-30T15:25:00.000-08:00

The Department of Homeland Security Immigration and Customs Enforcement (ICE) has issued Notices of Inspection to 1,000 employers across the country associated with critical infrastructure. From initial reports, it appears that the notices are primarily directed at checking employers’ IRS I-9 Forms and supporting documentation to confirm compliance with employment eligibility verification laws. ICE stated that businesses served with audit notices were selected for inspection because of investigative leads and intelligence, and due to their connection to public safety and national security. "ICE is focused on finding and penalizing employers who believe they can unfairly get ahead by cultivating illegal workplaces," said Assistant Secretary John Morton. "We are increasing criminal and civil enforcement of immigration-related employment laws and imposing smart, tough employer sanctions to even the playing field for employers who play by the rules."

This is a second major wave of I-9 audits by ICE, which follows the issuance of notices to 654 employers in a single day earlier this year. Those audits produced the following data (see www.ice.gov):

• ICE agents reviewed more than 85,000 Form I-9s and identified more than 14,000 suspect documents - approximately 16 percent of the total number reviewed.

• To date, 61 NIFs have been issued, resulting in $2,310,255 in fines. In addition, 267 cases are currently being considered for Notices of Intent to Fine (NIFs).

• ICE closed 326 cases after businesses were found to be in compliance with employment laws or after businesses were served with a Warning Notice in expectation of future compliance.

Employers are advised to audit their employment verification policies to ensure compliance with I-9 Form requirements. Make sure your I-9 Forms are filled out correctly, and that the company maintains copies of completed I-9 Forms on file for at least three years, or for one year after employment ends, whichever is longer. If changes are made to an I-9 Form, change the original form and initial and date the changes. Do not fill out a new I-9 Form. Re-verify expiring work authorizations and do not allow the employee to work if documentation has expired. Employers that receive notices from the Department of Homeland Security should contact legal counsel as soon as possible to review the Notice of Inspection and prepare their responses.

HIPAA Regulations Regarding Breaches of Security

2009-11-30T15:23:00.000-08:00

The U.S. Department of Health & Human Services recently issued regulations expanding the obligations of employers, covered entities and business associates when a breach occurs that results in the release of Unsecured Protected Health Information (UPHI). The regulations are available at the Department of Health & Human Services website. Employers subject to HIPAA requirements are encouraged to update their policies and procedures to reflect the new definitions and rules regarding the notification of affected employees, the media and the U.S. Department of Health & Human Services.

The new UPHI regulations took effect September 23, 2009.

McDonald v. Antelope Valley Community College

2009-11-30T09:52:00.000-08:00

In McDonald v. Antelope Valley Community College District, 2008 Cal. LEXIS 12468 (October 27, 2008), the California Supreme Court held that the doctrine of “equitable tolling” may apply to the one year statute of limitations on a California Fair Employment and Housing Act (“FEHA”) claim when an employee voluntarily pursues an internal complaint procedure. The equitable tolling doctrine essentially stops the limitations period from running while a plaintiff pursues other available remedies so the plaintiff does not run out of time for filing suit.

The plaintiffs, John McDonald, Sylvia Brown, and Sallie Stryker were all employees of Antelope Valley Community College (“Antelope”) who filed suit alleging racial harassment, racial discrimination, and retaliation. The trial court entered judgment for the employer on the grounds that the employees’ lawsuit was untimely. The Court of Appeals reversed as to McDonald and Brown, holding that the FEHA limitations period was “tolled” while these employees pursued their internal complaints. The California Supreme Court granted review of the appellate court decision, but limited its review to a single issue presented in analyzing Sylvia Brown’s claims: whether equitable tolling applied to her voluntary pursuit of internal administrative procedures prior to filing a FEHA claim?

The facts of Brown’s case were not at issue. Ms. Brown worked in the Antelope library as an assistant technician, and had twice applied for a promotion to a database administrator position. The first time Brown applied, Antelope did not interview her. The second time she applied, Antelope conducted an interview but did not offer her the promotion. Brown alleged that Antelope refused to promote her to the database administrator position because of her race (African-American) and/or her gender in violation of the FEHA.

The last act of alleged discrimination against Brown occurred in January 2001 – when Antelope denied her second request for a promotion.

In October 2001, Brown filed an internal complaint of discrimination with her immediate supervisors, followed by second formal complaint submitted to the Antelope Chancellor’s Office in November 2001. The Chancellor’s Office informed Brown that her complaint would be forwarded to Antelope for investigation and response, and that Antelope would have until January 31, 2002 to resolve the complaint. The Chancellor’s Office further informed Brown that she would have appeal rights following Antelope’s resolution of the complaint, and that Brown was always free to file a complaint with the DFEH at any time.

Antelope ultimately investigated and concluded in January 2002 that Brown had not been the victim of race or gender discrimination. Brown pursued internal administrative appeals. In October 2002, with the appeal process still underway, Brown filed an administrative charge with the California Department of Fair Employment and Housing (“DFEH”). This was 1 ½ years after the last act of alleged discrimination. The DFEH issued a right to sue notice, and Brown filed her lawsuit. The trial court granted summary judgment on Brown’s claims, holding that the complaint was time-barred because Brown filed her DFEH complaint more than one-year after the last discriminatory act allegedly occurred. The Court of Appeals reversed, and the Supreme Court granted review.

The interesting question presented in McDonald is whether equitable tolling should apply while a plaintiff (such as Sylvia Brown) elects to pursue an entirely voluntary administrative process. In circumstances where exhaustion of administrative remedies is mandatory prior to filing a lawsuit, equitable tolling is automatic. In various contexts, however, courts have extended the equitable tolling doctrine to voluntary pursuit of alternative remedies. See Marcario v. County of Orange, 155 Cal.App.4th 397 (2007)(applying equitable tolling during the employee’s pursuit of internal labor grievance); Downs v. Department of Water & Power, 58 Cal.App.4th 1093 (1997)(equitable tolling applies during pursuit of title VII complaint with the EEOC); Nichols v. Canoga Industries, 83 Cal.App.3d 956 (1978)(equitable tolling applies during pursuit of breach of warranty action in federal court).

The Supreme Court in McDonald cited the Marcario and Downs cases with approval, and held that equitable tolling may apply to an employee’s voluntary pursuit of internal remedies prior to filing a FEHA claim. Relying on public policy considerations, the Court reasoned that equitable tolling encourages and promotes informal resolution, and often avoids unnecessary, premature litigation. The Court acknowledged that equitable tolling is a judicially created, non-statutory doctrine that is “designed to prevent unjust and technical forfeitures of the right to a trial on the merits when the purpose of the statute of limitations—timely notice to the defendant of the plaintiff's claims—has been satisfied.” Perhaps revealing its activist tendencies, the Court expressed its willingness to apply this non-statutory doctrine “broadly” whenever “an injured person has several legal remedies and, reasonably and in good faith, pursues one.’”

With these principles in mind, the McDonald court had little difficulty applying equitable tolling on the facts of Sylvia Brown’s case. Antelope had adequate notice of Brown’s complaint and the opportunity to investigate and preserve evidence. Brown acted reasonably and in good faith in electing to pursue her internal remedies before filing a complaint with the DFEH. In these circumstances, the Court held that equitable tolling is appropriate to avoid the otherwise technical forfeiture of Ms. Brown’s claim.

It is important to note, however, that the Supreme Court’s decision in McDonald does not mean equitable tolling will apply to every situation in which an employee pursues an internal complaint with the employer. Application of the doctrine requires a fact-specific inquiry, keeping in mind the dual goals of providing timely notice to the defendant of legal claims, yet avoiding unjust, technical forfeitures of claims where the plaintiff has acted in good faith in pursuing relief.

CHANGES IN THE LAW - 2009

2009-11-30T09:51:00.001-08:00

ADA Amendments: President Bush signed the ADA Amendments Act of 2008 (“ADAAA”) into law on September 25, 2008. The ADAAA expands the applicability of the Americans With Disabilities Act by negating the impact of a series of United States Supreme Court decisions that had been favorable to employers. For California employers, the effect of the ADAAA will be minimal because they are already required to comply with the Fair Employment and Housing Act, which is more favorable to employees than the ADAAA. Even so, employers with multi-state operations should consider how the ADAAA might apply to their out-of-state operations.

Among the notable provisions of the ADAAA:

• Courts must determine whether an impairment substantially limits a major life activity without regard to the effects of listed mitigating measures such as medication, prosthetics, and assistive technology (except for “ordinary eyeglasses or contact lenses”);

• The definition of “major life activity” is expanded to include life activities such as walking, standing, bending and lifting; learning, reading, and thinking; the operation of major bodily functions, such as immune system function, cell growth, circulatory system and reproductive function;

• Conditions that are episodic or in remission may fall within the definition of a “disability” if such conditions substantially limit a major life activity when symptomatic;

• Individuals are not required to establish that their impairment limits or is perceived to limit a major life activity to be “regarded as being disabled.” However, reasonable accommodations need not be provided to an individual who is only “regarded as” having an impairment.

AB 10 - Computer Exemption: Effective immediately, this law amends Labor Code § 515.5, which exempts some employees in the computer software industry from state overtime laws. The law as amended provides that employees who meet other requirements for the exemption and who are paid an annual salary of not less than $75,000 (paid a monthly amount of not less than $6,250) qualify for the exemption; the previous law provided that only employees paid $36 per hour were exempt. The compensation levels established in this law will be adjusted annually according to the Consumer Price Index. If your employees qualify for the exemption, be sure to evaluate the requirements carefully. Liability for applying the exemption improperly may include penalties, interest and attorneys’ fees.

AB 2075 - Releases of Wage Claims: Effective January 1, 2009, this law changes Labor Code § 206.5, which prohibits release of any wage claim unless payment has been made. The bill added subpart (b), defining “release” to include “requiring an employee, as a condition of being paid, to execute a statement of the hours he or she worked during a pay period which the employer knows to be false.” Employers who require employees to certify hours worked prior to receiving pay must confirm the reported hours are correct and allow employees the opportunity to correct their time if necessary.

SB 940 - Temporary Service Employees: Applicable to “temporary service workers,” this law modifies Labor Code § 201.3 regarding payroll practices. As revised, Section 201.3 defines a “temporary services employer” as “an employing unit that contracts with clients or customers to supply workers to perform services for the clients or customers” and performs all of the following: negotiates with clients and customers for matters such as the time and place where the services are to be provided, type of work, working conditions, and quality and price of the services; determines assignments of workers, even if workers may refuse specific assignments; retains the authority to assign a worker to another client or customer when the worker is determined unacceptable; assigns workers to perform services for clients or customers; sets the rate of pay of workers; pays workers from its own account; retains the right to hire and fire.

Certain businesses are excluded from the definition of temporary service employer, including a bona fide nonprofit organization that provides temporary service employees to its clients; a farm labor contractor, as defined in subdivision (b) of Labor Code §1682; or a garment manufacturing employer. These new rules apply to temporary service employers:

• Unless an exception applies, temporary workers must be paid weekly. Wages for the current week’s work are due on the payday of the following week;

• When an assignment is concluded, the final wages for the assignment may be paid on the regular payday in the following week;

• If a temporary employee is assigned to work “day to day” from a pool of workers, the employee’s wages are due at the end of each day, if (1) the employee reports to or assembles at the office of the temporary services employer or other location, (2) the employee is dispatched to a client’s worksite each day and returns to or reports to the office of the employer or other location upon finishing the assignment, (3) the employee’s work is not executive, administrative, or professional, as defined in IWC wage orders, and (4) the employee’s work is not clerical;

• Strike replacements must be paid at the end of each workday;

• Except as stated above, temporary services employees who are fired or who quit must be paid pursuant to Labor Code §§ 201 and 202;

• These rules do not apply if the employee is assigned to a customer for more than 90 days, unless the temporary agency pays the employee weekly in accordance with this new law.

SB 28 - Text messaging: Effective January 1, 2009, this law prohibits drivers from using any electronic communications device to write, send, or read any “text-based communication,” including text messages, e-mails, instant messages, etc. The fine is $20 for the first offense, and $50 thereafter. Your employment policies should likewise prohibit this conduct.

San Francisco Transportation Assistance Ordinance: Effective December 8, 2008, this law requires employers with 20 or more employees to provide commuter benefits to non-exempt employees who perform at least ten hours work in San Francisco per week. Three options satisfy the requirements: an election program that allows employees to purchase transportation with pre-tax dollars; an employer paid benefit program that provides a transit pass for public transit or reimbursement for the same amount in vanpool charges; or, provide free transportation by vanpool, bus or other vehicle.

San Francisco Healthcare Ordinance: The Ninth Circuit recently ruled that the San Francisco Health Care Security Ordinance was not preempted by federal law (i.e. ERISA) and, therefore, stands. The ordinance contains an employer health care spending requirement and an government health care program funded, partly, by the employer. Other jurisdictions may enact similar laws that are likely to be upheld absent action from the U.S. Supreme Court.

LAWS THAT WERE REJECTED

AB 437 - Ledbetter v. Goodyear: This bill would have limited the liability of employers for discriminatory pay decisions to decisions made within 180 days prior to the filing of a DFEH Complaint by the employee, thereby setting aside the Supreme Court’s decision in Ledbetter regarding the statute of limitations.

AB 2279 - Accommodation for Medical Marijuana Use: This bill would have overturned the Ross v. RagingWire Telecommunications, Inc. decision, where the Court held that there is no duty under the FEHA to accommodate medical marijuana use as a treatment for a disability.

AB 2874 - Fair Employment and Housing Commission Damages Cap: This bill would have eliminated the damages cap of $150,000 for violation of the California Civil Rights Act of 2005 when asserted in a FEHC administrative hearing.

SB 1853 - Independent Contractors: This bill would have imposed penalties on consultants who knowingly advise an employer to classify someone as an independent contractor to avoid employee status. It would not have applied to attorneys.

AB 3063 - Pre-employment Inquiries: This bill would have added limits on pre-employment inquiries with respect to criminal convictions.

AB 2918 - Restrictions on Obtaining Credit Reports: This bill would have prohibited employers from requiring employees or applicants to be subject to credit checks, except in narrow instances.

Would you explain the Economic Stimulus Bill COBRA Premium Subsidy?

2009-11-30T09:49:00.001-08:00

Employers who offer group health insurance are now required to pay 65% of the COBRA premium costs for employees who are involuntarily terminated between September 1, 2008 and December 31, 2009. The employer may then seek reimbursement from the federal government by taking a credit against the employer's income tax withholding and FICA taxes. The subsidy does not apply to employees making over $125,000.00 annually or for joint filers making $250,000.00. Employers are required to provide notice of the subsidy to eligible employees.The Secretary of Labor will issue model notices in the next 30 days. The subsidy is good for nine months of premiums. Contact your COBRA administrator now to get the updated COBRA notice forms for contact us for assistance.

DLSE Authorizes Reduction in Work Schedules and Salaries of Exempt Employees

2009-11-30T09:47:00.001-08:00

The Department of Labor Standards Enforcement (DLSE) recently issued an opinion letter authorizing employers to reduce the work schedules of exempt employees, with a corresponding reduction in salary. This new opinion reverses the DLSE’s earlier 2002 analysis, which had prohibited employers from reducing the work hours and salaries of exempt employees.

In the 2002 opinion letter, the DLSE indicated that an employee could not retain her exempt status if the company reduced her work schedule to four days per week. The DLSE found that federal regulations prohibited employers from reducing an exempt employee’s work hours and salary when economic conditions were poor. The DLSE relied upon a New York district court case, Dingwall v. Freidman Fisher Assoc., 3 F. Supp. 2d 215 (1998), in support of its position.

The new opinion letter, issued August 19, 2009, reverses the 2002 advice. This time, the DLSE looked to United States Department of Labor guidance and determined that the salary basis test does not prevent a reduction in the salary and work hours of an exempt employee, provided that the reduction in salary is not intended to avoid the salary basis requirement. Under the salary basis test, exempt employees must be paid a salary of no less than two times the state minimum wage for full time employment. In addition, the exempt employee’s salary must be a set sum that is not subject to change based on the number of hours worked by the employee.

In changing its view, the DLSE noted that the Dingwall case had been characterized as misguided. The DLSE looked to a 2005 federal appellate court decision, In re Wal-Mart Stores, Inc., 395 F. 3d 1177 (10th Cir. 2005), which held that federal regulations reference deductions from salary during the current pay period, not reductions in an employee’s future salary. The DLSE also emphasized that the employer that was the subject of the recent opinion letter was going through significant economic troubles due to the current recession, and that the employer intended to implement a regular five day per week work schedule (with restoration of full salaries) when economic conditions improve.

Although the letter is not binding on courts, it is persuasive authority. Employers that are considering layoffs may elect to reduce exempt employees’ work schedules with proportionate salary reductions. These reductions cannot vary from week to week according to the hours worked by the employee, however. Additionally, employers should be cautious about making any changes to the work schedules and salaries of exempt employees other than the change specifically approved by the DLSE. It remains to be seen how the opinion letter is applied in different factual circumstances.

Employee Obligations to Engage in the Interactive Process Under FEHA

2009-08-13T11:41:00.000-07:00

In Scotch v. The Art Institute of California, 173 Cal.App.4th 986 (2009) the court held that the plaintiff in a “failure to accommodate” lawsuit must identify a reasonable accommodation, and establish that the accommodation was available at the time the "interactive process" should have occurred. An employer is not liable under the FEHA simply because its interactive process was less than perfect. The accommodation identified by the employee in Scotch was unreasonable as it amounted to a guarantee of full-time employment – an accommodation the employer is not legally obligated to provide.

Carmine Scotch was employed as an instructor at The Art Institute of California (the “Institute”), a media arts school offering degrees to its students in fields such as animation, game arts and design, and interior design. The Institute’s accreditation guidelines, prepared by the Accrediting Council for Independent Colleges and Schools, require faculty members teaching upper division courses to hold certain graduate degrees and/or certifications. The Institute made limited exceptions to the guidelines, depending on a faculty member’s experience and other qualifications. In such instances, the Institute encouraged the instructor to purse an advanced degree, and offered to pay tuition expenses for doing so. Mr. Scotch did not hold an advanced degree, so the Institute encouraged him to obtain a master’s degree.

Mr. Scotch taught five classes per semester, the Institute’s minimum for “full-time” status, which included health and life insurance benefits. In 2004, Mr. Scotch asked to stop teaching morning classes, stating only that the medication he took for “personal health issues” made it difficult to drive in the morning. The Institute honored the request, and did not inquire further into Scotch’s “personal health issues.”

In 2006, Scotch received a poor performance review citing, among other causes, Scotch’s failure to pursue a master’s degree as encouraged by the Institute. In response, Scotch told his supervisor that he suffered from a “long-term illness” that affected his job performance and his ability to pursue the master’s degree. Scotch’s supervisor referred him to the Institute’s Human Resources Director. Scotch told the HR Director that he was HIV positive, and requested that the information be kept confidential.

The HR Director scheduled a meeting with a manager to discuss Scotch’s illness and performance. Mr. Scotch understood the purpose of this meeting was “to explain the way the . . . review came out and discuss being careful about taking care of my health and the master’s degree requirement and how that would impact, possibly, and if there’s a way I could sort of slow down all the requirements so I could get all this done.” During the meeting, Scotch also suggested that the poor performance review was in retaliation for previous absences relating to his illness. Scotch told his supervisors he did not have time to fulfill his job duties and get a master’s degree, adding that he could not be stressed out and had to have enough time to do his outside freelance work. The supervisor responded by suggesting a longer term master’s degree program, that would allow Scotch to work toward the degree over three years with a decreased workload. Ultimately, the parties did not implement any specific accommodations, and did not move beyond “evaluation” of options.

In mid-2006, student enrollment declined at the Institute. To retain the instructors with master’s degrees, the Institute assigned them to upper level courses. The Institute laid off seven faculty members because they had not enrolled in master’s degree programs, and reduced the hours of ten others. The Institute told Mr. Scotch that he would be scheduled to teach lower division courses until he achieved a master’s degree, and reduced his courseload to three courses, which caused him to be classified as part-time. Mr. Scotch objected to his reduced hours, and ultimately resigned.

Mr. Scotch sued the Institute, alleging unlawful discrimination and retaliation by the Institute on the basis of Scotch’s disability. Scotch also alleged that the Institute failed to engage in a good faith interactive process, and failed to identify and offer a reasonable accommodation as required by the FEHA. The trial court granted summary judgment in favor of the employer, and the appellate court agreed.

The court evaluated Mr. Scotch’s discrimination claim using a “burden shifting” analysis. Scotch was required to demonstrate a “prima facie” case of discrimination, meaning that he had to show that the Institute took actions that, if unexplained, would support the inference that it is more likely than not that the actions were based on discrimination. The employer must then produce evidence of a legitimate, non-discriminatory reason for its actions. If the employer produces this evidence, the employee must prove that the employer’s reason was pretextual in order to win the case.

Evaluating the case under this standard, the appellate court agreed with the trial court’s decision disposing of Scotch’s claims. The appellate court focused on the poor performance review, and Scotch’s lack of a master’s degree and failure to enroll in a master’s program as evidence of the Institute’s legitimate, non-discriminatory reason for reducing Scotch’s hours. Scotch could not demonstrate by evidence that the Institute’s reason for reducing his schedule was pretextual, or that there was a causal link between the reduction in his hours and his disclosure that he was HIV-positive. Thus, his discrimination claim failed.

The appeals court also rejected Mr. Scotch’s claim for failure to make reasonable accommodation. It found that Scotch’s proposed accommodation – giving him priority in assignment of lower division courses to insure that he maintained full-time status – was not reasonable and would not have accommodated his work restrictions (i.e. the need to avoid stress while he pursued a master’s degree). In contrast, the appeals court also noted that the Institute had offered a potential accommodation – suggesting that Mr. Scotch pursue an extended three-year master’s program that would have reduced his workload and limited the stress caused by his teaching schedule.

On Mr. Scotch’s claim for failure to engage in the interactive process, the court criticized the employer’s process, particularly the failure to hold more than one meeting to discuss Scotch’s need for accommodation. Nonetheless, Mr. Scotch did not satisfy his burden of producing adequate evidence for his claim to go to trial because the Institute offered a reasonable accommodation, and he did not identify another reasonable accommodation that was available at the time the interactive process should have occurred. The court acknowledged that the employee does not have the same access to information about possible accommodations as the employer does during the interactive process. Still, the employee must ultimately be able to identify a reasonable accommodation that would have been available if the parties had engaged in a meaningful interactive process. In Scotch’s case, the court found that further meetings to discuss accommodations would have been nonproductive. As the court put it: “[I]f this case were presented to a jury, what remedy could it provide? How was Scotch damaged by any failure by the Institute to engage in the interactive process in good faith?”

The Scotch case highlights the confusion that often surrounds the interactive process, particularly when several areas of concern develop simultaneously. In Scotch, the parties did not have a common understanding of the purpose for their meeting. Was it to address his undefined “health issues”? His performance evaluation? Both? During the meeting, the parties apparently did not discuss any limitations on Scotch’s ability to do his job, except for his statement that his overall work requirements needed to be “slowed down.” If Mr. Scotch proposed a reasonable accommodation, it was so ill-defined that the Institute never understood what Scotch was requesting.

The employer in Scotch was ultimately saved by the fact that Mr. Scotch could not identify – even during the lawsuit – a reasonable accommodation that would have effectively addressed his disabling stress condition. If a reasonable accommodation had existed, but was simply not identified through this interactive process, the appellate court would have likely reached a different conclusion.

For California employers, the lesson of Scotch is to take seriously the obligation to engage in an interactive process. Employers should meet with the employee as soon as possible under the circumstances, asking questions about the limitations posed by the disability, and gathering information from both the employee and his or her medical care providers. As part of this process, the employer should identify the essential functions of the employee’s job, focusing on the physical requirements of the position. Employers should carefully consider all potential accommodations, and document this decision-making process in the employee’s personnel file for future reference. If a reasonable accommodation exists, the accommodation should be offered to the employee. The touchstone of this process is good faith. Employers with questions about the interactive process or other disability laws matters should consult with experienced HR professionals or employment law counsel.

Ricci v. DeStefano: Title VII and Discriminatory Pre-Employment Tests

2009-08-13T11:38:00.000-07:00

The U.S. Supreme Court’s decision in Ricci v. DeStefano, 129 S. Ct. 2658 (2009), attempts to answer the difficult question of whether an employer may intentionally discriminate against members of one protected class, to avoid a disparate impact claim by individuals in another protected group. In Ricci, the Court held that an employer’s refusal to certify test results on a promotional exam simply because a disproportionate number of minority examinees were unsuccessful constituted prima facie discrimination against the successful examinees in violation of Title VII. The employer could not remedy the racial disparity in its test results by making a race-based decision, unless it had a “strong basis in evidence” that certifying the results would make the employer liable for “disparate impact” discrimination against the unsuccessful minority examinees.

The City of New Haven, Connecticut, in reviewing its test results for promotions within its fire department, determined that certain minority groups failed the test at a disproportionately high rate as compared to non-minorities. A group of minority firefighters threatened a lawsuit, alleging that the test created a disparate impact on minority examinees. After a series of hearings, New Haven decided not to certify the test results. As a result, the firefighters who had successfully passed the exam were denied a place on the city’s promotion list.

Ultimately, 18 of the successful firefighters (17 white and one Hispanic) joined together and filed their own lawsuit, alleging that failure to certify their exam results constituted a violation of the U.S. Constitution's Equal Protection Clause, as well as Title VII of the Civil Rights Act of 1964. New Haven argued that its decision not to certify the test was designed to prevent an unlawful “disparate impact” on a recognized group of minority applicants. The district court agreed, and granted summary judgment in favor of New Haven, holding that it is not unlawful to take race into account to avoid a disparate impact claim. The Court of Appeals affirmed the district court’s decision.

The U.S. Supreme Court reversed. Initially, the Court had little difficulty holding that the City’s refusal to certify the test results because of the racial composition of the successful test-takers was a prima facie violation of Title VII's anti-discrimination provisions. The more challenging question was whether, or under what circumstances, such discrimination may be justified by legitimate business reasons? The lower courts had accepted New Haven’s argument that it need only show a “good faith belief” that the test results had an unlawful disparate impact on minorities. Instead, the U.S. Supreme Court held that employers are entitled to remedy a test’s disparate impact on minority examinees only when the employer has a “strong basis in evidence” that it will be liable for disparate impact.

Unfortunately, Ricci does not provide employers with much guidance as to when a “strong basis in evidence” exists. Based on Ricci, it seems clear that a statistical disparity alone is not enough. At a minimum, the employer must have evidence that its test was not job-related, or that less discriminatory testing options exist. Otherwise, the employer may be denying job benefits to a group of qualified examinees out of nothing more than a self-interested desire to avoid the time and expense of a threatened disparate impact lawsuit.

Although Ricci arose in the public sector, its reasoning applies to private employers as well. Any employer that uses tests to make hiring or promotional decisions should seek advice from experienced employment law counsel or HR professionals on how Ricci impacts their personnel policies. At a minimum, such tests should be reviewed to ensure that they are job related for the position in question and consistent with business necessity. Given the uncertainty in this area, employers should also consider whether alternative hiring and/or promotional practices are available that create less potential for disparate impact claims.

Employers should also seek guidance as to the impact of Ricci on existing affirmative action plans. Ricci indicates that Title VII permits some affirmative action plans: “[We do not] question an employer’s affirmative efforts to ensure that all groups have a fair opportunity to apply for promotions and to participate in the process by which promotions will be made.” Still, the contours of the employer’s right to make affirmative efforts to ensure a “fair opportunity” are murky, at best. Employers are cautioned to tread carefully in this area.

Boucher v. Shaw: Individual Manager Liability for Wage and Hour Violations

2009-08-13T11:36:00.000-07:00

In Boucher v. Shaw, 2009 U.S. App. LEXIS 16555 (9th Cir. 2009), the Ninth Circuit Court of Appeals held that former employees of the bankrupt Castaways Hotel could pursue federal wage and hour claims filed personally against the CEO, CFO and other officers of the corporation.

The Castaways Hotel, Casino and Bowling Center filed for Chapter 7 liquidation bankruptcy in 2004. The plaintiffs represent a class of employees terminated in connection with the bankruptcy. Their complaint alleged claims for unpaid wages, vacation and holiday pay under the federal Fair Labor Standards Act (“FLSA”). Among others, the lawsuit named the CEO, Dan Shaw, who owned 70% of the bankrupt corporation, as well as the CFO, Michael Villamor, who owned a 30% interest. The district court granted a motion to dismiss filed by the defendants on the grounds that they could not be held personally liable for the corporation’s alleged failure to pay wages as required by the FLSA.

The plaintiffs appealed, and the Ninth Circuit reversed. The FLSA defines the term “employer” as “any person acting directly or indirectly in the interest of an employer in relation to an employee.” Title 29 U.S.C. § 203(d). The Boucher court noted that courts are required to examine the “economic reality” of the relationship. In appropriate cases, an individual who exercises “control over the nature and structure of the employment relationship,” or “economic control” over the relationship, may be considered an “employer” for FLSA purposes. Because the plaintiffs in Boucher alleged that the CEO, CFO and others had “control and custody of the plaintiff class,” ownership interests in the corporation, and responsibility for cash management and employment matters, the court determined that a jury question existed as to whether these individuals were responsible for the alleged wage and hour violations.

Cases like Boucher should remind managers, officers and owners that they are not always protected from liability for wage and hour claims. As the number of bankrupt employers rises, lawsuits against individual owners/managers with the potential means to pay corporate debts should only increase. Although the California Supreme Court has held that corporate officers are not liable for state law wage and hour claims, Reynolds v. Bement, 36 Cal. 4th 1075 (2005), the federal standards differ and apply with equal force to most California employers. It should also be noted that courts have found other ways to hold owners liable for state law wage and hour violations, either on the theory of “joint employment” or relying on provisions of the Labor Code that permit recovery against a person who “causes” a violation. Ontiveros v. Zamora, 2009 U.S. Dist. LEXIS 13073 (E.D. Cal. 2009). In other words, owners and managers should not assume that a corporate bankruptcy will automatically allow officers and other managers to walk away from wage and hour liability – particularly those officers or managers with substantial ownership interests in the corporation.

California Supreme Court Offers Guidance on Workplace Surveillance

2009-08-13T11:29:00.000-07:00

The California Supreme Court’s decision in Hernandez v. Hillsides Children Center, Inc., 2009 Cal.LEXIS 5565 (2009) is an exhaustive study in California privacy law and the permissible scope of workplace surveillance. Ultimately, the Court’s analysis in Hernandez makes it clear that California employers have considerable flexibility to adopt reasonable workplace monitoring policies to accomplish legitimate business objectives.

Hillsides Children Center is a non-profit residential facility for abused children. The plaintiffs were clerical employees at Hillsides, whose job duties involved the use of certain office computers. When Hillsides discovered pornography on these computers, it conducted a workplace investigation to discover who was responsible for downloading the offensive materials. As part of the investigation, Hillsides installed a hidden camera to monitor the plaintiffs’ work station. Hillsides did not use the camera during the workday (since it had determined that the pornography was downloaded after hours), and it never recorded the plaintiffs’ activities.

The plaintiffs sued Hillsides alleging invasion of privacy. The trial court granted summary judgment for the employer. The plaintiffs appealed, and the appellate court reversed. Specifically, the appellate court held a jury question existed as to whether the installation of hidden cameras was an invasion of privacy; i.e., whether the employer’s conduct amounted to an unjustified and offensive intrusion into the plaintiffs’ “zone of privacy” sufficient to impose liability.

The California Supreme Court reversed the appellate court decision. Although the Court agreed that the plaintiffs had suffered an intrusion into their zone of privacy, it concluded that no reasonable jury could find that this minimal intrusion was either unjustified or offensive. The Hillsides opinion offers a thorough review of California privacy laws, including the concept of a fact-specific “sliding scale” of privacy rights, in which the permissible level of intrusion varies with the individual’s reasonable expectation of privacy under all the circumstances. In the context of the workplace, the Court noted that the plaintiffs’ expectation of privacy was increased because they shared an enclosed office with a locking door - as opposed to a “cubicle” environment in which employees expect to be overheard and observed. The Court also agreed with the plaintiffs that the method of workplace monitoring – hidden video cameras – was particularly invasive and subject to heightened scrutiny. Another bad fact for Hillsides: the total lack of notice that employees might be videotaped at work. The company’s personnel manual stated that computer activities might be monitored, but was silent as to the possibilities of video surveillance. After going through the facts, the Court had little difficulty finding that the employer had intruded into the plaintiffs’ “zone of privacy” by installing the hidden video cameras.

It is not enough, however, to establish an intrusion into the plaintiffs’ privacy. A tort claim for invasion of privacy also requires evidence that the intrusion was “highly offensive to a reasonable person” or an “egregious breach of social norms.” In making this determination, courts consider the place, time, and scope of the intrusion. In Hillsides, the surveillance was limited in place and scope to a single camera pointed at a single computer. It was limited in time to after-hours surveillance – specifically targeted to identify the person who had downloaded pornography. The Court also emphasized the legitimate purpose of the surveillance (protecting the abused children who resided at the facility), and the company’s safeguards in place to limit access to the video camera as well as the video recorded by it. The Court rejected the plaintiffs’ argument that Hillsides must prove that no less intrusive means existed to investigate the pornography incident. As a matter of law, the Court held that the employer’s conduct was not sufficiently offensive or egregious to support the plaintiffs’ claims.

The lesson of Hillsides is twofold. First, employers should review their personnel policies to ensure that employees receive adequate notice that video and other types of surveillance may occur in the workplace. Second, employers should take care to limit the place, time and scope of surveillance activities to the extent possible, keeping in mind that certain work environments (e.g., offices with doors) create a heightened expectation of privacy for employees.

Q&A re Employee Personal Bankruptcy

2009-04-17T10:55:00.000-07:00

Q: I’m the owner of a business and I just learned that one of my key employees who has access to employee social security numbers and business funds has filed for personal bankruptcy. Obviously, when the word gets around I am going to look like a fool for employing this person and if they should steal another employees’ identity or wages (they are in charge of payroll) I am concerned I will be liable for negligence. I would like to terminate this employee immediately. A friend of mine says I can’t, is that true?

A: Your friend is correct. First, not everyone who files for bankruptcy is a deadbeat. Many people have very specific reasons for doing so like overwhelming medical bills. The U.S. Bankruptcy Code contains a non-discrimination provision that bars employers from discriminating against an employee who has been a debtor or bankrupt, has been insolvent before the commencement of the bankruptcy or has not paid a debt that can be erased in bankruptcy. The purpose of bankruptcy is to give the debtor a fresh start so terminating them from their employment for doing so goes against the purpose of the law. There are no comparable provisions under California law, but the U.S. Bankruptcy Code applies to all private employers in this state. You will not be liable for negligence simply because you complied with federal law and did not fire a bankrupt employee. Keep in mind, however, that this law only prohibits discrimination based "solely" on the bankruptcy or insolvency. You can still discipline or terminate an employee for other legitimate reasons (e.g., poor performance) after you discover the prior bankruptcy. The key is to identify and document the other non-discriminatory factors that played a role in your decision.

Meal and Rest Period Q&A

2009-03-05T12:15:00.000-08:00

Q: I know the California Court of Appeal recently ruled on an employer's duty to enforce and police its meal and rest period policies. What exactly is the state of California with respect to meal and rest periods for non-exempt employees?

A: Brinker Restaurant Corporation v. Superior Court of San Diego County, the Fourth Appellate District, published July 22, 2008, holds that while employers cannot impede, discourage or dissuade non-exempt employees from taking their 10 minute rest breaks for every 4 hours worked and 30 minute unpaid meal periods for every 5 hours worked, the employer (as was the case before this decision) does not need to ENSURE that the breaks and meal periods are taken. The employer need only "make available" a rest period and meal period within the legal time limits. The employer should have a published policy allowing breaks and meal periods and cannot coerce or actively dissuade employees to not take the same. Employers should continue to actively document on timecards or time clocks that the employee took its breaks and meal periods within the legal time limits.

The DOL Issues New FMLA Regulations for 2009

2008-12-30T09:24:00.000-08:00

On November 17, 2008, the U.S. Department of Labor issued its final regulations interpreting the Family and Medical Leave Act (“FMLA”). The full text of the new regulations is available online at the following website: http://www.dol.gov/federalregister/PdfDisplay.aspx?DocId=21763. These regulations will become effective for all covered employers on January 16, 2009.

The new regulations provide greater clarity to existing regulations. They also implement FMLA leave for family members of military personnel as required by the recently enacted National Defense Authorization Act. Unfortunately, the new regulations do not offer helpful guidance with regard to intermittent leave, a persistent issue for employers. The regulations may also create uncertainty for California employers, since the provisions of the California Family Rights Act (“CFRA”) are not necessarily changed by the new FMLA rules. California’s CFRA regulations provide that, unless inconsistent with other laws, FMLA regulations are incorporated by reference to interpret the CFRA. 2 Cal. Code of Regs. § 7297.10. Thus, at least where the new FMLA provides greater protections for employees, it appears the FMLA regulations will supersede any corresponding but less favorable state regulations that have been used to interpret the CFRA.

Covered employers are encouraged to act quickly to update their FMLA/CFRA policies and practices. The following is a summary of some of the more important changes. Employers with questions about the new FMLA requirements should also consult employment law counsel or experienced Human Resources professionals for guidance.

Joint Employer Coverage – This section sets forth the circumstances under which outside companies that contract with employers to provide administrative services such as employee benefits or payroll will be considered “joint employers” of their client’s employees. The new FMLA regulations clarify that an outside company is considered a “joint employer” only if the outside company has the right to hire, fire, assign, direct or control the employees, OR benefit from the work performed by the client’s employees. 29 C.F.R. §825.106.¹

Eligible Employee – To be eligible for FMLA leave, an employee must be employed for 12 months and must work 1250 hours during the 12 months prior to the start of the leave requested. Under the current rules, the employee does not have to have worked 12 consecutive months with the employer. All prior employment with the employer is counted toward the 12-month eligibility requirement. Except in certain circumstances, the new regulation provides that periods of employment preceding a break in employment of seven years or more are not counted in determining whether an employee has satisfied the 12-month eligibility requirement. 29 C.F.R. §825.110.

In addition, employees who take military leave must be credited for the hours they would have worked but for fulfilling their military service obligations. This “credit” applies to both the 12-month and 1250-hour eligibility requirements.

Serious Health Condition – Under the FMLA, an employee may take leave due to the employee’s own serious health condition, or the serious health condition of a son, daughter, spouse, or parent. The new rules largely retain the definition of “serious health condition.” However, under the current rules, a condition that involves a period of incapacity of more than three days is a “serious health condition” if it also involves either: (1) two or more treatments by a healthcare provider; or (2) one treatment by a healthcare provider within seven (7) days after the first date of incapacity followed by a regime of continuing treatment under the supervision of a healthcare provider. 29 C.F.R. §825.115.

Under the “two or more treatments” part of the definition, the new FMLA rules state that both treatments by the healthcare provider must occur within 30 days of the first day of incapacity, except in limited circumstances. The health care provider, not the employee, must decide whether a second visit within the 30-day period is necessary.

A condition may also be a “serious health condition” if it is a “chronic” condition that requires “periodic” visits to a healthcare provider. The new regulations specify that “periodic” means at least two visits per year to a health care provider.

It is important to remember that rules of this type – narrowing the types of medical conditions that are covered by the FMLA – likely will not apply to the interpretation of the employer’s obligations under the CFRA.

Eligibility/Coverage

Care for a Family Member – The new FMLA regulations provide that an employee does not have to be the only person able to care for a family member with a serious health condition or a covered servicemember. This regulation is consistent with the manner in which the DOL has interpreted the existing regulations. 29 C.F.R. §825.124.

Calculating Used Leave – The new FMLA regulations make several changes to the calculation of FMLA leave entitlements. In general, the new regulations require the employer to divide the number of hours the employee was absent during the week by the number of hours the employee would have worked in the same week, thus providing the leave used by the employee in that workweek. For employees with variable workweek schedules, the new regulation requires the employer to average the employee’s hours over the 12 months preceding the leave, not the 12 weeks preceding the leave (the existing standard). With respect to holidays, the new regulation provides that, if an employee takes leave for an entire workweek that includes a holiday, the employee is charged for the full week of leave, including the holiday. If the employee takes leave of less than a full week, the holiday is not counted against the employee’s FMLA leave unless the employee would otherwise be scheduled to work on the holiday. 29 C.F.R. §825.200.

Overtime – The new FMLA regulation provides that when an employee misses overtime work due to FMLA leave, the overtime may be counted against the employee’s FMLA leave if the employee would be required to work the overtime but for the employee’s FMLA leave. 29 C.F.R. §825.205(c).

Intermittent Leave for Medical Treatment – The new FMLA regulations require an employee who takes intermittent leave because of planned medical treatment to make a “reasonable effort” to schedule the treatment so as to not disrupt unduly the employer’s operations. The existing rule required the employee to “attempt” to do so. The Department of Labor notes that the employee must try to arrange medical treatment so as to accommodate the employer’s needs, but states that the requirement is subject to various exceptions. 29 C.F.R. §825.203.

Substitution of Paid Leave – The new FMLA regulations require employees to substitute paid leave such as vacation for FMLA leave only when the employee is otherwise eligible for paid leave under the employer’s policy. So, if an employer requires that vacation time be scheduled in advance, the employer is not required to allow the employee to substitute vacation time for an unscheduled FMLA leave. 29 C.F.R. §825.207.

FMLA and Bonuses/Raises – Under the new FMLA regulations, employers may condition bonuses or pay increases upon attainment of specified goals, and may deny these benefits to employees who fail to meet these goals due to FMLA leave, provided that the employer does not treat employees who take similar forms of leave more favorable than those who take FMLA leave. 29 C.F.R. §825.215(c)(2).

Waiver/Settlements – The new rules clarify that an employee may waive claims based upon past violations of the FMLA without the approval of a court or the Department of Labor, but employees may not prospectively waive their rights under the FMLA. 29 C.F.R. §825.20220(d).

Light Duty Assignments – Under existing rules, employers are permitted to charge time spent performing light duty assignments against FMLA leave. The new regulation eliminates this practice. Instead, the employee’s right to job restoration is “tolled” during the light duty assignment. If the light duty assignment ends before the employee is able to resume his or her regular job duties, the employee may utilize FMLA leave. This change is important because it may result in the employer having to provide job restoration beyond the 12 weeks permitted under the FMLA in certain instances. If an employee takes four weeks of FMLA leave, works a light duty assignment for ten weeks, and then takes eight more weeks of FMLA leave, the employer would be required to return the employee to his or her job after the employee exhausted FMLA leave; in this case, after 22 weeks. 29 C.F.R. §825.220(d).

Rights and Obligations of Employer and Employee

Employer Notice Requirements – The new regulations consolidate the existing employer notice requirements into one section, with significant revisions. The notice provisions are divided into four requirements: general notice, eligibility notice, rights and responsibilities notice, and designation notice. 29 C.F.R. §825.300.

General notice: The new regulations require employers to post a notice explaining FMLA leave rights. The Department of Labor has prepared a new poster reflecting the new rules. It is available for download at: http://www.dol.gov/esa/whd/regs/compliance/posters/fmla.htm. The new poster must be “posted prominently where it can be readily seen by employees and applicants for employment.” If employees are not literate in English, the notice must be posted in the language in which the employees are literate. Electronic posting is allowed if all employees and applicants have access to the information. If the employer has a handbook or other written employee guidance, the general notice must be included therein. If the employer does not have a handbook or other written employee guidance, general notice must be provided to each employee at the time of hiring.

Eligibility notice: Upon receiving notice that an employee needs leave that may qualify as FMLA leave, the employer must provide eligibility notice to the employee. If the employee is not eligible, the notice must state at least one reason why. The employer must provide the eligibility notice within five business days after receiving notice of the employee’s need for leave, except in certain circumstances. If an employee later needs to take additional leave for the same qualifying reason, the employee remains eligible for leave for that reason, even if he or she would no longer be eligible to take leave for a different reason.

Rights and responsibilities notice: The new regulation requires employers to provide a rights and responsibilities notice each time the employer provides an eligibility notice. This notice must advise the employee that the leave may be counted against available FMLA leave, and of the 12-month period used to calculate leave; of any certification requirements and the consequences of failing to comply; of the employee’s right to substitute paid leave, whether substitution is required, and the employee’s right to take unpaid leave if paid leave is unavailable; of any requirement to make premium payments for health coverage; whether the employee is a key employee and the effect of the designation on the employee’s restoration rights; the employee’s right to maintain his or her benefits during FMLA leave, and to be restored to the same or an equivalent position upon returning from leave; and, the employee’s potential liability for health premiums paid by the employer if the employee fails to return to work after an unpaid FMLA leave.

The form for the notice of eligibility and rights and responsibilities is available for download at: http://www.dol.gov/esa/whd/fmla/finalrule/WH381.pdf.

Designation notice: Within five business days of receiving sufficient information to determine whether a leave qualifies as FMLA leave, the employer must notify the employee whether the leave will be designated FMLA leave. One notice is required for each FMLA qualified reason per 12-month period, irrespective of whether the leave is taken continuously or intermittently. The notice must advise the employee if paid leave will be substituted for unpaid FMLA leave. If a fitness for duty certification will be required before returning from leave, the notice must advise the employee of the same. If the amount of leave is known, the designation notice must inform the employee how much leave will be counted against the employee’s 12 weeks of FMLA leave. If the amount of leave is not known, upon request the employer must advise the employee how much leave the employee has used, but not more often than once during each 30-day period for which leave is taken. Eligibility and designation notices may be provided at the same time if the employer is in a position to do so.

The designation notice is available for download at: http://www.dol.gov/esa/whd/forms/WH-382.pdf.

Failure to Provide Notice – If the employer fails to provide eligibility and/or designation notice, the new regulations follow the Supreme Court’s holding in Ragsdale v. Wolverine World Wide, Inc., 535 U.S. 81 (2002). If an employee can demonstrate individualized harm because of the failure to provide such notice, the employee can recover damages. 29 C.F.R. §825.301(e).

Employee Notice Requirements – Under existing regulations, if the need for leave is foreseeable, the employee is required to provide notice of the need for leave 30 days in advance, or “as soon as practicable.” The new regulations allow the employer to require the employee to explain why it was not practicable to provide proper notice in cases where the employee provides less than 30 days notice of foreseeable leave. The employee is obligated to respond to the employer’s inquiry. The new regulations also clarify that “as soon as practicable” means either the same business day or the business day after the employee learns of the need for leave. However, employers must consider all the circumstances when evaluating whether it was practicable for the employee to provide notice earlier than when notice was given. Employers may require employees to comply with the employer’s usual notice and procedural requirements for requesting leave, and may delay or deny FMLA leave when employees fail to follow employer policies, so long as the policies do not require the employee to provide notice earlier than required under the new regulations. There is, however, an exception for “unusual circumstances.” Finally, when an employee seeks leave for an FMLA qualifying reason for which the employer previously allowed FMLA leave, the employee must reference the qualifying reason for the need for leave. 29 C.F.R. §825.302.

Medical Certification – If an employer requires that an employee submit medical certification in regard to a FMLA leave, the new regulations generally require that the request be made within five days after the employee gives notice of the leave. Employers may request certification at a later date “if the employer has reason to question the appropriateness of the leave or its duration.” The employee must return certification within 15 days after the employer’s request, unless it is not practicable to do so, or in cases where the employer extends the time for compliance. The new regulations require the employee to provide a certification that is complete and sufficient. Complete means the certification form is filled in entirely. Sufficient means the information is not vague or ambiguous. If the certification does not meet these standards, the employer must inform the employee in writing of the need for additional information. The employee must be allowed 7 days to provide the information. The employer must allow additional time if it is not practicable for the employee to correct the deficiency in 7 days. If the deficiency is not resolved within the time permitted, the employer may deny the FMLA leave request. The new regulations provide that where an employee seeks FMLA leave for his or her own serious health condition, the employer may include a statement of the essential functions of the employee’s job with its request for medical certification. If the employer does so, the certification may be insufficient if the healthcare provider does not address the essential functions that the employee is unable to perform. Finally, the medical certification form has been revised. The new form requests information including the health care provider’s area of specialization, medical facts regarding the employee’s condition and diagnosis, and certification that intermittent leave is medically necessary, if applicable. 29 C.F.R. §§825.305-307.

Authentication and Clarification of Certification – If the employee provides a complete and sufficient medical certification, the employer may not request additional information from the healthcare provider. The new regulation does allow the employer to contact the healthcare provider for the purposes of authenticating and clarifying the certification. The new regulations allow a human resources professional, leave administrator, or management official to make such contact, so long as the individual is not the employee’s direct supervisor. Authentication means confirming that the information on the certification was prepared or authorized by the healthcare provider. Clarification means inquiring about handwriting or inquiring to understand a response. The regulations require the employer to obtain a release compliant with HIPAA requirements before obtaining personally identifiable health information from a healthcare provider. The employer may deny FMLA leave if the employee fails to provide such a release or otherwise clarify the certification. 29 C.F.R. §825.307.

Recertification – The new regulations permit employers to request recertification as frequently as every 30 days. However, the employer must wait until the original specified duration expires before requesting recertification. If the original certification specifies a period that exceeds six months, the employer may request recertification every six months in connection with an absence. The employer may request recertification more frequently if the employee requests an extension of leave, circumstances change, or the employer receives information causing doubt about the validity of the original certification. Employers are allowed to provide a healthcare provider a record of the employee’s absences, and ask the healthcare provider if the employee’s serious health condition is consistent with the pattern of absences. 29 C.F.R. §825.308.

Fitness for Duty Certification – Employers may require employees to submit to a fitness for duty certification before returning to work following a FMLA leave. Employers may also provide the employee with a list of essential job functions, and require that the fitness for duty certification address the employee’s ability to perform the essential functions. 29 C.F.R. §825.312.

Military Family Leave

Serious Injury or Illness – As we explained in a previous article on this website, the National Defense Authorization Act (“NDAA”) creates two separate types of military family leave. The first type of leave allows eligible employees to take up to 26 weeks of FMLA leave in a 12 month period to care for a servicemember who suffers a “serious injury or illness.” The new regulations clarify that type of leave applies if the servicemember (regular Armed Forces or National Guard) suffers a serious injury or illness in the line of active military service and is either: (1) undergoing medical treatment, recuperation or therapy; (2) in outpatient status; or (3) on the temporary disability retirement list. The new regulations specifically state that Military Family Leave is not available to care for a former member of the Armed Forces, or a member on the permanent disability retired list. The term “serious injury or illness” is defined as a condition incurred in the line of active duty that may render the servicemember medically unfit to perform military duties.

Eligible Employees – Military Family Leave due to care for a “serious injury or illness” is available to a spouse, son, daughter, parent or “next of kin” of a covered servicemember. If a covered servicemember designates a relative as his/her “next of kin,” only that person qualifies as next of kin for FMLA purposes. Otherwise, the “next of kin” is defined as the nearest blood relative other than the spouse, son, daughter or parent. If there are multiple family members with the same level of relationship, all of those family members are eligible to act as “next of kin” under the FMLA.

Calculation of Leave – The 26 weeks of leave available under the FMLA to care for a seriously injured or Ill military member must be taken within 12 months of the first day of leave. If an employee takes 26 weeks of Military Family Leave in one year, he or she may not take an additional 26 weeks of leave the following year, unless the leave is to care for a different covered person, or to care for the same covered person following a new serious injury or illness.

Certification - The new regulations permit the employer to request a certification completed by the military member’s health care provider to support the need for Military Family Leave. The employer may require the health care provider to certify whether the servicemember was injured in active duty, provide the approximate date and probable duration of the injury, and a statement supporting the need for family care. The employer may also require the employee requesting leave to certify his or her relationship to the injured servicemember, the type of care that will be provided, and the estimated duration of the Military Family Leave. An optional certification form is available for download at: http://www.dol.gov/esa/whd/forms/WH-385.pdf.

Qualifying Exigencies – The second type of Military Family Leave authorized by the NDAA applies to “qualifying exigencies.” The new FMLA regulations clarify that this type of leave is available only to a spouse, parent, son or daughter of a member of the National Guard and Reserves on active duty or called to active duty status by the federal government in support of a “contingency operation.” The family of a member of the Regular Armed Forces is not eligible for “qualifying exigency” leave. Eligible employees may use FMLA for any of the following “qualifying exigencies” as defined in the new FMLA regulations (29 C.F.R. §815.126(a)):

Short Notice Deployment – Taking care of issues that arise when a covered servicemember is notified of a call to active duty 7 or fewer calendar days prior to the date of deployment. FMLA leave for this purpose is limited to a maximum of 7 days.

Military Events – Attendance at official ceremonies or programs, family support or assistance programs, and informational briefings.

Childcare and School Activities – Making childcare arrangements, providing childcare on an urgent basis, enrollment or transfer to new school or childcare facility; attendance at meetings with teachers or other school activities.

Financial/Legal Arrangements – Addressing financial/legal matters in the military member’s absence, such as transferring bank accounts, preparing wills/trusts, acting as the military member’s legal representative in legal proceedings or before government agencies (e.g., applications for military benefits).

Counseling – Attending counseling for issues that arise from the military member’s active military duty. This qualifying exigency includes counseling for the covered employee, the military member, or a child of the military member.

Rest and Recuperation – Spending time with a covered military member during leave from deployment. FMLA leave for this purpose is limited to a maximum of 5 days.

Post-Deployment Activities – Attendance at events such as arrival ceremonies and reintegration briefings that occur no more than 90 days following the termination of active duty status. This leave entitlement includes the right to take FMLA leave to address issues that arise from the death of a covered military member, such as funeral arrangements.

Additional Activities – The regulations include a “catch all” provision that permits the use of FMLA leave to address “other” issues related to the servicemember’s military duty, as mutually agreed by the employer and eligible employee.

Certification – The employer may require the employee to provide a copy of the active duty orders or other documentation demonstrating the servicemember’s call to active duty. The employer may also require the employee to submit a certification that includes the anticipated date and duration of the Military Family Leave. A “qualifying exigency” certification form is available for download at: http://www.dol.gov/esa/whd/forms/WH-384.pdf.

Practical Considerations

Compliance with the new FMLA regulations will require employers to act quickly to update personnel policies, employee handbooks, and administrative practices. Most urgently, employers and Human Resources professionals must review and implement the timing and content requirements for the general, eligibility, rights and responsibilities, and designation notices required by the new FMLA regulations.

For California employers, the interaction of the FMLA, the CFRA, and other state leave laws creates additional challenges and unanswered questions. For example, although an employee’s right to family and medical leave under the FMLA and the CFRA typically runs concurrently, it is still unclear whether this applies to Military Family Leave. Consequently, an employee may be eligible for an additional 12 weeks of unpaid leave time under the CFRA during an established 12-month period even though the employee has already exhausted a full 12 weeks of unpaid leave for qualified exigency and/or military caregiver leave under the FMLA.

Similarly, it is unclear whether Military Family Leave under the FMLA runs concurrently with the military spouse leave available under California law (Military & Veterans Code §395.10), which requires employers to provide up to 10 days of leave to the spouse of an individual in the Armed Forces, National Guard or Reserves during the military member’s leave from military deployment.

We are awaiting clarification of these and other issues, either from the California legislature or in regulatory action or interpretive guidance from the Fair Employment and Housing Commission (“FEHC”). In the interim, employers analyzing the interplay of these various federal and state legal requirements are advised to consult employment law counsel.

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1 All references are to the Department of Labor, Wage and Hour Division, The Family and Medical Leave Act of 1993; Final Rule, 29 C.F.R. §825 et seq.

The California Supreme Court Provides Guidance on Enforceability of Non-Competition Agreements

2008-08-14T12:50:00.000-07:00

On August 7th, the California Supreme Court held that all non-competition agreements are invalid in California under Business and Professions Code §16600, unless the agreement falls within an express statutory exception. Edwards v. Arthur Andersen LLP, 2008 Cal. LEXIS 9618 (Cal. Aug. 7, 2008) (“Edwards”). Edwards also reverses existing precedent and clarifies that a contractual release of “any and all” claims is valid, but does not encompass statutory claims not subject to waiver.

Factual Background

In January 1997, Arthur Andersen hired Raymond Edwards as a tax manager in its Los Angeles office. When Arthur Andersen hired Edwards, the company required him to sign a non-competition agreement. Among other provisions, the agreement prohibited Edwards from working on accounts for certain Arthur Andersen clients during his employment, and for a period of time following his termination.

In 2002, the company sold Edwards’ office to HSBC USA, a New York based banking corporation. As a condition of accepting employment with HSBC, Edwards and the other Arthur Andersen employees were required to execute a “Termination of Non-compete Agreement” (“Termination Agreement”). Under the terms of the Termination Agreement, Arthur Andersen agreed to relieve its former employees from their existing non-competition agreements, and the employees agreed to release Arthur Andersen from “any and all” claims, including those “that in any way arise from or out of, are based upon or relate to Employee’s employment by, association with or compensation from” Arthur Andersen. Edwards refused to sign the Termination Agreement. As a result, Arthur Andersen fired him, and HSBC withdrew its offer of employment.

In 2002, Edwards sued Arthur Andersen, alleging that the company’s non-competition agreement violated Business and Professions Code §16600 because it restrained him from practicing his profession. Edwards also alleged that the Termination Agreement was unlawful because it required him to release “any and all” claims, which would include claims such as employee claims for indemnification under Labor Code §§2802 and 2804, which are not subject to waiver.

Legal Analysis

On the non-competition issue, Arthur Andersen argued that Business and Professions Code §16600’s language forbids only non-competition agreements that completely prohibit an employee from engaging in his or her profession. The trial court agreed, and held that Arthur Andersen’s non-competition agreement was narrowly tailored and did not prevent Edwards from working in his chosen field, accounting. For this reason, the trial court held that the non-competition agreement did not violate §16600. The court based its ruling, in part, on prior federal cases out of the Ninth Circuit that found non-competition agreements valid so long as they are “narrowly tailored.” See Campbell v. Trustees of Leland Stanford Jr. Univ., 817 F.2d 499 (9th Cir. 1987).

Edwards appealed the trial court’s ruling and the appellate court reversed, holding that the plain language of §16600 prohibits all non-competition agreements unless the agreement is covered by a specific statutory exemption. Ultimately, the California Supreme Court granted review and affirmed the appellate court’s holding.

Specifically, the Supreme Court rejected the prior federal court decisions and held that the only exceptions to the §16600 prohibition of non-competition agreements are those expressly found in California statutes. Applying this rule, the Supreme Court found that “[Edward’s non-competition agreement] restricted Edwards from performing work for Andersen’s Los Angeles clients and therefore restricted his ability to practice his accounting profession. The non-competition agreement that Edwards was required to sign before commencing employment with Andersen was therefore invalid because it restrained his ability to practice his profession.”

The other interesting issue in Edwards is the validity of release agreements that purport to release “any and all” claims. Edwards argued that the Termination Agreement’s release of “any and all claims” against Arthur Andersen was invalid because it required Edwards to waive certain “non-waivable” rights under the California Labor Code. The appellate court agreed with Edwards and ruled that the release contained in the Termination Agreement was invalid.

On this point, the Supreme Court agreed with the employer, holding that the phrase “any and all claims” does not include non-waivable statutory rights. Instead, a release of “any and all claims” only waives rights that can legally be waived. The Supreme Court found that the release language in the Termination Agreement was lawful.

Practical Considerations

The Edwards decision is important, and should compel California employers to review their existing non-competition agreements. Under Edwards, non-competition agreements are now valid only in limited circumstances. Those circumstances include: (1) non-competition agreements necessary to protect trade secrets or prevent unfair competition; and (2) non-competition agreements authorized by California Business & Professions Code §16601, which authorizes agreements restraining competition in connection with the sale of a business, dissolution of a partnership, or the sale or disposition of all of a stockholder’s stock in a corporation. Absent one of these statutory exceptions, a non-competition agreement will not survive judicial scrutiny.

California employers are advised to consult with employment law counsel before requiring an employee to sign a non-competition agreement as a condition of continued employment.

In contrast, the California Supreme Court’s ruling that releases of “any and all” claims are not presumptively invalid should not have a significant impact on California employers. This ruling simply validates existing release language and should thwart attempts to void otherwise valid releases based on technical legal arguments. Employers are still advised, however, to conduct a legal audit of their release agreements periodically to ensure compliance with California law.

Labor Commissioner Adopts Important New Meal/Rest Period Rules

2008-07-28T12:37:00.000-07:00

On July 25, 2008, Labor Commissioner Angela Bradstreet sent a memorandum to staff at the California Division of Labor Standards Enforcement (“DLSE”) offering new guidance on the interpretation of California meal and rest period requirements in light of recent appellate court decision in Brinker Restaurant Corp. v. Superior Court, 2008 Cal.App.Lexis 1138 (July 22, 2008) (“Brinker”).

Brinker decided several critical issues in the interpretation of California’s meal and rest period requirements. The Labor Commissioner’s July 25th memorandum mandates that all DLSE staff apply the following rulings from Brinker effective immediately:

Meal Periods

• Brinker held that Labor Code § 512 and the meal period requirements set forth in the applicable wage order mean that employers must provide meal periods by making them available, but need not ensure that they are taken. Employers, however, cannot impede, discourage or dissuade employees from taking meal periods.

• Brinker rejected the so-called “rolling five-hour” requirement as being inconsistent with the plain meaning of Labor Code § 512 and the applicable wage order. An employer must make a first 30-minute meal period available to an hourly employee who is permitted to work more than five hours per day, unless (1) the employee is permitted to work a “total work period per day” that is six hours or less, and (2) both the employee and the employer agree by “mutual consent” to waive the meal period. The employer must make a second 30-minute meal period available to an hourly employee who has a “work period of more than 10 hours per day” unless (1) the “total hours” the employee is permitted to work per day is 12 hours or less, (2) both the employee and the employer agree by “mutual consent” to waive the second meal period, and (3) the first meal period “was not waived.”

Employers are not required to provide a meal period for every five consecutive hours worked. An employer’s practice of providing employees with an “early lunch” within the first few hours of an employee’s arrival at work does not violate California law, even though that would mean that the employee might then work in excess of five hours without an additional meal period.

Rest Periods

• Brinker held that the rest period requirements set forth in the applicable wage order mean that employers must provide rest periods, but need not ensure that they are taken. Employers, however, cannot impede, discourage or dissuade employees from taking rest periods.

• The court held that employers need only authorize and permit rest periods every four hours or major fraction thereof and they need not, where impracticable, be in the middle of each work period. The court interpreted the phrase “major fraction thereof” to mean the time period between three and one-half hours and four hours and not to mean that a rest period must be given every three and one-half hours.

In so doing, the Brinker court rejected as incorrect a 1999 interpretation by the Labor Commissioner that the term “major fraction thereof” means an employer must provide its employees with a 10-minute rest period when the employees work any time over the midpoint of each four hour block of time. The court ruled that the rest periods must be given if an employee works between three and one-half hour and four hours, but if four or more hours are worked, it need be given only every four hours, not every three and one-half hours.

Brinker also ruled that the applicable wage order rest period provisions do not require employers to authorize and permit a first rest period before the first scheduled meal period. Rather, the applicable language of the wage order states only that rest periods “insofar as practicable shall be in the middle of each work period.” As long as employers make rest periods available to employees, and strive, where practicable, to schedule them in the middle of the first four-hour work period, employers are in compliance with that portion of the applicable wage order.

The Brinker court relied upon the plain meaning of the Labor Code and applicable wage order provisions in making its determinations. The court found persuasive the reasoning in the federal district court decisions in White v. Starbucks (ND Cal. July 2, 2007) 497 F.Supp.2d 1080 and Brown v. Federal Express Corp. (CD Cal. Feb. 26, 2008) 2008 WL 906517, and concluded that employers need not ensure meal periods are actually taken, but need only make them available. The court distinguished the decision in Cicairos v. Summit Logistics, Inc. (2006) 133 Cal.App.4th 949, concluding that the court there only decided meal periods must be provided. The employer need not ensure they are taken.

Federal Workers May Sue for Retaliation Under the ADEA

2008-06-02T15:23:00.000-07:00

On May 27, 2008, the United States Supreme Court held that the federal Age Discrimination in Employment Act (“ADEA”) protects federal workers from retaliation based on age-related complaints. Gomez-Perez v. Potter, 2008 U.S. LEXIS 4518 (May 27, 2008).

The basic facts of Gomez-Perez were not in dispute. The plaintiff, Myrna Gomez-Perez, has worked for United States Postal Service (“USPS”) since 1987. In October 2002, while working full-time at the Dorado Post Office in Puerto Rico, Gomez-Perez requested a transfer to a part-time position at a different location. USPS approved the request. A month later, however, Gomez-Perez requested a transfer back to Dorado to return to her full-time position. USPS denied the request, and a short time later permanently converted Gomez-Perez’s former position at the Dorado Post Office into a part-time position.

Gomez-Perez filed a grievance, but it was denied by USPS. She then filed a civil action alleging that she had been discriminated against on the basis of her age (45) in violation of the ADEA. After filing her complaint, Gomez-Perez alleged that USPS subjected her to various forms of retaliation, including groundless sexual harassment complaints. Gomez-Perez also complained of verbal harassment on the basis of her age.

The legal question presented to the U.S Supreme Court was whether a federal employee could maintain a cause of action for retaliation under the ADEA. USPS had successfully argued at the trial court level that the federal government had not waived its “sovereign immunity” against retaliation lawsuits under the ADEA. The Court of Appeals rejected USPS’s “sovereign immunity” argument, but upheld the trial court’s ruling on the basis that the ADEA did not specifically permit a federal employee to sue for retaliation under the ADEA.

The majority decision, written by Justice Alito, rejected both of these defense arguments and unequivocally granted ADEA protections to federal workers on the same terms that have long applied to private workers. In so doing, the U.S. Supreme Court has now made it clear that retaliation against an employee for making complaints of age discrimination is prohibited by the ADEA, regardless of whether the employee works for the federal government or for a private employer.

The Gomez-Perez decision will not have any immediate impact on private employers, because retaliation against employees for complaining about age discrimination is already prohibited by the ADEA, as well as the equivalent provisions of the California Fair Employment and Housing Act (“FEHA”).

President Bush Signs the Genetic Information Non-Discrimination Act

2008-06-02T15:19:00.000-07:00

On May 21, 2008, President Bush signed the Genetic Information Nondiscrimination Act (“GINA”), which prohibits employers, employment agencies and labor unions from terminating, refusing to hire or otherwise discriminating against employees on the basis of their genetic information.

More specifically, GINA amends Title VII of the Civil Rights Act of 1964 to make it an “unlawful employment practice” for an employer to:

- Fail or refuse to hire, or to discharge, any employee, or otherwise to discriminate against any employee with respect to the compensation, terms, conditions, or privileges of employment of the employee, because of genetic information with respect to the employee; or

- Limit, segregate, or classify the employees of the employer in any way that would deprive or tend to deprive any employee of employment opportunities or otherwise adversely affect the status of the employee as an employee, because of genetic information with respect to the employee.

GINA also makes it an “unlawful employment practice” for an employer to request, require, or purchase genetic information with respect to an employee or a family member of the employee except in the following limited circumstances:

- Inadvertence: where an employer inadvertently requests or requires family medical history of the employee or family member of the employee.

- FMLA/CFRA requests: where an employer requests or requires family medical history from the employee to comply with the certification provisions of the Family and Medical Leave Act (“FMLA”) or similar requirements under state family and medical leave laws (i.e., CFRA).

- Public information: where an employer purchases documents that are commercially and publicly available (such as newspapers or periodicals) that include family medical history.

- Law enforcement: where an employer conducts DNA analysis for law enforcement purposes as a forensic laboratory, and requests or requires genetic information of such employer’s employees for quality control to detect sample contamination.

- Wellness Programs: where health or genetic services are offered by the employer, including such services offered as part of a wellness program, and:

(a) The employee provides a knowing, voluntary, and written authorization;

(b) The employee (or family member if the family member is receiving genetic services) and the provider involved in providing health or genetic services receive individually identifiable information concerning the results of such services; and

(c) Any individually identifiable genetic information is only available for purposes of such services and is not disclosed to the employer except in aggregate terms that do not disclose the identity of specific employees.

- Toxic Substances Monitoring. Where the information involved is to be used for genetic monitoring of the biological effects of toxic substances in the workplace, but only if:

(a) the employer provides written notice of the genetic monitoring to the employee;

(b) the employee provides a knowing, voluntary, and written authorization, or the genetic monitoring is required by Federal or State law;

(c) the employee is informed of individual monitoring results;

(d) the monitoring is in compliance with any federal genetic monitoring regulations, such as those promulgated by the Secretary of Labor pursuant to the Occupational Safety and Health Act of 1970 (OSHA), or state genetic monitoring regulations, in the case of a State that is implementing genetic monitoring regulations under OSHA authority (e.g., Cal-OSHA regulations); and

(e) the employer, excluding any licensed health care professional or board certified genetic counselor that is involved in the genetic monitoring program, receives the results of the monitoring only in aggregate terms that do not disclose the identity of specific employees.

GINA defines the term “genetic information” broadly to include any information about an individual’s genetic test, the genetic test of a family member and/or the manifestation of a disease or disorder in the individual’s family members. If the employer is in possession of genetic information about an employee, GINA requires that the employer treat such information as a confidential medical record and maintain such information on separate forms and in separate medical files.

GINA also prohibits health insurers from asking for or using genetic information to make coverage decisions or to set premiums.

GINA will become effective in November 2009.

City Employee Entitled to Pre-Layoff Hearing

2008-06-02T15:12:00.000-07:00

In Levine v. City of Alameda, 2008 U.S. App. LEXIS 10260 (9th Cir. 2008), the Ninth Circuit Court of Appeals held that Edward Levine, a laid off employee, was improperly denied a pre-termination hearing to challenge the City of Alameda’s layoff decision. The court reached this conclusion despite the fact that the City did not construe Levine’s layoff as a disciplinary action, and despite the fact that Levine’s union contract did not call for a hearing prior to his layoff.

Unlike employees of private companies, public employees enjoy a “property interest” in continued employment that is protected by the due process clause. Following the landmark 1975 decision by the California Supreme Court in Skelly vs. State Personnel Board, California public employers have been obligated to comply with certain due process procedures before taking serious disciplinary action against a permanent employee. These “Skelly rights” include:

- The right to prior written notice of the proposed action stating the grounds and particular facts upon which the action will be taken before any serious proposed disciplinary measures can be implemented;

- Access to all materials supporting the proposed action; and,

- The right to respond either orally or in writing, or both, to a manager who has the authority to recommend whether the proposed action should be taken.

Although “Skelly rights” typically are not extended to cases involving layoff, reclassification or resignation, the Ninth Circuit’s decision in Levine does not appear to draw this distinction.

The plaintiff in Levine was a property manager for the City of Alameda (the “City”). Levine’s City Manager advised him that he was being laid off. Levine asked the City Manager for a pre-termination hearing on the grounds that he felt his layoff was pretextual and discriminatory. The City Manager forwarded Levine’s request to the City’s Human Resources (“HR”) department, and asked that “Levine’s due process rights be respected.”

HR subsequently responded to Levine stating that, based on the express terms of his union contract, Levine was not entitled to a pre-termination hearing because he was being laid off and not terminated for cause. HR did offer to meet with Levine to discuss layoff procedures and retirement benefits, but would not give Levine an opportunity to respond to the layoff decision.

After the layoff, Levine brought a civil action against both the City and the City Manager under Title 42 U.S.C. section 1983, alleging that the defendants violated his federal due process rights. The district court ruled in Levine’s favor, at least in part, holding that his procedural due process rights were violated, and that Levine was entitled to a full evidentiary hearing before a neutral third-party. The district court also ruled, however, that both the City Manager and the municipality were immune from liability under Title 42 U.S.C. section 1983.

On appeal, the Ninth Circuit Court of Appeals affirmed the trial court’s ruling, stating that Levine was a civil servant who had a property interest in continued employment and was entitled to pre-layoff hearing. The union contract’s express terms were deemed not to trump Levine’s due process rights. Without discussing the distinction between disciplinary actions and layoffs, the court simply stated its belief that Levine was entitled to “a meaningful opportunity to respond to the layoff decision.”

As with the trial court, Levine’s victory was illusory because the Ninth Circuit agreed that all of the defendants were immune from liability. Specifically, the court held that the City Manager was entitled to qualified immunity on the grounds that he “reasonably believed that his conduct was lawful.” See Kulas v. Valdez, 159 F.3d 453, 456 (9th Cir. 1998). With reference to the claim against the City, the court noted that a municipality can be sued for monetary damages under section 1983 only “if the constitutional violation was a product of a policy, practice, or custom adopted and promulgated by the city's officials.” Because Levine could not demonstrate that the City maintained a policy, practice, or custom that amounted to “deliberate indifference” to his constitutional rights, the City was entitled to immunity. Van Ort v. Estate of Stanewich, 92 F.3d 831, 835 (9th Cir. 1996).

This case illustrates two significant points for public employers. First and foremost, a public employer cannot deprive an employee of his or her due process rights simply by calling a disciplinary action a “layoff.” Prior to making any termination decision, a public employer should analyze the facts of the case to determine whether a Skelly-type hearing is warranted.

Second, public employers cannot rely on union contracts or city policies that may limit an employee’s constitutional rights. Regardless of the language of the union contract, Levine illustrates that public employers must offer an eligible employee a “meaningful opportunity” to respond to the reasons for a termination.

The California Supreme Court Takes on Its First CFRA Case

2008-06-02T15:05:00.000-07:00

On April 7th, the California Supreme Court issued its first opinion analyzing the California Family Rights Act (“CFRA”). In Lonicki v. Sutter Health Central, the court made two significant rulings:

1. An employer is not required to utilize the CFRA’s “tie-breaking” procedure and obtain a third medical opinion to resolve a conflict between two doctors as to an employee’s CFRA eligibility. The Lonicki court rejected the employee’s argument that failure to obtain a third medical opinion prevented Sutter Health Central (“Sutter”) from ever challenging the employee’s CFRA eligibility.

2. The fact that an employee is able to work at a similar job at the time she is requesting time off for a “serious health condition” does not conclusively establish that the employee is not eligible for CFRA leave. In this regard, the Lonicki court ruled against Sutter, whose lawyers sought to dismiss the employee’s CFRA claims based on evidence that Lonicki was working at a similar job at the same time her psychiatrist took her off of work at Sutter.

Although Lonicki does not mark a dramatic shift in CFRA law, it does provide clarity on these two issues and understanding Lonicki will assist HR professionals in their efforts to comply with CFRA requirements.

The Law

The CFRA authorizes eligible employees to receive up to 12 workweeks of leave in a 12 month period for various reasons, including recovery from a “serious health condition.” The employer may condition CFRA leave on receipt of a timely certification from the employee’s health care provider, verifying that the employee has a “serious health condition” that qualifies for CFRA leave.

If the employee's health care provider provides a timely CFRA certification, the employer has the option to seek a second opinion from its own doctor. If these two doctors disagree, the CFRA authorizes the employer to seek a “tie-breaking” third opinion from a neutral health care provider.

Lonicki v. Sutter Health Central

Beginning in 1993, Antonina Lonicki worked as a technician in the sterile processing department at Sutter Roseville Hospital. Her job duties consisted of picking up equipment and processing instruments used in patient care. In January 1999, Lonicki accepted a second job, working part-time for Kaiser Hospital and performing similar duties in its sterile processing department.

In July 1999, Lonicki’s supervisor at Sutter advised her that her work shift would change from mornings to evenings. She left the hospital in tears, and subsequently requested a one-month leave of absence. Lonicki’s request was supported by a note from a nurse practitioner.

Sutter obtained a second opinion from one of its local doctors. The company doctor concluded that Lonicki was able to return to work without any restrictions. Sutter then instructed Lonicki to come back to work or face disciplinary action.

Lonicki’s union representative intervened, and Sutter ultimately agreed to allow Lonicki to use paid time off, but not to grant her medical leave. Lonicki was advised to return to work no later than August 23, 1999. Lonicki had previously stated that she was “unable to return to work” until August 27th.

On August 26, Lonicki consulted a psychiatrist. The psychiatrist diagnosed Lonicki with work-related “major depression,” and Lonicki provided Sutter with a note from the psychiatrist, who advised her to remain off of work for another month. Sutter responded by advising Lonicki that she had been terminated for “job abandonment” based on her failure to appear for work on August 23rd. Thereafter, Lonicki filed a lawsuit alleging that Sutter’s decision to terminate her employment was a violation of her rights under the CFRA.

Sutter’s attorneys asked the trial court to dismiss Lonicki’s case, arguing that Lonicki was not eligible for CFRA leave. Specifically, Sutter argued that the fact Lonicki was able to maintain her substantially similar part-time job at Kaiser was proof that she was able to perform her job duties at Sutter; i.e., that she did not need leave to recover from a “serious health condition.” Lonicki responded that differences between the two jobs raised fact issues that should be decided by the jury. She also argued that Sutter was barred from questioning her need for CFRA-qualified leave, based on Sutter’s decision not to obtain a “tie breaking” third opinion from a neutral health care provider. Ultimately, the trial court ruled in Sutter’s favor and dismissed the lawsuit.

Lonicki appealed, but the court of appeal agreed with the trial court. Lonicki then took her case to the California Supreme Court.

The Court first addressed Lonicki’s argument that Sutter gave up its right to argue that Lonicki was unqualified for CFRA leave when it elected not to obtain a tie-breaking opinion from a third health care provider. The Court had little difficulty rejecting this argument. Since the CFRA does not impose a mandatory obligation on employers to obtain a third opinion, the Court concluded that it is simply one, non-exclusive mechanism for dispute reason. As the Court explained:

If an employer doubts the validity of [a CFRA] claim, nothing…precludes the employer from denying the employee's request for medical leave and discharging the employee if the employee does not come to work. Of course, an employer embarking on that course risks a lawsuit by the employee and perhaps a finding by the trier of fact that the employer's conduct violated the employee's rights under either the CFRA or the FMLA, or both, by denying the requested medical leave. To avoid such risks, the employer can resort to the [tie-breaker] dispute-resolution mechanism provided for by both laws.

The Court then turned to the second question: whether Lonicki’s part-time job at Kaiser Hospital prevented her from arguing that she suffered from a “serious health condition” that required time off from her job at Sutter. On this point, the Court found that a jury could credit Lonicki's testimony about the differences between her two jobs, including the number of hours, responsibilities, etc., and thus, in theory, could decide that she was qualified for CFRA leave. In this regard, the Court noted that the proper question in a CFRA analysis is not whether the employee can work in general, but rather whether the employee is able to perform some or all of the duties of the job from which she is seeking a CFRA-qualified leave.

Practical Considerations

Lonicki is a reminder to all California employers to carefully evaluate whether an employee who requests CFRA leave is entitled to the protection of the statute — whether he or she has a “serious health condition” as defined by the CFRA. The CFRA “tie breaking” procedure provides a mechanism for obtaining an unbiased answer to this question. For this reason, employers should seriously consider obtaining a third opinion in appropriate cases. Depending on the circumstances, the benefit of doing so likely outweighs the cost.

Lonicki also makes it clear that an employer cannot refuse CFRA leave simply because it learns that the employee is currently working at another job, even if that job involves substantially similar job duties. Although not intuitive, employers must bear this fact in mind when deciding whether to grant a leave request.

Finally, Lonicki illustrates the need to seek advice from employment law counsel or experienced HR professionals in addressing employee health issues. In addition to the CFRA issues addressed in Lonicki, employee health concerns may also implicate various other employment-related laws, including the federal Family and Medical Leave Act, state and federal disability discrimination laws, workers’ compensation laws, and state and federal statutes that protect employee medical records and other confidential information from inappropriate use and/or disclosure.

Same Sex Marriage Issue

2008-05-20T12:49:00.000-07:00

In In re Marriage Cases, 2008 Cal. LEXIS 5247 (May 15, 2008), the California Supreme Court opened the door to same sex marriages by striking down several state statutes that limit marriage to opposite-sex couples. Writing for the majority of the court, Chief Justice Ronald George ruled that the “equal respect and dignity” of marriage is a “basic civil right” that cannot be withheld from same-sex couples. Any law that classifies or discriminates against people on the basis of their sexual orientation is now subject to strict scrutiny under the California State Constitution.

Employers may wonder what impact this new decision will have on the workplace. The short answer: Not much. Since 1999, the California Fair Employment and Housing Act (FEHA) has prohibited all forms of discrimination and harassment in employment on the basis of sexual orientation. Since 2003, the California Domestic Partner Rights and Responsibilities Act (CDPRA) has also made it clear that registered domestic partners have “the same rights, protections, and benefits” as married couples under the law. This means that same-sex partners are already able to obtain medical and other benefits through workplace programs. Last year, Governor Schwarzenegger even signed a bill (AB 102) that allows same-sex couples to choose the same surname upon registration of their domestic partnership. From the employer’s perspective, there is no legitimate reason to distinguish between same-sex and opposite-sex unions. The In re Marriage Cases decision may be significant for other reasons, but it does not change California employment law.

Employers should keep in mind, however, that same-sex marriage is a hot “water cooler” topic at the moment, and supervisors should be particularly vigilant about derogatory comments or slurs in the workplace. Employers should also make sure that their written HR policies specifically prohibit discrimination and harassment based on marital status and sexual orientation, and that employees have an appropriate complaint mechanism to address their concerns.

If an employee reports discrimination or harassment flowing from a same-sex marriage, the employer should conduct an investigation that is appropriate under the circumstances. If the allegations are substantiated, the employer should take prompt remedial action commensurate with the severity of the offense.

Individual Employees Are Not Liable for Retaliation Under FEHA

2008-03-04T13:19:00.000-08:00

On March 3, 2008, the California Supreme Court held that non-employer individuals are not personally liable for retaliation under the California Fair Employment and Housing Act, Cal. Gov. Code, § 12900 et seq. (“FEHA”). Jones v. Lodge at Torrey Pines (Case No. S151022).

The FEHA makes it unlawful for an employer to harass or otherwise discriminate against any employee based on the employee’s membership in a protected class. The FEHA also prohibits an employer from retaliating against an employee who has exercised his or her rights under the FEHA. In 1998, the California Supreme Court held, in Reno v. Baird (1998) 18 Cal.4th 640, that an individual cannot be held personally liable for discrimination under the FEHA.

Over the past several years, many lower state courts and the Ninth Circuit Court of Appeals distinguished numerous cases from Reno and held individual employees personally liable for retaliation under the FEHA. See Taylor v. City of Los Angeles Dept. of Water & Power (2006) 144 Cal.App.4th 1216; Walrath v. Sprinkel (2002) 99 Cal.App.4th 1237, 1240-1242; see also Winarto v. Toshiba America Electronics Components (9th Cir. 2001) 274 F.3d 1276. The California Supreme Court’s decision in Jones reverses these cases, and extends Reno to prohibit lawsuits alleging retaliation in violation of the FEHA against non-employer individuals.

The plaintiff in Jones alleged that he suffered sexual orientation discrimination, and that his supervisor subjected him to sexual orientation harassment, sexually harassed female employees, and retaliated against him when he complained about the harassment. Although the claims for harassment did not make it to trial, a jury ultimately found in favor of Jones on his claim for sexual orientation discrimination against The Lodge at Torrey Pines (The Lodge). The jury also found in Jones’ favor against both The Lodge and Jones’ supervisor on his claim for retaliation. The jury awarded compensatory damages of $1,395,000 against The Lodge and $155,000 against Jones’s supervisor. The case was appealed and the court of appeal upheld the jury verdict on a number of grounds. On further appeal, the California Supreme Court accepted review of the case only as to the limited question of whether an individual could be held personally liable for retaliation under the FEHA.

The Court’s decision relies heavily on its prior decision in Reno. The main difference between the two cases is the fact that the statutory provision prohibiting retaliation (as opposed to discrimination) includes “persons” among the entities that are prohibited from retaliating against an employee. The plaintiff in Jones argued that the use of the word “person” in the retaliation section of the FEHA demonstrated that the Legislature intended to permit lawsuits against individual employees. The California Supreme Court disagreed, concluding that this language did not clearly impose individual liability for retaliation.

Specifically, the Court searched the legislative history of the FEHA, and found no indication that the Legislature intended to impose individual liability for retaliation. The Court also concluded that the reasons for not imposing individual liability for discrimination are likewise compelling with regard to claims for retaliation: (1) individual liability would constrain supervisors’ ability to make personnel decisions because they would be concerned about their personal exposure to a lawsuit; (2) FEHA exempts small employers from liability and it therefore would be incongruous to impose such liability on individuals; and (3) management decisions are often made by a group of people and it would be impossible to establish each individual’s proportional liability.

Practical Considerations

The law is now settled that the FEHA imposes liability on individual employees for harassment (e.g., sexual harassment), but not for employment discrimination or retaliation. Keep in mind, however, that employers remain liable for all three of these unlawful employment practices. Consequently, the Jones decision may reduce the ability of plaintiffs to bring employment lawsuits against individual employees, but should not have much impact on the overall volume of FEHA lawsuits.

Employment Protections for Members of the Armed Forces

2008-02-06T14:15:00.000-08:00

On January 28, 2008, the President signed H.R. 4986, a national defense authorization act that includes amendments to the federal Family and Medical Leave Act (“FMLA”). The new amendments to the FMLA provide (a) up to six (6) months of leave for family members caring for military veterans injured while on active duty in the U.S. Armed Forces and (b) twelve (12) weeks of leave for family members of armed services personnel called up to active duty under certain circumstances. These changes to the FMLA take effect immediately.

H.R. 4986 modifies the FMLA, which already provides qualifying employees up to 12 weeks of unpaid leave each year to care for various serious health conditions suffered by the employee or a family member.

The new amendments to the FMLA more than doubles the available time off from work to care for injured members of the Armed Forces. An employee may take up to twenty six (26) weeks per year to care for an injured service-member. The new bill also makes a new category of employees eligible for leave – those employees with an immediate family member who has been called to active duty.

Employers are advised to make the following changes to their existing FMLA policies to reflect these changes:

Employee Entitlement

The FMLA amendments contained in H.R. 4986 (“Armed Forces FMLA”) provide eligible employees unpaid leave for any one, or for a combination, of the following reasons:

• A “qualifying exigency” arising out of a covered family member’s active duty or call to active duty in the Armed Forces in support of a contingency plan; and/or

• To care for a covered family member who has incurred an injury or illness in the line of duty while on active duty in the Armed Forces provided that such injury or illness may render the family member medically unfit to perform duties of the member’s office, grade, rank or rating. This benefit provides 12 weeks of FMLA leave due to a spouse, son, daughter or parent being on active duty or having been notified of an impending call or order to active duty in the Armed Forces. Leave may be used for any “qualifying exigency” arising out of the servicemember’s current tour of active duty or because the servicemember is notified of an impending call to duty in support of a contingency operation.

Duration of Leave

When Leave Is Due To a “Qualifying Exigency”: An eligible employee may take up to twelve (12) workweeks of leave during any 12-month period.

When Leave Is To Care for an Injured or Ill Service Member: An eligible employee may take up to twenty six (26) workweeks of leave during a single 12-month period to care for the service-member. Leave to care for an injured or ill service-member, when combined with other FMLA-qualifying leave, may not exceed 26 weeks in a single 12-month period.

Armed Forces FMLA runs concurrent with other leave entitlements, including the leave entitled authorized by the California Family Rights Act (“CFRA”).

Other Military Leave Entitlements

Employers should also keep in mind that state and federal law provide additional employment protections for members of the Armed Forces.

Long Term Leave. Under both state and federal law, employees directed to participate in extended military duty in the Armed Forces may be entitled to receive unpaid military leave. The Federal Uniformed Services Employment and Reemployment Rights Act (“USERRA”) may extend this leave period for as long as five years (with certain exceptions). Employees who return from military leave may be entitled to reinstatement upon completion of military service, provided such employees apply for reinstatement within the time allowed by law.

Non-Discrimination. State and federal law also prohibits an employer from discriminating against any member of the Armed Forces for taking military leave. California Military and Veterans Code § 394(f) makes it a misdemeanor to discriminate, discharge, or otherwise discipline or prejudice a member of the Armed Forces based on military status.

Military Spouse Leave. In California, employees who are “qualified military spouses,” defined as employees who work twenty (20) or more hours per week and who are married to a member of the Armed Forces actively deployed during a military conflict to an area designated as a combat theater, may take up to ten (10) days of unpaid time off each time the solider-spouse is on leave from active deployment to the combat theater. These employees are also protected against reprisals or retaliation for electing to take military spouse leave.

The interaction of these various employment protections for members of the Armed Forces can be challenging. Employers are advised to consult with experienced Human Resources professionals or employment law counsel in developing and implementing their military leave policies.

California Employers are Not Obligated to Accommodate Medical Marijuana

2008-02-05T13:18:00.000-08:00

On January 24, 2008, the California Supreme Court ruled that an employer is not obligated to “reasonably accommodate” an employee’s medical marijuana use as treatment for a “disability.” Ross v. RagingWire Telecomm, Inc., 2008 Cal. LEXIS 784 (January 24, 2008). Barring an amendment to the California Fair Employment and Housing Act (“FEHA”), employers are free to deny employment based on positive drug tests for marijuana, regardless of whether the employee alleges that the drug is prescribed by his or her treating physician.

Ross v. RagingWire Telecomm, Inc.

Gary Ross is a former employee of RagingWire Telecomm, Inc. (“RWT”), who suffers from back strain and muscle spasms as a result of injuries he sustained while serving in the United States Air Force. Ross’ back condition qualifies as a protected “disability” under the Fair Employment and Housing Act (“FEHA”), and he is eligible for various governmental disability benefits.

In 1999, Ross began to use medical marijuana prescribed by his treating physician as authorized by the Compassionate Use Act of 1996. See California Health & Saf. Code §11362.5. In 2001, RWT offered Ross a job as a lead systems administrator. In connection with the job offer, RWT also administered a drug test. When the drug test came back positive for tetrahydrocannabinol (THC), a chemical found in marijuana, RWT suspended Ross.

Ross responded to the suspension by giving RWT a copy of his physician’s recommendation for marijuana and explained to RWT’s human resources director that Ross used marijuana for medical purposes to relieve chronic back pain. RWT’s representative told Ross that RWT would call his physician and verify the recommendation. Shortly thereafter, RWT advised Ross that it had elected to terminate his employment due to his active use of marijuana.

Ross sued RWT in state court, alleging wrongful termination in violation of public policy, and that RWT violated the FEHA by discharging him without making reasonable accommodations for his disability. See Cal. Gov. Code §12940(a). Ross alleged that his disability and use of marijuana to treat pain did not affect his ability to do the essential functions of the job for which he was hired. Ross further alleged that he had worked in the same field since he began to use marijuana and has performed satisfactorily, without complaints about his job performance.

In a 5-2 decision, the California Supreme Court held that neither the FEHA nor the Compassionate Use Act prohibits an employer from denying employment based on a positive test for marijuana use. The Court held that the Compassionate Use Act “merely exempted medical users and their primary caregivers from criminal liability under two specifically designated state statutes.” No state law could completely legalize marijuana for medical purposes because marijuana remains illegal under federal law (21 U.S.C. §§ 812, 844(a)), even for medical users (see Gonzales v. Raich, 545 U.S. 1 (2005); United States v. Oakland Cannabis Buyers’ Cooperative, 532 U.S. 483 (2001)). Because the FEHA does not require employers to accommodate the use of illegal drugs, the Court held that RWT had a right to terminate Ross based on his positive drug test.

The Court also rejected Ross’ wrongful termination (public policy) claim predicated on the provisions of the Compassionate Use Act. In so doing, the Court once again emphasized that “the operative provisions of the Compassionate Use Act do not speak to employment law.” Rather, the sole purpose of the Compassionate Use Act was to exempt medical marijuana from criminal prosecution under state law. Accordingly, “given the Compassionate Use Act’s objectives and the manner in which it was presented to the voters for adoption, [the Court had] no reason to conclude the voters intended to speak so broadly, and in a context so far removed from the criminal law, as to require employers to accommodate marijuana use.”

Practical Considerations

Ross is welcome news for employers, as it eliminates one of the many grey areas in the enforcement of workplace drug testing policies. As a matter of law, an employer is free to deny employment to an employee who tests positive for marijuana use. Employers should keep in mind, however, that drug testing policies create a host of problems that are not addressed by the Ross decision. Improper use or application of such policies may be grounds for liability on various theories, such as invasion of privacy, infliction of emotional distress, defamation, wrongful termination, or violation of state and federal laws that protect recovering drug or alcohol abusers. Employers are cautioned to consult with experienced employment law counsel prior to implementing any drug testing policy.

Q&A: Electronic Data Storage

2007-12-19T12:59:00.000-08:00

Q: We back up our server every night onto a tape. How long do we have to keep our electronic data and is this the best way to store the data for quick retrieval?

A: Regulations adopted by the U.S. Supreme Court in April 2006, amending the Federal Rules of Civil Procedure, mandate that businesses must be able to quickly find electronic data when required by a federal court such as when the business is sued and the other side is making a demand for your documents, e-mail and other electronically stored records. This means in a nutshell that every electronic document stored by businesses--instant messages, financials, voicemail, and all text and graphic documents needs to be "easily retrievable." You cannot say to the court we have 800 tape back-ups to go through to find the data in question and it will take six months. You will need to produce the documents in 30 days. Not every document needs to be saved. Those that are "deleted within the course of regular business" are immune in the case of a litigation.

At this point, there is no authority establishing a guideline as to how long electronic data should be retained.

Digital archiving is a popular method for electronic storage that offers reasonable file accessibility. Tapes could offer reasonable accessibility if indexed properly. The only time you will need to refer to your backup tapes is to retrieve permanently stored or archived older files that have been removed from your document management system. In our case, we have every document created or scanned available for searching on our computers. We back up our servers on a regular basis to capture new files and changes to existing files.

Call your IT provider today and draft and implement a data storage and retention policy.

Q&A: Lump Sum Approach to Reimbursement Expenses

2007-12-19T11:36:00.001-08:00

Q: My sales team is required to use their own vehicles when traveling around to make sales. They travel more than 50 percent of the time. I do not like to deal with numbers such as the number of miles they drive, so I pay them a higher base salary and commission than I do my inside sales team that sits at a desk all day long. Can I use this lump sum method?

A: Yes, as long as you can prove that the pay increase or increase in commissions reimburses employees fully for the expenses they incur on your behalf. Also, the reimbursement is accounted for separately from their regular income. California Labor Code Section 2802 requires employers to indemnify employees for all expenses they incur in the discharge of their duties. The California Supreme Court has accepted the lump sum approach to reimbursement expenses but does say that such an approach will be subject to legal scrutiny. So, you better keep crunching those numbers and keep track of the miles the employee claims to have driven, as well as other expenses. I would use a boilerplate expense reimbursement form and require receipts. Call with any questions.

Employers May Use Lump Sum Payments to Compensate Employees for Work-Related Expenses

2007-11-12T11:49:00.000-08:00

On November 5th, the California Supreme Court held that employers may use a lump-sum method to reimburse employees for work-related expenses, as long as (1) the amount paid is sufficient to fully reimburse employees for the expenses they necessarily incur, and (2) the reimbursement is accounted for separately from their regular income. See Gattuso v. Harte-Hanks Shoppers, Inc., 2007 Cal. LEXIS 12687 (November 5, 2007). Although on its face this opinion appears to be a victory for employers, in reality it does not represent a significant change in California wage and hour law.

The Law

California Labor Code section 2802 requires that employers indemnify their employees for all expenses they necessarily incur in the discharge of their duties. This issue often arises in the context of outside salespersons or others who must use their personal vehicles for work purposes. It can be difficult and burdensome to calculate actual vehicle expenses, since such expenses include fuel, maintenance, repairs, insurance, registration, and depreciation. For this reason, employers have developed methods to approximate vehicle expenses and meet their reimbursement obligations.

The most common method is to use a reimbursement formula based on miles traveled. Using this approach, the employee need only keep a record of the number of miles driven on-the-job, and submit that information to the employer. The California Department of Labor Standards Enforcement (DLSE) has expressed its opinion that the mileage reimbursement method is presumptively valid and satisfies the employer’s obligation under Labor Code section 2802 if the employer uses the regularly updated Internal Revenue Service (IRS) reimbursement rate in calculating its expense reimbursements for work-related use of employee vehicles.

Another option for approximating mileage reimbursements is to pay the employee a fixed amount as an automobile expense reimbursement. This “lump-sum” method is often referred to by employers as “per diems” or “car allowances.” The amount of the lump-sum payment is typically based on the employer's understanding of the employee’s job duties, including the number of miles the employee typically or routinely must drive to perform those duties.

Gattuso v. Harte-Hanks Shoppers, Inc.

Harte-Hanks is an advertising company that prepares and distributes booklets (such as the PennySaver) across California. Harte-Hanks employs both outside and inside sales employees. Unlike inside sales employees (who contact customers by telephone), outside sales employees are required to drive their own vehicles in the field to contact customers to make sales.

Harte-Hanks does not separately reimburse outside sales employees for their automobile expenses. Instead, Harte-Hanks takes the position that it satisfies its obligation to compensate its outside sales employees for vehicle expenses, as required by Labor Code section 2802, by paying them higher base salaries and commission rates than it pays to inside sales employees.

At issue in Gattuso was whether Harte-Hanks could reimburse its outside sales force for vehicle expenses using this “lump-sum” method (i.e., giving the outside sales employees a higher base salary and/or commission rate to approximate vehicle costs). In summary, the Gattuso court held that Labor Code section 2802 does not prohibit an employer’s use of a lump-sum method to reimburse employees for work-related expenses, as long as (1) the amount paid is sufficient to fully reimburse employees for the actual expenses they necessarily incur, and (2) the reimbursement is accounted for separately from their regular income.

Two caveats are central to the court’s decision. Although lump-sum payments are lawful, an employee is still permitted to challenge the lump-sum payment as being insufficient under Labor Code section 2802 by comparing the lump-sum payment with the amount that would be payable under either the actual expense method or the mileage reimbursement method. If the comparison reveals that the lump-sum is inadequate, the employer is obligated to make up the difference.

Additionally, if an employer combines wages and business expense reimbursements in a single enhanced employee compensation payment (i.e., higher base salary or commissions for outside sales employees), the employer must be able to articulate the method or formula used to identify the amount of the combined employee compensation payment that is intended to provide expense reimbursement.

The fundamental lesson of Gattuso is that employers who use lump-sum payments or “enhanced compensation” to reimburse employees have no safe harbor. If, as is likely, the lump-sum payment does not adequately compensate employees for their actual vehicle costs, the employer is in violation of Labor Code section 2802.

Gattuso is also noteworthy from a procedural standpoint. Both the trial and appellate courts declined to certify Gattuso as a class action, stating that “the determination of whether there was a meeting of the minds and whether reimbursement was reasonable necessarily requires an individualized inquiry as to each outside sales representative.” This was a significant victory for Harte-Hanks – avoiding the time and expense of class action litigation in favor of individual claims by those outside sales employees who felt they were underpaid. Unfortunately, the California Supreme Court reversed and remanded the case to the trial court to consider the following issues:

(1) Did Harte-Hanks adopt a practice or policy of reimbursing outside sales representatives for automobile expenses by paying them higher commission rates and base salaries than it paid to inside sales representatives?

(2) If so, did it establish a method to apportion the enhanced compensation payments between compensation for labor performed and expense reimbursement?

(3) If so, was the amount paid for expense reimbursement sufficient to fully reimburse the employees for the automobile expenses they reasonably and necessarily incurred?

Reading between these lines, the three questions appear calculated to point out the “commonality” of the outside sales employees’ claims, and encourage the trial court to certify the class action. Although the trial court has not yet ruled on this issue, it appears likely that Harte-Hanks will be forced to defend its mileage reimbursement practices in the context of a class action.

Practical Tips

As mentioned above, Gattuso does not represent a significant change in California law. Although the Supreme Court does authorize employers to adopt lump-sum payment policies to reimburse employees for vehicle expenses, it also makes it clear that such policies will be subject to scrutiny and legal challenge. At the end of the day, the law remains the same: employers are obligated to reimburse each individual employee for all vehicle expenses they necessarily incur in the discharge of their duties. The presumptively accurate IRS mileage reimbursement is the obvious and most practical method to approximate this otherwise burdensome calculation.

Employers are advised to review their existing reimbursement policies with legal counsel or experienced HR professionals. Any employer that currently uses a method other than payment of the IRS mileage rate to reimburse employees for vehicle expenses should consult with legal counsel to ensure employees are being reimbursed for all actual costs associated with performing their job duties.

Employment Law Update - Governor's New Laws

2007-10-16T09:50:00.001-07:00

Last week, Governor Arnold Schwarzenegger signed a series of new employment laws that, for the most part, have been welcomed by the business community. The following is a summary of the new laws:

SB 812: Pharmacists/Alternative Workweek Schedules

SB 812 creates a new California Labor Code section 1186.5, which clarifies that all pharmacists are permitted to adopt alternative workweek schedules (AWS) as provided by Industrial Welfare Commission (IWC) Wage Order 4.

Pharmacists, depending on the nature of their work, may be regulated by IWC Wage Order 4, relating to professional, technical, clerical, mechanical and similar occupations (including employees in the health care industry), or by IWC Wage Order 7, which covers employees in the mercantile industry. Because the AWS rules differ under IWC Wage Orders 4 and 7, employers in the mercantile industry have been confused as to what type of AWS is permitted.

The new Labor Code section 1186.5 expressly permits pharmacists employed in the mercantile industry under IWC Wage Order 7 to adopt the same alternative workweek schedules allowed by IWC Wage Order 4, including alternative workweeks that can be adopted by employees working in the health care industry.

AB 392: Military Spouse Leave

AB 392 requires certain employers to allow an employee who is the spouse of a member of the Armed Forces, National Guard, or Reserves to take up to 10 days of unpaid leave while the member of the Armed Forces, National Guard, or Reserves is home on leave.

AB 392 enacts a new statute: California Military and Veterans Code section 395.10. The statute applies to employers with 25 or more employees, and requires the employer to provide leave to “qualified employees.” To be eligible for leave under AB 392, an employee must work an average of 20 or more hours per week and must be married to a member of the Armed Forces, National Guard or Reserves deployed during a period of military conflict to an area designated as a combat theater or zone.

Qualified employees are eligible to take time off during “qualified leave periods,” defined as periods during which the soldier-spouses are on leave from deployment.

An employer may not retaliate against any employee for requesting or taking the leave provided by AB 392.

SB 929: Computer Professionals/Prevailing Wages

Computer Professionals

SB 929 amends California Labor Code section 515.5, which creates an overtime exemption for certain highly skilled computer professionals who are primarily engaged in intellectual or creative work that requires the exercise of discretion and independent judgment. Job titles that may, in certain circumstances, fall into this overtime exemption include computer programmers, systems analysts, applications programmers and software engineers.

To qualify for the computer professional overtime exemption, the employee must receive a specified minimum hourly wage (which may be adjusted each year).

Effective January 1, 2008, SB 929 reduces the minimum hourly wage for application of the computer professional exemption from $49.77 to $36.00 per hour. The lower hourly wage threshold is intended to help the computer programming industry in California remain competitive nationally and globally.

Prevailing Wages

SB 929 also amends California Labor Code section 1773.9, which requires contractors and subcontractors performing work on certain public works to pay to their workers the “prevailing” rate of per diem wages. The prevailing rate includes both hourly wages and employee benefits, and is determined by the Director of Industrial Relations (DIR) with reference to collective bargaining agreements (CBA), wage rates for federal public works, and data from labor and employer groups. If the DIR determines that the general prevailing rate of per diem wages is the rate established by a CBA, and that the CBA contains pre-determined changes during its term that will affect the prevailing rate, those changes must be incorporated by the DIR into the prevailing wage determination.

SB 929 authorizes contractors and subcontractors, whenever the DIR prevailing wage determination contains a pre-determined change but does not specify how the change will be allocated between hourly wages and employer payments for benefits, to allocate payments equal to that change to either hourly wages or benefits for a specified time period, as provided. SB 929 also provides that, if the allocation of a pre-determined change is subsequently altered by the CBA that formed the basis of the prevailing wage determination, a contractor or subcontractor may allocate payments of not less than the amount of the definite and pre-determined change in accordance with either the originally published allocation or the allocation as altered in the CBA.

These changes are designed to protect employers from frivolous lawsuits that arose from inadvertently failure to comply with certain technical provisions of the former Labor Code section 1773.9.

SB 14: National Guard Participation in Cal-PERS

SB 14 permits officers, warrant officers, and enlisted personnel of the California National Guard to make a written election to become members of the California Public Employees’ Retirement System (Cal-PERS).

AB 338: Workers Compensation/Temporary Disability Benefits

AB 338 amends California Labor Code section 4656, which sets limits on temporary disability benefits under California’s workers compensation laws.

Currently, Labor Code section 4656 caps an injured worker’s eligibility for temporary disability benefits at 104 weeks. As interpreted by the Workers’ Compensation Appeals Board (WCAB), Labor Code section 4656 generally prohibits aggregate disability payments for a single injury occurring on or after April 19, 2004, from extending for more than 104 compensable weeks within a period of 2 years from the first date of temporary disability payments.

Effective January 1, 2008, AB 338 amends Labor Code section 4656 to provide that an injured worker is eligible to receive 104 compensable weeks of aggregate disability payments within a period of 5 years from the date of the injury.

By allowing 104 weeks of aggregate benefits within five years of the date of injury, AB 338 gives injured workers adequate time to obtain needed treatment, including surgery, and return to work after recovery. This approach also maintains the 104-week cap that has been important in speeding the claims process and improving return-to-work rates for injured workers.

Criminal Background Checks in California

2007-10-04T16:18:00.000-07:00

With increasing concern about identity theft and other crimes in the workplace, many employers are considering the implementation of a criminal background check policy. The Federal Trade Commission (FTC) reports that, in 2004, 9.3 million Americans (one in every 25 adults) were victims of identity theft. Perhaps more alarming to employers, as much as 50% of identity theft occurs in the workplace.¹ Since 2004, identity theft has been the fastest growing crime in the United States, and the FTC estimates that the majority of Americans will have been victims of identity theft by 2011.² Identity theft, like many other crimes, can be facilitated by access to confidential information in the workplace. Employers need to recognize their role in ensuring that persons with access to such confidential information do not have a history of engaging in criminal behavior.

Although there are few reported cases involving employer liability for identity theft committed by employees on the job, it is easy to predict an onslaught of these cases in the near future. California law imposes a duty of care on employers in hiring and supervising its employees: “An employer may be liable to a third person for the employer’s negligence in hiring or retaining an employee who is incompetent or unfit.” Federico v. Sup. Ct. (Jenry G.) (1997) 59 Cal.App.4th 1207. An employer’s liability for negligent hiring arises whenever a risk of harm is “reasonably foreseeable”; i.e., “when the employer knows, or should know, facts which would warn a reasonable person that the employee presents an undue risk of harm to third persons in light of the particular work to be performed.” Federico, supra, 59 Cal.App.4th at 1214 (emphasis added). This logic can, and likely will, be applied to identity crimes and other offenses that are emerging in the modern workplace.

In fact, over the years courts have held employers liable for the illegal acts of their employees in a variety of contexts. See Doe I v. City of Murrieta (2003) 102 Cal.App.4th 899 (police officer sexually abused a juvenile offender); Rahmel v. Lehndorff (1904) 142 Cal. 681 (waiter assaulted a patron in the restaurant); Underwriters Ins. Co. v. Purdie (1983) 145 Cal. App. 3d 57 (liquor store employee shot a delivery person); Evan F. v. Hughson United Methodist Church (1992) 8 Cal. App. 4th 828 (pastor sexually molested a youth parishioner); Najera v. Southern Pac. Co. (1961) 191 Cal. App. 2d 634 (employee assaulted a foreman at work); Monty v. Orlandi (1959) 169 Cal. App. 2d 620 (bartender struck a patron at the bar). The common thread in each of these cases is that the employer’s negligence in failing to conduct appropriate pre-employment screening was, in part, the basis of liability.

One way for employers to fulfill the duty of care they owe to their employees and patrons is to conduct criminal background checks. If an employer chooses to pursue this course, however, the employer must be careful to comply with the laws that govern criminal background checks. All employee background reports, including criminal background checks, raise issues under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., the California Consumer Credit Reporting Agencies Act (CCRAA), Cal. Civ. Code §§1785.1-1785.36, and the California Investigative Consumer Reporting Agencies Act (ICRAA), Cal. Civ. Code §1786. If the employer does the criminal background check itself, the FCRA doesn’t apply, but the CCRAA and the ICRAA may still be applicable. See Cal. Civil Code §1785.

The FCRA sets the national standard for employment background checks. Even in states like California that have laws governing background checks, employers have to follow the FCRA. State laws may confer additional rights to workers, but they cannot take away from the basic rights of the FCRA. In addition to covering credit checks, the FCRA governs all employment background checks, including criminal background checks, used to hire, promote, retain or reassign an employee.

The FCRA applies only when an employment background check is prepared by an outside screening company. It is not possible to address here all aspects of the FCRA. Essentially, when a third party performs a background check, the FCRA requires that (1) the employer notify the employee that an investigation may be performed, (2) the employee receive an opportunity to consent to the background check, and (3) the employee receive notification if information in the report is used to make an “adverse” employment decision.

Additionally, the FCRA requires that the employer provide a “pre-adverse action notice,” together with a copy of the background report before any adverse action is taken. The notice must advise the complainant of his or her rights to dispute inaccurate and/or incomplete information. If the employer takes adverse employment action without first providing this notice and giving the employee a right to respond, it will commit a violation of the FCRA.

California law is substantially similar to federal law. The most important distinguishing feature is that state law also covers employers who conduct background checks themselves, something the FCRA specifically excludes.

Under California law, an employment background check is called an investigative consumer report (ICR). If the employer uses an outside investigator to prepare the ICR, the outside investigator is called an Investigative Consumer Reporting Agency (ICRA). Before any ICRA conducts an investigation and prepares an ICR, the employee must receive a written notice that:

• States the purpose of the report.
• Gives the name, address, and telephone number of the investigator.
• Includes a summary of the employee’s rights to see and copy the report.
• Includes a box to check if the employee wants a copy of the report.

If the employee elects to see a copy of the report, it must be sent within three business days of the date the employer receives it. The report may come from the employer or from the investigator.

If the employer conducts a background check itself, without using an outside investigator, some notice requirements still exist, and each notice must include a box to check if the employee would like a copy of public records obtained in the investigation. California law does not require an employer who conducts a background check in-house to give detailed notice as is required when an outside agency is retained. At a minimum, however, the employer must give prior notice and provide the employee a right to receive a copy of any and all public records compiled in the report. See Cal. Civ. Code § 1786.16(2).

There is an important exception in California: employers are not required to get permission from an employee to conduct a criminal background check if the employer suspects the employee of wrongdoing or misconduct.

Under California law, criminal convictions can be reported up to seven years prior to the date of the report. See Cal. Civil Code §1786.18. With some important exceptions, employers can use the information contained in the criminal background report to make informed hiring decisions. Employers should note, however, that the California Labor Code prohibits employers from any taking any adverse action based on an arrest or detention that did not result in a conviction. Similarly, an employer cannot ask questions about a conviction for which the record has been ordered sealed, expunged or eradicated by the court, or an arrest for which pretrial diversion has been completed. See Cal. Labor Code §432.7. The Labor Code also prohibits employers from asking applicants about convictions that are more than two years old for possession of marijuana (other than concentrated cannabis), possession of paraphernalia for using marijuana, and presence in a location where marijuana is being used. See Cal. Labor Code §432.8.

Employers must keep in mind that any compilation of criminal background information, whether conducted in-house or by an outside investigator, may implicate the FCRA, the CCRA, and the ICRAA. A private right to sue exists under each of these statutes, see, e.g., 15 U.S.C. §§1681n, 1681o (FCRA), Cal. Civ. Code §§1786.20, 1786.1786.50, and penalties for violations can be substantial. For example, the ICRAA permits the employee to file suit for actual damages or $10,000, which ever is greater, as well as punitive damages in appropriate cases. Attorneys’ fees and costs may also be recoverable.

Practical Tips

There are good reasons for all California employers to consider the use of criminal background checks in their hiring practices. Because the laws in this area are complex, employers are advised to consult with an employment law attorney or experienced human resources professional to weigh the risks and benefits of adopting a policy regarding criminal background checks.

Once the employer decides to conduct criminal background checks, it should consider out-sourcing the background check process to a company that specializes in this area. Most companies can contact business associates to get a list of referrals. If not, a quick internet search will identify several companies from which the employer can choose a qualified service provider based on cost, turn-around time and security measures.

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1 H.J. Cummins, Identity Thieves Find Businesses a Rich Loan of Data, Star Tribune (July 18, 2007).

2 Peter Marshall, Identity Theft: Limiting Your Employees' Risk -- And Your Liability (January 19, 2006) HR.BLR.com, available for download at http://hr.blr.com.

Time off for pregnancy

2007-09-05T12:45:00.000-07:00

I have a pregnant employee who wants to take seven months off for her pregnancy and the birth of her child. Can she do that? Do I have to keep her job open, or can I replace her with another employee?

Depending on the number of employees you have, the number of months and the number of hours worked by the employee, she may be entitled to four months of California Pregnancy Disability Leave and an additional 12 workweeks of California Family Medical Leave to bond with the baby once the baby is born. If during the period that the employee is on leave, your business has a legitimate reduction in force or you have ample cause to terminate the employee, you may be able to do so. Pregnancy discrimination claims are on the rise so it is always prudent to contact your employment attorney before you terminate the pregnant employee. Here is a recap:

1. Employers with five or more employees have to provide employees who are disabled by pregnancy, childbirth and related medical conditions four months of job-protected leave per pregnancy.

2. Employers with 50 or more employees within 75 miles of one another for 20 calendar weeks are subject to the California Family Medical Leave Act and must provide 12 workweeks of job-protected leave to an eligible employee to stay home and bond with the baby. Dads and domestic partners get this leave too.

3. Eligible employees for the 12 weeks of baby-bonding time are those who have worked 1,250 hours in the previous 12 months and have been employed for 12 months.

Breaking News!! FEHC Approves Anti-Sexual Harassment Training Regulations

2007-08-01T10:28:00.000-07:00

The California Legislature made national headlines back in 2004 when it passed Assembly Bill (AB) 1825, which mandates sexual harassment training for all supervisory employees. Since that time, the Fair Employment and Housing Commission (“FEHC”) has issued several versions of its proposed regulations implementing AB 1825, using recommendations taken during public hearings to refine and clarify the substance of its sexual harassment prevention training requirements. On repeated occasions, the FEHC’s proposed regulations failed to gain approval from the Office of Administrative Law (“OAL”), primarily due to technical flaws and a lack of clarity, as well as a vigorous debate over the provisions outlining who is qualified to prepare and conduct anti-harassment training under the statute.

On July 18, 2007, the Office of Administrative Law (“OAL”) approved the final version of the FEHC regulations implementing AB 1825. The final regulations, entitled “Sexual Harassment Training and Education,” will become effective on August 17, 2007, and are available for download at www.fehc.ca.gov. Some highlights of the final regulations include the following:

The Basics

AB 1825 applies to all companies that regularly employ fifty (50) or more employees or “receive the services” of 50 or more persons. This means that an employer utilizing independent contractors or temporary workers must include these persons in making the determination whether the employer is obligated to provide AB 1825 training. There is no requirement that the fifty (50) employees or contractors work at the same location, or that all work or reside in California. Out-of-state employees must be included in determining the application of AB 1825, but the employer is not obligated to provide training to out-of-state employees. As a practical matter, however, a company that is required to establish a sexual harassment prevention training policy for its supervisory employees in California may conclude that such training is beneficial for out-of-state supervisors as well. If you are unsure whether your company is covered by AB 1825, you should consult with an experienced employment law attorney to develop your company’s policy.

AB 1825 mandates that employers complete their first round of supervisory training on or before January 1, 2006. Thereafter, employers must provide two (2) hours of sexual harassment prevention training to each supervisory employee every two years. New supervisory employees must be trained within six (6) months of accepting a supervisory position, and every two (2) years thereafter. However, a newly hired supervisor can “carry over” training from a previous employer and need only receive and acknowledge a copy of the new employer’s anti-harassment policy within six (6) months of arriving at the new job.

The final AB 1825 regulations allow employers to track compliance individually or by “training year.” Under the “training year” method, an employer may designate a “training year” in which it trains all supervisory employees and thereafter retrains them by the end of the next training year (e.g., all supervisors trained in training year 2005 are trained again in 2007). Employers must keep documentation of all sexual harassment prevention training, including the name of the supervisory employee trained, the date of training, the type of training, and the name of the qualified trainer. The documentation must be kept as a business record for a minimum of two (2) years. Remedies for failure to comply with this record-keeping requirement may include an administrative order from the FEHC finding that the employer is out of compliance, and demanding compliance within sixty (60) days.

Qualified Trainers

AB 1825 provides that prevention training must be taught by qualified “trainers or educators.” Those qualified to conduct AB 1825 training include any attorney with a minimum of two (2) years of experience and a practice specialty in employment law. AB 1825 training may also be conducted by certain educators with post-graduate degrees or teaching credentials and experience teaching college-level (or higher) employment law courses. Human resources professionals or “harassment prevention consultants” are qualified as trainers if they have at least two (2) years of practical experience designing or conducting discrimination and harassment prevention training, responding to sexual harassment or discrimination complaints, investigating claims, or advising companies or employees about prevention issues. Prior to hiring an AB 1825 trainer, a contracting employer should always obtain written verification that the proposed trainer meets the education and/or experience requirements set forth at Section 7288(a)(9) of the FEHC regulations.

Training Content

AB 1825 mandates that sexual harassment prevention training must be of a high quality, conducted via “classroom or other effective interactive training.” The training must include information and practical guidance regarding federal and state statutory laws prohibiting sexual harassment, the correction of sexual harassment and the remedies available to victims, and illustrations aimed at instructing supervisors in the prevention of sexual harassment, discrimination, and retaliation. The FEHC final regulations contain a list of mandatory topics for AB 1825 training:

· A definition of unlawful sexual harassment under both the California Fair Employment and Housing Act (“FEHA”) and Title VII of the federal Civil Rights Act of 1964 (“Title VII”).

· A summary of FEHA and Title VII statutory provisions and case law principles that prohibit sexual harassment, discrimination and retaliation in the workplace, including the employer’s affirmative obligation to identify and prevent such unlawful conduct.

· The types of conduct that constitutes sexual harassment.

· Remedies available for sexual harassment.

· Strategies to prevent sexual harassment in the workplace.

· “Practical examples,” such as fact patterns taken from case law, news and media accounts, hypotheticals based on workplace situations and other sources which illustrate sexual harassment, discrimination and retaliation using training techniques such as role playing, case studies and group discussions.

· The limited confidentiality of the complaint process.

· Resources for victims of unlawful sexual harassment, such as to whom within the change of command they can/should report any alleged sexual harassment.

· The employer’s obligation to conduct an effective workplace investigation of any and all harassment complaints.

· Training on what to do if the supervisor is personally accused of harassment.

· The essential elements of an anti-harassment policy and how to utilize it if a harassment complaint is filed.

Regardless of whether the employer’s own employee handbook or discrimination policies are used in the training, AB 1825 also requires that the employer provide a copy of its anti-harassment policy to each supervisor, and that each supervisor acknowledge receipt and understanding of the policy.

Types of Training

The “effective interactive training” contemplated by AB 1825 can take one of several forms. In addition to traditional classroom training, which consists of in-person instruction, with content created by a trainer in a setting removed from the supervisor’s daily duties, AB 1825 also authorizes:

E-Learning. Employers may satisfy the requirements of AB 1825 by providing individualized, interactive, computer-based training created by a qualified trainer and an instructional designer. The e-learning training must provide a link or directions on how to contact a trainer who must be available to answer questions and to provide guidance and assistance about the training within a “reasonable” period of time (no more than two business days).

Webinar. AB 1825 also specifically authorizes “webinar” training – defined as an internet-based seminar with content created and taught by a qualified trainer and transmitted over the internet or intranet in real time. The webinar must provide the supervisors an opportunity to ask questions, to have them answered and otherwise to seek guidance and assistance. If an employer elects to use webinar training, it must maintain documentation to establish that each supervisor who was not physically present in the same room as the trainer actually attended the webinar training and actively participated with the training’s interactive content, discussion questions, hypothetical scenarios, quizzes or tests, and activities.

Regardless of the type of training utilized, AB 1825 also requires that the training program include questions that assess learning, skill-building activities that assess the supervisor’s application and understanding of content learned, and numerous hypothetical scenarios about harassment, each with one or more discussion questions so that supervisors remain engaged in the training.

Good Faith Compliance

For employers who began their AB 1825 compliance programs before the OAL adopted these final regulations, there is one more important note:

An employer who has made a substantial, good faith effort to comply with [AB 1825] by completing training of its supervisors prior to the effective date of these regulations shall be deemed to be in compliance with [AB 1825] regarding training as though it had been done under these regulations.

If you are unsure whether the AB 1825 compliance program adopted by your company complies with the new FEHC regulations, you should make every effort to complete your AB 1825 training before August 17, 2007. Any training program completed before August 17th that makes a substantial, good faith effort to train supervisors on prevention of sexual harassment in the workplace will be deemed compliant and not subject to the new FEHC regulations. Beginning August 17th, all companies should review their AB 1825 policies with employment law counsel or experienced Human Resources professionals to ensure compliance with the FEHC regulations on a go-forward basis.

EMPLOYEE IS PROTECTED FROM DISCHARGE FOR MAKING A COMPLAINT ABOUT THREATS OF WORKPLACE VIOLENCE

2007-07-05T15:06:00.000-07:00

A California appellate court recently held that the public interest in a “safe workplace” and a “crime-free” workplace protects an employee from discharge for making complaints about an employee who threatens him or her with physical violence. Franklin v. The Monadnock Company, 151 Cal. App. 4th 252 (May 24, 2007).

The Law

Under California Labor Code § 2922, the employment relationship is presumed to be terminable “at-will.” Absent a contractual provision or statutory requirement to the contrary, either the employer or the employee may terminate the employment relationship at any time, with or without notice, for any reason.

Over the years, the legislature and the courts have carved out numerous exceptions to the at-will employment doctrine. One of these exceptions arises when an employee is terminated for “performing an act that public policy would encourage, or for refusing to do something that public policy would condemn.” Gannt v. Sentry Insurance, 1 Cal. 4th 1083 (1992). In Stevenson v. Superior Court, 16 Cal. 4th 880 (1997), the California Supreme Court outlined the requirements of this “public policy” exception: First, the policy must be supported by either constitutional or statutory provisions. Second, the policy must be “public” in the sense that it “inures to the benefit of the public” rather than serving merely the interests of the individual. Third, the policy must have been articulated at the time of the discharge. Fourth, the policy must be “fundamental” and “substantial.” Stevenson, supra, 15 Cal. 4th at 889-890.

Franklin v. The Monadnock Company

Calvin Franklin worked as a “heat treater” at a small parts manufacturing plant. A co-worker named Richard Ventura allegedly made threats against Franklin and three other employees, stating that he would “have them killed.” Franklin and the others reported Ventura’s alleged threats to the employer’s Human Resources Department (“HR”), but the employer did not take any action. A week later, Ventura allegedly attempted to stab Franklin with a metal screwdriver. Franklin filed a police report stating that “his safety, as well as that of his co-workers, was being endangered” by Ventura. According to Franklin, the employer then terminated his employment because of his “internal” complaints to HR and his “external” complaints to the police department.

Franklin filed a lawsuit alleging, among other things, that the employer terminated him in violation of the “public policy” requiring an employer to provide a “safe workplace” and a “crime-free workplace.” The employer filed a demurrer (the California equivalent of a motion to dismiss the complaint) challenging whether Franklin could state a valid wrongful termination claim on these facts.

The court held that the allegations of Franklin’s complaint, taken as true, would support a cause of action for wrongful termination in violation “public policy.” Specifically, the court determined that California’s statutes, when read together, establish a fundamental “public policy requiring employers to provide a safe and secure workplace, including a requirement that an employer take reasonable steps to address credible threats of violence in the workplace.” As sources for this public policy, the court cited California Labor Code §§ 6400 et seq. (occupational safety statutes); California Code of Civil Procedure § 527.8 (giving employers the ability to seek workplace violence restraining orders on behalf of employees); and California Penal Code § 422 (criminalizing certain threats of violence). Because Franklin alleged that he articulated this fundamental public policy at the time of his termination, the court had little difficulty concluding that his complaint was sufficient to state a valid wrongful termination claim.

Practical Tips

The reasoning of Franklin is subject to debate, since the court could not identify any specific constitutional or statutory provision that requires an employer to prevent workplace violence. As a practical matter, however, the court’s decision in Franklin – that an employer cannot terminate an employee for complaining about workplace violence -- makes common sense and should not come as a surprise to California employers. Employers should take all complaints of workplace violence seriously, and should not penalize any employee for raising such issues with managers, HR professionals or law enforcement.

The broader language of Franklin stating that employers are required to “provide a safe and secure workplace, including a requirement that an employer take reasonable steps to address credible threats of violence in the workplace” should also be taken seriously. Employers should audit their employee handbooks to ensure that the topic of workplace violence is adequately addressed and that employees have a clear understanding of their reporting options. Employers should also train supervisors and managers to spot workplace violence issues and bring them to the attention of HR professionals.

Finally, employers should understand that workplace violence is among the most delicate issues in the workplace, and that the consequences of mishandling workplace violence can be tragic. Employers should intervene immediately, but carefully, and should consult experienced HR professionals and employment counsel at every step of the decision-making process.

Just in! The U.S. Congress passed and President Bush has signed a Federal Minimum Wage Increase

2007-06-04T10:48:00.000-07:00

The U.S. Congress passed a Minimum Wage increase. President Bush signed the bill on May 25, 2007. The increase will take place in three stages. It will increase from the current $5.15 an hour to $7.25 per hour over the next two years.

However this change does not supersede California State minimum wage mandates. Currently minimum wage for California is $7.50 and will increase to $8.00 effective January 1, 2008.

Essentially the Federal Minimum wage increase only means, to California employers, a change in the required postings. When new Federal Minimum Wage posters become available, employers must replace their old posters with the new.

Breaking News!! The Meal and Rest Time Premium is NOT a Penalty

2007-04-20T15:33:00.000-07:00

The California Supreme Court case of Murphy v. Kenneth Cole Productions, Inc., 2007 WL 1111233, confirms an unsettled issue surrounding the proper interpretation of Labor Code section 226.7. Namely, the premium imposed on employers for meal and rest time violations is not a penalty; it must be classified as wages. Disagreement about whether this ruling is good or bad depends on your perspective; however, most will agree that it will have real consequences for employers . . . three (3) times the consequences, to be exact.

Instead of one (1) year, an employee can now reach back three (3) years to recover for meal and rest time violations. In addition, lifting the penalty classification has unveiled the applicability of Business & Professions Code section 17200 to meal and rest time violations. That section provides for class action lawsuits and further provides a 4 year statute of limitations.

Given the Murphy ruling, it is not enough for employers to simply implement a meal and rest time policy that matches the Labor Code. To protect against costly lawsuits, the employer must also require, enforce and document compliance.

To read more about this topic, click here to view The Ison Law Group's newsletter...

Sexual Harassment – An Age Old Issue Continues to Plague Organizations

2007-03-23T15:03:00.000-07:00

The issue of sexual harassment in the workplace is constant and ongoing. On March 8, 2007, the EEOC obtained a $1.1 Million dollar verdict in EEOC v. Custom Companies, Inc., et al, N.D. Ill. Nos. 02-C-3768 and 03-C2293, Mem. Op. & Order 3/8/2007.

The EEOC charged that female sales associates were exposed to unwelcome workplace groping, lewd sexual language, sexual propositions, pornography and were retaliated against when they complained to the government. The EEOC maintained that the female sales representatives were expected to entertain Custom Companies customers and potential clients at the “Thee Doll House” and its successor “Crazy Horse Too,” so-called “gentlemen’s” or “strip” clubs on Kingsbury Street in Chicago, now known as “VIP’s: A Gentlemen’s Club.” The EEOC presented evidence at trial that the Chief Executive Officer of Custom Companies also had an ownership interest in and was the Chief Executive Officer of “The Doll House” and “Crazy Horse Too.”

The EEOC brought the lawsuit under Title VII of the Civil Rights Act of 1964. Sexual harassment violates Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination based on race, color, religion, sex (including sexual harassment or pregnancy) or national origin and protects employees who complain about such offenses from retaliation.

Ultimately the judge ordered that Custom Companies cease sponsoring company events at “a place of adult entertainment or which includes adult entertainers” and that Custom Companies distribute a notice to its customers and employees “advising them of the jury verdict [and] the court’s judgment.” The court ordered employees to be notified of their “right to contact the EEOC without fear of retaliation,” and further ordered the employer to provide sexual harassment training for all employees, including top executives and supervisors.

What should you do to prevent claims of sexual harassment?

1) Take all complaints of sexual harassment seriously and thoroughly investigate.
2) Draft and implement a employee handbook with a detailed sexual harassment policy containing a clear complaint reporting procedure.
3) In California, employers with 50 or more employees and independent contractors are required to provide 2 hours of interactive training every two years.

Blog on about other best practices for preventing sexual harassment in the workplace.

The Backdoor Approach – Avoiding a Tangled Web

2007-03-23T14:57:00.000-07:00

Here is the scenario. The manager has an employee who has been working for 2+ years. The manager sets up a meeting with HR. The manager details stories of how this employee is not performing. The manager recalls all the issues that have occurred for as long as the employee has worked for the employer. The manager then asks, "Can I terminate this employee?"

The dutiful HR representative reviews the personnel file to see if the file contains any prior documentation on this employee. What do you think the HR person found? Nothing!!!! No written performance plans or discipline. What was found are performance evaluations where the manager rated the employee as “meets expectations.” The manager has also given the employee merit increases. The HR representative brings up the company's "progressive disciplinary policy" and reminds the manager he/she failed to follow it making the termination risky. The manager responds...let's just lay the employee off." The manager, unbeknownst to the HR representative is being pressured from upper management to cut the budget and would much rather deal with this difficult employee through budget cuts. Sound familiar? Other possibilities suggested by the manager include transferring the employee into another department, using some technicality to terminate the employee, making up a reason to terminate the employee, or worse yet, "making it hard" on the employee so they will quit. Alas, “The Backdoor Approach.”

Granted...dealing with difficult employees is not a walk in park, but let’s face it...honesty is the best policy. After all, we are in an age where full disclosure and corporate transparency are becoming common terms of our day. Using the "Backdoor Approach" can leave an organization exposed to punitive damage liability.

To avoid getting stuck in a tangled web, three points apply:

1. If you have a progressive disciplinary policy -– follow it. Better yet, get rid of it and make everyone an "At-Will" employee. Draft and implement a performance for improvement coaching methodology...it focuses on the positive...evaluate employees no less than quarterly.
2. Document all counselings...email is better than nothing...but the best practice is for the employee to sign off on receipt of the coaching.
3. Employ and utilize experienced employment law counsel.

Do you have questions or comments? Share with us!

Flawed Firings – Avoid Public Scrutiny and Preserve Dignity

2007-03-23T13:58:00.000-07:00

Today’s headlines scream about the scandalous terminations of our U.S. Attorneys. The Whitehouse probe will determine if the firings of our eight prosecutors were politically motivated. Although what happens in Washington seems far removed from our daily lives we at The Ison Law Group see "flawed firings" daily.

So let's talk about how to terminate ethically as well as legally.

Consider that in August of 2006, Radio Shack terminated 400 employees via email. What about the manager, who in spite of coaching, chose to fire an associate via the fax. Another story I recall, of long ago, is of a manager who one morning when driving into the parking lot, spotted an employee who was about to be fired, drove up to the employee, rolled down the window, and said "I wouldn’t bother going in today because today is your last day".

Follow these steps for a lawful and ethical termination:

1. Remember to be human – show some compassion when firing the employee.
2. Privacy, privacy, privacy – In spite of Donald Trump’s methodology, the firing should not be a public spectacle, keep it private.
3. Inquiring minds want to know – if co-workers ask where’s so and so today? Read point 2 above. Keep it private, don’t be a contributor to the grapevine.
4. In California, you must have the final check cut and ready to give to the employee on their last day.
5. Have you retained other employees for the same infractions.
6. Has the employee complained recently of a violation of the law or exercised a legal or employer right to complain?
7. Have you followed your own policies regarding termination?
8. Have you provided the employee with the FOR YOUR BENEFITS document from the EDD?

What are your thoughts on this topic? Do you have any best practice ideas to share?

Appropriate Wage Order

2007-03-15T12:41:00.000-07:00

How do I determine if I have the appropriate wage order posted?

All California employers must post at least one of the 17 Wage Orders, a Summary of the Industry Specific Wage Orders and the California Minimum Wage Order. To determine the applicable wage order, you must first determine if your business is covered by one of the industrial wage orders: 1-Manufacturing; 2-Personal Service; 3-Canning Freezing and Preserving Industry; 5-Public Housekeeping; 6-Laundry, Linen Supply, Dry Cleaning and Dyeing Industry; 7-Mercantile; 8-Industries Handling Products after Harvest; 9-Transportation; 10-Amusement and Recreation Industry; 11-Broadcasting; 12-Motion Picture; 13-Industries Preparing Agricultural Products for the Market on the Farm; and 16-Construction. If the primary purpose of your business matches one of the Industry Wide Wage Orders, post it along with the Summary and Minimum Wage Posters and you are finished. If not, you need to see if the primary purpose of your business falls under one of the Occupational Wage Orders -- Wage Order Nos. 4, 14, 15, 17. More than one Wage Order may be applicable.

To obtain a wage order click here.