U.S. Supreme Court Holds No Self-Care FMLA Claims Against State

I know it's been a while. I'm on strike waiting for Brinker.  In the meantime, though, the U.S. Supreme Court held that the Family and Medical Leave Act's "self-care" provision is not applicable to the states (and their agencies) in federal courts because of the Eleventh Amendment to the Constitution.

While interesting to constitutional law scholars and state governments, the Court's decision in Coleman v. Court of Appeals of Maryland (opinion here) does not affect FMLA claims against private employers at all.  It also does not disturb the Court's prior decision in Nevada Dept. of Human Resources v. Hibbs, 538 U. S. 721 (2003), in which the Court held that FMLA claims based on leave to care for family members or baby bonding are authorized against the states.

The difference between this case and Hibbs is that the Fourteenth Amendment to the U.S. Constitution permits Congress to implement its guarantee of due process and equal protection via "appropriate legislation."  In Hibbs, the Court decided that baby-bonding and family care leave are "appropriate" because Congress was concerned with sex discrimination, and that there was evidence that states were engaging in sex discrimination against parents and women caring for family members.  The "self-care" provision, though, is applicable to both sexes and is intended to remedy the costs of losing a job when one is ill.  That subject is not appropriate for legislation under the Fourteenth Amendment. As the plurality opinion put it:

what the family-care provisions have to support them, the self-care provision lacks, namely evidence of a pattern of state constitutional violations accompanied by a remedy drawn in narrow terms to address or prevent those violations.

There, you're all constitutional lawyers now.  The decision was fractured, with only 4 justices signing the lead opinion (Kennedy, Thomas, Roberts and Alito).  Four justices dissented, joining an opinion written by Justice Ginsburg (Kagan, Sotomayor, and Breyer).  Justice Scalia did not join the opinion, but agreed that the FMLA's self-care section does not apply to the states.  Justice Scalia's concern is that the analysis the Court uses to decide if the Eleventh Amendment bars a lawsuit against a state is mushy and should be revised.

New U.S. Supreme Court Opinion May Signal End of California Courts' Arbitration Jurisprudence

In West Virginia, the state Supreme Court held that, as a matter of "public policy," pre-dispute arbitration agreements covering claims for personal injury arising from nursing home patronage are void.  In a terse, unsigned opinion, the U.S. Supreme Court reversed the state high court.

West Virginia's prohibition against predispute agreements to arbitrate personal-injury or wrongful-death claims against nursing homes is a cate- gorical rule prohibiting arbitration of a particular type of claim, and that rule is contrary to the terms and coverage of the FAA.

 

The West Virginia Supreme Court alternatively held that the arbitration agreement at issue was "unconscionable,"  a state law defense that is a valid exception to the Federal Arbitration Act. 
The U.S. Supreme Court also vacated that alternative holding:

in its discussion of the alternative holding, the state court found the arbitration clauses unconscionable in part because a predispute arbitration agreement that applies to claims of personal injury or wrongful death against nursing homes "clearly violates public policy." Id., at 91a.

On remand, the West Virginia court must consider whether, absent that general public policy, the arbitration clauses in Brown's case and Taylor's case are unenforce-able under state common law principles that are not specific to arbitration and pre-empted by the FAA

Here's why you may care - In California, the Supreme Court and the courts of appeal have fashioned special rules for enforcing arbitration of certain kinds of employment claims (arising from statute or public policy).  Rather than banning agreements to arbitrate outright (as in the West Virginia case), the California courts have come up with a gauntlet of impediments, making it easy to hold arbitration agreements "unconscionable" based on criteria that would not apply to any other kind of contract.  Thus, the California courts apply different rules to agreements to arbitrate certain kinds of claims, but not others. 

Given the Supreme Court's recent case law, these state law rules may not be long for this world. Of course, Congress could amend the Federal Arbitration Act or the Supreme Court's membership might change, in which case all bets are off.

This case is Marmet Healthcare Center v. Brown and the opinion is here.

US DOL Proposing New FMLA Regulations

The U.S. Department of Labor has issued a notice of proposed regulations regarding a couple of FMLA issues.  The draft regulations implement recent modifications to the FMLA contained in the 2010 National Defense Authorization Act.

There will be changes to military servicemember leave. There also will be new rules for certain airline employees, who would otherwise be ineligible for leave.  According to the DOL, the proposed
regulations cover the following:

• the extension of military caregiver leave to eligible family members of recent veterans with a serious injury or illness incurred in the line of duty;
• a flexible, three-part definition for serious injury or illness of a veteran;
• the extension of military caregiver leave to cover serious injuries or illnesses for both current servicemembers and veterans that result from the aggravation during military service of a preexisting condition;
• the extension of qualifying exigency leave to eligible employees with covered family members serving in the Regular Armed Forces;
• inclusion of a foreign deployment requirement for qualifying exigency leave for the deployment of all servicemembers (National Guard, Reserves, Regular Armed Forces);
• the addition of a special hours of service eligibility requirement for airline flight crew employees; and
• the addition of specific provisions for calculating the amount of FMLA leave used by airline flight crew employees.

The DOL has created a web page containing links to the proposal, fact sheets, and more here.

Employers may comment on the draft regulations before April 16, 2012.  For details on how to comment, see the Notice of Proposed Rulemaking here.  Instructions regarding comments are at the beginning of this document.

DGV

New "Hiring Goal" for Federal Contractors

The OFCCP, the arm of the US Department of Labor, handles affirmative action obligations for federal contractors. For employers subject to OFCCP jurisdiction - The agency has proposed new regulations that would establish a "goal" for employers to employ individuals with disabilities.  The goal is 7%.  You can find the proposed rule and other information from the DOL here.

State High Court Orders Review of Case to Clarify Legality of Rounding Timecard Entries - California Chamber of Commerce

The California Supreme Court directed the Fourth District Court of Appeal to review a case involving whether "rounding" time clock entries is lawful under California law. Federal law permits rounding, and the California Division of Labor Standards Enforcement has permitted as a matter of policy, so long as the "rounding" evens out or favors the employee. A trial court recently ruled that a class action involving rounding could proceed against an employer, See's Candies. See's sought a writ in the Court of Appeal, which summarily denied the Petition. The Supreme Court, however, unanimously voted to Order the Court of Appeal to hear See's petition on the merits.

The petition for review is granted. The matter is transferred to the Court of Appeal, Fourth Appellate District, Division One, with directions to vacate its order denying mandate and to issue an order directing respondent Superior Court to show cause why the relief sought in the petition should not be granted. Votes: Cantil-Sakauye, C.J., Kennard, Baxter, Werdegar, Chin, Corrigan, Liu, JJ.

This does not mean See's will win. The Court of Appeal may decide in favor of the employee. But at least we'll have our first appellate decision on the issue of rounding.

I will let you know when the Court of Appeal decides the case. If you want to follow along the docket is here.

Thanks to the CalChamber for letting us know about this.

DGV

California Supreme Court to Revisit Arbitration Ruling

The U.S. Supreme Court in November ordered the California Supreme Court to revisit its decision in Sonic-Calabasas A v. Moreno.  So, the California Supreme Court just issued the following order:

In light of the United States Supreme Court's order vacating our judgment in the above-entitled case and remanding the cause to this court "for further consideration in light of AT&T Mobility LLC. v. Concepcion, 563 U.S. __ (2011) [131 S.Ct. 1740]," the parties are requested to brief the significance of that case. The parties are requested to file and serve simultaneous briefs by February 10, 2012, and may file and serve reply briefs by February 24, 2012.

We posted about Sonic-Calabasas here.


What's going on here, is that the California Supreme Court decided in Sonic-Calabasas A, 4-3, that an arbitration agreement requiring employees to arbitrate instead of going through the labor commissioner's informal hearing procedure was unlawful. The decision in my opinion cannot survive the Fedreal Arbitration Act, particularly after the U.S. Supreme Court's decision in AT&T v. Concepcion (discussed here).


So, there will be a round of briefing and then the Court will probably schedule oral argument in the future and issue a new opinion.

DGV

Court of Appeal Holds Arbitration Agreement Invalid

Yes, again.This time, the court refused to enforce an arbitration agreement that was included in an application form. (Don't do this).  The key issues for the court were (1) that the agreement was written in the first person so as to suggest it was one-way (2) that the agreement referenced the AAA arbitration rules, but did not attach them to the agreement (3) that there was no language explaining that "binding arbitration" means you give up the right to trial in court and (4) that the agreement was "take it or leave it."

The one-way language and the inclusion of the agreement to arbitrate in the application materials probably weakened this arbitration agreement such that it was easy to invalidate. But on the issue of "arbitration rules," the court does not mention that the AAA employment rules are modeled after the California Supreme Court's decision in Armendariz, that they provide more employee protection than the statutory arbitration acts, and that Armendariz itself does not require attaching the rules.  Indeed, Armendariz allows for implying the statutory rules if an arbitration agreement is silent regarding matters such as discovery.

On the issue of explaining what "binding arbitration" means, Armendariz does not require that either.  The term "binding" is not too complex.

The labyrinth of requirements the courts are imposing in the name of "unconscionability" is going to make it hard for employers to create a "bullet-proof" agreement.  Sooner or later, a court will consider whether the unconscionability doctrine has been stretched too far, and that it is a back-door attack on the Federal Arbitration Act's preemption law.  Until then, employers should be aware that arbitration agreement law is in flux and that their agreements may be challenged on a variety of grounds that may not always be obvious.

This case is Wisdom v. Accentcare and the opinion is here.

U.S. Supreme Court on Ministerial Exception to Title VII

The U.S. Supreme Court decided for the first time that there is a "ministerial exception" to anti-discrimination laws such as the ADA. The lower courts for many years recognized that exception.

At issue was Hosanna-Tabor Evangelical Lutheran Church and School and its discharge of a former teacher, Cheryl Perich. Perich was classified as a "called" teacher, rather than a "lay" one. Called teachers have to satisfy certain requirements, cannot be removed except for cause and by a vote of the congregation, and hold the title “Minister of Religion, Commissioned.”

As a called teacher, Perich 

taught math, language arts, social stud- ies, science, gym, art, and music. She also taught a reli- gion class four days a week, led the students in prayer and devotional exercises each day, and attended a weekly school-wide chapel service. Perich led the chapel service herself about twice a year.

Perich developed symptoms of narcolepsy, which resulted in her inability to perform her job. She later was discharged, after she threatened to file a Charge. The EEOC took up her case and sued on her behalf.

The District Court dismissed the case; the Sixth Circuit reversed, holding that a retaliation claim under the ADA could proceed against the Church.
The unanimous Court, recognizing there is a ministerial exception, put it this way:

We agree that there is such a ministerial exception. The members of a religious group put their faith in the hands of their ministers. Requiring a church to accept or retain an unwanted minister, or punishing a church for failing to do so, intrudes upon more than a mere employment decision. Such action interferes with the internal governance of the church, depriving the church of control over the selection of those who will personify its beliefs. By imposing an unwanted minister, the state infringes the Free Exercise Clause, which protects a religious group’s right to shape its own faith and mission through its appointments.

The Court did not set out a specific test, but noted that (1) the Church held Perich out to be a minister (2) the Church had a ceremony and the congregation was involved in her investiture (3) she had significant religious training as a prerequisite (4) she held herself out to be a minister and even took a special tax deduction applicable only to members of a ministry (5) her duties involved significant religious teaching activities.


Based on that, the Court decided that Perich met the standards of the ministerial exemption.  The Court was careful to note that the term "minister" was misleading because the exception applies to religions that do not include "ministers."  The Court also refused to address the "parade of horribles" the EEOC argued, such as that Church employers would be exempt from wage-hour or criminal violations towards "ministerial" employees.  


The case is Hosanna-Tabor Evangelical Lutheran Church and School v. Perich and the opinion is here.

NLRB Decide Class Action Waivers Violate the National Labor Relations Act

If you need more convincing that the National Labor Relations Board's work will affect the private-sector workplace (even after all the Facebook hoopla), here it is.

DR Horton, a home builder, imposed a mandatory arbitration agreement. The agreement required the employee to assert all claims related to his employment in arbitration.  The agreement further states:

that the arbitrator “may hear only Employee’s individual claims,” “will not have the author- ity to consolidate the claims of other employ- ees,” and “does not have authority to fashion a proceeding as a class or collective action or to award relief to a group or class of employees in one arbitration proceeding”

The NLRB first held, in agreement with its administrative law judge, that the arbitration agreement unlawfully precluded an employee from filing a charge with the NLRB.  So, arbitration agreements must carve-out the right to do so.

The groundbreaking part of the decision is that requiring an employee to arbitrate all claims and only on an individual basis violates the National Labor Relations Act's guarantee of the right to engage in "concerted activity":

[The arbitration agreement] requires employees, as a condition of their employment, to refrain from bringing collective or class claims in any forum: in court, because the [agreement] waives their right to a judicial forum; in arbitration, because the [agreement] provides that the arbitrator cannot consolidate claims or award collective relief. The [agreement] thus clearly and expressly bars employees from exercising substantive rights that have long been held protected by Section 7 of the NLRA.

The Board decided this case with just two members, because the lone Republican (Member Hayes) recused himself.  It is unfathomable why the Board did not wait until it had a full complement for such an important decision, but that's the way things go.  We'll see if the courts decide that the decision is invalid under the Supreme Court's decision in New Process Steel v. NLRB (discussed here) (Board must have three member quorum).  I did not research whether 2 + 1 recused member is sufficient or whether New Process Steel will apply.

The Board was careful to note that an arbitration agreement that permits class actions to be filed in court, while mandating arbitration of individual claims would be lawful:

We need not and do not mandate class arbitration in order to protect employees’ rights under the NLRA. Rather, we hold only that employers may not compel employees to waive their NLRA right to collectively pursue litigation of employment claims in all forums, arbitral and judicial. So long as the employer leaves open a judicial forum for class and collective claims, employees’ NLRA rights are preserved without requiring the availability of classwide arbitration. Employers re- main free to insist that arbitral proceedings be conducted on an individual basis.

This decision likely will be challenged in appeals court and then to the Supreme Court.  So, the arbitration see-saw is not going to stop swaying yet.  For now, though, arbitration agreements containing class action waivers are subject to attack before the National Labor Relations Board.  Plaintiff lawyers thinking of challenging arbitration agreements on this basis in court may run into something called "Garmon" preemption. :)

So, to sum up:
- class waivers in arbitration agreements are lawful, if the arbitration agreement applies only to claims brought on an individual basis;
- an arbitration agreement cannot prevent an employee from filing a charge
- this decision applies only to employers covered by the National Labor Relations Act (so it does not cover certain small employers, agriculture, government employees, etc.) Most private sector employers, union and non-union, are covered.
- this decision is subject to further review, and there will be lots of it.

The case is DR Horton and the decision is here.

DGV

President Appoints Three to NLRB

The "recess" appointments fill up the Board to 5 members.  Guess what?  The full Board is not stacked with pro-management Board members.  Read the announcement and bios here.

DLSE revises FAQs on Wage Theft Notice...

I posted about the Division of Labor Standards' Enforcement's template Notice here and about the FAQs here.  The DLSE apparently has thought better of its requirement that even current employees receive a notice (because that plainly was not in the statute).  So, the agency revised its FAQ's, here.  Slightly concerned employers I spoke with ... please take note.

DGV

Court of Appeal Finds "At Will" Insurance Agent Was Independent Contractor

Happy New Year!

Kimbly Arnold was an agent working for Mutual of Omaha.  She was non-exclusive, and sold other lines as well.  She was "at will" but was paid solely on commissions, had no office space unless she paid for it, had no supervisor or other personnel "managing her."  Her only job requirement was to submit at least one application for insurance every six months. 
Arnold took a job with another company requiring an exclusive relationship. She then brought a class action alleging failure to reimburse expenses under Labor Code Section 2802, and failure to pay wages at the time of termination.  Both of these claims require an "employment" relationship. 
Agreeing with the trial court, the Court of Appeal held that Arnold was an independent contractor, based in part on this evidence:

Mutual managers make themselves available to assist agents, as distinguished from supervising them. Training is generally not mandatory and is offered chiefly for the guidance of "new" agents. Training is required only with respect to compliance with state law directives. Managers provide assistance with sales or clients when an agent "wants them to assist." Software is provided by Mutual as a "best practice[e]" to enable agents to sell its products more successfully. Conference rooms, if available, are provided as a courtesy to agents seeking to set up a meeting and have no other space in the office. Mutual policy does not otherwise reimburse agents for regular business expenses, such as entertaining a client, although it does provide certain "prospecting" credits, beginning when an agent is newly appointed, by which the agent might apply for reimbursement for mailings, newsletters, and similar expenses to generate new business for Mutual products. The credits must be used and have no separate compensatory value. While Mutual pays its agents in two-week periods, payments are comprised of commissions and bonuses established by policy, and there is no guaranteed compensation; advances may be authorized only by a general manager in the event an agent has submitted an application for which a policy is likely to be issued. Advances are rare, due to the policy to pay commissions only on business actually issued, as opposed to routine advances for the purpose of regularizing payment amounts. . . ..

Arnold used her own judgment in determining whom she would solicit for applications for Mutual‟s products, the time, place, and manner in which she would solicit, and the amount of time she spent soliciting for Mutual‟s products. Her appointment with Mutual was nonexclusive, and she in fact solicited for other insurance companies during her appointment with Mutual. Her assistant general manager at Mutual‟s Concord office did not evaluate her performance and did not monitor or supervise her work. Training offered by Mutual was voluntary for agents, except as required for compliance with state law. Agents who chose to use the Concord office were required to pay a fee for their workspace and telephone service. Arnold‟s minimal performance requirement to avoid automatic termination of her appointment was to submit one application for Mutual‟s products within each 180-day period. Thus, under the principal test for employment under common law principles, Mutual had no significant right to control the manner and means by which Arnold accomplished the results of the services she performed as one of Mutual‟s soliciting agents.
The additional factors of the common law test also weigh in favor of finding an independent contractor relationship. Although Mutual could terminate the appointment at will, a termination at-will clause for both parties may properly be included in an independent contractor agreement, and is not by itself a basis for changing that relationship to one of an employee.
Notably, Arnold was engaged in a distinct occupation requiring a license from the Department of Insurance, and was responsible for her own instrumentalities or tools with the exception of limited resources offered by Mutual to enhance their agents‟ successful solicitation of Mutual‟s products. Arnold was required to pay a fee for the use of Mutual‟s office space and telephone service. Although Mutual paid its agents in a systematic way every two weeks, Arnold‟s payment itself—chiefly commissions—was based on her results and not the amount of time she spent working on Mutual‟s behalf. Finally, both Arnold and Mutual believed, at the time of her appointment, they were creating an independent contractor relationship and not an employee relationship.

Thus, the court went through the typical analysis of an independent contractor relationship under California's "common law" test and came up with little evidence of an employer-employee relationship.  The court rejected Arnold's attempt to define employee more broadly by using a Labor Code Section that contains no definition of employee... (Lab. Code 2750).

Anyway, the case is Arnold v. Mutual of Omaha Ins. Co. and the opinion is here.

Wage Theft Protection Act - FAQs from the DLSE

Here are some FAQs regarding the new notices that must be provided to employees "at the time of hire."
Some thoughts:

1. The DLSE apparently takes the position that the notice must be provided to existing employees, although that requirement is not contained in the statute.  
2.  Remember that changes to any of the items in the notice have to be communicated, either by a proper wage statement or a new notice.
3.  It is not mandatory to use DLSE's template form.  Employers may create their own. However, all the information on the DLSE's form (even the information not specified in the statute, must be listed on a separate form, rather than incorporated into a larger contract, offer letter, or handbook).
4.  If the notice is given electronically, the DLSE requires some method of obtaining an acknowledgement from the employee.
5.  The DLSE's notice requires specification of whether there is an oral or written employment agreement.  Every employee is employed pursuant to an "agreement," even if the employee is "at will."  (An agreement is as simple as "I will pay you if you work today."  It also could include a written offer letter or a formal employment contract).   So, employers should specify whether the employment contract is oral or written without fear that this provision somehow compromises at-will employment.
6.  The penalty for non compliance is not specified in the law and, therefore, will likely be the "PAGA" penalties of $100 per employee per pay period for the initial violation and $200 per pay period per employee for subsequent violations.  So, it is wise to comply with this law.

Happy New Year anyway!

DGV

California Supreme Court Clarifies Administrative Exemption

The Supreme Court issued a unanimous decision rejecting the lower court's interpretation of the "administrative exemption."

Frances Harris and other claims adjusters sued Liberty Mutual Ins. Co., claiming that claims adjusters were mis-classified as exempt.  The Court of Appeal agreed, holding that claims adjusters are part of an insurance company's "production" and therefore cannot be performing "administrative" functions.  The Court of Appeal also included some disturbing language in its opinion regarding how "important" the administrative work must be, and that only work at a high level would count towards the exemption.

The Supreme Court disagreed.  However, the Court limited its holding to setting out the proper standards for determining whether someone is performing "administrative" work.   It did not rule one way or the other regarding whether the claims adjusters were exempt.

The Supreme Court summarized as follows:

Federal Regulations former part 541.205(a), (b), and (c) must be read together in order to apply the ―directly related‖ test and properly determine whether the work at issue satisfies the administrative exemption. For example, former part 541.205(b) supplied a general description of the types of duties that constitute ―administrative operations of the business. It included work performed by ―white-collar employees engaged in ̳servicing‘ a business as, for example, advising the management, planning, negotiating, [and] representing the company. The dissent below argued, ―That is what claims adjusters do—they negotiate settlements (and conclude some without seeking approval), advise management, and process claims.‖ The incorporation of former part 541.205(b) shows that whether work is part of the ―administrative operations‖ of a business depends, in part, on whether it involves advising management, planning, negotiating, and representing the company. It is not so narrowly limited as the majority below declared. 

In addition to the above regulations, the Supreme Court referred the Court of Appeal to the Wage Order definition of the administrative exemption.

Thus, the "duties test" for the administrative exemption is analyzed using former 29 CFR 541.205 (now 541.201-203) in its entirety. [Because these regulations have been amended, it will be important to find the 2001 version of the federal rules. ]

It remains to be seen how the courts interpret the Supreme Court's guidance. But if the Court of Appeal's test had been affirmed, it would have severely curtailed the exemption.  We at least know that the Supreme Court disagreed with that approach.

The opinion is Harris v. Superior Court (Liberty Mut. Ins. Co.) and the opinion is here.

More on AB 469 Notice "Template"

Per my previous post, the DLSE issued its "template" for compliant AB 469 disclosures.  See the post re DLSE template here.


An impolitic or imprudent employment lawyer might say that the DLSE's waiting until December 29 to issue a template implementing AB 469 disclosures (to begin on 1/1/12) was arrogant, unconscionable, and all but a gift to plaintiff lawyers. But I've never been one of those rash people.  :::whistling::::

What makes this all more galling is that the DLSE has imposed requirements over and above what the statute actually provides for.  DLSE had the right to expand on the law's requirements becuase the statute says that the required disclosure must include "any other information the Labor Commissioner deems material and necessary."

That's all fine, but how about more than 2 work days' notice of what you think is necessary?  Not to mention that 90% of management is on vacation.  Employers likely planned the new notices would include only the items expressly identified in the law, given DLSE's failure to promptly issue its template.  Now they have to re-tool, which may be easier to do in a mom & pop store, but not so easy when there are multiple outlets and hundreds of new hires to process.

Perhaps the DLSE didn't care because the notice provision does not apply to...the DLSE (!) or other government employers.  Go figure.

Oh well, enough whining.  The DLSE model includes a couple of itsems not specified in the actual statute:  1) the name and address of a PEO or other third party that administers the hiring process (but not a payroll processor or recruiting agency) 2) whether the employment agreement is oral or written... there may be more. I just got the thing today and all...

DGV

California DLSE Issues Template AB 469 Notice... IMPORTANT

AB 469 requires employers to give new hires, at the time of hire, a notice containing certain information listed in the law. The statute also requires the California Division of Labor Standards Enforcement to issue a model notice.  The DLSE finally did so, and it is here.
Happy New Year!

U.S. Dept of Labor to Cut Overtime Exemption for Home Caregiver Agencies

The Fair Labor Standards Act exempts from minimum wage and overtime law:

domestic service employees employed ``to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves (as 
such terms are defined and delimited by regulations of the 
Secretary). 

Section 13(b)(21) exempts any employee employed "in domestic service in a household

and who resides in such household."

Under current regulations, an employer such as an agency can employ these caregivers and live-ins and treat them as exempt under the FLSA.  That is, qualifying employees would be paid a certain amount of money to perform the duties without tracking their time or receiving overtime premiums.  Presumably, the agencies markup this rate to add overhead and profit and then charge the patient a fixed amount of money for the service.

The U.S. DOL has issued a proposed regulation (here)  that would prohibit home care agencies from treating caregivers as exempt.  However, individual caregivers not employed by an agency or its individual employer (the patient or patient's family) still may assert the exemption.  (Note - After a humongous analysis and notice of proposed rule making, the proposed regulations are all the way at the very end of the link).  Here is the section that applies to third party agencies:

Sec.  552.109  Third Party Employment.

    (a) Third party employers of employees engaged in companionship services within the meaning of Sec.  552.6 may not avail themselves of the minimum wage and overtimeexemption provided by section 13(a)(15) of the Act, even if the employee is jointly employed by the individual or member of the family or household using the services. However, the individual or member of the family or household, even if considered a 
joint employer, is still entitled to assert the exemption, if the employee meets all of the requirements of Sec.  552.6.
    (b) * * *
    (c) Third party employers of household workers engaged in live-in domestic services within the meaning of Sec.  552.102 may not avail themselves of the overtime exemption provided by section 13(b)(21) of the Act, even if the employee is jointly employed by the individual or member of the family or household using the services. However, the individual or member of the family or household, even if considered a 
joint employer, is still entitled to assert the exemption.

This is one cryptic draft regulation. Even if the individual's family is a joint employer with whom?? The public can comment until Feb. 27, 2012.  Maybe they'll clear it up.

The proposed regulation also revises the definition of "companionship services" and "live-in domestic services.  To see those, click the link above and scroll way down to the draft regulation at 552.6.  Employees who do not pass the duties tests in these regulations also must be treated as non-exempt - by individual employers and agencies alike.

California employers will be affected by this, because the federal rule will apply even if California would extend the exemption to home agencies.  If federal law says no exemption, that controls.   Also, this change would not affect most employers. But it sure will affect people who count on home care agencies to deliver services.  Who is going to pay for the overtime and other obligations (like record keeping) that the lost exemption will cause?   

DGV

Court of Appeal Makes Christmas Come Early for Employers re Reporting Time and Split Shifts

The Court of Appeal issued a ruling that may change the way us employment lawyers advise clients. But WARNING, this decision is not yet final and cannot be relied upon just yet.
Anyway the first issue deals with "reporting time" pay.  California's IWC Wage Orders require "reporting time pay," viz:

Each workday an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee‘s usual or scheduled day‘s work, the employee shall be paid for half the usual or scheduled day‘s work, but in no event for less than two (2) hours nor more than four (4) hours, at the employee‘s regular rate of pay, which shall not be less than the minimum wage.‖ (Cal. Code Regs., tit. 8, § 11040, subd. 5(A).)

It has been long understood (not just by me) that if an employee has to come in for a scheduled meeting on a day off, the employer must pay at least 1/2 the employee's regular scheduled shift (up to 4 hours).Don't take my word for it, here's what the Division of Labor Standards Enforcement has written about it:

Required "Training" Or "Staff" Meeting Attendance. DLSE has been asked on a number of occasions how the Reporting Time provisions of the Orders affect a situation where the employer requires employees to attend a short training meeting, staff meeting or similar gathering under a variety of circumstances. Most common are:

Required meeting is scheduled for a day when the worker is not usually scheduled to work. The employer tells all of the workers that attendance at the meeting is mandatory and a one- or two-hour shift is "scheduled" for this meeting. For those workers not "regularly scheduled" to work, the employee must be paid at least one-half of that employee’s usual or scheduled day’s work. * * *

Well, the Court of Appeal disagreed with the DLSE's analysis.  AirTouch Cellular scheduled meetings lasting two hours or less. Some employees came in specially for the meeting and claimed they were owed up to 4 hours' pay (1/2 the regular shift). The court said:

To simplify, the issue may be framed by the following question: If an employee‘s only scheduled work for the day is a mandatory meeting of one and a half hours, and the employee works a total of one hour because the meeting ends a half hour early, is the employer required to pay reporting time pay pursuant to subdivision 5(A) of Wage Order 4 in addition to the one hour of wages?

The answer to this question is no, because the employee was furnished work for more than half the scheduled time. The employee would be entitled to receive one hour of wages for the actual time worked, but would not be entitled to receive additional compensation as reporting time pay.

If that wasn't enough, the Court then resolved another mystery that has vexed employers and their lawyers for years:  When, if ever, is a "split shift" premium due to an employee who earns more than minimum wage for the day?   See, the wage order requires split shift premiums, but the provision is expressed in terms of "minimum" wage.  The court of appeal agreed with a district court when it held that "The plain language of the split shift regulation reflects an intent to ensure that an employee who works a split shift must be compensated highly enough so that he or she receives more than the minimum wage for the time actually worked plus one hour."

Therefore, an employee who earns more than $72 for an 8 hour day (assuming an $8 minimum wage) does not receive a  split shift premium, even if he works a split shift.  The court unfortunately did not say what happens when the day is shorter than 8 hours. ... must the employee still earn $72 for the day even if he only works 6 hours? 

Anyway, this wage and hour obscurity is probably dry as dirt for some of you. For others, though, this case could result in significant payroll savings. 

And DLSE, remember when I asked you the split shift question in a request for opinion letter like 3 years ago?  Remember?   Never mind. 

The opinion is Aleman v. Airtouch Cellular and the opinion is here.


DGV

NLRB Giving and Taking Away

Two items from your friends at the National Labor Relations Board.

As predicted, the new NLRB rights poster (discussed here) is postponed again - this time until April 2012.  Announcement here.  H/T Ross Runkel.

For the bad news, the Board just finalized revisions to election rules.  (Announcement is here).  Here is a redline of the changes to the election procedures.  The new rules severely curtail pre-election hearings on such matters as whether the voting unit is appropriate and who is eligible to vote.  Little things like that.  As a result, elections will occur much more quickly after a petition is filed, and there will be shorter "campaign" periods.

Look for the Union label!  There probably will be a few more of them starting next year!

San Francisco Update

Employers operating in SF - couple of things to note.

First, a new poster!  This one must be posted by employers with more than 20 employees who are covered by San Francisco's health care program.   Under that program, employers must spend a certain amount per hour on health care coverage for San Francisco based employees. That amount starts at $1.46 per hour for employers of 20-100 employees.  Read the poster and download it here.

Second, the San Francisco minimum wage, is going up!  San Francisco employers must start paying $10.24 minimum starting 1/1/12. That's a big jump from this year's minimum of $9.92, because the minimum wage is indexed to inflation.  Prices have been going up too, except for home prices of course!  And employers have to post the updated poster, which is here.

San Francisco employers- here's wishing you an enjoyable winter celebration of pointy sustainably grown trees, except for those of you who are enjoyment-challenged or hypofuniacs.

DGV