What's New in Employment Law?

Friday, October 12, 2007

Court of Appeal's Meal and Break Opinion in Long Awaited Brinker case

....too bad it's unpublished for now.

Meal and break claims have been all the rage in employment law circles. Plaintiffs have alleged in class actions that employers have denied rest breaks, and have not properly "forced" employees to take meal periods that are long enough, early enough, or free enough from duty.

Today, though, the employers won a significant ruling which, if eventually published, could shift some of the momentum.

With respect to rest periods, the court summed up that the trial court should not have granted class certification, and that rest period law is as follows:

Had the court properly determined that (1) employees need be afforded only one 10-minute rest break every four hours "or major fraction thereof" (Cal. Code Regs., tit. 8, § 11050, subd. 12(A)), (2) rest breaks need be afforded in the middle of that four-hour period only when "practicable," and (3) employers are not required to ensure that employees take the rest breaks properly provided to them in accordance with the provisions of IWC Wage Order No. 5, only individual questions would have remained, and the court in the proper exercise of its legal discretion would have denied class certification, with respect to plaintiffs' rest break claims because the trier of fact cannot determine on a class-wide basis whether members of the proposed class of Brinker employees missed rest breaks as a result of a supervisor's coercion or the employee's uncoerced choice to waive such breaks and continue working.

With regard to meal periods, the court clarified the law regarding the timing of meal periods. The court noted employees are entitled to a thirty-minute meal period for each work period of more than five hours per day. That does NOT mean that a second meal period must occur within five hours of the first meal period. That means that if an employee works ten hours, two meal periods must be provided at some time during the shift. There is no such thing, therefore as "early" lunch violations.

The court, however, punted on the most eagerly awaited issue: is an employer required to "ensure" the employees take their meal periods, or must they simply be "offered" like rest periods? The court of appeal refused to decide the issue until the trial court had the opportunity to do so. Therefore, we must continue to wait and see on that issue. The federal district court in White v. Starbucks Corp. (N.D.Cal. July 2, 2007) 497 F.Supp.2d 1080 has held that meal periods merely have to be offered, but that decision is not binding on California courts.

It is unclear why the Court of Appeal chose not to publish this decision. However, I believe the defense bar may seek an order of publication. Yeah, I know, bold prediction.

The opinion is in Brinker Restaurant Corp. v. Superior Court.

DGV

Wednesday, October 03, 2007

California Court of Appeal Limits Administrative Exemption

Insurance claims adjusters were ruled "non-exempt" under the administrative exemption in what is known as the Bell cases. See Bell v. Farmers Ins. Exchange (2001) 87 Cal.App.4th 805; Bell v. Farmers Ins. Exchange (2004) 115 Cal.App.4th 715. So, in Harris v. Superior Court, the Court of Appeal found that Liberty Mutual claims adjusters likewise were non-exempt.

The headline here, though, is that the Court thoroughly analyzed the administrative test, and explained the limited applicability of the administrative test in California (although the court claimed it was relying on federal regulations). The two key points are these:

- exempt administrative work must involve policy making, higher level, office work. The court sets a high bar here, rendering lower level employees in traditionally administrative

- "production" work - by definition not administrative - does not have to involve actually producing the product or service that the employer sells. Rather, even office work is "production" when it is simply carrying out policies.

This decision should be closely examined when classifying employees in back-office departments such as MIS, accounting, and maybe even HR. The exemption may be tougher to prove for lower-level administrative jobs in the more vertical, larger organizations.

DGV

Supplemental Disability Pay Does Not Affect Salary Basis Test

Generous employers sometimes supplement California's state disability insurance coverage with salary continuation programs. No good deed goes unpunished? Not this time. Employees brought a class action alleging unpaid overtime. They claimed they were misclassified as "exempt" because the employer's salary replacement program resulted in impermissible "deductions" from their salary during the initial week of "disability." The complaints were that the salary continuation program did not fully replace salary, that payments were delayed because the employer required the employee to present the SDI check so the payments could be coordinated, and other perceived flaws. The legal issue was whether the salaries could be reduced under the "bona fide" disability plan exception to the salary basis required.
The Court of Appeal turned back all of the plaintiffs' arguments. The Court also rejected the DLSE's enforcement position that reliance on SDI was improper under the "bona fide" plan exception.
The case is Sumuel v. ADVO, Inc. and the opinion is here.

Saturday, September 22, 2007

Applicant Waives ADA claim in Employment Application

Christine Nilsson applied for a job as a police officer in Mesa, Arizona. As part of the application process, she had to undergo a detailed background investigation. she signed a waiver regarding this investigation:

Nilsson agreed to “waive all [her] legal rights and causes of action to the extent that the Mesa, Arizona, Police Department investigation (for purposes of evaluating [her] suitability or application for employment) . . . violate[d] or infringe[d] upon . . . [her] legal rights and causes of action . . .” In addition, Nilsson: [A]gree[d] to hold harmless and release from liability under any and all possible causes of legal action the City of Mesa, Arizona Police Department, their officers, agents, and employees for any statements, acts, or omissions in the course of the investigation into [her] background, employment history, health, family, personal habits and reputation.

Ultimately, Nilsson was denied employment allegedly based on a negative psychological evaluation. She sued under the ADA, Title VII (for retaliation) and state law.

The Court of Appeals held that the ADA claim, based on denial of employment due to a mental disability, was barred by the release. However, the court said that the Title VII claim was different. The release covered the entire background and investigation process, but did not cover the interview. Nilsson claims Mesa asked improper questions about a prior EEOC proceeding. That claim was permitted to proceed to the merits. (The Ninth Circuit then said summary judgment was properly granted).

Of note, the opinion does not discuss the Fair Credit Reporting Act and its potential effect on the case. In addition, the Court first analyzed whether Nilsson knowingly and voluntarily released the claims. The Court found Nilsson had the necessary education and experience to sign the release. The release also advised her to consult with counsel if she did not understand it.

So, at least where the employee is sufficiently sophisticated to understand a release, a relatively simple release in an application bars claims based on pre-hire background checks, medical examinations, etc.

The case is Nilsson v. City of Mesa.

DGV

Sunday, September 16, 2007

California Court: Alleged Independent Contractor Drivers Are Employees

In Estrada v. Fedex Ground Package System, Inc., the Court of Appeal upheld the trial court's determination that certain FedEx drivers were mis-classified as independent contractors.

There's a lot more to the court's analysis, but this pretty much sums up the court's discussion of the independent contractor issue:

FedEx’s control over every exquisite detail of the drivers’ performance, including the color of their socks and the style of their hair, supports the trial court’s onclusion that the drivers are employees, not independent contractors.

The Court of Appeal also denied FedEx's appeal of the class certification order. The Court concisely summarized the requirements:

A class action requires an ascertainable class with a well-defined community of
interest among its members. Community of interest, in turn, requires that common questions of law or fact predominate, and that class representatives (who must be able to adequately represent the class) have claims typical of the class. The class is ascertainable if it identifies a group of unnamed plaintiffs by describing a set of common characteristics sufficient to allow a member of that group to identify himself as having a right to recover based on the description.

Finally, the Court of Appeal ruled once and for all that employers may require employees to use their own vehicles as part of the job. (Of course, the employee must be reimbursed for the expenses associated with using the vehicle).

DGV

Saturday, September 15, 2007

Settlement of Wage Claim under FLSA

The Fair Labor Standards Act permits settlements of claims for unpaid wages under the supervision of the Secretary of Labor. The Secretary has a form, under which employees acknowledge receipt of all wages due them and release all claims under the Fair Labor Standards Act arising from the failure to pay those wages.

In Dent v. Cox Communications Las Vegas, Inc., the employees signed U.S. DOL approved releases. Then Dent sued for more unpaid wages, but for a time period preceding the dates included in the DOL release. The Ninth Circuit held that the release covered only the payroll periods expressly covered in the DOL release and Dent was free to pursue earlier claims.

WARN Act Inapplicable to Remote Employees

The WARN Act normally applies to layoffs or plant closings at "single" sites of employment. There are detailed regulations on what constitutes a "single site." These regulations extend the "single site" concept to mobile workers (such as traveling salespersons), who receive work assignments and report to management at a "headquarters." These mobile employees may be covered by WARN under those special circumstances.

In Bader v. Northern Line Layers Inc., the workers were at construction sites in several states. Headquarters was in Billings, MT. The workers argued that because the construction assignments were temporary, and the Billings office handled all accounting, billing, payroll, and other administrative functions, they were actually employed in Billings for WARN purposes. The Ninth Circuit disagreed. The court noted that work assignments were made locally. Most of the employees were not Montana residents. The supervision was located locally, not in Montana, etc.

WARN is tricky and each layoff or shutdown needs to be closely examined in light of the applicable regulations and case law.

Pending California Bills

Thursday, August 30, 2007

California Supreme Court: Class Action Waiver in Arbitration Clause Void in Overtime Case; Opt-Outs Not a Shield

Well, the California Supreme Court giveth and it taketh away. If you enjoyed the Court's decisions in the Ralph's and Green cases issued last week, you might have been looking forward to another employer victory in the Gentry opinion. Not so much.

In fact, not at all. The California Supreme Court in another 4-3 split, decided that class action waivers may be deemed invalid. Trial courts must decide, case by case, whether a class action waiver is void according to these criteria:

when it is alleged that an employer has systematically denied proper overtime pay to a class of employees and a class action is requested notwithstanding an arbitration agreement that contains a class arbitration waiver, the trial court must consider the factors discussed above:

- the modest size of the potential individual recovery,

- the potential for retaliation against members of the class,

- the fact that absent members of the class may be ill informed about their rights, and

- other real world obstacles to the vindication of class members’ right to overtime pay through individual arbitration.

If it concludes, based on these factors, that a class arbitration is likely to be a significantly more effective practical means of vindicating the rights of the affected employees than individual
litigation or arbitration, and finds that the disallowance of the class action will likely lead to a less comprehensive enforcement of overtime laws for the employees alleged to be affected by the employer’s violations, it must invalidate the class arbitration waiver to ensure that these employees can “vindicate [their] unwaivable rights in an arbitration forum.”

The above may be the headline, but the rest of the opinion is worse. Disagreeing with the Ninth Circuit, the court decided that Circuit City's "opt-out" provision did not save an arbitration agreement from procedural unconscionability. Here the Court frankly just made up a rationale for why an employee who has a 30 day period to choose whether to sign an agreement actually may not have any choice. The Court had to do this, or its unconscionability jurisprudence would not apply simply because the employer gave the employee a meaningful chance to either sign or not sign the arbitration agreement.

Justices Moreno, Werdegar, Kennard, and ... Chief Justice George made up the majority. Justices Baxter, Corrigan and Chin joined in the dissent.

Wow, this is another blow to using arbitration agreements in employment cases. It's almost at the "why bother" stage.

The case is Gentry v. Superior Court (Circuit City Stores)

DGV

Thursday, August 23, 2007

Court of Appeal Rejects Trade Secrets Claim

The Court of Appeal in Yield Dynamics, Inc. v. Tea Systems Corp. undertook a detailed analysis of Yield's claims for misappropriation of trade secrets, asserted against a former employee. The court upheld the trial court's conclusions that Yield had failed to establish (1) the misappropriated items were properly defined as "trade secrets" because there was no independent economic value associated with their secrecy (2) damages. The court also upheld the trial court's decision in favor of the defense on a number of other claims, including breach of contract, fraud, and unfair competition. This case provides a useful roadmap to litigants attempting to establish trade secrets status.

DGV

California Supreme Court: Plaintiffs Must Prove They Are Qualified Individuals With Disabilities Under California Law

The federal ADA requires employees to prove as part of their prima facie case that they can perform the essential functions of the job they hold or seek, with or without reasonable accommodation. Put another way, if they can't do the job regardless of accommodation, they cannot claim discrimination under the ADA.
The California FEHA is broader than the ADA in many respects. Lower courts were split on whether the employee had to prove they were qualified - that they could perform essential job functions with or without accommodation. In Green v. State of California, the court of appeal held that employers, not employees, had the burden of proof on this issue. That is, the lower court said that employers must show the employee was NOT able to perform essential job functions with or without any accommodation.
The California Supreme Court, reviewing Green v. California, held that FEHA is analyzed like the ADA, in that employees have the burden of proving they can perform their essential job functions with or without reasonable accommodation.

DGV

California Supremes: Bonuses Legal in California!

When I am asked to give examples of California employment law that makes people in other states smack their foreheads, wage and hour law always provides the best ones. In recent years, courts held that profit-based bonus plans were illegal in California because they took into account costs such as workers' compensation premiums and breakage, merely within the FORMULA used in calculating a profit-based bonus. Pity me. When I advise out-of-state employers on this issue, I usually have to hold the phone six inches from my ear.

No more. A sliver of sanity was restored today. The California Supreme Court decided in PRACHASAISORADEJ v. RALPHS GROCERY COMPANY, INC., that such bonuses are perfectly legal. That is, employers no longer have to fear giving extra compensation to employees based on profitability. The essence of the Court's decision:

The Plan was not illegal, we conclude, simply because, pursuant to normal concepts of profitability, ordinary business expenses, such as storewide workers’ compensation costs, and storewide cash and merchandise losses, were figured in, along with such other store expenses as the electric bill and the cost of goods sold, to determine the store’s profit, upon which the supplementary incentive compensation payments were calculated. By doing so, Ralphs did not illegally shift those costs to employees. After fully absorbing the expenses at issue, Ralphs simply determined what remained as profits to share with its eligible employees in addition to their normal wages.
Amen.

Tuesday, July 24, 2007

California Labor Commissioner to Hold Public Forum on Meal and Rest Periods

The DLSE has scheduled a "public forum" on August 2, 2007 in Sacramento. The details are here.

The purpose of the meeting is to allow members of the public "to inform the newly appointed California State Labor Commissioner, Angela Bradstreet, of their concerns regarding how recent changes to the meal and rest period enforcement practices required by legislation and recent court decisions has impacted their daily work-lives."

Alternatively, the Labor Commissioner will accept written comments by August 31, 2007.

DGV

Sunday, July 22, 2007

Final California AB1825 Sexual Harassment Training Regulations (Really)

The Fair Employment and Housing Commission reports here that the California Office of Administrative Law has approved the final AB 1825 sexual harassment training regulations.
Here are the regulations.

They will become effective on or about August 17. Employers have until then to ensure that their training programs are in compliance with the specifics. There are provisions that may require employers' attention. Here are a few:

1. Electronic learning -

An employer utilizing a webinar for its supervisors must document and demonstrate that each supervisor who was not physically present in the same room as the trainer nonetheless attended the entire training and actively participated with the training’s interactive content, discussion questions, hypothetical scenarios, quizzes or tests, and activities. The webinar must provide the supervisors an opportunity to ask questions, to have them answered and otherwise to seek guidance and assistance.

2. Who are qualified trainers -

(A) A trainer shall be one or more of the following:
1. "Attorneys" admitted for two or more years to the bar of any state in the United States and whose practice includes employment law under the Fair Employment and Housing Act and/or Title VII of the federal Civil Rights Act of 1964, or
2. "Human resource professionals" or "harassment prevention consultants" working as employees or independent contractors with a minimum of two or more years of
practical experience in one or more of the following: a. designing or conducting
discrimination, retaliation and sexual harassment prevention training; b. responding to sexual harassment complaints or other discrimination complaints; c. conducting investigations of sexual harassment complaints; or d. advising employers or employees regarding discrimination, retaliation and sexual harassment prevention, or
3. "Professors or instructors" in law schools, colleges or universities who have a post-graduate degree or California teaching credential and either 20 instruction hours or two or more years of experience in a law school, college or university teaching about employment law under the Fair Employment and Housing Act and/or Title VII of the federal Civil Rights Act of 1964.
(B) Individuals who do not meet the qualifications of a trainer as an attorney, human resource professional, harassment prevention consultant, professor or instructor because they lack the requisite years of experience may team teach with a trainer in classroom or webinar trainings provided that the trainer supervises these individuals and the trainer is available throughout the training to answer questions from training attendees.

Documentation -

(2) Documentation of Training. An employer shall keep documentation of the training provided its employees under this section to track compliance, including the name supervisory employee trained, the date of training, the type of training, and the name the training provider and shall retain the records for a minimum of two years.

Small employers crossing the 50 employee threshold - six months to do the training

Content - review your training programs carefully to ensure all the elements care covered.

Too much trouble? Well, I have a suggestion [shameless plug alert!]:

http://shawvalenza.com/about_training.php

DGV

9th Circuit Sets Low Bar on Employer Liability for Employees' Conduct

Poland was with the Customs Service in Denver. Hillberry was his supervisor. Hillberry demonstrated some anti-age animus towards Poland. Poland at some point filed a charge of discrimination. Later, Hillberry requested an administrative review of Poland's management of subordinates. The reviewers found that Poland engaged in unprofessional conduct as a manager. As a result, Poland was demoted to a non-supervisory job and transferred to Vienna Virginia.
Poland accepted the transfer, but retired 3 years before the mandatory retirement age.

Poland sued for, among other things, retaliation and constructive discharge. He said that the administrative review was retaliation for his age discrimination claim. The trial court awarded damages for constructive discharge and retaliation.

The Ninth Circuit reversed on the constructive discharge claim. 2/3 of the judges said that Poland did not establish his working conditions were intolerable merely because he was demoted and transferred. Among other things, the court noted that Poland worked 5 months in Virginia, contradicting his argument the transfer created intolerable conditions.

The really significant part of the case, though, is the Ninth Circuit's stance on liability for actions taken by innocent superiors on the basis of lower level employees' complaints. Hillberry did instigate the investigation into Poland's conduct, true. But the court did not rely on that alone and said that Hillberry's referral alone would not have been enough. Rather, the court focused on the fact that the investigators had access to Hillberry's notes, that Hillberry gave the list of witnesses to the investigators, and that the panel relied on performance reviews that had increased in frequency after Poland filed his first discrimination complaint.

In upholding Poland's claim, the court announced the rule for holding employers liable for negative, non-discriminatory actions taken on the basis of an employee's complaint that is tainted by bias:

We hold that if a subordinate, in response to a plaintiff’s protected activity, sets in motion a proceeding by an independent decisionmaker that leads to an adverse employment action, the subordinate’s bias is imputed to the employer if the plaintiff can prove that the allegedly independent adverse employment decision was not actually independent because the biased subordinate influenced or was involved in the decision or decisionmaking process.

The court added that if the investigation is "entirely independent" of the subordinate's influence, the animus of the retaliating employee is not imputed to the employer.

So, if an employee engages in protected activity by complaining against a manager, that manager cannot be the impetus for negative treatment against the complaining employee, unless an "entirely independent" investigation finds the negative treatment is justified. Otherwise, the odds of a retaliation finding are very high.

The case is Poland v. Chertoff. Opinion is here.

Friday, July 20, 2007

EEOC Revises Age Discrimination Regulations

The Equal Employment Opportunity Commission has revised its regulations regarding enforcement of the Age Discrimination in Employment Act. The text of the affected regulations as revised is here. The purpose of the revisions is to conform them with the U.S. Supreme Court's decision in General Dynamics Land System, Inc. v. Cline, 540 U.S. 581 (2004). There, the Supreme Court held that the ADEA prohibits only age discrimination against employees that are older than there comparators. That means that an employee over 40 cannot complain that an older employee was favored over him or her, even though the over-40 employee is covered by ADEA.
The new text of the regulation makes clear:

Favoring an older individual over a younger individual because of age is not unlawful discrimination under the ADEA, even if the younger individual is at least 40 years old. However, the ADEA does not require employers to prefer older individuals and does not affect applicable state, municipal, or local laws that prohibit such preferences.

U.S. Supreme Court Roundup 2006-2007

Here is our article summarizing the Supreme Court's labor and employment law decisions during the 2006 Term. We also note the three pending cases that will be addressed next Term, beginning in October 2007.

Greg

Monday, July 16, 2007

California Supreme Court: CEO's Malicious Prosecution Action OK

Sometimes plaintiffs and their lawyers like to sue the CEO or another high level executive for what they call "in terrorem" effect. You know, it's an attention getter. Other times individual defendants are added to defeat the possibility of federal court jurisdiction.

They say, though, if you go for the king, make sure you kill him. Because if you don't, he has the resources to sue you all the way to the Supreme Court.

Thomas Siebel is one such CEO. Debra Christoffers sued him and Siebel Systems for a variety of claims, many of which may not be asserted against individual managers as a matter of settled law. After Mr. Siebel won on the claims asserted against him as an individual, he sued Christoffers' attorneys, E. Rick Buell II and Carol L. Mittlesteadt for malicious prosecution. The trial court threw the case out. The court of appeal reinstated Siebel's case.

The complication here was that all parties settled Christoffers' underlying lawsuit and the cross-actions while that suit was on appeal. Mittlesteadt therefore argued that Mr. Siebel could not sue for malicious prosecution because he did not receive a "favorable" judgment in the underlying case.

The Supreme Court, 7-0, decided Mr. Siebel was free to proceed on his malicious prosecution claim even though the parties settled the underlying lawsuit. The opinion is here. The case is Siebel v. Mittlesteadt.

Those plaintiff attorneys who sue individual defendants based on frivolous legal theories may take away something from this decision. To be honest, in my experience, most plaintiffs' lawyers are more professional than that.

Greg

Thursday, July 05, 2007

New (Federal) Minimum Wage Poster

New federal minimum wage? New federal minimum wage poster! And it's a beauty. Here.
Your current FLSA minimum wage poster is good through July 24, 2007.

DGV

Wednesday, July 04, 2007

Court of Appeal Protects Investigator During Litigation

Bessie Gallanis-Politis sued her employer, LA County, for discrimination. During the litigation, a couple of supervisors investigated certain issues, purportedly to help prepare the discovery responses. They also took a number of other, incidental, actions, including requiring Gallanis-Politis to change her attendance records to "unapproved absence" when she attended depositions. She amended her complaint, suing the individual supervisors for retaliation. The Court of Appeal held that the supervisors' conduct arose from the litigation and were protected by California's anti-SLAPP law. In other words, the court said that Gallanis-Politis retaliated against the supervisors in violation of the statute. This case protects employees from employee-plaintiffs who attempt to sue managers involved in the defense of the case, and employee-plaintiffs who attempt to shield themselves from neutral policies during litigation. The case is Gallanis-Politis v. Medina, and the opinion is here.

Court of Appeal Upholds Termination for Personal Work on Company Time

Loggins v. Kaiser Permanente upholds summary judgment against an employee's claim of race discrimination and retaliation. Loggins was fired because over 80% of her hard drive contained personal documents. She was accused of devoting too much work time to personal business. (Bloggers and Internet junkies, beware). The case is important because it holds (1) timing of adverse action alone is not sufficient to prove pretext when alleging retaliation (2) the standard for retaliation claims under the Fair Employment and Housing Act is the same as under common law (wrongful termination) and (3) the employer's legitimate business reason simply must be "legitimate" -- non-discriminatory -- and is not held to any additional scrutiny for "fairness" or accuracy.

Damages in California Employment Law Cases

The court of appeal in Davis v. Los Angeles Unified School District Personnel Commission explains a number of principles applicable to damages awards in employment law cases. The case involves an employee who successfully claimed he was wrongfully demoted. The appeal concerns the measure of damages. The court held :the plaintiff does not recover back pay during the period when he or she is unable to work due to a non-industrial disability. The court also said that the employee is not entitled to reinstatement until he can perform the functions of the job. The court also explains how back pay is calculated with respect to mitigation. The opinion covers the "mixed motive" defense's effect on damages. This is a key case for settlement discussions, mediations, and if those fail - jury instructions on damages.

DGV

IRS May Tax Emotional Distress Damages

Last year, the D.C. Circuit held that emotional distress damages were not taxable and that to do so was unconstitutional. The case, Murphy v. IRS, arose in the context of an employment law matter. Well, the same panel just reversed itself. The court held that emotional distress damages not arising from physical injury were properly taxed under the Internal Revenue Code. Here is the opinion. Don't read it unless you enjoy the tax code, constitutional law, or want to turn to stone. Just saying.

DGV

Wednesday, June 27, 2007

U.S. Department of Labor FMLA Analysis

The U.S. DOL sought comments on its FMLA regulations last fall and winter. They have come out with a thorough report. It's so thorough, the executive summary alone is 12 pages. Originally, they were seeking these comments in contemplation of possible revisions. But the report does not mention what if any revisions are under consideration. For now, you may wish to read the report to confirm what you already know: intermittent leave and medical certification are the most difficult parts of FMLA to administer. Most employers are fine with bona fide leave for birth and adoption and for truly serious health conditions. See? It took me only two lines to give you this blinding glimpse of the obvious.

Tuesday, June 26, 2007

Court of Appeal Upholds Summary Judgment Against Disability Discrimination Claim

UPS has very strict policies enforcing the U.S. Department of Transportation's hours of work standards. King was a supervisor, responsible for ensuring employees logged hours properly, and managing the employees so they did not exceed DOT guidelines. After several warnings, King apparently persuaded an employee to revise a time card so it would appear she was not in violation of the DOT standard. After an investigation, UPS fired King. He had over 30 years of service. UPS thought highly of him. But they found his conduct to be an integrity violation and discharged him.
King sued for disability discrimination, failure to make reasonable accommodation, and breach of contract. The court of appeal in a strongly worded opinion, King v. UPS, held that King failed to raise a triable issue of fact. King did not deny what he did. The court swept aside King's efforts to argue that he had just returned from a medical leave of absence, that the employee with the false time card was not really at risk of going over hours, and that his managers conspired against him because he did not introduce evidence that UPS's stated reason for firing him - King's conduct - was untrue and was instead a mask for discrimination. The court detailed the summary judgment standard in discrimination cases, synthesizing a number of principles developed over time. The court's main point is that if the employer has a good faith belief that a manager engaged in misconduct, the plaintiff must do more than speculate about hidden reasons.

DGV

Monday, June 25, 2007

"No-Hire" Agreement Is Unenforceable in California

Consultant firms often assign consultants to work closely with clients. Sometimes consultant companies include "no hire" agreements, under which the customer is precluded from hiring consultant's employees for a period of time. In VL Systems, Inc. v. Unisen, Inc., the court of appeal held that such a no-hire agreement was unenforceable in California as an illegal non-compete. The court left open the possibility that a more narrow agreement might be enforceable. However, the fact that the consultant company's agreement made it illegal to hire any of the consultant's employees - even ones never assigned to work for the customer - rendered the agreement overly broad and unenforceable.

DGV

Monday, June 18, 2007

Happy Birthday to Shaw Valenza LLP!

We started our Firm a year ago today, on June 19, 2006. We are proud of what we have accomplished during our first year. And we look forward to more self-congratulatory posts in the years to come!

Thank you for reading the blog over the past year. We posted about 90 items. We tried to catch everything, but probably fell short. So let's say we tried to catch the important developments. We hope we have succeeded in becoming a valuable resource for our readers.

Best wishes,

Greg

Thursday, June 14, 2007

California Administrative Exemption Inapplicable

Eicher v. ABI contains a thorough analysis of the administrative exemption to overtime law.

Here are the facts from the opinion:

ABI owns the rights to ABI MasterMind software . . . ABI’s primary business is
to sell the software . . . , implement the software for the customer, train the
customer, and provide additional support. During the implementation phase, ABI typically sends its employees to the customer’s site to install and train the customer, based on the specific needs of that customer. . . . Hired as a consultant, Eicher eventually became a senior consultant. His college degree was in sociology, not computer science. He spent half of his time in the office and the other half on-site
at customers’ venues. Eicher primarily provided customer service and training on the ABI MasterMind software. He did not hire or fire employees, negotiate contracts with customers, or consult with ABI or its customers about business policies and practices. . . . Concerning Eicher’s duties as an employee of ABI, the trial court found that Eicher “devoted the majority of his work time in training customer employees on MasterMind and troubleshooting the software when he was engaged in implementation on the customer’s site. [Eicher] also spent time gathering information about the customers’ employment practices and entering data into the appropriate fields of the MasterMind program. [Eicher] testified that he spent the
majority of his time, when in [ABI’s] office, performing customer service work. The remainder of his time was spent on individual training and administrative duties.

So, Eicher was exempt, right? Wrong. The court noted that he was a "production" employee, involved in implementing ABI's core business. He did not affect policy at the customer or his employer. He simply customized the ABI software for the customer's use.

The court did not entertain ABI's argument that Eicher qualified under the administrative exemption because he “carr[ies] out major assignments in conducting the operations of the business, or whose work affects business operations to a substantial degree.” ABI did not make that argument at the trial court and did not support it with evidence, the court of appeal said.

The moral: The administrative exemption is not a catch all for all office-based work. Also, if the employee is generating revenue for the business, chances are the administrative exemption will not apply. Where does this decision leave lower level consultants assigned to work on customers' projects? (Watch your backs consultant firms. There be sharks in these waters).

DGV

Thursday, June 07, 2007

Article: Sexual Harassment Training Not a How-to-Sue

Professor Caren Goldberg of American University concluded a study of 234 white-collar professionals in which she concludes sexual harassment training does not encourage employees to file lawsuits. The study's findings are reported in this article, published in the Insurance Journal on June 7. In California and Connecticut, training is the law anyway. But we have always believed the benefits of anti-harassment training outweigh the potential risks. This study backs up that conclusion.

DGV

Thursday, May 31, 2007

Federal Minimum Wage Increase Approved

California's minimum wage is higher than the federal counterpart. But California employers with operations in other states may be interested to know the federal minimum wage is going up. Part of an Iraq funding bill, HR 2206, the minimum wage increase to $5.85 per hour (from $5.15) takes effect 60 days from May 25, the date of its passage. 12 months later, the wage increases to $6.55, and then to $7.25 12 months after that. The text of the new federal minimum wage law is here.

The California minimum wage presently is $7.50 and will rise to $8.00 on January 1, 2008.

San Francisco's minimum wage for 2007 is $9.16 and changes (increases) every year because it is indexed to inflation.

DGV

Tuesday, May 29, 2007

U.S. Supreme Court Clarifies Title VII Statute of Limitations

Lilly Ledbetter claimed Goodyear discriminated against her based on her sex by setting her pay lower than male counterparts. As a result, her pay continued to be lower over time. Years after the allegedly discriminatory pay decisions, she brought a claim of sex discrimination under Title VII of the Civil Rights Act of 1964. Title VII requires plaintiffs to file administrative charges within 180 days of the discriminatory decision. But Ledbetter argued that each paycheck was a new discriminatory decision to pay her, based on the initial discriminatory setting of her pay.

The Supreme Court held (5-4) that the EEOC charge was untimely. Reviewing its prior decisions on the issue, the Court held: "The EEOC charging period is triggered when a discrete unlawful practice takes place. A new violation does not occur, and a new charging period does not commence, upon the occurrence of subsequent nondiscriminatory acts that entail adverse effects resulting from the past discrimination. But of course, if an employer engages in a series of acts each of which is intentionally discriminatory, then a fresh violation takes place when each act is committed."

Thus, the "continuing violation" doctrine has no applicability to pay cases where the initial decision resulted in lower pay, but there were no later, discriminatory decisions perpetuating the initial wrong.

The case is Ledbetter v. Goodyear.

Sunday, May 27, 2007

Law Firm's Arbitration Agreement Unenforceable

O'Melveny & Myers is a giant and well respected law firm. Its arbitration agreement received no respect from the Ninth Circuit, though. Applying California law, the Ninth Circuit held the agreement failed the test for unconscionability:

- It was a take-it-or-leave-it agreement, even though it was announced three months before its effective date. An "opt out" is not procedurally unconscionable only if it permits "opting out" of the arbitration clause, not opting out of the employment relationship.

- The agreement barred all claims not asserted within a year of their occurrence. The court of appeals held that the shortened statute of limitations was unconscionable. The court distinguished a case where a shortened statute of limitations was held to be lawful - the lawful limitations period was measured as six months from the employee's termination, rather than from when the claim was discovered.

- The agreement contained a broad confidentiality clause, prohibiting disclosure that there was a claim or an arbitration. The court said this was unconscionable because it precluded employees from discovering "repeat players" before the same arbitrators, as well as "precedent" in applying the arbitration agreement.

- The agreement contained a "carve out" permitting the Firm to go to court for injunctive relief to prevent disclosure of attorney client AND other confidential information.

- The agreement precluded administrative proceedings before the U.S. DOL and the California Division of Labor Standards Enforcement, while allowing administrative charges to be filed at the EEOC and California DFEH.

So, it's time to tune up those arbitration agreements again.

DGV

Compete, Yes, But Don't Breach Duty of Loyalty

Competition is favored in California. But agents (including employees) cannot divert customers to another employer while still in an agency / employee relationship. Employees are free to leave, but while they remain employed, they owe a duty of loyalty to their employers. The Court of Appeal upheld a preliminary injunction where a business seller, retained as "managing agents" of the sold business, breached the duty of loyalty by diverting business to a third party. The case is Huong Que v. Luu.

DGV

9th Circuit: California Law Prohibits Hiring Away "For Cause" Employees

CRST is a trucking company. It had one-year contracts with new employees. CRST provided significant training to the new employees and wanted them to remain employed so they got their money's worth. CRST limited its right to terminate the employees' employment during the one-year initial agreement. In exchange, if the employees left voluntarily within the year, they refunded training costs.

Werner hired away CRST employees while they were under contract. CRST sued Werner for interference with CRST's contracts (of which Werner was aware). The Ninth Circuit held that the complaint stated a cause of action under California law governing interference with contract, and unfair business practices under California's unfair competition law. CRST Van Expedited, Inc. v. Werner Enterprises.

For employers willing to forgo "at will" employment, this case may effectively protect their investment in training and recruiting workers. The Court did not address any of Werner's potential defenses, including the privilege of competition under California law. It could be this case is another option for employers in California who cannot tie employees via non-competition agreements. Maybe employers can use renewable three-month contracts instead, so bad employees may be discharged at the end of the three-month period? The case probably has no effect when the employee chooses to leave, however. We'll see.

Friday, May 25, 2007

Proposed FEHA Amendment: "Familial Status" Discrimination

This week, the EEOC issued new "ENFORCEMENT GUIDANCE: UNLAWFUL DISPARATE TREATMENT OF WORKERS WITH CAREGIVING RESPONSIBILITIES." The EEOC recognizes it can't create new discrimination criteria not in Title VII. However, the agency explains, discrimination against those who care for family members or against those who care for individuals with disabilities may constitute discrimination. Much of this guidance deals with "work/family" conflict, and the effect of gender stereotypes associated with assumptions about familial responsibilities.

Coincidentally(?), the California Senate introduced SB 836, adding a new protected category to the Fair Employment and Housing Act: "familial status." Familial status is vaguely defined as "an individual who is or who will be caring for or supporting a family member." "Family member" means child, spouse, domestic partner, parent, parent-in-law, or grandchild.

Most of us fall (or will fall) within this new category. Congratulations. So, if the bill passes, will those ineligible for FMLA/CFRA have a new way of proving discrimination? Does "caring for" mean permanently, or just one day of care?

Stay tuned.

Thursday, May 24, 2007

New California Case: Prevent Workplace Violence

Plaintiff Franklin alleged that a coworker in the workplace had threatened to have three other employees and him killed, that defendants did nothing in response to his complaint to them about the threats, that the coworker thereafter assaulted him with a screwdriver, that plaintiff reported the assault to the police, and that plaintiff was terminated from his employment as a result of his complaints to defendants and the police.

In Franklin v. The Monadnock Company, the Court of Appeal held that these allegations were sufficient to support a claim for wrongful termination in violation of public policy. The public policy? The employer's duty to provide a safe workplace.

This case will support employers' arguments that there should be little to no tolerance for violent threats or conduct. Therefore, there should not be a duty to provide a "reasonable accommodation" for violent misconduct. However, employers face some mixed signals on that point.

The best way to prevent a claim for workplace violence is training supervisors to detect and respond to workplace violence symptoms, and take them seriously, and for HR managers to learn how to conduct investigations. It also helps to better understand the obligation to accommodate those employees with bona fide disabiliies that may suggest violent tendencies.

Sunday, May 13, 2007

California Court on Sexual Harassment Away from Work

When a supervisor accompanies an employee to events away from the workplace, claims for sexual harassment may still be available where the supervisor engages in misconduct. The Court of Appeal in Myers v. Trendwest Resorts reversed summary judgment in favor of the employer.

The court of appeal examined recent California Supreme Court authority and decided that Myers should be permitted to proceed against Trendwest. Myers' supervisor, Damlahki, engaged in conduct Myers claimed created a hostile work environment. The most serious allegations, however, occurred away from the workplace. Damlahki and plaintiff were on a job assignment and went to Damlahki's house. In the garage, Damlahki groped plaintiff etc. Another incident occurred at a social outing.

Trendwest's main argument was that it could not be liable for harassment that occurred outside the scope of Damlahki's employment. Trendwest argued it did not approve of the job assignment away from work, nor did it sponsor social drinking activities other than its holiday party. The Court of Appeal said that under recent case law,

The trial court erred because, in order for the employer to avoid strict liability for the supervisor’s actions under the FEHA, the harassment must result from a completely private relationship unconnected with the employment. Otherwise, the employer is strictly liable for the supervisor’s actions regardless of whether the supervisor was acting as the employer’s agent.

The employee's failure to complain, the company's anti-harassment policy, and the employee's agreement to accompany the supervisor on a weekend to Las Vegas (which did not occur), were all irrelevant. The fact that the incident in the garage occurred as the outcropping of a work-related drive was sufficient to confer liability on Trendwest. This standard is much broader than is applicable under traditional claims asserted against employers for conduct by employees. Employers must educate managers that they do not check their supervisory status at the plant gates and that their conduct away from work involving other employees may give rise to liability.

California Court: Employer Failed to Follow CFRA Requirements

The California Family Rights Act in most respects mirrors the federal FMLA. These laws have been around for some time now. But their provisions, and the interplay between them and workers' compensation and disability discrimination laws, continue to vex employers. The California Court of Appeal's decision in Faust v. California Portland Cement is a cautionary tale for employers trying to untangle this complex web of laws and regulations.

Faust worked for California Portland Cement as a "lube specialist" at a quarry. He experienced some severe stress and work and filed a worker's compensation claim. He sent in an initial note note in support of a request for leave based on depression. His psych benefits ended. He then sought an extension supported by a note from his chiropractor.

The employer questioned the adequacy of the certificate and attempted to call Faust. His wife told the HR manager that Faust was too stressed to speak with the HR manager, and she could speak with Mrs. Faust, Faust's workers' compensation lawyer, or his chiropractor. The company did not accept these options and terminated Faust's employment after seven weeks of leave. Significantly, the company also did not designate the leave as CFRA/FMLA, or notify Faust of his rights under those laws.

Faust sued for disability discrimination and harassment under the Fair Employment and Housing Act, as well as denial of CFRA leave, interference with the right to take CFRA leave, retaliation, and unfair business practices in violation of California Bus. and Prof. Code section 17200. The trial court granted summary judgment in favor of the company, holding that Faust had engaged in "insubordination" by taking unauthorized leave. The trial court's main point was that Faust did not cooperate with the company's efforts to clarify the bases for his leave.

The Court of Appeal reversed on the CFRA claims. Here are the important issues decided:

1. Interference with CFRA merely requires proof that the employee was entitled to leave and the employer denied the leave. There is no "pretext" or "shifting burdens" analysis normally applicable to discrimination claims.

2. The company's failure to demonstrate it had (1) posted the required notices regarding FMLA/ CFRA leave, and (2) notified Faust of his right to CFRA leave precluded summary judgment against Faust. The CFRA regulations expressly state the employer's failure to give notice precludes the employer from denying leave because the employee failed to give adequate notice.

3. The court would not hold that, as a matter of law, the company was privileged to insist on speaking with Faust directly, rather than his wife, doctor or workers' compensation attorney. This is significant, as employees frequently refer management to "representatives," and employers frequently (and correctly) insist on communication with their own employee. The court said that whether Faust adequately communicated is for the trier of fact (likely a jury made up of 12 employees who may not want to talk with HR.)

4. The chiropractor's note, while perhaps not adequate to constitute a medical certification, was more than sufficient to put the employer on notice that it should look further into whether the leave qualified under CFRA. The court then said that the company's efforts were insufficient because it did not seek out Faust's designated representatives, and that the company failed to give Faust notice of leave anyway.

5. The retaliation claim survived because the company's legitimate business reason was undermined by the fact that the company would not communicate with any of Faust's representatives, "particularly" his workers' compensation attorney. The court said that this failure was sufficient to permit a trial on whether the discharge was in retaliation for Faust's taking a protected leave.

6. The wrongful termination in violation of public policy claim survived because the CFRA claim survived. But the court noted in a footnote that Faust's reporting co-worker misconduct would not support that wrongful termination claim. That footnote will come in handy for employers in other contexts.

7. The court finally allowed the FEHA disability discrimination claim to proceed. With little analysis, the court relied on Faust's discrediting the company's legitimate business reason for discharging him, as discussed above.

It is always much easier to analyze these issues in hindsight. The company did try to assess Faust's entitlement to leave, and Faust did not fully cooperate. But, as this decision makes clear, the law places most of the burden on the employer to ferret out whether employees are entitled to protected leave. So, the decision might have come out better for the employer if it had (1) taken into account Faust's initial claim of a mental disability when refusing to deal with the "representatives" and (2) provided notice of CFRA leave at the outset of Faust's leave.

DGV

Friday, May 11, 2007

California Supreme Court Takes Up Unique Disability Discrimination Case

I covered Roby v. McKesson here in December. The California Supreme Court agreed to hear the case, which means the lower court's opinion no longer may be cited as precedent. Here is the issue on appeal:

This case presents the following issues: (1) In an action for employment discrimination and harassment by hostile work environment, does Reno v. Baird (1998) 18 Cal.4th 640 require that the claim for harassment be established entirely by reference to a supervisor's acts that have no connection with matters of business and personnel management, or may such management-related acts be considered as part of the totality of the circumstances allegedly creating a hostile work environment? (2) May an appellate court determine the maximum constitutionally permissible award of punitive damages when it has reduced the accompanying award of compensatory damages, or should the court remand for a new determination of punitive damages in light of the reduced award of compensatory damages?

So, the Court has agreed to decide if "harassment" is conduct separate and apart from managers' personnel decisions, or whether personnel decisions (demotion, discipline, etc.) can form part of a "harassment" claim. Check back in a couple of years for the exciting conclusion!

DGV

Wednesday, May 09, 2007

A Pot Pourri of Shaw Valenza's Articles Published in 2007

Here are some articles we've written since the beginning of the year, all of which are posted here on our website -

EMPLOYERS MUST COMPLY WITH STATE LAWS ON MEAL BREAKS, REST PERIODS
By D. Gregory Valenza, published in the San Francisco Daily Journal 4 May 2007

California employers must furnish employees with both rest periods, which are paid, and meal periods, which are not paid. These requirements first appeared in the Industrial Welfare Commission's Wage Orders in 1916. But in 2000, the Legislature imposed on employers significant financial consequences for failure to comply with rest and meal period laws.

THE EVOLUTION OF CALIFORNIA LABOR CODE SECTION 132A
By Jennifer Brown Shaw and Becki Graham, published in The Daily Recorder 25 April 2007

The California Constitution mandates a form of workers’ compensation outside of the common law remedies available in civil lawsuits. The Legislature has implemented this public policy so the workers’ compensation system is the preferred means to remedy employees’ work-related injuries.

POTENTIAL LIABILITY FOR EMPLOYER-SPONSORED SOCIAL EVENTS
By Jennifer Brown Shaw and Carolyn Burnette, published in The Daily Recorder 11 April 2007

In general, an employer may be liable for employee conduct at a social event (both negligent and intentional) whenever such conduct is “within the course and scope of employment.”

ALTERNATIVE WORKWEEKS
By D. Gregory Valenza and Matthew J. Norfleet, published in the San Francisco Daily Journal 6 April 2007

The eight-hour workday is a founding principle of organized labor in the United States. The famous Haymarket Square riots in Chicago in 1886 resulted in the deaths of seven police officers when one of the attendees threw a bomb at the advancing riot squad. Although there was no evidence that union leaders threw the bomb or even knew of its existence, they were executed for inciting the riot by holding a rally for an eight-hour day...

"EXEMPT" STATUS UNDER CALIFORNIA LAW: AVOID THE PITFALLS"
By Jennifer Brown Shaw, published in The Daily Recorder, 28 March 2007

In the past several years, California employers have struggled to understand which of their employees may be properly classified as “exempt” under California law. Those employees are “exempt” from minimum wage and overtime (and other compensation, such as reporting time and call back pay), and required to take rest breaks and meal periods. Part of the confusion stems from the fact that the requirements for exempt status under the federal Fair Labor Standards Act (FLSA) are different in many ways from the California requirements. While these differences are not new, the recent flood of class action litigation regarding which employees are properly due overtime necessarily has generated keen interest in compliance.

A NEW LOOK AT PAID LEAVE UNDER THE FAMILY AND MEDICAL LEAVE ACT
By Jennifer Brown Shaw, published in The Daily Recorder 14 March 2007

In a nutshell, the FMLA provides up to 12 weeks of job-protected leave to eligible employees. Eligible employees are those who have been employed for at least a year, have 1250 hours of service with the employer, and are employed at a worksite where 50 or more employees work within a 75-mile radius. The California Family Rights Act (“CFRA”) provides similar leave. In general, the laws are considered parallel. But there are significant exceptions, particularly with respect to the treatment of leave due to pregnancy disability.

A CHECKLIST FOR PREVENTING HUMAN RESOURCES PROBLEMS
By Jennifer Brown Shaw, published in The Daily Recorder, 28 February 2007

Management concerned with employment law liability should be focused on prevention: preventing lawsuits, preventing employee morale problems, and preventing the day-to-day hassles personnel issues can create. The road to success in this area is not paved with good intentions, however. Employers must understand basic human resources principles to avoid the employment law pitfalls that await.

MILITARY PERSONNEL HAVE JOB PROTECTION RIGHTS WHEN CALLED TO DUTY
By Jennifer Brown Shaw, published in The Daily Recorder, 13 February 2007

With the still unresolved political question of whether to “escalate” or “withdraw” from the Iraq war, America’s service men and women continue to be called away from their civil jobs to assist with the war effort. At least one source reports that, since September 11, 2001, approximately 550,000 reservists and members of the National Guard have been called to active duty. Of those, 475,000 have returned to the civilian work force.

EFFECTIVE EMPLOYEE TRAINING PROGRAMS: MONEY IN THE BANK
By Jennifer Brown Shaw, published in The Daily Recorder, 30 January 2007

What can employers do to reduce their potential exposure for workplace related claims? Adopting and fairly administering lawful policies and procedures is a good start, of course. However, employers also must take the next step to train employees about what is expected of them and the options available for resolving workplace issues within the organization.

Happy reading!

DGV

Thursday, May 03, 2007

California Supreme Court Upcoming Hearings

The California Supreme Court will deliver major rulings this summer.

PRACHASAISORADEJ v. RALPHS GROCERY will be heard on June 6. This case is critically important to all employers who provide employees with bonuses based on profitability. The Court is deciding if a bonus based on profits is illegal because it takes into account workers' compensation costs by necessity because such costs are included in profit calculations.

GENTRY v. S.C. (CIRCUIT CITY STORES) will be heard on June 5. This case examines whether class action waivers in employment agreements are enforceable. The court already has held in another case that class action waivers in consumer class actions are not. This case is different because of the value of the claims at issue, whcih are much higher than in the credit card fee case previously decided.

GREEN v. CALIFORNIA will be heard on May 31. This case addresses who the burden of proof in disability discrimination cases. Does the plaintiff have to prove that he or she could perform the essential functions of the job as part of the prima facie case? Or does the employer have to prove that the plaintiff could not do so as an affirmative defense?

The Court must issue an opinion within 90 days of oral argument. So, this summer will be full of opportunities for celebration or misery, depending on the opinions issued. And we will be there with blog postings, articles, and legal updates. But you knew that.

DGV

Thursday, April 19, 2007

California Arbitration Agreements Do Not Always Have to Comply with Armendariz

In California, arbitration agreements will be deemed "unconscionable" if they concern discrimination or "public policy" causes of action, unless they comply with the procedural requirements set forth in Armendariz v. Foundation Health Psychcare Services.

Armendariz requires, among other things, "neutral arbitrators, more than minimal discovery, a written award, and all of the types of relief that would otherwise be available in court and, in addition, "'do[] not require employees to pay either unreasonable costs or any arbitrators’ fees or expenses as a condition of access to the arbitration forum.'"

Many an arbitration agreement has been invalidated under Armendariz, either because the arbitration agreement shifted costs to the employee, did not provide for discovery, or unduly limited remedies. There also is the argument that Armendariz requires "mutuality," which means that if an agreement is not entirely mutual, it is invalid as unconscionable.

Well, in Giuliano v. Inland Empire Personnel, the plaintiff sued for breach of contract, alleging he was not paid bonuses or severance to which he was entitled. He signed an arbitration agreement that probably would have failed under Armendariz. But the Court of Appeal here said that because no FEHA or public policy claim was at issue, Armendariz did not apply.

This decision is significant, because many employers are sued for breach of contract, fraud, and other causes of action not involving discrimination or harassment If Armendariz does not apply, employers will have significant freedom to include in these arbitration agreements terms that would not normally be upheld under Armendariz, e.g., a waiver of entitlement to punitive or tort damages, short statute of limitations, carve-outs permitting the employer to seek injunctive relief, etc. Employers seeking to change arbitration provisions must have them carefully reviewed by counsel - not kidding.

DGV

Monday, April 16, 2007

Ca Supreme Court: Three-Year Statute of Limitations for Meal Periods Claims

Murphy v. Kenneth Cole Productions was supposed to be the case in which the California Supreme Court once and for all held that meal period penalties are in fact penalties and not wages. Wrong again! The high court unanimously held that meal period premiums are "wages," not penalties. So much for all the press on the hotly divided court at oral argument.

Anyway, so what? Well.....wage claims are covered by a three-year statute of limitations; penalty claims are covered by a one-year statute. Three years is three times longer than one year, which may result in larger claims and larger awards .

If you care about such things, this case kind of smarts. But wait...there's more.

The Supreme Court also held that appeals of Labor Commissioner decisions to Superior Courts may include new claims not litigated on the administrative level. That means that employees may lose a claim at the Labor Commissioner level, appeal, and assert entirely new theories in court for the first time as part of the simple appeal "de novo" process. I suppose it also means that employers may appeal Labor Commissioner decisions and face entirely new claims at the Superior Court level.

DGV

Monday, April 09, 2007

One for the Employment Litigators

The plaintiff sued the SF Housing authority and lost. (Demps v. SF Housing Authority). Employment law practitioners will like the thorough legal discussion of the retaliation claim. This also is one of the rare opinions where the court said that the plaintiff failed to make out a prima facie case of discrimination because the plaintiff "was not performing competently."

Also - the court in Demps finally overruled its old decision in Biljac Associates v. First Interstate Bank. No longer may trial courts refuse to rule on objections to evidence at summary judgment hearings by saying, "I'm only relying on admissible evidence."

Disclosure of employees' names and addresses in wage/hour class actions upheld

Employers involved in wage and hour class actions likely will NOT be able to successfully object to (pre-certification) disclosure of names and addresses of putative class members.

We previously covered Pioneer Electronics v. Superior Court (Olmstead), in which the California Supreme Court said that disclosure of class contact information was OK if the putative class member had the opportunity to "opt out" of disclosure. But Pioneer was a consumer class action, not an employment law case. Everyone knows employees have reasonable expectations of privacy in personnel information. Employment cases are different. Pioneer won't apply, right?

Wrong. The Court of Appeal in Belaire-West Landscape v. Superior Court (Rodriguez) applied Pioneer to a wage and hour class action. The Court briefly touched on the difference between an employee's privacy interest in personnel records voluntarily disclosed to an employer, but basically said that the ability to "opt out" of disclosure was sufficient protection of that privacy interest.

The disclosure of putative class members' names and addresses may be significant, depending on how the plaintiffs' bar uses the information. Maybe there will be a backlash against the plaintiffs' bar for bothering employees at home. Maybe plaintiffs will submit a lot more hostile declarations in support of class certification motions. Time will tell.

DGV

Thursday, March 22, 2007

Immigration is a hot employment law issue too

Two recent cases examine the intersection of immigration law and employment litigation and both decisions are in favor of the immigrants.

First, California employment law does not make distinctions between employees working lawfully or illegally. Labor Code 1171.5 plainly declares:

(a) All protections, rights, and remedies available under state law, except any reinstatement remedy prohibited by federal law, are available to all individuals
regardless of immigration status who have applied for employment, or who are or
who have been employed, in this state. (b) For purposes of enforcing state labor and employment laws, a person's immigration status is irrelevant to the issue of liability,and in proceedings or discovery undertaken to enforce those state laws no inquiry shall be permitted into a person's immigration status except where the person seeking to make this inquiry has shown by clear and convincing evidence that the inquiry is necessary in order to comply with federal immigration law.

In Reyes v. Van Elk, the California Court of Appeal held that section 1171.5 is not preempted by federal immigration laws. Reyes and others accused Van Elk of failing to pay the "prevailing wage." The Superior Court held that federal immigration law preempted section 1171.5 and that Reyes could not seek unpaid prevailing wages because he was an illegal immigrant. The court of appeal reversed, holding that federal law (IRCA) does not preempt section 1171.5, and that Reyes had standing to sue for unpaid wages.

Second, in a case having broad implications for employers hiring workers under immigration visas such as H1-B's, the Ninth Circuit Court of Appeals held that an employer could be held liable for wrongfully discharging an employee who was not authorized to work in the U.S. The case is Incalza v. Fendi. Incalza worked for Fendi under an E-1 visa. When a French company bought Fendi, the E-1 visa no longer was valid. Fendi, which did apparently not want to retain Incalza anyway, discharged him because he was not lawfully working in the U.S. Incalza asked for a leave of absence to obtain a visa or to marry his fiance, a U.S. citizen.

Incalza sued for breach of contract not to terminate without good cause, among other things. Fendi argued that "good cause" was established because Incalza was not lawfully allowed to work, and Fendi was not obligated to wait until Incalza became authorized to work. A jury found in favor of Incalza. Fendi appealed and ran right into Stephen Reinhardt.

The Court of Appeals said that IRCA does not require employers to terminate workers who may resolve immigration status if they are granted a leave of absence. Does the law require granting a leave of absence? No, but this did not stop the Court of Appeals. The Court said that an employee on leave is not actually "employed" under IRCA. (This is news to employers who must provide all sorts of leaves with guaranteed reinstatement.) Because the employee is not really "employed" while on leave, the court reasoned, the employer can comply with IRCA and not discharge the worker.

Distinguishing Supreme Court authority and the IRCA statute itself, the Court announced this rule: "as a general rule, individuals who are indisputably not authorized to work must be discharged immediately. An individual who has the opportunity to switch from an E-1 to an H1-B . . . is, however, another matter."

Incidentally, the court also held that IRCA does not conflict with Lab. Code section 1171.5, just as the state court in Van Elk did. So, that issue is settled unless the Supremes take up Fendi.

In light of this case, employers seeking to discharge employees must carefully examine whether to use the expiration of a visa as the sole justification for termination. The courts may well say that it was not "necessary" to discharge the worker merely because he or she no longer was authorized to work in the U.S.

Stay tuned.

Thursday, March 08, 2007

Ninth Circuit Protects Employee's Violent Outbursts

An employee claiming "bi-polar" disorder was privileged to storm out of the boss' office, throw papers at the boss, and kick and toss objects around her cubicle, according to the Ninth Circuit Court of Appeals.

Gambini received a warning for her attitude. She claims she had bi-polar disorder. During the meeting over the warning, she became upset, left the meeting, and then started kicking her cubicle and throwing objects. Employees complained they were in fear of her next outburst. The Company hospitalized her and provided FMLA paperwork. They later terminated her employment.

Gambini sued and lost the case at trial. In Gambini v. Total Renal Care, deciding the case under Washington law (but tracking its own ADA jurisprudence), the Court of Appeals said that the jury should have been instructed that "if it found that her conduct at issue was caused by or was part of her disability, then it could find that one of the substantial reasons she was fired was her bi-polar condition."

That means the jury has to consider whether the conduct at issue is associated with a mental disability that cannot be seen or really measured. Is the conduct a result of an impairment, or just the result of a bad day, or someone emboldened by ADA protection maybe?

Consider a state like California where nearly every condition is a disability. Any conduct an employee can attribute to a disability is protected? What if the employee's symptoms include breaking things or setting them on fire? What if the employee "because" of a disability does not control bodily functions? How about touching other employees? Cursing? Taking unannounced days off?

Yes, these examples are subject to an "undue hardship" analysis, but the employer has the burden of proving undue hardship, and it's a tough burden. Direct threat? Even tougher! What if the employer fired twenty people without disabilities for throwing objects at a supervisor? The person with a disability gets a pass? I understand there are folks with real disabilities who need a boost. But I don't think the ADA was intended to be stretched in this fashion. Additionally, the opportunity for abuse is pretty high with a decision like this.

Tiny bright spot for the employer - the Ninth Circuit said that the FMLA claim was properly dismissed because the employer showed it would have fired Gambini regardless of her having taken leave.

DGV

Saturday, March 03, 2007

California Final Final Sexual Harassment Training Regs Issued

The Fair Employment and Housing Commission responded to the concerns of the Office of Administrative Law by issuing revised final AB 1825 regulations. There are refinements regarding who will be eligible to design and present AB 1825 training.

Yes, we're still qualified. We think.

But employers looking to conduct their training in house, and those evaluating third-party vendors, should carefully review these regulations to ensure that the designer and presenter is qualified under the new regulations.

DGV

California DLSE Changes View on Professional Exemption

The California Division of Labor Standards Enforcement has revised its Enforcement and Interpretations Manual regarding some aspects of the "professional exemption." The DLSE's enforcement position is consistent with the DOL regulations as they existed before the revisions in 2004.

In particular, the DLSE clarified that the "learned" professional exemption now requires learning only above the high school level. The manual does not say it is necessary for exempt employees to have post-bachelor's degrees. If you haven't fallen asleep yet, you can view the manual here. Turn to chapter 54, which is at page 236 of 303 on your Acrobat reader....

DGV

California Employers Cannot Require Employees to Use Vacation During FMLA Leave

FMLA leave is generally unpaid. The FMLA generally provides employers with the right to require employees to use vacation and sick leave (or other paid leave) during FMLA-covered leave. But there are some rather badly written DOL regulations that restrict the employer's right to when leave is "unpaid." And when an employee receives benefits such as under a temporary disability leave benefit plan the leave is not "unpaid" and the employer cannot require the employee to use vacation or sick pay. The Seventh Circuit Court of Appeals recently applied that regulation in Repa v. Roadway Express, Inc. The effect of the decision is that California employers cannot require employees to use vacation, sick or other paid leave when the employee is receiving state disability, PFL, or workers' compensation benefits. If you need more information on this, we will have an article posted on our website about it next week.

DGV

Friday, February 16, 2007

Congress Considering "Card Check" Bill to Increase Unionization

According to these interesting data from the Bureau of Labor Statistics, about 7% of the private sector employees are unionized; that number is about 36% for government employees. So, many don't pay attention updates like this. That may change soon. Congress is interested in increasing that percentage.

Here's a quick and oversimplified overview of union organizing under current laws:

When unions attempt to organize employees, they collect "authorization cards" from employees. Once they obtain enough cards, they typically present them to the employer and demand the right to bargain. (Some unions go straight to the NLRB and petition for an election). But the employer can reject the cards and demand a secret ballot election usually conducted by the National Labor Relations Board. Once the Board processes a petition for an election, the union and employer have about six weeks to "campaign" until the election. The union and the employer present their respective cases, and the employees vote in a secret ballot. The NLRB counts the votes. Unions and their advocates argue this election process deters unionization because employers use unfair or illegal election tactics. Employers argue they and the unions present the facts and let the employees decide. About half the time, the employees decide against the union. Unions don't like that success rate.

So, apparently a majority of the House of Representatives would like to skip all that secret ballot election stuff and let the union obtain representation rights just by collecting authorization cards. HR 800, The Employee Free Choice Act would do just that.

It's a lot easier to organize employees when the employer does not get a chance to explain why union representation is not a good idea. And the First Amendment gives unions a free reign on what they can say to obtain a signature on an authorization card. I bet peer pressure increases the number of signatures. Organizers' unchallenged promises about the benefits of unions help, and there could even be some signature hanky-panky once in a while too. (Such a cynic).

No one is paying attention to the rest of the Bill, though. Another section would require unions and employers to mediate and then arbitrate if negotiations do not quickly result in a new collective bargaining agreement. Lots of power in the hands of one arbitrator to unilaterally "impose" an agreement. Another provision imposes penalties of up to $20,000 per violation of "unfair labor practices" committed by employers before the first collective bargaining agreement is signed.

This Bill is not new. But with the power shift in Congress, this year it is gaining traction. Vice President Cheney has said publicly it will be vetoed if passed. But sometimes deals are made.... So stay tuned.

Saturday, February 10, 2007

AB 1825 Harassment Training Regulations Disapproved

The California Fair Employment and Housing Commission's regulations implementing AB 1825 (mandatory sexual harassment training) failed to gain approval from California's Office of Administrative Law. The FEHC made the announcement here.

The OAL's chief concern was that the regulations were not sufficiently "clear" in certain respects, particularly regarding who is qualified to prepare and conduct anti-harassment training under the statute. There were also some more technical flaws.

The FEHC plans to modify the regulations and publish them for a brief public comment period
before re-submitting them to the OAL. The FEHC's modifications may have a significant effect on existing programs, depending on whether the new standards "raise the bar" on who is qualified to prepare or conduct AB 1825 training.

Once the regulations are re-issued, employers should reevaluate whether their trainers and training programs meet the new standards.

DGV

Ninth Circuit Explains "Regarded As" Claims under the ADA

An employer's acknowledgement that an employee has an "impairment" is not enough to support a claim that the employee is "regarded as" having a disability.
Walton v. U.S. Marshall Service involves a former security guard at a federal courthouse. The essential functions of the job include the ability to "localize" sound. Walton had only one functioning ear, which affected her ability to localize sound. After a required medical exam, the security services contractor terminated Walton's employment because she could not perform essential functions of her job. She claimed the contractor "regarded" her as having a disability.
The Ninth Circuit held:

to state a "regarded as" claim a plaintiff must establish that the employer believes that the plaintiff has some impairment, and provide evidence that the employer subjectively believes that the plaintiff is substantially limited in a major life activity. If the plaintiff does not have direct evidence of the employer's subjective belief that the plaintiff is substantially limited in a major life activity, the plaintiff must further provide evidence that the impairment imputed to the plaintiff is, objectively, a substantially limiting impairment.

Applying this rule, the Court of Appeals decided that the employer's actions demonstrated only that the employer regarded the employee as having an "impairment," but there was no evidence the employer considered the impairment to be "substantially limiting" in one or more major life activities.

Employers often ask whether exploring the possibility of accommodation, asking an employee to have a fitness for duty examination, or otherwise acknowledging medical impairments will create "regarded as" liability. This decision makes it harder for plaintiffs to make that argument under the ADA and federal Rehabilitation Act.

Tuesday, February 06, 2007

Ninth Circuit Affirms Order Certifying Huge Class Action Against Walmart

A couple of years ago, the U.S. District Court for the Northern District of California certified a class of female employees against Walmart. The case was noteworthy because it is a nationwide class action in which the plaintiffs claim Walmart discriminates against female employees in setting compensation, making promotion decisions and other issues. The class size was estimated at 1.5 million workers.

Walmart appealed the class certification order. The Ninth Circuit heard oral argument in August 2005, and finally issued its opinion today. A three judge panel voted 2-1 to affirm the district court's decision. Barring settlement or a successful decertification of the class, the huge class action against Walmart will proceed to trial.

DGV

Friday, February 02, 2007

Another San Francisco Paid Sick Leave Update

The San Francisco Office of Labor Standards Enforcement (OLSE) has come up with some FAQs regarding the San Francisco paid sick leave ordinance. The FAQs give some insight as to the city's enforcement position. The answers to some of the questions will confirm that the ordinance is nearly impossible for large employers with operations within and without San Francisco to comply with. The law goes into effect this Monday, February 5, 2007. Good luck!

DGV

Frere Jacques, Dormez-vous?

Now and then one should look beyond California's borders for employment law trendzzzzz. So, according to this article in the San Francisco Chronicle, France's health ministry is looking into whether to mandate nap time for workers. With their 35 hour workweek and months of vacation, sick time, etc., the stress of finding things to do in one's spare time apparently causes sleepless nights for French workers. OK, I'm a little jealous. There is no truth to the rumor that San Francisco is considering mandating juice and cookies. Yet.

DGV