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

California Supreme Court: Franchisor MAY Be Liable for Franchisee's Employee's Sexual Harassment Claim*

*But not in this case.

Taylor Patterson, an employee at a Domino's franchise in southern California, sued her employer (called "Sui Juris LLC") and her former manager for sexual harassment.  She also sued Domino's Pizza,  LLC, the franchisor.  

The trial court granted Domino's' summary judgment motion, finding Domino's was not the plaintiff's employer, or that the franchisee was not Domino's' "agent."  The court of appeal, though, reversed.  

On review, the California Supreme Court agreed with the trial court, and dismissed the case against Domino's, the franchisor.  

The opinion goes into a long discussion of franchisor history and law, which I'm sparing you. Here is the money quote:

franchisees are owner-operators who hold a personal and financial stake in the business. A major incentive is the franchisee‘s right to hire the people who work for him, and to oversee their performance each day. A franchisor enters this arena, and becomes potentially liable for actions of the franchisee‘s employees, only if it has retained or assumed a general right of control over factors such as hiring, direction, supervision, discipline, discharge, and relevant day-to-day aspects of the workplace behavior of the franchisee‘s employees. Any other guiding principle would disrupt the franchise relationship.

The Fair Employment and Housing Act holds "employers" liable for workplace discrimination, harassment, and retaliation.  The franchisor, although exercising control over branding and the products and services offered, did not impose control over the day to day employment relationship.  

The Supreme Court went on to explain what the nature of an "employer" is in the context of FEHA:

There are few California cases defining an employer under the FEHA provisions invoked here. But, it appears, traditional common law principles of agency and respondeat superior supply the proper analytical framework under FEHA, as they do for franchising generally. Courts in FEHA cases have emphasized "the control exercised by the employer over the employee‘s performance of employment duties." (Bradley v. Department of Corrections & Rehabilitation (2008) 158 Cal.App.4th 1612, 1626, citing Vernon, supra, 116 Cal.App.4th 114, 124-125; accord, McCoy v. Pacific Maritime Assn. (2013) 216 Cal.App.4th 283, 301-302.) This standard requires "a comprehensive and immediate level of 'day-to-day‘ authority" over matters such as hiring, firing, direction, supervision, and discipline of the employee. (Vernon, supra, 116 Cal.App.4th at pp. 127-128.)

As discussed above, Domino‘s lacked the general control of an employer or principal over relevant day-to-day aspects of the employment and workplace behavior of Sui Juris‘s employees. Application of the FEHA test for determining an employment relationship produces no different result in this franchising case than the one we have already reached. Plaintiff is mistaken to the extent she implies that the contrary is true.

So, this case should guide franchisors, as well as affiliated companies. 

Turning to the case at bar, the Supreme Court examined a number of facts to determine Domino's did not exercise the requisite control.  These included

- the language of the franchise agreement.  Critically, the agreement provided Domino's had no say in day-to-day employment issues involving the franchisee's employees. 

- the franchisee in practice exclusively controlled hiring, firing, and other employment decisions. He did not involve Domino's in any such decisions.

- the franchisor did provide certain training to employees on methods and the like.  But the franchisee had exclusive control over sexual harassment training and "how employees treat each other" in the workplace.

- Domino's had no complaint procedure for franchisee employees to report harassment; only the franchisee had such procedures in place.

It should be noted this decision was 4-3.  Justice Baxter penned the majority opinion. He's retiring. I'm going to miss him.  CJ Cantil-Sakauye and Justices Chin and Corrigan joined the majority.

Justice Werdegar, joined by Justice Liu and Justice Chaney (sitting by designation from the court of appeal), would have held that the franchisor should be held liable.  However, even the dissenters agreed

That a franchisor is not automatically the employer of its franchisee‘s employees, irrespective of the details of the parties‘ relationship, necessarily follows. So, too, does it follow that a franchisor may under the circumstances of the parties‘ relationship in fact be an employer. The outcome depends on the factual inquiry.

Therefore, all seven justices agreed on the basic principle. The dissenters believed there was enough to hold Domino's LLC liable.  So, there is no bright line rule re franchisor liability.  There will be litigation to decide in each case whether a franchisor exercises the requisite control to qualify as an "employer."  Franchisors and franchisees will have to ensure their agreements are consistent with their intent in this area.  And franchisors seeking to avoid responsibility for employment law claims will have to cede control over day-to-day employment issues.

This case is Patterson v. Domino's LLC and the opinion is here.

CA Governor Signs Two Wage-Hour Bills

Governor Jerry Brown signed a couple of wage-hour laws, which will take effect 1/1/15.  Neither is earth-shattering, but affected employers take note:

AB 2074, text here, clarifies California law regarding the statute of limitations for "liquidated damages," available for unpaid minimum wage claims.  The statute amends Labor Code section 1194.2 (here) to say that the statute of limitations for liquidated damages will be the same as the statute of limitations applicable to the underlying wage claim.  I'm not sure, but it may be that employers argued the statute of limitations is only 1 year because liquidated damages are a form of penalty.

AB 2743, text here, expands the availability of "waiting time penalties."  Per Labor Code section 203 (here), employers face a penalty of up to 30 days' pay when they do not pay employees correctly and timely at termination of employment.  Section 201.9 of the Labor Code allowed employers in the "live theatrical or concert" industry to pay final wages in accordance with a collective bargaining agreement. AB 2743 expands the availability of waiting time penalties to situations when the employer does not pay on time under that CBA.  So, employers not in the "live theatrical or concert" business:  Nothing to see here.

9th Circuit: Cop with ADHD Has No "Disability" Under the ADA

Here's a remainder from the Ninth Circuit that not every impairment is a "disability."   And without a "disability" within the meaning of the ADA, there is no obligation to accommodate and there is no relief available for termination of employment based on a claim of disability discrimination.

A 9th Circuit panel held, 2-1, that a police officer with ADHD did not have a legally sufficient  "disability" to justify a claim under the ADA.  That is because, the court found, his "impairment" did not "substantially limit" the major life activities of working or interacting with others.

The employee, Weaving, was diagnosed with ADHD at six years old.  At 12, he stopped taking medication, but had difficulty getting along with others during his teen and adult years.

So, Weaving becomes a police officer in Beaverton, Oregon.  He passed all the exams, physical and mental. He did not disclose his ADHD diagnosis or prior medications, believing he was no longer afflicted.  He stayed in Beaverton for about 10 years, and received much negative feedback about his personality conflicts.

He joined the Hillsboro, Oregon, police force in 2006.  He disclosed his previous ADHD diagnosis and noted some of the personality conflicts that had plagued him.  Hillsboro offered him provisional employment, subject to a medical evaluation.  Weaving passed that evaluation, as well as another one when he applied for promotion to sergeant.  His superiors noted he sometimes was perceived as arrogant or intimidating, but that he did his job well.

After a couple of incidents of conflict with his co-workers/ subordinates, the city placed Weaving on administrative leave. (Paid, natch.).  While on leave, Weaving came to the conclusion that ADHD might be the source of some of his troubles (!).  A doctor agreed that his ADHD might cause him to interact roughly with co-workers, but that he could still be an "excellent" officer.  So, weaving told the City that he should be reinstated with "all reasonable accommodations," so that he might obtain treatment and improve his communications.

But, while on administrative leave, the city conducted an investigation. The consensus was that Weaving was, in effect, a terror.  Two doctors evaluated him as medically fit for duty, too.  So, the city decided to discharge Weaving.

A jury found the city violated the ADA by firing Weaving and awarded him money damages. but not reinstatement.  The city appealed.

The court of appeals first considered whether Weaving was "substantially limited" in the major life activity of working.  The ADA Amendments Act relaxed the "substantially limited" standard. Even so, the court held there was no evidence of substantial limitation:

The record does not contain substantial evidence showing that Weaving was limited in his ability to work compared to “most people in the general population.” See 29 C.F.R. § 1630.2(j)(1)(ii). On the contrary, there is evidence showing that Weaving was in many respects a skilled police officer. ****
Weaving's supervisors recognized his knowledge and technical competence and selected him for high-level assignments. In 2007, before receiving any treatment for adult ADHD, he was promoted to sergeant. In 2009, a psychologist and a physician/psychiatrist both deemed Weaving fit for duty as a
police officer.
 * * * *
Given the absence of evidence that Weaving’s ADHD affected his ability to work, and in light of the strong evidence of Weaving’s technical competence as a police officer, a jury could not reasonably have concluded that Weaving’s ADHD substantially limited his ability to work.

Weaving also claimed substantial limitation in the major life activity of interacting with others. The Ninth Circuit recognizes that as a major life activity.  But, reviewing its own and other courts' decisions, the court said that merely failing to "get along" is not the same as interacting:

Weaving’s interpersonal problems do not amount to a substantial impairment of his ability to interact with others within the meaning of the ADA. Weaving’s ADHD may well have limited his ability to get along with others. But that is not the same as a substantial limitation on the ability to interact with others. See McAlindin, 192 F.3d at 1235; see also Jacques v. DiMarzio, Inc., 386 F.3d 192, 203 (2d Cir. 2004) (distinguishing “‘getting along with others’ (a normative or evaluative concept) and ‘interacting with others’ (which is essentially mechanical)”).
* * *
Weaving was able to engage in normal social interactions. His interpersonal problems existed almost exclusively in his interactions with his peers and subordinates. He had little, if any, difficulty comporting himself appropriately with his supervisors. A case like Weaving’s is what we described in McAlindin as not giving rise to a disability claim.

The court then further explained its ruling, removing the possibility that mere "jerks" can claim they have disabilities.

One who is able to communicate with others, though his communications may at times be offensive, “inappropriate, ineffective, or unsuccessful,” is not substantially limited in his ability to interact with others within the meaning of the ADA. Jacques, 386 F.3d at 203. To hold otherwise would be to expose to potential ADA liability employers who take adverse employment actions against ill-tempered employees who create a hostile workplace environment for their colleagues.

Right.  On the other hand, those who have a severe inability to relate to others (such as those who cannot relate to anyone, rather than co-workers) may still claim a disability under the court's previous decisions.  I would also point out that the court does not close the door on all persons claiming a disability based on ADHD.  The name of the condition does not matter. It's all about  how the condition's impairment "substantially limits" one or more major life activities.  So, it's possible that another person's ADHD could result in more profound limitations.  Remember too that the effects of medication are irrelevant under California and federal law.

In dissent, Judge Callahan assiduously argued that the majority substituted its judgment for the jury and was unfaithful to the circuit's precedent.  She claimed the majority cherry-picked evidence, rather than simply looked for substantial evidence to support the jury's conclusion.

The opinion in Weaving v. City of Hillsboro is here. 

California Court of Appeal: Employers Must Reimburse Employees for Cell Phone Use - Even if Plan is Unlimited

The Court of Appeal made an unprecedented ruling regarding the employer's obligation to reimburse employees for business use of personal items; here, a cell phone.

The threshold question in this case is this: Does an employer always have to reimburse an employee for the reasonable expense of the mandatory use of a personal cell phone, or is the reimbursement obligation limited to the situation in which the employee incurred an extra expense that he or she would not have otherwise incurred absent the job? The answer is that reimbursement is always required. Otherwise, the employer would receive a windfall because it would be passing its operating expenses onto the employee. Thus, to be in compliance with section 2802, the employer must pay some reasonable percentage of the employee’s cell phone bill. Because of the differences in cell phone plans and worked-related scenarios, the calculation of reimbursement must be left to the trial court and parties in each particular case.

***
To show liability under section 2802, an employee need only show that he or she was required to use a personal cell phone to make work-related calls, and he or she was not reimbursed. Damages, of course, raise issues that are more complicated. 

You can look for case law or other authority explaining how this rule is derived, but you won't find any. This Court created the rule that additional incremental expense is not required. 

It's old news that employers must reimburse employees for business use of a personal automobile.  Although the employee owns the car, there are incremental costs associated with operating the vehicle on a business trip: the tires, the oil, fuel, wear and tear.  It's not really the same thing when an employee already owns a cell phone with an unlimited data plan.  The phone exists. The phone bill is the same regardless of whether the employee uses it for business or personal calls.  

Now, don't get me wrong.  I see where the employer has an obligation to reimburse under different circumstances.  For example, if the use of a cell phone is integral to the job, sure.  For example in this case, it is possible that the job itself required being outside an office and available by phone.  If an employee increases his or her plan minutes because of work-related calls, naturally the employer should have to pay.  If an employee has to buy a phone or phone plan because of work, absolutely.  But if an employee already has an unlimited plan, how is he or she out money - requiring reimbursement - if he or she simply uses her phone that she already had? 

The court of appeal has an answer: it's irrelevant. Reimbursement is due.  The court was careful to say that use of the personal phone must be "mandatory."  So, occasional voluntary use may not create a reimbursement obligation.  Using your cell phone to call your voice mail when outside the office?  Could be? 

This case also could have a significant affect on the BYOD (bring your own device) plans that are popular nowadays. Employers and employees should establish in advance whether the employer requires employees to use a personal device as part of the job, and then decide how much the employer will pay for its use.   The court gave no guidance on this point other than "a reasonable percentage" of the cost of the monthly plan.

Of additional interest, does this case create new expense reimbursement obligations when the employee uses personal items for work, but does not incur an additional expense?  what about if an employer requires an employee to wear a suit or tie to work?  Must the employer pay a reasonable percentage of the cost?  Briefcase?  We shall see.

This case is Cochran v. Schwan's Home Service and the opinion is here. 

Court of Appeal: Two New Arbitration Decisions Highlight Importance of Drafting Agreements Correctly

Here are two new decisions that illustrate why arbitration agreements have to be drafted properly to be enforced.

The Court of Appeal's decision in Rebolledo v. Tilly's, Inc. (opinion here)  is important for employers who issue revisions to policies and employment agreements.  Basically, Tilly's issued several versions of an arbitration agreement and did not adequately manage how the revisions' affected prior ones.  A 2001 version of the arbitration agreement excluded wage-hour claims within the jurisdiction of the Labor Commissioner.   A 2005 arbitration provision did not contain the exclusion. However, the 2001 agreement said that it required three signatures of company executives to modify it.  The 2005 provision did not include those signatures.

Upholding the trial court, the Court of Appeal held that the later arbitration agreement did not supersede the earlier one, and the earlier one did not cover Rebolledo's claims:

We agree with the trial court’s interpretation of the agreement holding arbitration would fall within the broad category of “employment policies” requiring the signature of three executives for any modification. And because the 2005 Agreement contains a material modification of the types of claims that must be arbitrated, it required the signature of three executives to be enforceable.

The employer in Galen v. Redfin Corporation (opinion here) won enforcement of its arbitration agreement, but the plaintiff challenged the arbitration agreement as limited to disputes concerning the interpretation of the arbitration agreement itself.

Paragraph 26 of the Agreement initially states: “In the event that any disputes arise regarding the interpretation or enforcement of this Agreement, such disputes shall be resolved as follows . . . .” (Italics added.) The paragraph goes on to discuss the use of good faith negotiations followed by mediation, if necessary. In the event mediation fails or is refused, the Agreement provides that all disputes “arising out of or related to this Agreement which have not been settled by mediation shall be resolved by binding arbitration within the State of Washington.” (Italics added.) 

The court ultimately determined that this language included claims concerning whether the plaintiff was an independent contractor agreement, but primarily because the arbitration provision was contained within the plaintiff's independent contractor agreement.  The plaintiff would have had a stronger argument if the arbitration agreement was "stand-alone."  So, it's important to draft the scope of the arbitration clause carefully.  A broader provision might read, for example, "any dispute regarding the [employment] [independent contractor] relationship, and the termination of that relationship or any other matter contained within this agreement."

The court's opinion in Galen is also notable because it held that a mutual attorney's fees provision and a forum selection clause did not render the agreement unconscionable.  The attorney's fees discussion did not address the other decisions that hold such agreements are unconscionable unless they explain that employers cannot recover fees under some statutory claims.  The forum selection clause discussion ostensibly authorizes employers to require arbitration outside of California if there is a logical relationship between the forum and the contract.   So, interesting decision, but one that may be at odds with others already on the books.