U.S. Supreme Court Upholds Idaho Law Re Union Political Activities Checkoff

I know I'm posting late on this, but I have a strong need to have full coverage of the U.S. Supreme Court's employment law opinions, even the ERISA cases. I hope I didn't inconvenience my devoted followers, and the copycats who don't read the advance sheets themselves .... (Hi!)

This one is a labor / First Amendment crossover. A union claimed Idaho law, prohibiting deductions from employees' pay for union political action funds, is unconstitutional in violation of the First Amendment. The Court disagreed and upheld Idaho law.

Here's the issue and the Court's resolution, as framed by the Court itself:

Under Idaho law, a public employee may elect to have a portion of his wages
deducted by his employer and remitted to his union to pay union dues. He may not, however, choose to have an amount deducted and remitted to the union’s political action committee, because Idaho law prohibits payroll deductions for political activities. A group of unions representing Idaho public employees challenged this limitation. They conceded that the limitation was valid as applied at the state level, but argued that it violated their First Amendment rights when applied to county, municipal, school district, and other local public employers.

We do not agree. The First Amendment prohibits government from “abridging the freedom of speech”; it does not confer an affirmative right to use government payroll mechanisms for the purpose of obtaining funds for expression. Idaho’s law does not restrict political speech, but rather declines to promote that speech by allowing public employee checkoffs for political activities. Such a decision is reasonable in light of the State’s interest in avoiding the appearance that carrying out the public’s business is tainted by partisan political activity. That interest extends to government at the local as well as state level, and nothing in the First Amendment prevents a State from determining that its political subdivisions may not provide payroll deductions for political activities.

So, there you have it. The case is Ysursa v. Pocatello Ed. Assn. and the opinion is here.

Another Court of Appeal Decision on Tip Pooling

Did lawyers file a whole bunch of class actions on tip pooling at about the same time a year or two ago? Apparently so. Several judicial opinions have now emerged. They're not good for the plaintiffs.

We recently posted about Budrow v. Dave & Buster's here. There, the court decided that a restaurant's requirement that cocktail waitrons tip out a bartender was lawful.
Now, in Etheridge v. Reins International California, Inc. opinion here, the court of appeal reached the same conclusion, albeit with a slightly different formulation. Tip pooling, the court held, is fine when the tips are doled out to employees in the "chain of service." It is still forbidden to involve managers / supervisors in tip pools. But the bussers, bar backs, and hosts can breathe again.

Another Arbitration Agreement Bites the Crust

er... Dust, too.

Western Pizza owns some Domino's franchises. Their arbitration agreement had a class action waiver (illegal). It also had an arbitration selection procedure specifying a certain "dispute resolution service" that had only one arbitrator employed. So, that kind of took the surprise out of who would conduct the arbitration. The court struck down the arbitration agreement as unconscionable. Not a surprise given the current state of arbitration case law.

Interestingly, though, the court of appeal held that the company's "small claims" procedure, permitting relaxed discovery, evidence, and hearing procedures for claims worth less than $50,000. The court noted that such things are normal in arbitration anyway. Also, the court did not find unconscionable the agreement's silence on discovery procedures and no requirement of a written award, holding these were "implied" in the agreement under Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83.

The case is Sanchez v. Western Pizza Enterprises, Inc. and the opinion is here.

Court of Appeal Holds Statements Regarding Termination Were Not Defamatory "Per Se"

Slander per se means that a false statement is actionable without proof of actual damages. In California, the law defines the types of slander that count as "per se," which include a statement that:

[¶] 1. Charges any person with crime, or with having been indicted, convicted, or punished for crime; [¶] 2. Imputes in him the present existence of an infectious, contagious, or loathsome disease; [¶] 3. Tends directly to injure him in respect to his office, profession, trade or business, either by imputing to him general disqualification in those respects which the office or other occupation peculiarly requires, or by imputing something with reference to his office, profession, trade, or business that has a natural tendency to lessen its profits; [¶] 4. Imputes to him impotence or a want of chastity . . .

Mike Regalia was a senior executive. When he was fired, the senior management said that he demanded a "finders fee" or "commission" on a sale without a justification, and that people would not work for him and had threatened to leave. He sued for, among other things, defamation. A jury decided he had been slandered and awarded him $750,000 for damage to his reputation without proof of actual economic loss.

The Court of Appeal disagreed. It is the court's job to decide if a statement is slanderous "per se" or if proof of damages is required (called slander per quod). Here's the court's analysis:

A person can make a claim for money that is rejected as not being justified, and still not be viewed as having committed an act that reflects negatively on that person. Thus a statement about such a claim does not necessarily directly injure him in his profession, trade or business (Correia v. Santos, supra, 191 Cal.App.2d at p. 852) so as to fit within subdivision (3) of Civil Code section 46. (See Gang v. Hughes (9th Cir. 1954) 218 F.2d 432 [alleged statements that a plaintiff‟s attorney refused to settle a case until he was paid and that he was paid because he demanded immediate payment not slander or libel per se].) Likewise, the statement that Regalia was fired because other employees would not work for him and would leave if he remained employed does not, on its face, clearly fall within subdivision (3) of Civil Code section 46. That one or more employees do not want to work for someone, without more, again, does not necessarily reflect adversely on the person. The employee or employees might not want to work for a person because of the person‟s work ethic or rectitude, or legitimate business policies.

Managers have the right to explain to employees why they have discharged someone. There are good business reasons to do so, such as to inform employees what performance standards govern employment. If statements such as the above were actionable as slander per se, no employer would ever explain why someone was no longer employed unless it wished to risk liability without proof of damages. Employees, on the other hand, are protected from false statements if they are actually injured. So, the court struck a reasonable balance here it seems to me.

This case, however, reinforces the need to be factual when explaining someone's departure. Had they called the ex-employee a "thief" or an "incompetent" manager, that might have been a different story. And neutral references are still the safest policy.

The case is The Nethercutt Collection v. Regalia and the opinion is here.

New COBRA Notices Available

Employers covered by COBRA have to comply with the new COBRA requirements included in the "ARRA" stimulus bill. We wrote an article about this here, and we posted here.

The US Department of Labor has issued model notices to aid compliance. Those are here.

DGV

California FEHC Compares ADA, ADAAA and FEHA

The California Fair Employment and Housing Commission issued a handy chart comparing the original Americans with Disabilities Act, the 2008 amendments (ADAAA), and the Fair Employment and Housing Act's coverage of individuals with disabilities. Here is the chart.

California FEHC Compares New FMLA Regulations with CFRA/PDL

The California Fair Employment and Housing Commission issued a helpful comparison chart covering the new FMLA regulations and their effect on California's Family Rights Act and Pregnancy Disability Leave law. Here it is.

Court of Appeal Clarifies California's Tip Pooling Law

If you have worked in a restaurant, then you know. Most restaurants require waitrons (servers) to "tip out" busboys, bartenders, runners, hosts, and/or others involved in the chain of service. If you gain the reputation for stiffing the busboy, bartender, etc. (under-tipping), you will be punished by no water, wrong drink orders, forgotten bread for your table, etc. So, smart wait staff tips out correctly.
In California, though, there is a statute addressing the practice of "tip pooling." The primary purpose of the law is to prevent management from taking a dip into the tip pool, as it were.
Some folks believe that tips by law are retained only by the server who collects it, or who engages in "direct table service."
The Court of Appeal put that interpretation to rest in Budrow v. Dave and Buster's. There, a cocktail waiter objected to tipping out the bartender. No wonder he lasted a month, or three months as he argued.
Anyway, the opinion is here. I'll bet you some side work that the Justices themselves or the court staff pulled a few doubles in their day.

GINA Regulations Coming

The EEOC has proposed regulations implementing and interpreting the Genetic Information Nondiscrimination Act of 2008 (GINA). The draft covers definitions of terms used in the law, what constitutes discrimination, how to protect genetic information in employers' possession, and MORE!

The EEOC is inviting the public to comment on the proposed regulations. If you want to access through the EEOC's own website, it's not posted as of this writing. But it will appear here. As of now, you can view the document here.

Thanks to Ross Runkel for reporting this before it happened.

DGV

Court of Appeal Upholds Release of Overtime Claims

Labor Code section 206.5 invalidates releases of wage claims. But when there is a bona fide dispute over whether wages are due, releases are valid. That's what the court of appeal held in Chindarah v. Pick Up Stix.

This was an overtime class action that went to mediation but did not settle. The employer did an "end run" and settled out about 200 employees with individual releases. Employees challenged the validity of the releases under Labor Code section 206.5. But the court of appeal, agreeing with the trial court, held:

The releases here settled a dispute over whether Stix had violated wage and hour laws in the past; they did not purport to exonerate it from future violations. Neither did the releases condition the payment of wages concededly due on their executions. The trial court correctly found the releases barred the Chindarah plaintiffs from proceeding with the lawsuit against Stix.

If this case is not taken up by the Supreme Court for review, it will clarify a longstanding unresolved issue in California law regarding when settlements of wage claims will be enforced.
Employers will be able to settle claims involving uncertain liability, such as for certain meal period claims, or misclassification issues when the factual issues are in dispute.

Read the opinion here.

California Supreme Court Addresses State Employees' Whistleblower Protections

Before a state employee can bring suit under the California Whistleblower law, he or she must seek relief before the State Personnel Board. When the SPB issues "findings," or even when the SPB fails to do so in the time allowed,the law says that the employee may sue in Superior Court. But the court of appeal held that when, as in the present case, an employee receives adverse findings from the SPB, the employee must seek to overturn those findings before going to court.

The Supreme Court reversed that decision, 7-0. The high court held that an employee may proceed to court when the SPB issues or fails to issue findings within the prescribed time, and the employee need not seek a writ or a hearing before an administrative law judge first.

The case is State Bd. of Chiropractic v. Superior Court and the opinion is here.

California Amends Alternative Workweek Law

As part of California's recent budget compromise, the Legislature made welcome revisions / clarifications to the law governing "alternative workweek arrangements." These arrangements are the authorized exemptions to "daily overtime" law.

The bill, AB 5, amends Labor Code section 511. Presumably, the DLSE will revise its manual and the IWC will issue revised wage orders.

First, the law defines what counts as a "work unit" for having the vote for the alternative workweek arrangement:

For purposes of this section, “work unit” includes a division, a department, a job classification, a shift, a separate physical location, or a recognized subdivision thereof. A work unit may consist of an individual employee as long as the criteria for an identifiable work unit in this section is met.

The new law also expressly allows employers to give employees the right to vote on a "menu of options" that includes not only "alternative workweek" schedules (such as 4/10 hour days) but also an eight hour per day option. That will likely result in a lot more votes for passage.

The law also permits employees to move from one option to another weekly. That will give employees the option of working 4/10 one week and then 5/8 the next week if the employer consents.

Here is the statute.

DGV

President Obama Issues Pro-Labor Executive Order No. 4

The President signed a new executive order authorizing "project labor agreements" in certain "large scale" federal construction contracts. The order, signed Feb. 6, 2009, takes effect immediately. Basically, the order authorizes contracting agencies to require private-sector contractors to sign on to a union contract for the life of the project:

The term "project labor agreement" as used in this order means a pre-hire
collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project and is an agreement described in 29 U.S.C. 158(f).

The order applies only to construction projects worth more than $25 million. You can view it here.

Did You Read the "Stimulus" Bill?

What employment law changes are included in the stimulus bill? Law firms are starting to pick over the new law, signed on February 17, 2009.

A number of employment law firms' newsletters report there is a big change to COBRA. To summarize, under the new law, certain employees fired / laid off employees from September 2008 until December 2009 will pay a discounted COBRA premium, which employers apparently will recover as a tax credit. The provision is available only to individuals earning less than $125,000 and married couples with incomes under $250,000. So, that will be easy for employers to administer. Not. I smell full employment for benefits administrators. See? Job creation!

What else is in the "American Recovery and Reinvestment Act" to stimulate employers? We'll find out in the coming days. If you can't wait, or you want to help your representative or Senator understand what s/he voted for, you can read the entire new law here. Just hit "control-F" and search for "COBRA" or "Title III," addressing the COBRA premium discount.

DGV

Ninth Circuit Withdraws "Flyover" Wage and Hour Case

We posted about Sullivan v. Oracle here, and blew a weekend on an article (you don't have to read) here. That's the case where the court of appeals held that an out of state resident is covered by California's wage and hour laws even when he or she works only briefly in California.

The Ninth Circuit decided to withdraw the opinion, here. Instead, the court certified three questions to the California Supreme Court:

First, does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs in the circumstances of this case, such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week?

Second, does § 17200 apply to the overtime work described in question one?

Third, does § 17200 apply to overtime work performed outside California for a California-based employer by out-of-state plaintiffs in the circumstances of this case if the employer failed to comply with the overtime provisions of the FLSA

So, the California Supreme Court, if it accepts the Ninth Circuit's invitation, will give its input and then the Ninth Circuit presumably will re-issue its opinion with the benefit of California's high court's analysis. Stay tuned.

Ninth Circuit Holds Type 2 Diabetic Was Qualified Individual

The Ninth Circuit avoided deciding whether the ADAAA amendments to the ADA are retroactive by holding that a type-2 diabetic had a disability and was a qualified individual under the original ADA.

Larry Rohr was a welder metallurgy specialist for Salt River Project Ag. Improvement and Power District, a political subdivision of the Arizona state government. He developed type-2 diabetes. His doctors imposed a number of restrictions on his diet and prescribed medication. The timing and management of his blood sugar testing, eating, and administration of medication resulted in a number of restrictions. Additionally, because of his medical condition, he was susceptible to a number of symptoms.

At times, Rohr was assigned to work in the field and out of town trips. His doctors, and the company's imposed a number of restrictions on his work, which included extended travel. Ultimately, the company concluded he could not perform his essential job functions and gave him the opportunity to transfer to another job or take early retirement. He sued for disability discrimination under the ADA. The district court granted summary judgment, holding he was not an individual with a "disability" and that he was not "qualified"

The Ninth Circuit disagreed. The opinion discusses at length the limitations on Rohr's ability to eat, including scheduling his meals, eating at certain times, and adjusting medication for food, testing and exercise. The court said not all diabetics are substantially limited, but that Rohr had a number of challenges that seem common to many with the condition. So, particularly under the new ADAAA amendments, it will be nearly impossible to argue diabetes is not a disability after this opinion.

The court then tackled whether Rohr was "qualified" in that he could perform his essential job functions with or without accommodation. Salt River argued Rohr could not pass a respirator test per OSHA standards. The court found a triable issue of fact because: the test was not required by OSHA, Salt River did not consider other testing methods, and the use of a respirator may not have been "necessary" to the job.

The court rather summarily found the parties' disputed whether aspects of Rohr's job were "essential" including the need to travel extensively.

The court also decided that the ADAAA amendments would have lent further support to the conclusion that summary judgment should be reversed. However, the court declined to rule that the amendments applied to Rohr's case, which was filed long before the president signed the 2008 amendments into law. The court's comments on the ADAAA, all dicta, portend tough sledding for employers seeking to challenge whether someone has a "disability" under the new framework.

The deicsion is Rohr v. Salt River Project and the opinion is here.

Ninth Circuit Grants En Banc Review in Dukes v. Walmart

Almost two years ago, the Ninth Circuit upheld class certification in one of the largest employment class actions ever: Dukes v. Walmart. The complaint alleges company-wide sex discrimination in promotions and other job decisions. We posted on the initial order here.

The Ninth Circuit has now agreed to hear the case "en banc," meaning by a panel of 15 judges rather than three. The original opinion's panel no longer is citable. It probably will be some time until the en banc decision comes out, which could provide significant guidance on class certification in the federal courts within the Ninth Circuit.

California Supreme Court: Public Employee May Be Disciplined for Refusing to Cooperate in Investigation

The California Supreme Court held that a deputy public defender was properly discharged when he refused to answer questions during an internal investigation. He argued that he could not be compelled to answer because he invoked his Fifth Amendment right to refuse to answer questions on the grounds they might incriminate him.

But the investigator, a supervisor attorney at the public defender's office, had informed him that his cooperation in the investigation would not be used against him in criminal proceedings. Was his refusal to testify protected conduct? The court unanimously said "no":

a public employee may be compelled, by threat of job discipline, to answer questions about the employee’s job performance, so long as the employee is not required, on pain of dismissal, to waive the constitutional protection against criminal use of those answers. Here, plaintiff was not ordered to choose between his constitutional rights and his job. On the contrary, he was truthfully told that, in fact, no criminal use could be made of any answers he gave under compulsion by the employer. In the context of a noncriminal public employment investigation, the employer was not further required to seek, obtain, and confer a formal guarantee of immunity before requiring its employee to answer questions related to that investigation.

The case is Spielbauer v. County of Santa Clara and the opinion is here.

President Obama Issues Three Pro-Labor Executive Orders

The President issued three "executive orders" affecting certain federal contractors:

1. Requires contractors to post a poster explaining employees' rights to join or not join unions. View here.

2. Denies federal funds to pay for contractors' activities related to "persuading" employees to join or not join unions. View here.

3. Requires contractors to retain predecessor companies' qualified employees rather than laying them off and hiring their own workers. View here.

I-9 Form Changes

The USCIS has delayed implementation of a new I-9 form containing new employment eligibility documentation requirements. The January 30, 2009 announcement is here. Under the current schedule, a new I-9 form will be required on April 3, 2009. The Jan. 30 order extends the comment period for proposed regulations issued in November 2008.
You can see the new proposed regulations and the sample new I-9 form and instructions here.