DLSE's Digest of New California Employment Laws

The California Division of Labor Standards Enforcement compiled a booklet of new California employment laws, as well as some bills that did not make the cut.

The digest includes the new wage-hour related laws, organized by subject matter, a brief description, and whether the law was passed or vetoed.  Download your own copy here.

Don't ever say I did not give you anything for Festivus.

Greg

California Confusion over Paid Sick Leave

DLSE: The Wage Theft Templates Need Updating!  Or do they?

Per Labor Code 2810.5, employers must provide non-exempt workers with a Wage Theft Notice at the time of hire and after certain changes to wages and other covered matters.

The DLSE publishes a template on a website, called Wage Theft Protection Act.  The template forms are available in several languages.

California's new paid sick leave law, AB 1522,  modified Lab. Code section 2810.5.  The revised law requires the Wage Theft Notice to include information about paid sick leave. Although no sick leave accrues until July 1, 2015, employers must issue a new Wage Theft Notice beginning January 1, 2015.

So, DLSE should have issued a revised template.  Oh, you want the revised template notice?  DON'T look at the Wage Theft Protection Act page linked above.  Instead, go over to the DLSE's paid sick leave page, here. There, you will find the new Wage Theft form.

DLSE, please fix this.

Exempt Employees

Section 2810.5, the Wage Theft Protection Act, requires the notice discussed above. But exempt employees (i.e., executive, administrative and professional exempt) do not count. They are not required to receive the notice.

At the same time, exempt employees ARE required to receive paid sick leave under the new law.  Do you have to provide exempt employees within individualized information about paid sick leave?

Nobody knows. It appears that exempt employees are required to have their accrued sick leave balances on their checks, and they must be able to see the poster.  But, because section 2810.5 does not apply to exempt employees they do not have to receive a Lab. Code section 2810.5 notice.

* * * *

Merry Christmas!

IRS Increases Standard Mileage Reimbursement Rate to $0.575

Please see the Chamber's post on the increase to the standard mileage rate. (Here).  Most employers are concerned with the business reimbursement rate, which goes up to $0.575 per mile effective January 1, 2015.

Here's a quick spiel on the significance of the standard mileage rate:

Employers in California are required to reimburse employees for reasonably necessary expenses incurred in connection with their work via Labor Code section 2802.  Expenses associated with personal use of their vehicles are included within 2802.

Most employers pay the IRS reimbursement rate. It is not mandatory to do so. But how do you calculate how much oil, tires, and brake shoes that an employee's business trip will consume?
Right, you can't.  That's why it pays to pay the standard rate.

Employees may argue that the standard rate is not enough. But it's their burden to show that their actual, reasonably necessary expenses were worth more than the standard rate. And it's going to be hard for them to measure the "actual" necessary costs of operating a car for a 30 mile trip.

NLRB Overrules Itself and Appropriates Companies' Email Systems for Employees' Protected Communications

In 2007 the National Labor Relations Board held, in The Guard Publishing Company, dba Register Guard, 351 NLRB 1110 (2007), that employers do not have to permit union organizing activity over their own email system.  Here's the essence of that decision:

An employer has a “basic property right” to “regulate and restrict employee use of company property.” Union Carbide Corp. v. NLRB, 714 F.2d 657, 663–664 (6th Cir. 1983). The Respondent’s communications system, including its e-mail system, is the Respondent’s property and was purchased by the Respondent for use in operating its business. The General Counsel concedes that the Respondent has a legitimate business interest in maintaining the efficient operation of its e-mail system, and that employers who have invested in an e-mail system have valid concerns about such issues as preserving server space, protecting against computer viruses and dissemination of confidential information, and avoiding company liability for employees’ inappropriate e-mails. * * * *In numerous cases, however, where the Board has addressed whether employees have the right to use other types of employer-owned property—such as bulletin boards, telephones, and televisions—for Section 7 communications, the Board has consistently held that there is “no statutory right . . . to use an employer’s equipment or media,” as long as the restrictions are nondiscriminatory. * * * *Accordingly, we hold that the Respondent may lawfully bar employees’ nonwork-related use of its e-mail system, unless the Respondent acts in a manner that discriminates against Section 7 activity.

Good times.  But, to paraphrase a talking head's recent statement in another context, "dude, that was like 7 years ago!"  Relying in part on "scholars," second only to referencing "studies" when justifying a peremptory exercise of raw power, the Board has overruled itself.  As a result, employers may not prohibit employees' personal use of email, during non-work time, about a host of subjects covered under section 7 of the National Labor Relations Act, including union activity.

The new decision, following a long tradition of colorful NLRB precedent names, is Purple Communications, Inc., 361 NLRB No. 126 (2014). There, the Company had an email policy that will remind you of your company's policy:

INTERNET, INTRANET, VOICEMAIL AND ELECTRONIC COMMUNICATION POLICY
Computers, laptops, internet access, voicemail, electronic mail (email), Blackberry, cellular telephones and/or other Company equipment is provided and maintained by the [sic] Purple to facilitate Company business. All information and messages stored, sent, and received on these systems are the sole and exclusive property of the Company, regardless of the author or recipient. All such equipment and access should be used for business purposes only.

Prohibited activities
Employees are strictly prohibited from using the computer,  internet, voicemail and email systems, and other Company equipment in connection with any of the following activities
2. Engaging in activities on behalf of organizations or persons with no professional or business affiliation with the Company.
. . . .
5. Sending uninvited email of a personal nature.

All agreed that the policy was lawful under Register Guard, by the way.  Rather, the union and NLRB's general counsel specifically asked the NLRB to overrule the prior decision.

Challenge accepted.  Here's the Board's ruling:

we will presume that employees who have rightful access to their employer’s email system in the course of their work have a right to use the email system to engage in Section 7-protected communications on nonworking time. An employer may rebut the presumption by demonstrating that special circumstances necessary to maintain production or discipline justify restricting its employees’ rights.66 Because limitations on employee communication should be no more restrictive than necessary to protect the employer’s interests,67 we anticipate that it will be the rare case where special circumstances justify a total ban on nonwork email use by employees. In more typical cases, where special circumstances do not justify a total ban, employers may nonetheless apply uniform and consistently enforced controls over their email systems to the extent that such controls are necessary to maintain production and discipline.

(emphasis mine)

I will spare you the detailed rationale. The opinion is above. But the gist of it is that email is a ubiquitous form of communication; employees have special rights to communicate at work about section 7 issues; and the special nature of email warrants treating it different from other company property like bulletin boards. And the employer's property rights must yield to section 7 rights.

Finally, the NLRB decided to apply its decision "retroactively" to pending cases.  So, employers must take action.

So, what does this change mean?

1.  Email policies must allow employees to communicate about activities protected by Section 7 of the National Labor Relations Act.  The catch is that Section 7 is very broad, and permits communications about "wages, hours, and other terms and conditions of employment."  That means, for example, that it's unlawful to prohibit employees' criticism of a boss related to working conditions, or to share salary information over email, and more.

2. The Board's decision applies only to employees.  It does not grant outsiders' access to the Company's email.  It may be, although this is unclear, it means that the employer can ban non-work-related communications over its email system with outsiders.

3.  The decision allows employers to prohibit use of its email system during working time, as long as the policy remains non-discriminatory.

4.  Employers must re-draft their electronic communications policies now, as this decision applies to the unionized and non-unionized workforce, at least those within the jurisdiction of the NLRB.

5. Employers are not required to grant email access to employees for the purpose of making such communications.

6. The decision does not apply to other types of communication (e.g., instant message, text). However, my prediction is that the Board will address those modes in another case.

7.  There will be litigation over what will qualify as allowed "uniform and consistently enforced controls over their email systems to the extent that such controls are necessary to maintain production and discipline."  So, prepare for more handbook updates.

8. The decision may be appealed to the U.S. Court of Appeals, which could decline to enforce it. But this case is Board precedent, which will guide future decisions by Administrative Law Judges.  Also, Courts of Appeals usually (almost always) enforce the Board's interpretation of the NLRA.

What of employer monitoring?

You may ask, rightly, whether an employer who monitors email will be accused of "spying" in violation of the NLRA.  Of course it will!  But, to its credit, the Board addressed this issue, and allows employers to continue email monitoring as a general practice, so long as it is not targeted at section 7-related communications, including of course union organizing activity:

Our decision does not prevent employers from continuing, as many already do, to monitor their computers and email systems for legitimate management reasons, such as ensuring productivity and preventing email use for purposes of harassment or other activities that could give rise to employer liability.73 The Respondent and some amici assert that such monitoring may make them vulnerable to allegations of unlawful surveillance of employees’ Section 7 activity. We are confident, however, that we can assess any surveillance allegations by the same standards that we apply to alleged surveillance in the bricks-and-mortar world. Board law establishes that “those who choose openly to engage in union activities at or near the employer’s premises cannot be heard to complain when management observes them. The Board has long held that management officials may observe public union activity without violating the Act so long as those officials do not ‘do something out of the ordinary.’”74 An employer’s monitoring of electronic communications on its email system will similarly be lawful so long as the employer does nothing out of the ordinary, such as increasing its monitoring during an organizational campaign or focusing its monitoring efforts on protected conduct or union activists. Nor is an employer ordinarily prevented from notifying its employees, as many employers also do already, that it monitors (or reserves the right to monitor) computer and email use for legitimate management reasons and that employees may have no expectation of privacy in their use of the employer’s email system.

So, it's not illegal to monitor for harassment, trade secret misappropriation, etc. 

Happy holidays!

Greg

Unanimous U.S. Supreme Court: Security Screenings Non-Compensable Under FLSA

The Supreme Court further explained how to determine whether time spent at work is "preliminary" or "postliminary" and therefore not compensable under the federal Fair Labor Standards Act.  Per the Court:

The employer in this case required its employees, warehouse workers who retrieved inventory and packaged it for shipment, to undergo an antitheft security screening before leaving the warehouse each day.

The case involved temporary workers at an Amazon warehouse.  They were actually employed by Integrity Staffing Solutions, an agency.  Naturally, with all of that inventory around, security was important to minimize theft. So, 

Integrity Staffing required its employees to undergo a security screening before leaving the warehouse at the end of each day. During this screening, employees removed items such as wallets, keys, and belts from their persons and passed through metal detectors.

Busk and other employees filed a class action, claiming that the time spent on the screenings should be compensated because they were required to wait to be screened, because screening was for the employer's benefit, and because the screening process could take considerably more than a couple of minutes in some cases (sometimes up to 25 minutes even).

In a 9-0 opinion by Justice Thomas, with a concurrence by Justice Sotomayor with Justice Kagan joining, the Supreme Court reversed the 9th Circuit Court of Appeals.

The legal issue here involves the "Portal to Portal Act," which modified the federal Fair Labor Standards Act.  The P2P Act, as I like to call it today,  exempts from compensable time "activities which are preliminary to or postliminary" to "principal activities.” If they are pre- or post-luminary, they are not compensable.

Security screenings obviously are not "principal" actives. But that does not render them automatically pre- or postliminiary. That is because the term, "principal" activities, includes "all activities which are an ‘integral and indispensable part of the principal activities."

The Court explained what "integral and indispensable" means:

An activity is therefore integral and indispensable to the principal activities that an employee is employed to perform if it is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.

Again, if it's "integral and indispensable" then it's compensable time under the FLSA.

So, the court applied the above definition of integral and indispensable to security screenings, thusly:

The security screenings at issue here are noncompensable postliminary activities. To begin with, the screenings were not the “principal activity or activities which [the] employee is employed to perform.” 29 U. S. C. §254(a)(1). Integrity Staffing did not employ its workers to undergo security screenings, but to retrieve products from ware- house shelves and package those products for shipment to Amazon customers.

The security screenings also were not “integral and indispensable” to the employees’ duties as warehouse workers. As explained above, an activity is not integral and indispensable to an employee’s principal activities unless it is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform those activities. The screenings were not an intrinsic element of retrieving products from warehouse shelves or packaging them for shipment. And Integrity Staffing could have eliminated the screenings altogether without impairing the employees’ ability to complete their work.

(emphasis mine)

The Court rejected the 9th circuit court of appeals's conclusion that the time was compensable because the employees were "required" to undergo the screenings, and also rejected the notion that the time was compensable because it was for the employer's benefit:

If the test could be satisfied merely by the fact that an employer required an activity, it would sweep into “principal activities” the very activities that the Portal-to-Portal Act was designed to address. The employer in Anderson, for instance, required its employees to walk “from a timeclock near the factory gate to a workstation” so that they could “begin their work,” . . . . A test that turns on whether the activity is for the benefit of the employer is similarly overbroad.

The plaintiffs argued that the employer could have reduced the screening time by adding more screeners or by staggering break and shift times.  But the Court held that the employer's power to reduce the time it took did not change the character of  the activity from non-compensable to compensable. 

So, big victory for employers under the FLSA.  California employers, not so fast.

There is no P2P Act under California law.  Rather, all time is compensable if the employee is "subject to the control of the employer." That's why what may seem as "preiminary" or "postliminary" under California law may nonetheless be compensable.  As the California Supreme Court once wrote in rejecting importation of the P2P Act: "we conclude that the federal statutory scheme, which differs substantially from the state scheme, should be given no deference." Morillion v. Royal Packing Co., 22 Cal. 4th 575, 588 (2000).

Therefore, my opinion is, and I say that emphasizing this is NOT legal advice: employers should not change practices in California unless or until the California courts adopt the holding in this case, or unless or until a wage-hour lawyer with really good insurance says it's ok. 

Good luck out there.

The opinion in Integrity Staffing Solutions, Inc. v. Busk is here.

Greg 

About My Post Below on McLean v. California

I just learned the California Supreme Court has granted review in the McLean case that discussed below (here). So, as Emily Litella said, "never mind" until the high court rules...

Court of Appeal: Employees Who "Retire" Have Quit Under the Labor Code

McLean v. California involves public sector employees, but it's applicable to the private sector as well.  McLean worked as a deputy attorney general. She retired in November 2010.  On her last day, she alleges, the state did not pay her final wages.

In California, all wages (including base pay, unused vacation, vested bonuses or commissions, etc.) are due on the termination date, subject to a few, narrow exceptions.  Employees who resign with less than 72 hours notice are due their wages within 72 hours of the termination date.   These provisions are contained within sections 201 and 202 of the Labor Code. There are various statutory exceptions applicable to certain industries. 

This requirement by law generally applies to state agencies.  However, state employees may elect to transfer accrued leave pay to a retirement account rather than take payment.  The state is deemed timely if it makes that transfer within 45 days of termination.

When employers pay employees after the deadline, Labor Code section 203 says that employers owe a penalty of one day's pay for each day that the pay is late, up to a maximum of 30 days' pay.  (Example: employee earns $100 per day. Employer is 31 days late with final pay. Employer owns penalty of 30 X $100 = $3,000).   The failure to pay must be "willful," which is a liberal definition and means that the employer intentionally did not pay what was owed.  Mistakes may not be deemed "willful" but many are.  Genuine disputes over what is owed (such as the calculation of a commission "earned" as of the termination date) do not count as "willful."

Attempting to avoid penalties, the state argued that "retirement" is not "quitting" under the Labor Code.  McLean and the state argued the dictionary definition and other issues to the court of appeal.    Not surprisingly, to me anyway, the court of appeal held that a retirement is a type of "quit."

So, when a person "retires," that person also "quits" within the meaning of Labor Code section 202.  If you think this post is too long, consider that it took about 14 pages for the court to get there.  

This case is McLean v. California and the opinion is here. 

Court of Appeal: Meal Period Class Action Not "Welcome to Walgreens"

This is not a class action post, bored blog readers. Read this one if you are interested in meal and break issues.

The Court of Appeal affirmed the denial of class certification in a meal and break case.  The ruling is against a recent tide of class action opinions.  The opinion, though is good not only about class certification, but about explaining meal break rules.

The Court of Appeal explained the current state of California law on meal breaks in refreshing, plain English, as follows:

Under the make available standard, the employer merely must make meal breaks available. That is, the employer must relieve the employee of all job duties for the meal break, and then the employer may allow employees to decide for themselves whether to take the break. This make available standard thus allows an employee to choose to skip the break and, for instance, to leave work early instead. If the employer provides a break opportunity to the worker, the employer incurs no liability if the employee then decides to skip or delay the break.

Walgreens employees sometimes did decide to skip or delay breaks. One employee explained, for instance, that “I generally take my lunch breaks, but about once a week I will skip lunch because I want to be able to leave work early.” Another testified that, “[e]ven though it has always been Walgreens’ policy to provide a 30-minute meal period, I preferred to skip mine and instead leave early. If I am not hungry, which is typically the case, I do not need a meal period, especially since it is unpaid time.” There was other similar evidence about skipping or delaying breaks. 

The Court then explained what the law is not.

Under the alternative ensure standard, an employer must ensure employees take breaks. That is, an employer must make workers take meal breaks whether they want them or not. Employers are liable for missed meal breaks even when workers choose to skip their breaks because the ensure rule makes breaks mandatory. 

Recall that the California Supreme court has rejected the "ensure" standard.

The Court of Appeal then explained why the "make available" standard is not amenable to class certification:

Meal break classes are harder to certify under a make available test because the fact of a missed break does not dictate the conclusion of a violation (and thus employer liability). Rather, under the make available standard you additionally must ask why the worker missed the break before you can determine whether the employer is liable. If the worker was free to take the break and simply chose to skip or delay it, there is no violation and no employer liability. This make available test thus can make analysis of break violations more complex than under the ensure standard.

Amen.  Bold is mine.

The plaintiff, curiously, argued that Walgreens management's emails insisting that employees take meal breaks supported class certification.  The trial court disagreed and so did the Court of Appeal:

“Just an FYI . . . if anyone is on this list, they did not receive a lunch. Please, you must talk to the assistant managers and find out why. . . . please make a big deal about this . . . remind employees that it is their job to ask for a break or lunch if they did not receive it, but also remind the Managers on duty that they must have a break schedule created for every shift . . . there is no negotiation about this . . . there is no excuse not to give a break or lunch . . . look at your schedule and make sure you have the right people at the right time." 

* * * *

This email evidence cut against Collins’s motion. “[A]n employer may not undermine a formal policy of providing meal breaks by pressuring employees to perform their duties in ways that omit breaks.” (Brinker Restaurant Corp. v. Superior Court, supra, 53 Cal.4th at p. 1040.) These emails, however, do not show Walgreens pressuring employees to omit breaks. They show the opposite: Walgreens pressuring store managers to ensure employees took meal breaks. The emails show respect for workers’ rights, not pressure against them.

Here's a part of the opinion that makes me want to apply for State Bar Judge. The Court of Appeal exposed the plaintiff's attorney's practices of drafting form declarations containing information that contradicted what employees had told the plaintiffs'  lawyers, which the employees then signed anyway:

Collins presented 44 form declarations. They were mostly identical. Each one
stated that on some occasions “meal periods were not made available to me.” The ostensible reason was “we were short-handed and I was required to work through my meal period.” 

The trial court gave the declarations no weight because they were unreliable. Most deposition witnesses recanted their declarations to some degree or entirely. The prevalence of falsity in the declarations raised questions about how Collins’s lawyers had created these declarations in the first place. * * * 

The trial judge repeatedly said these declarations “appalled” him, and he told counsel, “You know better.” 

The trial court was “especially troubled” that, once deposed, so many witnesses recanted their declarations. 

Form declarations present a problem. When witnesses speak exactly the same words, one wonders who put those words there, and how accurate and reliable those words are. 

There is nothing attractive about submitting form declarations contrary to the witnesses’ actual testimony. This practice corrupts the pursuit of truth.
It was not error for the trial court to give these unreliable declarations no weight. 

To employers:
- Ensure your meal period policies are lawful and require employees to take meal periods. Do not make them "optional" because of the "make available" legal standard.  If they do not take them, contrary to company expectations, that will not result automatically in liability and will help  thwart class certification.
- Follow up on policies by auditing compliance and ensuring management and employees understand, in writing, that they are expected to comply with the policy, not wink at it.

To defense lawyers:
- Depose declarants and find out how they filled out declarations that are too good to be true. Do not accept form declarations that result in mass, identical testimony.

This case is In re Walgreens Overtime Cases and the opinion is here.

San Francisco Minimum Wage Going Up; Oakland's Too

The San Francisco minimum wage will increase as follows in the years to come:

Effective Date	Minimum Wage Rate
01/01/2015	$11.05
05/01/2015	$12.25
07/01/2016	$13.00
07/01/2017	$14.00
07/01/2018	$15.00
Following Years 07/01	CPI Increase

That is the result of a ballot measure that the San Francisco electorate passed on election day this year.  You can find more information here.  Note that the minimum wage increases twice in 2015: once on January 1 and once on May 1.  That should keep the poster-hangers and payroll services busy.

Over in Oakland, the voters passed a different minimum wage increase. Beginning March 2, 2015, Oakland's minimum wage increases to $12.25 per hour. Yep, higher than San Francisco's, at least for a couple of months.  Then, the Oakland minimum wage will increase annually every January 1, indexed to inflation.

Oakland also passed a paid sick leave ordinance and made it unlawful for hospitality industry employers to retain service charges.  Read about the Oakland ordinance here.

California Employers: Remember Voting Time Obligations and Poster

I'm a bit late with this reminder:  At least 10 days before the November 4 election, employers in California must post this notice. Employers also must give employees up to two hours off to vote if they are unable to vote outside of work hours.  Here is information from the California Secretary of State about the law.

NLRB Doubles Down: Again Holds Waivers of Class Actions in Arbitration Agreements Illegal

It's election time. So here's a short political rant:  The National Labor Relations Board is one of the administrative agencies that prove the cliche: elections have consequences.  (The President nominates the Board's members, each of whom is confirmed by the Senate to a five-year term.)  The President packed the Board with "recess appointments" after the Senate would not confirm his nominees. The Supreme Court voided those recess appointments. And then the Senate confirmed a slate of 5 nominees in a political compromise over filibusters and such.  Because advice and consent on the merits. End rant.

Whether you agree or disagree with the administration's politics, it's no secret that the NLRB has set about expanding the reach of the National Labor Relations Act, into non-union settings (like social media policies; handbook policies against insubordination, disloyalty, etc.; confidentiality agreements; and more).  It is not an exaggeration to say that non-union employers face more scrutiny by the National Labor Relations Board than they ever have in the past.

The Board also has weighed in on private agreements to arbitrate. The Board made news a couple of years ago when it held that an employer's requiring employees to waive the right to pursue class relief in mandatory arbitration agreements violated the National Labor Relations Act.  That was the "DR Horton" decision here.  The essence of DR Horton is that class action waivers violate the National Labor Relations Act by requiring employees to give up the right to act in a group (class) concerning wages, hours, or other terms and conditions of employment.

But the Fifth Circuit Court of Appeals refused to enforce DR Horton, meaning it could not be enforced against DR Horton in court, or against other employers as precedent.  Other courts also declined to follow DR Horton in part because it has nothing to do with the National Labor Relations Act, and in part because the U.S. Supreme Court has found class waivers to be fine under the Federal Arbitration Act.  Even the California courts of appeal have refused to hold class waivers unenforceable under DR Horton.

So, given that courts, which interpret the law that Congress enacts, universally rejected DR Horton, the NLRB's decision is probably relegated to the dust-bin of blips in the employment law radar, never to be heard from again, right?

Political rant redux: Nah, this is the 2014 National Labor Relations Board. They are not constrained by silly federal and state judges and stuff!  Ok, I'm done.

The Board's new decision, Murphy Oil (opinion here) gives new life to DR Horton.  Based primarily on encouraging law review articles written by law school professors, 3 of 5 members decided to re-affirm DR Horton and declare once again that class action waivers in arbitration agreements violate the NLRA, and will maintain this position until the U.S. Supreme Court says otherwise.  Given it will take the federal courts and Supreme Court a few years to take up the issue, this will be the Board's position for a while.

So, in this new case,  Sheila Hobson worked for a Murphy Oil facility and signed an arbitration agreement containing this language:

INDIVIDUAL AND COMPANY UNDERSTAND THAT, ABSENT THIS AGREEMENT, THEY WOULD HAVE THE RIGHT TO SUE EACH OTHER IN COURT, TO INITIATE OR BE A PARTY TO A GROUP OR CLASS ACTION CLAIM, AND THE RIGHT TO A JURY TRIAL, BUT, BY EXECUTING THIS AGREEMENT, BOTH PARTIES GIVE UP THOSE RIGHTS AND AGREE TO HAVE ALL EMPLOYMENT DISPUTES BETWEEN THEM RESOLVED BY MANDATORY,
FINAL AND BINDING ARBITRATION. ANY EMPLOYMENT RELATIONSHIP BETWEEN INDIVIDUAL AND COMPANY IS TERMINABLE AT-WILL, AND NO OTHER INFERENCE IS TO BE DRAWN FROM THIS AGREEMENT.

Hobson later sued Murphy under the Fair Labor Standards Act, asserting a collective action along with three other employees.  The federal district court ordered Hobson to individual arbitration.   But Hobson filed a complaint (charge) with the NLRB and the NLRB's General Counsel charged Murphy with an unfair labor practice (forcing Hobson to give up the right to collectively pursue her wage claims).

The NLRB decided 3-2 that Murphy violated the NLRA, that DR Horton was correctly decided and valid, that the circuit courts that rejected it were wrong, and that the 2 dissenting Board members were also wrong.

What is the upshot?

1. Class action waivers in arbitration agreements remain enforceable in court.

2. Employers maintaining class arbitration waivers may expect unfair labor practice charges before the NLRB, including non-union employers.

3.  NLRB orders are not enforceable by themselves, in that the NLRB has to go to a federal court of appeals to obtain a judgment. So, unless a circuit court of appeals enforces the Board's order, the legal effect of an unfair labor practice finding is limited to whatever sanctions the Administration can levy on employers who are federal contractors found to violate the NLRA, and to whatever retribution the NLRB may bring against the employer for refusing to comply with its unenforceable order.

4. If a circuit court does choose to enforce the order, it could create a circuit split, providing some incentive for the U.S. Supreme Court to take up the case.

Be careful out there.

Governor Brown Signs End of Session Employment Laws Part II

Here are some of the other employment laws that Governor Jerry Brown has signed, which will result in new obligations and liabilities in 2015.  

AB 1897 (text is here)  This new law states that employers that use temp agencies ("labor contractors") are liable for the unpaid wages and liability for failure of the contractor to secure workers' compensation insurance.  There are exceptions for certain types of labor.  Additionally, this law applies only to employers of > 25 workers, who hire more than 5 temps from agencies at a time.  So, for example, if your company hires a vendor to work in your manufacturing plant during a busy season. Then the vendor doesn't pay the employees.  You, the employer, will be liable for those payments on the same basis as the vendor.  Neat, right?  Also, employers and vendors cannot contract away this liability in the service agreement.

AB 1660. (text is here).  The California legislature is not done passing employment laws that make it illegal to take action against those applicants / employees who cannot lawfully be employed.  See, if you intentionally employ people who are unauthorized to work, it can be a federal crime. If you don't employ them, you can get sued for violating California law.  Another reason it's fun to be a California employer, eh gang?

The most recent law is AB 1660. This one addresses California's new driver's license that is specially created for "persons of undocumentation," or whatever the term is now.  If you see such a driver's license, do not take negative action against an employee for having one.  That's because:

It is a violation of the California Fair Employment and Housing Act (Part 2.8 . . . for an employer or other covered person or entity, pursuant to Section 12940 of the Government Code and subdivision (v) of Section 12926 of the Government Code, to discriminate against a person because the person holds or presents a driver’s license issued pursuant to this section, or for an employer or other covered entity to require a
person to present a driver’s license, unless possessing a driver’s license is required by law or is required by the employer and the employer’s requirement is otherwise permitted by law. Nothing in this section shall be construed to limit or expand an employer’s authority to require a person to possess a driver’s license.

So, first, it's "national origin" discrimination to take action against someone who has one of these special driver's licenses. Therefore, if an employee can present sufficient documentation to satisfy the I-9 requirements, it's probably a FEHA violation to deny employment based on the fact that the employee cannot establish the bona fides needed for a "regular" driver's license.

Second, it's illegal to ask to see a driver's license, unless the employer requires the employee to have one.  So:  It's probably best not to inspect an employee's driver's license for driving authorization until after the employee is hired.

The law also provides that driver's license information is confidential.  That means it should not be copied and routinely given out. The law does not designate personnel files as confidential, but they are treated as such to protect employees' privacy. So, there's an argument that third party subpoenas for personnel records should not mandate automatic disclosure of driver's licenses unless there is a sufficiently important reason.

That all said, this law recognizes that the employer has the right to obtain proper authorization for an employee to work, including proper documentation to support an I-9 Form.  The law also says it's not a violation to enforce the IRCA by refusing to hire someone who cannot pass the I-9 Form requirements.  So, there's that.

California Governor Brown Signing More New Employment Laws at End of 2014 Session (Part I)

The 2014 legislative session is over.  But employers will be remembering this one for a long time.  California Governor Jerry Brown signed a host of new laws at the end of the session.  Many deal with narrow-cast and public sector-related funding issues, which I won't cover here.  (You're welcome).

But there are several highlights among the new bills that merit your attention.  Thanks as always to Phyllis Cheng, on behalf of the California Bar's Labor and Employment Law section, for compiling the information and sending it out.

AB 1723 expands the Labor Commissioner's power to issue citations for under payment of wages to include waiting time penalties (not a new penalty, but a different method of enforcement).

AB 2617 appears to prohibit pre-dispute releases between employers and independent contractors that include waivers of claims under the "Ralph" and Bane Civil Rights Acts.  These are civil rights laws prohibiting hate crimes and violence based on protected criteria.  This law does not appear to apply to employees, but it's unclear because it's written so poorly.  But it only applies to provisions included in a contract for goods and services, and only prohibits waivers when "entering" into the contract (such as an independent contractor agreement (or offer letter if it applies to employees).  This law will take effect because the Governor also signed AB 2634.

AB 26 and AB 2272 expand prevailing wage law.  Prevailing wage is an inflated minimum wage rate that must be paid to "public works" contracts.  These laws expand what are "public works" and what is included in the term "construction" among other things. If you have state contracts, please review these with your lawyers.

Did the California Legislature Kill Arbitration?

Could be.  Certainly, arbitration services should be concerned that their services may not command the interest they once did.

Governor Brown just signed AB 802. This law applies to new arbitrations administered after 1/1/2015.

I'm going to call this law the "Slow Death to Arbitration Act."  Catchy? The plaintiff trial lawyers legislators who came up with this one are evil geniuses. If your company conducts arbitration, you are going to want to read this one.

One of the benefits of arbitration is that it's private. Not anymore. The major arbitration services, such as JAMS, AAA, etc. must publish at least quarterly a report and post it on its website.  The information will list the good and the bad, will give anyone who looks a free directory of plaintiff attorneys who have sued your companies, and more.  How about the number of mediations you've been involved in?

I'm highlighting in bold what employers should be most concerned about.

(1) Whether arbitration was demanded pursuant to a pre-dispute arbitration clause and, if so, whether the pre-dispute arbitration clause designated the administering private arbitration company.

(2) The name of the nonconsumer party, if the non consumer party is a corporation or other business entity, and whether the nonconsumer party was the initiating party or the responding party,

if known.

(3) The nature of the dispute involved as one of the following: goods; credit; other banking or finance; insurance; health care; construction; real estate; telecommunications, including software and Internet usage; debt collection; personal injury; employment; or other. If the dispute involved employment, the amount of the employee’s annual wage divided into the following ranges: less than one hundred thousand dollars ($100,000), one hundred thousand dollars ($100,000) to two hundred fifty thousand dollars ($250,000), inclusive, and over two hundred fifty thousand dollars ($250,000). If the employee chooses not to provide wage information, it may be noted.

(4) Whether the consumer or nonconsumer party was the prevailing party. As used in this section, “prevailing party” includes the party with a net monetary recovery or an award of injunctive relief.

(5) The total number of occasions, if any, the non consumer party has previously been a party in an arbitration administered by the private arbitration company.

(6) The total number of occasions, if any, the non consumer party has previously been a party in a mediation administered by the private arbitration company.

(7) Whether the consumer party was represented by an attorney and, if so, the name of the attorney and the full name of the law firm that employs the attorney, if any.

(8) The date the private arbitration company received the demand for arbitration, the date the arbitrator was appointed, and the date of disposition by the arbitrator or private arbitration company.

(9) The type of disposition of the dispute, if known, identified as one of the following: withdrawal, abandonment, settlement, award after hearing, award without hearing, default, or dismissal without hearing. If a case was administered in a hearing, indicate whether the hearing was conducted in person, by telephone or video conference, or by documents only.

(10) The amount of the claim, whether equitable relief was requested or awarded, the amount of any monetary award, the amount of any attorney’s fees awarded, and any other relief granted, if any.

(11) The name of the arbitrator, his or her total fee for the case, the percentage of the arbitrator’s fee allocated to each party, whether a waiver of any fees was granted, and, if so, the amount of the waiver.

So, now, the enforceability of an arbitration agreement will be one issue. Whether you want the results of all your arbitrations posted online, with all the above information included, is something else.  Employers will have to consider whether to use private arbitration services, and whether this information revealed to the public makes arbitration an attractive alternative.

Good luck in 2015. 

Court of Appeal: Federal OSHA preempts Unfair Competition Claims ( B&P Section 17200)

California's unfair competition law, Business and Professions Code section 17200, is quite broad.  Plaintiffs can bring claims for injunctive relief and restitution for just about anything they can prove is unlawful, unfair, or fraudulent.

California’s “UCL defines ‘unfair competition’ as ‘any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.’ [Citation.] By proscribing ‘any unlawful’ business act or practice (ibid.), the UCL ‘“ borrows”‘ rules set out in other laws and makes violations of those rules independently actionable.”

The District Attorney of a jurisdiction also may use another section of the UCL, section 17204, to collect statutory penalties; private litigants cannot.  Such penalties are in addition to whatever other remedies are available.

Per the Court of Appeal in Solus Industrial Innovations LLC v. Superior Court, here's what happened:

Solus makes plastics at an Orange County manufacturing facility. In 2007, Solus installed an electric water heater intended for residential use at the facility. In March 2009, that water heater exploded, killing two workers instantly in what district attorney refers to as an “untimely and horrific death.”

As a result, Cal-OSHA investigated and fined Solus.  Because there was a death, Cal OSHA also referred the case to the district attorney, who prosecuted company officials.  But the DA also brought a civil action for penalties under the UCL. 

The company argued that federal OSHA preempts the UCL claim.  Federal OSHA preempts all workplace safety laws.  However, the Secretary of Labor may approve a state plan to substitute for the federal enforcement scheme, under certain conditions.

The problem for the DA is that the Secretary of Labor did not consider or approve private enforcement under the UCL by a DA.  Rather, it approved the Cal OSHA enforcement scheme.  Therefore, the Court of Appeal held that the DA could not maintain a civil claim for penalties under the UCL based on a workplace safety violation subject to Cal OSHA's jurisdiction.

Here's the money quote:

In light of our determination that state regulation of workplace safety standards is explicitly preempted by federal law under the OSH Act, and that consequently California is entitled to exercise its regulatory power only in accordance with the terms of its federally approved workplace safety plan, we conclude the district attorney cannot presently rely on the UCL to provide an additional means of penalizing an employer for its violation of workplace safety standards.

So, the Secretary of Labor would have to approve a modification to the California OSH law.  I imagine that could occur if California acts to make the change and submits it to our current administration. But we'll have to wait and see.

The opinion in Solus Industrial Innovations LLC v. Superior Court is here.

More New California Employment Laws... Anti-Bullying Training and Unpaid Intern Harassment

The Governor has signed or is about to sign two more employment laws:

AB 1443 by Assemblymember Nancy Skinner (D-Berkeley) – This new bill amends the Fair Employment and Housing Act to prohibit harassment against unpaid interns (in case they would not quality as "employees.").

The other new law requires a longer discussion.  AB 2053 by Assemblymember Lorena Gonzalez (D-San Diego) expands California's anti-harassment training law, AB 1825.  Employers must include as part of AB 1825 training information about "abusive conduct."   So, the Fair Employment and Housing Act is where AB 1825 sits.  And AB 1825 training originally was targeted at harassment that is illegal under FEHA, although it also must include training about discrimination and retaliation too.

 

Under the new law, though, employers must include information about conduct that is not covered by the Fair Employment and Housing Act.  That is because that law covers conduct that is motivated by sex, race, and other protected categories.  Here's the definition:  

For purposes of this section, “abusive conduct” means conduct of an employer or employee in the workplace, with malice, that a reasonable person would find hostile, offensive, and unrelated to an employer’s legitimate business interests. Abusive conduct may include repeated infliction of verbal abuse, such as the use of derogatory remarks, insults, and epithets, verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or
undermining of a person’s work performance. A single act shall not constitute abusive conduct, unless especially severe and egregious.

So, no requirement of race, sex, or national origin-based hatred or bias. 

Most of the definition of abusive conduct prohibits treatment that is out of bounds, and which would be probative of a harassment claim if related to a protected status.  Training cannot hurt.  And as of now, as stated, "abusive conduct" is not prohibited by law.  

But the definition includes "derogatory remarks," that a "reasonable person" would find "humiliating."   For example, " Bob, you did a terrible job on that project.  Derogatory? Sure.  Humiliating?" Could be, right?   Perhaps the law requires repeated conduct, because it says "a single act" is not abusive conduct.  But even that proviso has a wiggle for single acts that are "especially severe and egregious."  Employers and managers will have to rely on "malice" to differentiate between harsh criticism and "abusive conduct."  Malice, though, is not defined in this statute, though it means "hatred or ill will" in other contexts.

We'll see how this shakes out. I'm sure that adding "abusive conduct" to FEHA is only one or two legislative sessions away.  Illegal harassment is not protected by the First Amendment, says the California Supreme Court. Is there a first amendment issue here?  We'll have to see that as well.   Stay tuned.  

This new law kicks in January 1, 2015.  I'm off to modify our training programs now.

Court of Appeal: Lying on Timesheets re Break Time is Misconduct: No Unemployment for You

The Court of Appeal in Irving v. California Unemployment Insurance Appeals Board reversed a trial court ruling awarding an ex-employee unemployment benefits.

The Unemployment Ins. Appeals Board had ruled against the employee.

The administrative law judge found plaintiff exceeded the break times permitted by the district and made false entries on the time records. Plaintiff’s conduct constitutes dishonesty within the meaning of California Code of Regulations, title 22, section 1256-34, subdivision (a) which states in part, ‘“Dishonesty’ includes such acts and statements as lying, theft, making false entries on records, and other actions showing a lack of truthfulness and integrity. . . .” Here, plaintiff on four occasions took excessive breaks. And then he, by his own admission and the documentary evidence, failed to correctly state on his written timesheets how long the excessive breaks lasted. Based upon the foregoing, plaintiff committed misconduct within the meaning of section 1256.

If you read the opinion, you will see that the employee made a variety of excuses why he falsified time records to show that he took compliant breaks, while in reality he had taken overly long ones.  If you sift through it, you'll see the trial court's and employee's argument was that he had a "good faith" misunderstanding about whether he was doing something wrong.

The court of appeal rejected these arguments and the trial court's conclusions, relying on the EDD's regulations:

There is no basis for a finding that a reasonable person would have thought plaintiff’s conduct was not dishonest under the circumstances. As noted, one sentence in California Code of Regulations, title 22, section 1256-34, subdivision (b) mirrors the good faith misunderstanding language in section 1256, “Dishonesty does not exist if the employee’s act or statements arise from a good-faith misunderstanding between the employer and employee where a reasonable person would not have interpreted the acts or statements as dishonest under the circumstances.”

This rule, with its multiple uses of negatives, incorporates the following elements. For purposes of finding misconduct based upon dishonest actions, dishonesty does not exist under specified circumstances set forth in California Code of Regulations, title 22, section 1256-34, subdivision (b). For purposes of California Code of Regulations, title 22, section 1256-34, subdivision (b), the necessary circumstances must involve a dispute between the employer and the employee concerning whether conduct is dishonest. However, the dispute must arise from a good-faith misunderstanding between the employer and the employee. The good-faith misunderstanding is viewed from a reasonable person’s perspective; not from the employee or employer’s standpoint. Once the good faith dispute concerning whether the conduct is dishonest is viewed in that context, there are generally two possible outcomes. The first potential outcome is that if a reasonable person would not have interpreted the employee’s conduct as dishonest, then there has been no dishonesty. Under this first potential outcome, the employee is entitled to recover unemployment compensation benefits. By contrast, the second possible outcome arises if a reasonable person would have interpreted the employee’s conduct as dishonest. If a reasonable person concludes the employee’s conduct is dishonest, then there has been dishonesty for purposes of denying recovery of unemployment insurance benefits. Here, a reasonable person would not have interpreted plaintiff’s actions in taking four excessively long breaks and repeatedly falsifying his time records as honest. There is no evidence that a good-faith misunderstanding existed or could exist concerning plaintiff’s admitted taking of excessive breaks on four occasions and falsifying his time records.

But the court noted that this was a public employer, and that its conclusion might not apply automatically in a private sector setting.  Editorial comment: $%^&*

It bears emphasis that unlike other disputes that arise in the workplace, making false entries in a public document can be, depending on the circumstances, a crime. (Gov. Code, §§ 6200-6201; Pen. Code, § 115, subd. (a); see People v. Garfield (1985) 40 Cal.3d 192, 196.)

The court also rejected the "everybody does it" gambit:

The fact that other employees took excessive breaks is legally irrelevant. California Code of Regulations, title 22, section 1256-34, subdivision (b) addresses the situation when other employees engage in dishonest acts. When an employee engages in dishonest acts or statements and is thereby discharge, it is not an excuse that other employees engaged in an equally culpable act. (Ibid.) This rule applies even though the employer has no specific rule forbidding dishonesty. (Ibid.) 

The case is Irving v. California Unemployment Insurance Appeals Board and the opinion is here.

9th Circuit Upholds Statistical Sampling to Determine Liability in Off the Clock Overtime Class Action

Allstate re-classified its adjusters to be non-exempt some years back.  Rather than require employees to keep their work time on time sheets or use a time clock, the employees were paid a standard eight hours per day / 40 hours per week.  However,

the manager of each local office has the power to file a timekeeping “exception” or “deviation” from the default expectation of 8 hours per day and 40 hours per week. This adjustment takes place when a claims adjuster’s request for overtime or early leave is approved. Managers do not adjust time cards based on either their own observations of work habits or on the technological records contained in computer and telephone systems. Each local office has a nonnegotiable compensation budget, which creates a functional limit on the amount of overtime a manager may approve.

Auto-punching, overtime pay only upon request, and a budget restricting overtime... What could go wrong?  

Right.  Jiminez, an adjuster, filed a class action. He claimed Allstate had an "unofficial policy" of discouraging employees from reporting overtime.  As a result, he and the class  members worked "off-the-clock" overtime for which they were not compensated.

Of note, the panel approved a district court's formulation of the elements of an off the clock work claim as follows:

Under California law, there are three elements of an off-the-clock claim of the type raised by the class here: “[A] plaintiff may establish liability for an off-the-clock claim by proving that (1) he performed work for which he did not receive compensation; (2) that defendants knew or should have known that plaintiff did so; but that (3) the defendants stood idly by.” Adoma v. Univ. of Phoenix, Inc., 270 F.R.D. 543, 548 (E.D. Cal. 2010) (internal quotation marks omitted).

Unfortunately, the court did not also cite Jong v. Kaiser Found. Hospital, a California decision (prior post here).

Anyway, the Court of Appeals here agreed with the district court that the class action should be certified.  The district court found these common questions predominated over individual ones:

(i) whether class members generally worked  overtime without receiving compensation as a result of Defendant’s unofficial policy of discouraging reporting of such overtime, Defendant’s failure to reduce class members’ workload after the reclassification, and Defendant’s policy of treating their pay as salaries for which overtime was an “exception”; (ii) whether Defendant knew or should have known that class members did so; and (iii) whether Defendant stood idly by without compensating class members for such overtime.

The Court of Appeals decided that these common questions would resolve the "common issue" of whether Allstate could be liable for off-the-clock work.  You may ask how a class can prove that its employees worked under the "unofficial" policy or the "official" policy requiring payment for all overtime?  

With statistics, that's how.  The Ninth Circuit panel held that the statistical models proposed by the plaintiff, and approved by the district court, could be used to prove liability:

the district court carefully analyzed the specific statistical methods proposed by plaintiffs. It struck some of the expert testimony offered by plaintiffs as insufficiently empirically supported and took pains to ensure that the statistical analysis it did accept conformed to the legal questions to which the analysis was being applied. Unlike the putative class in Comcast, 133 S.Ct. at 1434, which relied on
statistical analysis that was not closely tied to the relevant legal questions, or in Duran, 325 P.3d at 940, which used a sample of 20 names drawn from a hat without evidence showing that the number of names chosen or the method of selection would produce a result that could be “fairly extrapolated to the entire class,” the district court has accepted a form of statistical analysis that is capable of leading to a fair determination of Allstate’s liability, and preserved the rights of Allstate to present its damages defenses on an individual basis.

Allstate argued that the "unofficial policy" did not exist and that it had strong policies against off-the-clock work. But the court held that this argument was properly made at trial rather than certification:

Allstate argues that its formal policies which call for employees to be  paid for all overtime worked are lawful, and that the alleged informal “policy-to-violate-the-policy” does not exist. This argument is appropriately made at trial or at the summary judgment stage, as it goes to the merits of the plaintiffs’ claim. See In re Whirlpool Corp. Front-Loading Washer Products Liab. Litig. , 722 F.3d 838, 857 (6th Cir. 2013) (noting that if a defendant has a strong argument against classwide liability, it “should welcome class certification” as that allows it the opportunity to resolve claims of all class members at once). Whether any of these common questions are ultimately resolved in favor of either side is immaterial at this class certification stage, where we determine whether any answer that the questions could produce will drive resolution of the class’ claims.

So, take-aways: 

- "auto-clocking" is not a good practice if you want to avoid off-the-clock class actions.  

-  courts are continuing to certify now, ask about liability later.  

- statistical sampling can be used to determine liability without violating due process, at least for now. The U.S. Supreme Court has yet to rule on this issue.

This case is Jimenez v. Allstate Ins. Corporation and the opinion is here.

Court of Appeal: Employer's Fitness for Duty Examination Was Justified to Evaluate Workplace Threat

Professor John Kao engaged in a series of confrontations with other academics at University of San Francisco over time.  His co-workers became afraid of him.   He angrily responded to innocuous questions, and became enraged at colleagues over seemingly benign interactions.

So, the University began investigating.  It retained some specialists in workplace violence and threat assessment.  The experts recommended that Professor Kao be examined by a professional, who would render a "fitness for duty" opinion.  The University explained to Kao that he had to submit to the fitness for duty, or be placed on a leave of absence and excluded from the premises.  The University explained in detail the requirements of the FFD exam, including strict limitations on the expert evaluator's dissemination of information about Kao's condition.

Kao's lawyer got involved, and objected to the FFD.  As a result, the University placed Kao on a leave.   There were further meetings and exchanges with Kao's counsel, the faculty's union representative, and the University, to no avail.  The University then agreed to arbitration - under which the University would be bound, but Kao would not (!).  But Kao objected and would not agree to any ADR and would not submit to the exam.  Kao's attorney wanted to have a "clear the air meeting," at which Kao would assure the University he meant no harm.   The University ultimately terminated Kao's employment, about a year after all the problems started.

Kao sued for disability discrimination and defamation, among other things. A jury rejected Kao's claims and he appealed.

Kao argued at trial that the FFD was a medical examination.  Under the Fair Employment and Housing Act, a medical examination of an employee is permissible if "job-related and consistent with business necessity."  And Kao argued that the FFD could not be job-related or necessary without the University's first engaging in the "interactive process" that is part of the "reasonable accommodation" process.

The Court of Appeal rejected that argument. First, the court noted that the FFD is not an accommodation, and the interactive process relates to the accommodation process.   Second, the court noted that Kao was required to initiate the interactive process, not the University:

Unless a disability is obvious, it is the employee’s burden to initiate the interactive process. (Gelfo v. Lockheed Martin Corp (2006) 140 Cal.App.4th 34, 62, fn. 22; 2 Wilcox, Cal. Employment Law (2013) § 41.51[3][b], p. 41-278.) Kao cannot plausibly claim it should have been obvious to USF that he was disabled because he never admitted any disability in the workplace. When a disability is not obvious, the employee must submit “reasonable medical documentation confirm[ing] [its] existence.” (Cal. Code Regs., tit. 2, § 11069, subd. (d)(2).) Kao did nothing of the sort. He provided no information to USF after learning of the university’s concerns other than documents at the October 2008 meeting with Philpott, which were aimed at showing that those concerns were illusory.

The court concluded that no interactive process was necessary.  For those of you wondering what "job-related and consistent with business necessity means," the court quoted from the jury instruction:

The jury was instructed in accordance with Government Code section 12940, subdivision (f): “ ‘John Kao claims that the university wrongfully required a medical and psychological examination (fitness-for-duty or FFD). [¶] . . . The University of San Francisco asserts that the medical or psychological examination (fitness-for-duty or FFD) request was lawful because it was necessary to the university’s business. To succeed, the university must prove both of the following: 1, that the purpose of the FFD was to operate its business safely and efficiently; and 2, that the FFD would substantially accomplish this business purpose. [¶] . . . If the university proves that the FFD is necessary to the university’s business, then the FFD is lawful unless John Kao proves both of the following: 1, that there was an alternative to the FFD that would have accomplished the university’s business purpose equally well; and 2, that the alternative would have had less adverse impact on John Kao.’ ”

The Court also rejected Kao's claim that the University fired him for not releasing his medical records in violation of California's Confidentiality of Medical Information Act.  The Court approved of the instruction to the jury that the University avoided liability if the jury found that the University fired Kao for refusing a lawful fitness for duty exam.

The Court upheld the trial court's granting of "non-suit" on Kao's defamation claim.  The claim was based on HR's sharing of a letter detailing Kao's conduct in connection with the FFD examination request.  The Court agreed that the "common interest" privilege applied and there was not evidence of the "malice" required to defeat the privilege.

Finally, the Court ruled that the University was entitled to put on evidence of available employment to Kao, even outside the context of a tenured University professor job.  That is important to the argument regarding mitigation of damages.   The Court of Appeal said it was up to the jury to decide if the comparable replacement employment was sufficiently similar.

This case is Kao v. University of San Francisco and the opinion is here.

Court of Appeal (Finally) Holds Workers' Compensation Act Preempts Intentional Infliction Claims

Yau was a service manager at a car dealer, claims he was fired for reporting to management that his bosses were defrauding Ford Motor Company by submitting false warranty claims.  For the most part, Yau complained about the nature of his discharge, which included deputy sheriffs lurking as he packed up his belongings.

The trial court dismissed the case.  The court of appeal reversed.  The appellate court decided Yau had adequately alleged a claim for wrongful termination in violation of public policy based on his allegations of warranty fraud.  But that's not really the interesting part of the case.

The interesting part is that the court of appeal decided that no cause of action for intentional infliction of emotional distress is available separate from the wrongful termination claim. The court finally addressed a 2008 California Supreme Court decision that I have been pushing up hill for years.  Here's how the appellate court saw it:

Physical and emotional injuries sustained in the course of employment are pre-empted by the workers’ compensation scheme and generally will not support an independent cause of action. (Cole v. Fair Oaks Fire Protection Dist. (1987) 43 Cal.3d 148, 160 (Cole).) Emotional injuries caused by workplace discipline, including termination, fall within this rule. (Ibid.; see also Shoemaker v. Myers (1990) 52 Cal.3d 1, 7.)  * * *

Yau relies on a series of cases that have found exceptions to this general rule of preemption when the intentional infliction of emotional distress claim is based on conduct that violates a fundamental public policy. (See e.g., Cabesuela v. Browning-Ferris Industries of California, Inc. (1998) 68 Cal.App.4th 101, Leibert v. Transworld Systems, Inc. (1995) 32 Cal.App.4th 1693; Phillips v. Gemini Moving Specialists (1998) 63 Cal.App.4th 563.) Those cases were decided before our Supreme Court’s decision in Miklosy v. Regents of University of California (2008) 44 Cal.4th 876 (Miklosy), which held the exception to workers’ compensation preemption for employer “conduct that ‘contravenes fundamental public policy’ is aimed at permitting a Tameny action [for wrongful discharge in violation of public policy] to proceed despite the workers’ compensation exclusive remedy rule.” (Id. at pp. 902-903.) This exception does not, however, allow a “distinct cause of action, not dependent upon the violation of an express statute or violation of fundamental public policy.” (Id. at p. 902.) Miklosy held that even “‘severe emotional distress’” arising from “‘outrageous conduct’” that occurred “at the worksite, in the normal course of the employer-employee relationship” is the type of injury that falls within the exclusive province of workers’ compensation. (Ibid.) “‘An employer’s intentional misconduct in connection with actions that are a normal part of the employment relationship . . . resulting in emotional injury is considered to be encompassed within the compensation bargain, even if the misconduct could be characterized as “manifestly unfair, outrageous, harassment, or intended to cause emotional disturbance.”’ [Citation.]” (Vasquez, supra, 222 Cal.App.4th at p. 833.)

This case is Yau v. Santa Margarita Ford, Inc. and the opinion is here. 

California Enacts Paid Sick Leave

The Governor signed AB 1522, which confers upon most California employees paid sick leave.  The law is somewhat similar to San Francisco's paid sick leave ordinance.

Here is the text of the new law. 

The law adds sections 245-249 to the Labor Code.

Here are key provisions, although we'll have a more detailed article soon:


Coverage 

1.  The effective date is 7/1/15.  So employers will have time to develop their policies.

2.  All employers, of any size, are covered.  Public sector too.

3.  Employees with collective bargaining agreements providing paid sick leave (and other issues), and who make more than 30% more than minimum wage, are not covered.

4.  Employees in the construction industry may not receive any paid sick leave if there is a collective bargaining agreement that expressly waives the new law, provided other requirements in the law are met.

5. Flight crew members covered by the federal Railway Labor Act who receive compensatory time off under certain circumstances are not covered.

6.  Providers of in-home supportive services under certain sections of the Welfare and Institutions Code are not covered.  However, it looks like other home care employees will be.

7.  Employees who work 30 days or more in California are covered.

8.  "Exempt" employees, such as managers, lawyers, etc. are covered.

Sick Leave Terms

1. Sick leave can be used to take care of the employee, as well as family members. Family members include parents, children, foster and step-children, grandparents, siblings, domestic partners, and others.

2.  "Pay" is at the employee's base rate.

3.   The right to use paid sick leave begins at 90 days of employment.

4.  Sick leave accrues from the first day of employment.

5.  The employee earns an hour of sick pay for each 30 hours worked.

6.   The employer can limit paid sick leave to 3 days or 24 hours per 12 month period (rolling, calendar, or anniversary year).

7.  Accrued sick leave carries over to the next year. But the employer can cap accrual at 48 hours or 6 days.

8.  The employer can set a minimum increment of 2 hours of sick pay usage.  However, the employee can use how much he or she wishes.  The employer cannot mandate that the employee use more than the employee wants to use.

9.  PTO  and existing sick plans may be sufficient if they satisfy the minimums in the law.  That is, there is no need to provide additional sick pay above what the employer offers already (assuming the employer's policy is at least as generous).

10. Anyone reinstated < 12 months from termination has accrued, unused sick leave restored.

11.  No payout on termination.

12. The law does not repeal "Kin Care."  So, employers with more generous plans will have to allow employees to use 1/2 of the annual sick leave entitlement for Kin Care under that statute (assuming the employer's plan provides for more than 6 days of paid sick leave per year).

Notice

1.  The employee only has to give notice if foreseeable or, if not foreseeable, as soon as practicable. That's a change to employer policies that will have to be implemented.

2.  Employee notice can be written or verbal.

3. The employer must include the accrued balance of sick pay on the wage statement per Lab. Code section 226.  Or, the employer can provide a separate document at each pay day. However, the section 226 penalties do not apply.  Rather the special penalties in this statute apply.

4.  Section 2810.5 (Wage Theft notice law) is amended to now include a notice re paid sick leave.

5.  New poster.  $100 penalty for violating the poster requirement.


Enforcement

1. No private right of action.  This law is enforced by the DLSE or the attorney general.  However, there appears to be a provision that will allow for a "private attorney general" action for "equitable, injunctive, or restitutionary relief, and reasonable attorney’s fees and costs."  That is, no penalties under PAGA.  It is unclear how this will work, given the rest of the statute provides only for enforcement by the DLSE or attorney general.

2. It remains to be seen whether a cause of action for wrongful termination in violation of public policy will lie for those who claim wrongful termination due to taking sick leave.

3.  There is a "safe harbor" from penalties applicable to "isolated" and "inadvertent" record keeping or notice errors.

4.  The labor commissioner can award unlawfully withheld sick pay, reinstatement, and back pay at an administrative hearing.

5.  There are a variety of $50 penalties per day per employee available, which apply for different violations.  It's unclear how they work together. But the  maximum aggregate penalty per violation is $4,000.00 to each person whose rights were violated. That penalty may include triple the sick pay that was withheld.  The labor commissioner can award pre-judgment interest too.

6.   There is a "rebuttable presumption" of retaliation if an employer takes negative action against an employee who files a complaint with the labor commissioner, participates in an investigation about paid sick leave, or opposes an employer practice related to paid sick leave.

7.  The law says that the labor commissioner can conduct hearings, but the law does not specify that the hearings take place under the normal wage hearing statute.   So, if the labor commissioner rules against you on a sick leave / discharge claim, you have to go to superior court on a writ of mandate, maybe?  No appeal de novo and bond filed in superior court?  We'll see I guess.

8.  The labor commissioner can file suit if the employer does not comply with the labor commissioner's rulings.

*  *  *

Well that's a good start.   The nice news is that these modest minimum paid sick leave requirements are easily amended in future years.  So, don't get used to the 3-day minimum, k?

Before July 2015, ensure you revise your sick leave policies, payroll checks, and Wage Theft forms!

We will have more information as it becomes available and so will the DLSE. Good luck.

DGV