AALRR attorney Thomas Lenz was quoted by the Riverside Press-Enterprise on December 23, 2010, in an article on labor negotiations, which you can read here.
Wednesday, December 29, 2010
Tuesday, December 28, 2010
Withdrawal Liability May Extend To Alter Ego Employer
By Thomas A. Lenz
In the construction industry, and elsewhere, many businesses are commonly owned but have distinct labor relations issues. In fact many such "double breasted" companies operate with distinct union and non-union businesses. The details of how companies are structured and run matter. This is made clear in a recent ruling by the Ninth Circuit Court of Appeals.
In Resilient Floor v. M & M Installation (9th Cir. 09-17064 12/22/10), the Court addressed a claim by labor trust funds against a non-union employer. The claim involves "withdrawal liability" by which a previously unionized company may be obligated to pay a share of a union pension fund's underfunding for future retirement benefits after the unionized company terminates a bargaining relationship with the union. In this instance the key issue became whether a commonly owned company, which had always been non-union, could be held liable for the unionized company's withdrawal liability.
The Ninth Circuit looked to the "alter ego" test under existing labor law to determine whether a non-union employer could be held responsible for the obligations of a unionized employer. In this regard the Court observed, “The dispute actually raised in this case centers on what is the correct test for determining whether Simas Floor is M&M’s alter ego and how the Pension Fund, which bears the burden of proof, may satisfy the test. [… The] alter ego test requires proof (1) that the two firms have “common ownership, management, operations, and labor relations,” and (2) that the non-union firm is used “in a sham effort to avoid collective bargaining obligations.” Id.
The Ninth Circuit took the view that coordinated operations demonstrated common control and interdependence of the companies and could support an alter ego finding. The Court expressly acknowledged arguments put forth by the trust funds that, Simas Floor exercised such control over M&M and M&M’s employees to be considered their employer. It did, in the Fund’s view, because there was no written agreement between Simas Floor and M & M; M & M was not an arm’s length subcontractor.
The Court observed that Simas Floor controlled M & M’s work assignments; Simas Floor hired, fired, and disciplined M & M’s installers; Simas Floor supervised M & M installers on site; income received by Simas Floor was used to pay M & M’s pension contributions and later its withdrawal liability; and Simas Floor controlled the cash that flowed through M & M so that M & M would never have sufficient funds to meet its withdrawal liability obligations unless those funds were supplied by Simas Floor. The Court also stated there is an indication that M & M and Simas Floor used Simas Floor to avoid M & M’s withdrawal liability.
Additionally, M & M received all of its contracts and income from Simas Floor, and passed profits through to Simas Floor rather than itself making a profit. One of the reasons for the failure of M & M to make withdrawal liability payments may be that it lacked either the income or capital to do so. The Court saw fit to infer a fraudulent intent, although Simas Floor argued M & M ran out of business in a down economy.
The Court's analysis of these details and use of the alter ego test with a double breasted construction operation makes clear the threat commonly owned companies may face with sharing potential withdrawal liability. These issues have heightened importance in the current economy where construction work is most generally available on a unionized basis, many contractors have an interest in running double breasted operations to take advantage of union markets now and non-union markets when the economy improves, and the general lack of health of union pension funds in the current economic and financial climate. Performing work on a unionized basis may be what is needed to keep a company afloat in the current climate. Doing so with a union having an unhealthy pension fund, where there exist risks of withdrawal liability, must be considered a part of the mix. Where commonly owned union and non-union employers operate, the structural need for separation and distinction in operations cannot be overestimated.
The Ninth Circuit's ruling will generate further proceedings on the liability claim against the non-union employer due to the closeness and circumstances of its operations with the commonly owned unionized company. Other employers are wise to note the example this case provides in structuring and running their own business to minimize legal risks, particularly if double breasting is a consideration.
In the construction industry, and elsewhere, many businesses are commonly owned but have distinct labor relations issues. In fact many such "double breasted" companies operate with distinct union and non-union businesses. The details of how companies are structured and run matter. This is made clear in a recent ruling by the Ninth Circuit Court of Appeals.
In Resilient Floor v. M & M Installation (9th Cir. 09-17064 12/22/10), the Court addressed a claim by labor trust funds against a non-union employer. The claim involves "withdrawal liability" by which a previously unionized company may be obligated to pay a share of a union pension fund's underfunding for future retirement benefits after the unionized company terminates a bargaining relationship with the union. In this instance the key issue became whether a commonly owned company, which had always been non-union, could be held liable for the unionized company's withdrawal liability.
The Ninth Circuit looked to the "alter ego" test under existing labor law to determine whether a non-union employer could be held responsible for the obligations of a unionized employer. In this regard the Court observed, “The dispute actually raised in this case centers on what is the correct test for determining whether Simas Floor is M&M’s alter ego and how the Pension Fund, which bears the burden of proof, may satisfy the test. [… The] alter ego test requires proof (1) that the two firms have “common ownership, management, operations, and labor relations,” and (2) that the non-union firm is used “in a sham effort to avoid collective bargaining obligations.” Id.
The Ninth Circuit took the view that coordinated operations demonstrated common control and interdependence of the companies and could support an alter ego finding. The Court expressly acknowledged arguments put forth by the trust funds that, Simas Floor exercised such control over M&M and M&M’s employees to be considered their employer. It did, in the Fund’s view, because there was no written agreement between Simas Floor and M & M; M & M was not an arm’s length subcontractor.
The Court observed that Simas Floor controlled M & M’s work assignments; Simas Floor hired, fired, and disciplined M & M’s installers; Simas Floor supervised M & M installers on site; income received by Simas Floor was used to pay M & M’s pension contributions and later its withdrawal liability; and Simas Floor controlled the cash that flowed through M & M so that M & M would never have sufficient funds to meet its withdrawal liability obligations unless those funds were supplied by Simas Floor. The Court also stated there is an indication that M & M and Simas Floor used Simas Floor to avoid M & M’s withdrawal liability.
Additionally, M & M received all of its contracts and income from Simas Floor, and passed profits through to Simas Floor rather than itself making a profit. One of the reasons for the failure of M & M to make withdrawal liability payments may be that it lacked either the income or capital to do so. The Court saw fit to infer a fraudulent intent, although Simas Floor argued M & M ran out of business in a down economy.
The Court's analysis of these details and use of the alter ego test with a double breasted construction operation makes clear the threat commonly owned companies may face with sharing potential withdrawal liability. These issues have heightened importance in the current economy where construction work is most generally available on a unionized basis, many contractors have an interest in running double breasted operations to take advantage of union markets now and non-union markets when the economy improves, and the general lack of health of union pension funds in the current economic and financial climate. Performing work on a unionized basis may be what is needed to keep a company afloat in the current climate. Doing so with a union having an unhealthy pension fund, where there exist risks of withdrawal liability, must be considered a part of the mix. Where commonly owned union and non-union employers operate, the structural need for separation and distinction in operations cannot be overestimated.
The Ninth Circuit's ruling will generate further proceedings on the liability claim against the non-union employer due to the closeness and circumstances of its operations with the commonly owned unionized company. Other employers are wise to note the example this case provides in structuring and running their own business to minimize legal risks, particularly if double breasting is a consideration.
Monday, December 20, 2010
Court of Appeal Reiterates That Non-Employers Are Not Liable For Wages
In Futrell v. Payday California, Inc., et al., a class action case involving overtime claims against a payroll company that prepared and issued plaintiff’s paychecks, W-2’s and related documents, the California Court of Appeal affirmed the trial court's grant of summary judgment dismissing the plaintiff’s action against the payroll company on grounds that the payroll company was not the plaintiff’s “employer.”
John Futrell provided security and crowd control services for Reactor Films, Inc., a company that produces television commercials. In 2006, Futrell brought a class action lawsuit against Reactor Films and Payday California (“Payday”), the payroll company that provided payroll processing for Reactor Films, alleging he worked overtime on several different projects for Reactor and was not compensated at the proper rate. Specifically, he alleged he was paid one and one-half times his regular rate of pay for hours worked in excess of eight hours in a workday but should have been paid double his regular rate of pay for all of those hours in excess of twelve hours in a workday and was therefore owed $126.00. Futrell claimed he was an employee of Payday because it acted as a joint employer with Reactor Films during the course of several television commercial productions, and his pay stubs, W2 certificates, and paychecks identified Payday as his “employer.”
The trial court issued its ruling that Futrell was not “employed” by Payday before the California Supreme Court decided Martinez v. Combs (2010) 49 Cal. 4th 35, previously discussed here, which sets forth three alternative definitions of employment to determine whether an employer-employee relationship exists. The Court of Appeal affirmed the trial court’s ruling in light of the Martinez case, finding that Payday was not Futrell’s employer for purposes of sections 203, 226, 510, and 1194 of the Labor Code, or for purposes of the Fair Labor Standards Act ("FLSA").
The Court of Appeal found that the three part test required by Martinez to determine whether an employer-employee relationship exists was not satisfied: 1) Payday did not exercise control over Futrell’s hours or working conditions by issuing paychecks and calculating pay and tax withholding; 2) Payday did not suffer or permit Futrell to work because there was no evidence showing Payday had the power to either cause Futrell to work or prevent him from working; and 3) under the common law test of employment, which considers whether the alleged employer “controlled the details” of the employee’s activities, Payday did not control the details of Futrell’s activities, as Payday did not direct or supervise Futrell at the production sites, Payday did not provide any tools, or the place of work, to Futrell, Payday did not set Futrell’s pay, and the crowd and traffic control services performed by Futrell were not for Payday’s benefit, nor are such jobs an integral part of payday’s regular business operations.
The Court of Appeal also found that under the FLSA’s “economic reality test” which determines whether persons are employer and employee for purposes of the FLSA, Payday prepared paychecks for Futrell for the work he performed on behalf of his actual employer, Reactor Films.
Finally, the Court of Appeal affirmed that it follows the California Supreme Court’s ruling in Reynolds v. Bement that agents or corporate officers of an employer are not personally liable in an action for unpaid overtime under Labor Code section 1194.
This decision is important because it reiterates that persons and entities other than a person's "employer," such as corporate officers and directors, supervisors, parent corporations, franchisors, and affiliated entities, ordinarily are not liable for alleged failures to comply with various wage and hour provisions of the Labor Code or with Industrial Welfare Commission Wage Orders.
Thursday, December 16, 2010
Court of Appeal Holds Employer's Lawsuit Against Former Employees For Defamation And For Related Claims Can Proceed
By Sun Hi Ahn and Christopher S. Andre
In Overhill Farms, Inc. v. Nativo Lopez, et al., the California Court of Appeal affirmed the decision of an Orange County trial court to deny the defendant former employees Anti-Slapp ("Strategic Lawsuit Against Public Participation") motion to strike Overhill Farms' lawsuit against the former employees as to Overhill Farms' claims for alleged defamation, intentional interference with prospective economic advantage, intentional interference with contractual relations, and extortion arising out of statements in a press release issued by the former employees stating Overhill used an Internal Revenue Service social security number discrepancy letter as a "pretext" to terminate a large number of employees and referring to Overhill Farms' actions as "racist and discriminatory abuse against Latina women immigrants" thus allowing Overhill Farms' lawsuit against the former employees to proceed. The Court of Appeal's opinion contains much that is potentially useful to California employers.
Overhill Farms received from the IRS a letter notifying Overhill Farms that 231 of its employees supplied invalid social security numbers and that Overhill Farms' use of invalid tax identification information exposed Overhill Farms to penalties and criminal liability. An IRS agent told an attorney for Overhill Farms that Overhill Farms could not continue to employ anyone could not provide a valid social security number.
In response to the IRS letter, Overhill Farms sent to each of the 231 employees a letter informing them they had provided an invalid social security number, requesting that they correct any errors within 30 days, and informing them they would continue to be paid. Just one of the employees provided information showing the invalid social security number was in error. Nearly all of the employees failed to respond. Overhill Farms sent to the employees a second letter providing them with an additional 30 days to address the discrepancies. Overhill Farms also continued to pay for the benefits of those employees. Overhill Farms also met with the representatives of the employees' union, who acknowledged that nearly all of the employees were "not 'authorized to work in the United States." After the second 30-day period expired, Overhill Farms terminated the employees who failed to respond to its requests or otherwise failed to provide a valid social security number.
After the terminations, the employees approached Nativo Lopez of Hermandad Mexicana Latinoamericana , also named as a defendant, to help them organize a response to the terminations. That response took the form of a press release stating the employees "were protesting 'racist firings by Overhill,'" picketing at two of Overhill Farms' facilities, and picketing and leafleting at the business of one of Overhill Farms' customers accusing Overhill Farms of being an "UNFAIR and RACIST EMPLOYER." One leaflet stated Overhill Farms' president "is confident that we are passive and will accept this racist and discriminatory abuse against Latina women immigrants and our families without a fight." Fliers urged recipients to boycott Overhill Farms and stated Overhill Farms "is '[a]n abusive and racist employer in the manner that it treats its workers" and similar accusations.
The defendant former employees responded to Overhill Farms' lawsuit by filing an Anti-SLAPP motion to strike Overhill Farms' complaint. California' Anti-SLAPP statute provides a mechanism to challenge a lawsuit or a cross-complaint arising out of protected speech. If the party bringing such a motion establishes that the claim(s) sought to be stricken arise out of protected activity, such as protected speech, the burden then shifts to the party asserting the claim(s) to show a probability of prevailing on its claims. If the party asserting the claim(s) shows such a probability, the court must deny the Anti-SLAPP motion.
Both the trial court and the Court of Appeal determined that Overhill Farms met its burden of showing a probability it would prevail on its claims against the former employees by showing that a number of the statements by the former employees' either "declares or implies a provably false assertion of fact," namely that Overhill Farms used the IRS discrepancy letter as a "pretext" for terminating the employees for racist or other discriminatory reasons. The Court of Appeal explained that while mere expressions of opinion are often not actionable acts of defamation, the former employees' allegations of racism viewed in context "is not merely a hyperbolic characterization of Overhill's black corporate heart -- it represents an accusation of concrete, wrongful conduct," and "a claim of racially motivated employment termination is a provably false fact." The Court of Appeal explained that "an employee's failure to explain or correct an invalid social security number, after being notified of the problem and asked to do so, clearly is grounds for firing." The Court of Appeal noted that Overhill Farms "provided substantial evidence defendants either knew, or recklessly disregarded, facts demonstrating that [Overhill Farms] had not fired hundreds of Latino employees based solely on having been notified of a potentially innocent discrepancy in social security numbers" as the defendants asserted. The Court of Appeal explained further that "[w]hat actually happened is that Overhill notified the effected employees their social security numbers had been identified as 'invalid,' gave them substantial opportunity to resolve the problem and provide a valid number, and only terminated the employment of those who either admitted falsifying their documents, or failed or refused to respond to the issue at all."
The Court of Appeal held also that Overhill Farms' claims against the defendants were not preempted by the National Labor Relations Act, explaining that "an action for malicious and injurious libel in the course of a labor dispute, although an unfair [labor] practice and prohibited by the Act, was not preempted since it was unprotected conduct and since remedying injury to reputation was of only slight concern to the national labor policy. . . ."
The Court of Appeal's decision in this case is potentially useful to California employers because it establishes that employees and labor organizations cannot make without consequence defamatory statements about an employer. In other words, an employer is not required to simply tolerate in every instance whatever unfounded or false slings and arrows employees and/or labor organization might hurl the employer's way.
In Overhill Farms, Inc. v. Nativo Lopez, et al., the California Court of Appeal affirmed the decision of an Orange County trial court to deny the defendant former employees Anti-Slapp ("Strategic Lawsuit Against Public Participation") motion to strike Overhill Farms' lawsuit against the former employees as to Overhill Farms' claims for alleged defamation, intentional interference with prospective economic advantage, intentional interference with contractual relations, and extortion arising out of statements in a press release issued by the former employees stating Overhill used an Internal Revenue Service social security number discrepancy letter as a "pretext" to terminate a large number of employees and referring to Overhill Farms' actions as "racist and discriminatory abuse against Latina women immigrants" thus allowing Overhill Farms' lawsuit against the former employees to proceed. The Court of Appeal's opinion contains much that is potentially useful to California employers.
Overhill Farms received from the IRS a letter notifying Overhill Farms that 231 of its employees supplied invalid social security numbers and that Overhill Farms' use of invalid tax identification information exposed Overhill Farms to penalties and criminal liability. An IRS agent told an attorney for Overhill Farms that Overhill Farms could not continue to employ anyone could not provide a valid social security number.
In response to the IRS letter, Overhill Farms sent to each of the 231 employees a letter informing them they had provided an invalid social security number, requesting that they correct any errors within 30 days, and informing them they would continue to be paid. Just one of the employees provided information showing the invalid social security number was in error. Nearly all of the employees failed to respond. Overhill Farms sent to the employees a second letter providing them with an additional 30 days to address the discrepancies. Overhill Farms also continued to pay for the benefits of those employees. Overhill Farms also met with the representatives of the employees' union, who acknowledged that nearly all of the employees were "not 'authorized to work in the United States." After the second 30-day period expired, Overhill Farms terminated the employees who failed to respond to its requests or otherwise failed to provide a valid social security number.
After the terminations, the employees approached Nativo Lopez of Hermandad Mexicana Latinoamericana , also named as a defendant, to help them organize a response to the terminations. That response took the form of a press release stating the employees "were protesting 'racist firings by Overhill,'" picketing at two of Overhill Farms' facilities, and picketing and leafleting at the business of one of Overhill Farms' customers accusing Overhill Farms of being an "UNFAIR and RACIST EMPLOYER." One leaflet stated Overhill Farms' president "is confident that we are passive and will accept this racist and discriminatory abuse against Latina women immigrants and our families without a fight." Fliers urged recipients to boycott Overhill Farms and stated Overhill Farms "is '[a]n abusive and racist employer in the manner that it treats its workers" and similar accusations.
The defendant former employees responded to Overhill Farms' lawsuit by filing an Anti-SLAPP motion to strike Overhill Farms' complaint. California' Anti-SLAPP statute provides a mechanism to challenge a lawsuit or a cross-complaint arising out of protected speech. If the party bringing such a motion establishes that the claim(s) sought to be stricken arise out of protected activity, such as protected speech, the burden then shifts to the party asserting the claim(s) to show a probability of prevailing on its claims. If the party asserting the claim(s) shows such a probability, the court must deny the Anti-SLAPP motion.
Both the trial court and the Court of Appeal determined that Overhill Farms met its burden of showing a probability it would prevail on its claims against the former employees by showing that a number of the statements by the former employees' either "declares or implies a provably false assertion of fact," namely that Overhill Farms used the IRS discrepancy letter as a "pretext" for terminating the employees for racist or other discriminatory reasons. The Court of Appeal explained that while mere expressions of opinion are often not actionable acts of defamation, the former employees' allegations of racism viewed in context "is not merely a hyperbolic characterization of Overhill's black corporate heart -- it represents an accusation of concrete, wrongful conduct," and "a claim of racially motivated employment termination is a provably false fact." The Court of Appeal explained that "an employee's failure to explain or correct an invalid social security number, after being notified of the problem and asked to do so, clearly is grounds for firing." The Court of Appeal noted that Overhill Farms "provided substantial evidence defendants either knew, or recklessly disregarded, facts demonstrating that [Overhill Farms] had not fired hundreds of Latino employees based solely on having been notified of a potentially innocent discrepancy in social security numbers" as the defendants asserted. The Court of Appeal explained further that "[w]hat actually happened is that Overhill notified the effected employees their social security numbers had been identified as 'invalid,' gave them substantial opportunity to resolve the problem and provide a valid number, and only terminated the employment of those who either admitted falsifying their documents, or failed or refused to respond to the issue at all."
The Court of Appeal held also that Overhill Farms' claims against the defendants were not preempted by the National Labor Relations Act, explaining that "an action for malicious and injurious libel in the course of a labor dispute, although an unfair [labor] practice and prohibited by the Act, was not preempted since it was unprotected conduct and since remedying injury to reputation was of only slight concern to the national labor policy. . . ."
The Court of Appeal's decision in this case is potentially useful to California employers because it establishes that employees and labor organizations cannot make without consequence defamatory statements about an employer. In other words, an employer is not required to simply tolerate in every instance whatever unfounded or false slings and arrows employees and/or labor organization might hurl the employer's way.
Monday, December 13, 2010
California Court Dismisses Overtime and Missed Meal and Rest Break Claims by Exempt Employee
By Ronald W. Novotny
On December 9, 2010, the California Second District Court of Appeal upheld the dismissal of a lawsuit brought by a United Parcel Service supervisor for unpaid overtime and missed meal and rest breaks, on the ground that he was employed in an exempt position under California law. The court in Taylor v. UPS held that both the executive and administrative exemptions applied, since the supervisor was primarily engaged in management-related duties which qualified for application of each of the exemptions.
The supervisor, David Taylor, was employed as a Hub Supervisor, On-Road Supervisor, and Center Manager in various UPS facilities in the Southern California Inland Empire. He earned over twice the minimum wage as well as stock awards and bonuses which were not available to hourly employees. His primary duties included reviewing daily operational reports to manage productivity and performance; meeting with union officials to improve employee relations; ensuring proper staffing levels and determining training needs; providing constant feedback, motivation and support to personnel to improve employee performance; scheduling vacation time and assessing employee performance; preparing accident reports; and building customer relations. Finding that these were precisely the kind of “management duties” that the state Division of Labor Standards Enforcement (DLSE) identified as qualifying for the exemption, the court had little difficulty finding that they satisfied the “duties test” for application of the executive exemption.
The court next turned to the issue of whether Taylor actually had the authority to hire and fire employees and exercised independent judgment and discretion in performing his duties. The court determined that these factors were satisfied as well, notwithstanding the existence of a union agreement and a full-fledged personnel manual that Taylor was required to implement, given the fact that his recommendations and suggestions were given weight in carrying out personnel decisions. Finally, the court determined that the same duties which qualified Taylor for the executive exemption also justified application of the administrative exemption, in view of the fact that his administration of UPS’s customer relations and workplace safety policies related to the running of the company’s general business operations.
This case is an important one in that it specifies the kinds of job duties which will qualify for application of these exemptions to a company’s supervisor under California law.
Friday, December 10, 2010
EEOC Issues Final Regulations Implementing the Genetic Information Nondiscriminaton Act of 2008
On May 21, 2008, President George W. Bush signed the Genetic Information Nondiscrimination Act of 2008 (“GINA”) into law, which prohibits the use of genetic information in the employment context, restricts employers and other entities covered by Title II from requesting, requiring, or purchasing genetic information, and strictly limits such entities from disclosing such information. GINA took effect on November 21, 2009.
On November 9, 2010, the Equal Employment Opportunity Commission (“EEOC”) issued Final Regulations interpreting GINA and providing guidance on GINA’s provisions. The EEOC’s Final Regulations become effective on January 10, 2011.
Click here to download and read the full alert.
9th Circuit Modifies On Rehearing Previous Holding Regarding Minister Exception To Certain Employment Laws
As we previously reported here, in Alcazar, et al. v. The Corporation Of The Catholic Archbishop of Seattle, et al., the Ninth Circuit Court of Appeals held that a Catholic seminarian's claims against his church for allegedly unpaid wages brought under a Washington state minimum wage statute is barred as a matter of law by the Free Exercise Clause and the Establishment Clause of the First Amendment of the United States Constitution.
Cesar Rojas and Jesus Alcazar were Catholic seminarians in Mexico. They were required to participate in ministry training in Washington state. Mr. Rojas and Mr. Alcazar both brought sexual harassment claims against Father Horatio Alvarez and the Corporation Of The Catholic Archbishop of Seattle, and Mr. Rojas brought also claims for alleged unpaid overtime under Washington state's Minimum Wage Act.
On appeal, the Ninth Circuit affirmed the District Court's dismissal of the claims. In particular, the Ninth Circuit held that Rojas' wage and hour claims are barred by the Free Exercise Clause and by the Establishment Clause of the United States Constitution.
The court established a broad test for determining who qualifies as a "minister," stating "if a person (1) is employed by a religious institution, (2) was chosen for the position based 'largely on religious criteria,' and (3) performs some religious duties and responsibilities, the person is a 'minister' for purposes of the ministerial exception." The court noted that lay persons can be "ministers" under this test and that "secular duties are important to a ministry." For example, the court noted that a church's director of music ministry and part-time teacher fell under the "ministerial exception."
Today, on rehearing, the court acting en banc adopted the three-judge panel's previous decision in the case but vacated that part of the previous decision adopting the above broad test for determining who qualifies as a "minister." (Click here to download and read the en banc decision.) The court states: "We leave for another day the formulation of a general test because, under any reasonable construction of the ministerial exception, Rosas meets the definition of minister." The court went on to "hold that the First amendment considerations relevant to an ordained minister apply equally to a person who, though not yet ordained, has entered into a church-recognized seminary program to become a minister and who brings suit concerning employment decisions arising from work as a seminarian."
While the court declined to adopt a general test for who does and who does not qualify as a "minister" for purposes of applying the "ministerial exception," the court nevertheless did provide some guidance helpful to employers who are religious institutions. The court explained that "[a] church may well assign secular duties to an aspiring member of the clergy, either to promote spiritual value (such as diligence, obedience, or compassion) or to promote its religious mission in some material way. The ministerial exception applies notwithstanding the assignment of some secular responsibilities."
Wednesday, December 8, 2010
California Supreme Court Decision Is A Mixed Bag For Employers
Labor Code section 203(a) provides that "[i]f an employer willfully fails to pay, without abatement or reduction . . . any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefore is commenced; but the wages shall not continue for more than 30 days." Labor Code section 203(b) provides that "[s]uit may be filed for these penalties at any time before the expiration of the statute of limitations on an action for the wages from which the penalties arise."
In Pineda v. Bank of America, N.A., the California Supreme Court resolved two issues associated with Labor Code section 203 "waiting time" penalties: (1) Does a one-year or a three-year statute of limitations apply when an employee is suing to recover only "waiting time" penalties (i.e., when an employee was paid all of his or her wages but the employer did not timely pay the wages)? (2) Can "waiting time" penalties be recovered as "restitution" under Business and Professions Code section 17200, et seq., which is subject to a four year statute of limitations? The California Supreme Court states the answer to both questions is "no."
As to the question of whether a suit to recover only "waiting time" penalties is subject to a one-year or to a three-year statute of limitations, the court determine that a three-year statute of limitations applies to claims for "waiting time" penalties regardless of whether the employee(s) seeking those penalties are seeking only those penalties or those penalties and the underlying allegedly unpaid wages. In so holding, the court disapproved the Court of Appeal's decision in McCoy v. Superior Court (2007) 157 Cal.App.4th 225 holding that a claim for "waiting time" penalties only is subject to a one-year statute of limitations."
As to the question of whether "waiting time" penalties can be recovered as "restitution" under Business and Professions Code section 17200, et seq., which is subject to a four year statute of limitations, the court held that "waiting time" penalties cannot be recovered as "restitution" because, unlike unpaid wages, persons seeking "waiting time" penalties do not have a vested, ownership interest in such penalties until such penalties are awarded "by a relevant body" (i.e., by a court or other tribunal).
By way of its decision in Pineda, the California Supreme Court continues its trend of construing Labor Code provisions broadly in favor of employees and delivered a mixed bag for employers. On the one hand, it has always been reasonably clear that "waiting time" penalties are not recoverable as "restitution" and are not subject to a four-year statute of limitations. On the other hand, as did the California Court of Appeal in McCoy v. Superior Court, we do not think the California Supreme Court's decision that claims for "waiting time" penalties are always subject to a three-year statute of limitations and never to a one-year statute of limitations is necessarily compelled by the language of Labor Code section 203(b).
Regardless of what one thinks about what statute of limitations should apply to claims for "waiting time" penalties, such penalties can be substantial, especially when the claims of many former employees are aggregated in a class action lawsuit. For example, if an employer "willfully failed" to pay to an employee earning $20.00 per hour all wages due and owing to that employee at the time that employee's employment ends, the employee's wages would continue as a penalty until paid or until an action seeking those wages is filed up to 30 days wage or up to $4,800.00. If a certified class consisted of 500 such employees, the "waiting time" penalties would total $2,400,000.00.
On its surface, the "waiting time" penalties seem most applicable to a situation where an employer willfully fails to provide to an employee who quits or is terminated the employee's final paycheck. However, some courts have ruled that such "waiting time penalties" apply when an employer has provided an employee his or her final paycheck but "willfully" failed to pay some wages to the employee before the employee's employment ended and did not include those wages in the employee's final paycheck.
Employers concerned about the prospect of becoming subject to such penalties, particularly employers who experience relatively high turnover of employees, should consider consulting with competent employment law counsel about steps that can be taken to reduce the possibility of becoming subject to such penalties.
Monday, November 22, 2010
Court of Appeal Expands Availability Of PAGA Penalties
By Ronald W. Novotny and Christopher S. Andre
In a case of first impression, in Bright v. 99¢ Only Stores, the California Court of Appeal held an employee may seek Private Attorney General Act ("PAGA") penalties for alleged violations of an Industrial Welfare Commission ("IWC") wage order requirement that employers provide employees suitable seats in the workplace when the nature of the work reasonably permits the use of seats. The court rejected the employer's argument that PAGA penalties are available only for violations of wage payment laws and concluded such penalties are available for violation of nonwage labor standards contained in the IWC's wage orders.
The plaintiff in the case, Eugenia Bright, alleged 99¢ Only Stores violated Section 14 of Wage Order 7-2001 stating all working employees “shall be provided with suitable seats when the nature of the work reasonably permits” such use. She sought civil penalties under Labor Code section 1198, stating the employment of any employee “under conditions prohibited by” IWC wage orders is unlawful. The court held civil penalties available under PAGA, consisting of $100 per each "aggrieved employee" per pay period for the first violation and $200 per "aggrieved" employee per pay period for each subsequent violation, could be recovered because no other penalties for violating the seating requirements were provided by law.
This case raises the prospect that employers will face similar penalties for violating other non-monetary labor standards contained in the wage orders, such as those requiring that employers maintain a minimum temperature of 68 degrees in restrooms and requiring employers to provide elevators when employees work more than four stories above ground level. When PAGA penalties are awarded, 25% of the penalties are to be disbursed to the employee(s) bringing the action, and the remaining 75% are to be disbursed to the California Labor and Workforce Development Agency. Persons bringing such claims can also be awarded their reasonable attorney's fees and costs. Thus, PAGA penalties operate in part as a "bounty" to encourage employees and the attorneys who represent them to bring such claims.
Employers concerned about the seemingly ever expanding exposures associated with California's employment laws should consider consulting with experienced employment counsel about policies and practices that can help to reduce that potential exposure.
Wednesday, November 10, 2010
AALRR Defeats Motion For Class Certification
On November 8, 2010, the firm was successful in defeating a motion for class certification and was able to obtain an order striking the class allegations of the complaint pending in the San Bernardino County Superior Court. Tom Kovacich argued the motion on behalf of the employer, VCI Telcom, Inc. The complaint alleged a menu of wage and hour violations, including underpayment of prevailing wages and sought to certify a class consisting of 89 workers. The court stated on the record that the case presented the closest case for class certification the court has ever had but felt that individual issues predominated over the issues common to the class. Tom felt a critical factor in the case was the development of evidence that the company's policies and practices were consistent with the law, and plaintiffs did not carry their burden of establishing that the alleged violations were common to the class. As a result of the Court's denial of class certification, the employer must address only the claims by the two plaintiff former employees who were employed for approximately nine months.
Monday, November 8, 2010
California Court Denies Certification of Meal and Rest Break Classes
By Ronald W. Novotny
Adding to the body of case law that has been developed pending the Supreme Court's decision in the Brinker Restaurant case, a California appellate last week sided with the employer's arguments they need only “provide” meal periods under state law and not “ensure” that they are taken. The court in Hernandez v. Chipotle Mexican Grill accordingly upheld an order denying certification of a proposed meal break class on this basis.
In the Chipotle case, the employer informed its employees that they were entitled to meal breaks, and paid them for the time the employees took them. A class of employees nevertheless sued for missed meal and rest breaks, contending that they were denied breaks or that their breaks were interrupted by their managers. Based on employee declarations showing that some employees were always provided breaks, that some missed them, and that others may have chosen to willingly forego them, the court concluded that the “requisite community of interest [wa]s missing” and that certification of the proposed “missed meal break class” was improper. The court noted that the only evidence of a company-wide policy and practice was the “employer’s evidence that it provided employees with meal and rest breaks as required by law,” and that no evidence common to all class members could establish liability on that claim.
The case is also noteworthy because it recognized that certification of meal and rest break classes could be improper even if the employer did not require the employees to record their break times. The court noted that because employees are relieved of all duty and free to leave the premises, there was “no financial incentive to record all breaks accurately.” The court also noted that the law does not require employers to keep records of paid rest breaks, and denied certification of the proposed meal break class even through the employer paid the employees for their meal breaks and did not require employees to record them. This is important in view of the fact that employers are often challenged in these cases for failing to record the meal breaks as required by the state wage orders.
Thursday, October 21, 2010
California Court Invalidates Arbitration Agreement Based on Unconscionable Terms
By Ronald W. Novotny
In the case of Trivedi v. Curexo Technology Corp. published on October 20, 2010, a California appellate court refused to enforce an arbitration provision in an employment contract on the ground that it contained multiple unconscionable provisions. By permitting it to pursue injunctive relief in court, and by including a provision in the agreement requiring that the prevailing party be awarded its attorneys’ fees and costs, the employer forfeited its ability to enforce the agreement when the employee sued for discrimination and wrongful termination.
The court first concluded that with respect to the attorneys' fees provision, the employee was placed at greater risk in arbitration than if he pursued a claim in court because he could only be held responsible for the employer’s attorneys’ fees in a judicial action if his claim was determined to be groundless or brought in bad faith. By providing for an award of attorneys’ fees automatically to the prevailing party, the agreement therefore "served as a vehicle for the waiver of statutory rights" created by the Fair Employment & Housing Act, under which the employee’s suit was asserted. The court further concluded that because it was "more likely that the employer would seek injunctive relief" than the employee, the agreement was unlawfully one-sided.
Notably, the court refused to sever these two provisions and enforce the remainder of the agreement. It also found that the agreement was "procedurally unconscionable" because it was imposed by the employer unilaterally and without providing the employee with a copy of the American Arbitration Association Rules that would govern any arbitration proceeding. The case accordingly represents another example of judicial hostility to arbitration agreements which do not merely provide for a substitute forum for the employee to resolve their claims.
Monday, October 18, 2010
Survey Shows Labor and Employment Claims On The Rise
The Los Angeles Daily Journal reports that corporate counsel who participated in a recent survey are seeing increases in a variety of employment related claims, especially: wage-and-hour disputes; labor union matters; discrimination cases based on alleged age, sex, gender, and disability, and Employee Retirement Income Security Act claims. According to the Daily Journal, "Wage-and-hour disputes remain the primary concern, with nearly half of survey respondents identifying worker classification and over-time claims as seeing the greatest spikes." Predictably, respondents attribute the increase in discrimination claims "due to the rising number of laid-off and fired workers who are suing their former employers."
The good news is there are steps an employer can take to help reduce the likelihood of being sued and to help defend against a suit if one is brought. Some of those steps include:
Having good written policies can make it more difficult for a plaintiff current or former employee to credibly contend the employer has a policy or practice of not complying with applicable laws and regulations. Such written policies can, among other things, make it more difficult for plaintiffs to obtain class certification.
Properly documenting when non-exempt employees begin and end the workday, take rest periods, and take meal periods can make it more difficult for a plaintiff current or former employee to credibly contend the employer did not pay the employee for all hours worked, did not authorize and permit required rest periods, the employer did not provide all required unpaid meal periods, and/or did not provide accurate wage statements or "pay stubs," which are some of the most common claims we see.
Having an enforceable arbitration agreement can help make an individual discrimination, harassment, or retaliation case less attractive to a plaintiff's attorney. Plaintiff's attorneys sometimes rely on the prospect of a jury trial to increase the value of such a case.
Friday, October 8, 2010
California Supreme Court Upholds Implemented Furloughs of State Employees
The California Supreme Court recently upheld the Governor's unilaterially-implemented mandatory furloughs of represented state employees. Professional Engineers in Calfornia Gvoernment, et al. v. Arnold Schwarzeneegar, et al., California Supreme Court Case NO. S183411, October 4, 2010. The Court determined that the Budget Act of 2008 "reasonably included the furlough plan that was then in existence," tehre therefore the Legislature approved the Governor's furlough plan as required by law. The Court's ruling was premised on state law that specifically requires the Legislature to approve provisions of memoranda of understanding requiring the expenditure of state funds in the annual Budget Act.
Click here to read the full alert.
Monday, October 4, 2010
Governor Schwarzenegger Signs Meal Period and Marrow Donation Leave Bills, Vetoes Nine Other Employment-Related Bills
By Jonathan Judge
Governor Schwarzenegger vetoed nine out of the eleven employment-related bills we were tracking that made it to his desk for approval.
The two bills the Governor signed are effective January 1, 2011:
Signed - AB 569 (Emmerson) Meal & Rest Periods - This bill amends Labor Code Section 512 and exempts from meal and rest period provisions, employees in construction, commercial drivers, employees of local publically owned electric utilities, and security officers, as defined, if such employees are covered by a valid Collective Bargaining Agreement (“CBA”). To qualify for the exemption, the CBA must provide for: wages, hours of work, and working conditions of employees, and meal periods for those employees, final and binding arbitration of disputes concerning application of its meal period provisions, premium wage rates for all overtime hours worked, and a regular hourly rate of pay of not less than 30 percent more than the state minimum wage rate.
Signed - SB 1304 (DeSaulnier) Marrow Donation Leave - This bill requires employers with 15 or more employees to permit employees to take paid leaves of absence for organ donation (up to 30 days) and bone marrow donation (up to five days), and to restore an employee returning from such leave to the same or equivalent position. The bill also prohibits an employer from interfering with, or retaliating against, an employee taking such leave, or opposing an unlawful employment practice related to such leave. The bill also creates a private right of action for aggrieved employees to seek enforcement of these provisions. Covered employers may require an employee take up to five days of earned but unused sick or vacation leave for bone marrow donation, and up to two weeks of earned but unused sick or vacation leave for organ donation as a condition of receiving such leave.
The vetoed bills are summarized below, with the Governor’s veto message linked where available.
Vetoed - AB 482 (Mendoza) Consumer Credit Reports - This bill would have prohibited employers, with the exception of certain financial institutions, from obtaining a consumer credit report for employment purposes unless the information is (1) substantially job-related, meaning that the position of the person for whom the report is sought has access to trade secrets, money, other assets, or confidential information, and (2) the position of the person for whom the report is sought is a position in the state Department of Justice, a managerial position, that of a sworn peace officer or other law enforcement position, or a position for which the information contained in the report is required to be disclosed by law or to be obtained by the employer.
Vetoed - AB 1881 (Monning) Liquidated Damages in Wage Claims - This bill would have, in cases of minimum wage violations, increased the amount of liquidated damages that may be awarded to an employee to twice the amount of wages unlawfully unpaid, plus interest.
Vetoed - AB 2187 (Arambula) Failure to Pay Final Wages Additional Penalty - This bill would have created a new separate prohibition against a person, who, having the ability to pay, willfully fails to pay all wages due to an employee who has been discharged or quit within 90 days. The bill would have imposed a fine of between $1,000 and $10,000, up to six months jail time, or both, for such conduct. The violating individual would have also been required to pay restitution to the aggrieved employee upon conviction.
Vetoed - AB 2340 (Monning) Bereavement Leave - This bill would have allowed for three days unpaid leave for bereavement purposes upon the death of a spouse, child, parent, sibling, grandparent, grandchild, domestic partner, or domestic partner’s child, within 13 months of the death of the bereaved individual. The provisions of the bill would not have applied to an employee who is covered by a valid CBA that provides for bereavement leave and other specified working conditions.
Vetoed - AB 2468 (DeLeon) Lactation Breaks - This bill would have authorized an employer to use the designation "Mother-Friendly Worksite" in its promotional materials, if it submitted its workplace breast-feeding policy to the Labor Commissioner and the Labor Commissioner determined that the employer's policy provides for specified criteria.
Vetoed - AB 2770 (Monning) Labor Code Enforcement - This bill would have, until January 1, 2017, established a pilot program to investigate employment and payment practices within the swimming pool and spa construction industry. The Employment Development Department (“EDD”), in conjunction with other agencies and industry representatives, would have been required to establish criteria that would trigger a recommendation for an audit or investigation state authorities.
Vetoed - SB 903 (Wright) Statute of Limitations - This bill would have extended the period within which the Division of Labor Standards Enforcement (“DLSE”) may commence a collection action, as defined, from one year to three years.
Vetoed - SB 1370 (Ducheny) Commission Agreements - Effective January 1, 2012, this bill would have required all employers entering into commission agreements with employees to enter into written agreements or face liability in a civil action to the employee for treble damages.
Vetoed - SB 1474 (Steinberg) Agricultural Employee Labor Representatives - This bill would have authorized the Agricultural Labor Relations Board, under specified circumstances, to set aside an election where there has been misconduct by the employer affecting the outcome of the election and to certify a labor organization as the exclusive bargaining representative for a bargaining unit if the organization had previously presented the board with authorization cards signed by more than 50% of the employees in that bargaining unit.
Governor Schwarzenegger vetoed nine out of the eleven employment-related bills we were tracking that made it to his desk for approval.
The two bills the Governor signed are effective January 1, 2011:
Signed - AB 569 (Emmerson) Meal & Rest Periods - This bill amends Labor Code Section 512 and exempts from meal and rest period provisions, employees in construction, commercial drivers, employees of local publically owned electric utilities, and security officers, as defined, if such employees are covered by a valid Collective Bargaining Agreement (“CBA”). To qualify for the exemption, the CBA must provide for: wages, hours of work, and working conditions of employees, and meal periods for those employees, final and binding arbitration of disputes concerning application of its meal period provisions, premium wage rates for all overtime hours worked, and a regular hourly rate of pay of not less than 30 percent more than the state minimum wage rate.
Signed - SB 1304 (DeSaulnier) Marrow Donation Leave - This bill requires employers with 15 or more employees to permit employees to take paid leaves of absence for organ donation (up to 30 days) and bone marrow donation (up to five days), and to restore an employee returning from such leave to the same or equivalent position. The bill also prohibits an employer from interfering with, or retaliating against, an employee taking such leave, or opposing an unlawful employment practice related to such leave. The bill also creates a private right of action for aggrieved employees to seek enforcement of these provisions. Covered employers may require an employee take up to five days of earned but unused sick or vacation leave for bone marrow donation, and up to two weeks of earned but unused sick or vacation leave for organ donation as a condition of receiving such leave.
The vetoed bills are summarized below, with the Governor’s veto message linked where available.
Vetoed - AB 482 (Mendoza) Consumer Credit Reports - This bill would have prohibited employers, with the exception of certain financial institutions, from obtaining a consumer credit report for employment purposes unless the information is (1) substantially job-related, meaning that the position of the person for whom the report is sought has access to trade secrets, money, other assets, or confidential information, and (2) the position of the person for whom the report is sought is a position in the state Department of Justice, a managerial position, that of a sworn peace officer or other law enforcement position, or a position for which the information contained in the report is required to be disclosed by law or to be obtained by the employer.
Vetoed - AB 1881 (Monning) Liquidated Damages in Wage Claims - This bill would have, in cases of minimum wage violations, increased the amount of liquidated damages that may be awarded to an employee to twice the amount of wages unlawfully unpaid, plus interest.
Vetoed - AB 2187 (Arambula) Failure to Pay Final Wages Additional Penalty - This bill would have created a new separate prohibition against a person, who, having the ability to pay, willfully fails to pay all wages due to an employee who has been discharged or quit within 90 days. The bill would have imposed a fine of between $1,000 and $10,000, up to six months jail time, or both, for such conduct. The violating individual would have also been required to pay restitution to the aggrieved employee upon conviction.
Vetoed - AB 2340 (Monning) Bereavement Leave - This bill would have allowed for three days unpaid leave for bereavement purposes upon the death of a spouse, child, parent, sibling, grandparent, grandchild, domestic partner, or domestic partner’s child, within 13 months of the death of the bereaved individual. The provisions of the bill would not have applied to an employee who is covered by a valid CBA that provides for bereavement leave and other specified working conditions.
Vetoed - AB 2468 (DeLeon) Lactation Breaks - This bill would have authorized an employer to use the designation "Mother-Friendly Worksite" in its promotional materials, if it submitted its workplace breast-feeding policy to the Labor Commissioner and the Labor Commissioner determined that the employer's policy provides for specified criteria.
Vetoed - AB 2770 (Monning) Labor Code Enforcement - This bill would have, until January 1, 2017, established a pilot program to investigate employment and payment practices within the swimming pool and spa construction industry. The Employment Development Department (“EDD”), in conjunction with other agencies and industry representatives, would have been required to establish criteria that would trigger a recommendation for an audit or investigation state authorities.
Vetoed - SB 903 (Wright) Statute of Limitations - This bill would have extended the period within which the Division of Labor Standards Enforcement (“DLSE”) may commence a collection action, as defined, from one year to three years.
Vetoed - SB 1370 (Ducheny) Commission Agreements - Effective January 1, 2012, this bill would have required all employers entering into commission agreements with employees to enter into written agreements or face liability in a civil action to the employee for treble damages.
Vetoed - SB 1474 (Steinberg) Agricultural Employee Labor Representatives - This bill would have authorized the Agricultural Labor Relations Board, under specified circumstances, to set aside an election where there has been misconduct by the employer affecting the outcome of the election and to certify a labor organization as the exclusive bargaining representative for a bargaining unit if the organization had previously presented the board with authorization cards signed by more than 50% of the employees in that bargaining unit.
Tuesday, September 28, 2010
9th Circuit Limits Potential Defenses To Class Certification
In Bateman v. American Multi-Cinema, Inc., the Ninth Circuit Court of Appeals reversed the decision of the United States District Court for the Central District of California to deny class certification on the ground that a class action would not be a superior method of litigating the case under Federal Rule of Civil Procedure 23(b)(3) on account of (1) potential liability proportionate to the actual harm, if any, to the plaintiff and class members, (2) the size of the potential damages, and (3) the defendant's good faith compliance. The Ninth Circuit held that none of those three considerations was a proper basis for the District Court to deny class certification.
The plaintiff brought a class action alleging he and some 290,000 potential class members received automated movie ticket counter receipts that violated the Fair and Accurate Credit Transactions Act ("FACTA") in that the receipts included both the first four and the last four digits of customers' credit card account numbers. FACTA provides for statutory damages of $100 to $1,000 for each willful violation of the Act.
The District Court agreed with American Multi-Cinema that class certification should be denied under Federal Rule of Civil Procedure 23(b)(3) because class litigation of the claims for statutory damages under FACTA would not be superior because the court believed "class treatment could result in enormous liability completely out of proportion to any harm suffered by the plaintiff," and, further, American Mult-Cinema "demonstrated good faith by complying with FACTA within a few weeks of the filing of" plaintiff's complaint.
The Ninth Circuit rejected the concerns of the District Court as valid bases for denying class certification even though the Ninth Circuit recognized that "[i]t is widely accepted that class certification 'may force a defendant to settle rather than incur the costs of defending a class action and run the risk of potentially ruinous liability.'"
The Ninth Circuit's reasoning would likely apply to employers defending class action lawsuits in Federal Court.
However, the court left open the possibility of defending against potentially ruinous liability on constitutional grounds. The court expressly reserved judgment about "whether a showing of 'ruinous liability' would warrant denial of class certification in a FACTA or similar action," and expressly reserved judgment about whether a District Court "may be entitled to reduce" a damages award in a class case "if it is unconstitutionally excessive."
Plaintiffs bringing class action wage and hour lawsuits now routinely include allegations that their claims fall under California's Labor Code Private Attorneys General Act of 2004 ("PAGA"), which provides for awards of very sizable penalties when aggregated to account for hundreds or even thousands of class members. PAGA provides for penalties of $100 per employee per pay period for each initial violation and of $200 per employee per pay period for each subsequent violation. We believe the possibility of potentially ruinous liability under PAGA is subject to challenge on constitutional grounds.
Tuesday, September 14, 2010
AALRR Attorney Thomas Lenz Quoted In The Riverside Press-Enterprise Regarding Labor Negotiations
AALRR attorney Thomas Lenz was quoted by the Riverside Press-Enterprise on September 10, 2010, in an article on labor negotiations, which you can read here.
Thursday, September 9, 2010
NLRB Holds Bannering of Secondary Employers Lawful
By Ronald W. Novotny
In a long-awaited decision, the National Labor Relations Board held that a union’s display of a peaceful stationary banner at the location of an employer with whom it had no dispute did not violate the secondary boycott provisions of the National Labor Relations Act. Likening such activity to the mere distribution of handbills that was found lawful by the U.S. Supreme Court in its 1988 decision in Edward J. DeBartolo Corp. v. Florida Gulf Coast Bldg. Trades, the Board concluded that the bannering merely attempted to “persuade” members of the public to assist it in its objectives, and not to “coerce” or “restrain” anyone in violation of the law.
The case involved efforts by the Carpenters Union in Arizona to publicize its disputes with three construction contractors by stationing banners outside of three hospitals on which they had performed work. The banners were between 3 and 4 feet high and 15 to 20 feet long, and bore the words “SHAME ON” followed by the name of the hospital and “Labor Dispute” on each of them. While two or three people held the banner, others distributed handbills explaining that the union’s dispute was with the non-union contractors and that by using their services the hospitals were “contributing to the undermining of area labor standards.”
In a split decision supported by only three of the agency’s five members, the Board found that this activity did not constitute the same kind of “confrontational conduct” that picketing normally does, and that most passing motorists and others to whom it was directed would not feel intimidated by the banners. The majority noted that the banner holders did not move, shout, impede access, or otherwise interfere with the secondary employers’ (i.e., the hospitals’) operations, and “did not engage in any other activity that is considered confrontational within the context” of the dispute. Accordingly, while a complaint alleging a violation of the secondary boycott laws was dismissed in that case, union bannering activity which becomes confrontational can presumably still be challenged as unlawful in the future. (Carpenters Local 1506 and Eliason & Knuth of Arizona, Inc., 355 NLRB No. 159)
In a long-awaited decision, the National Labor Relations Board held that a union’s display of a peaceful stationary banner at the location of an employer with whom it had no dispute did not violate the secondary boycott provisions of the National Labor Relations Act. Likening such activity to the mere distribution of handbills that was found lawful by the U.S. Supreme Court in its 1988 decision in Edward J. DeBartolo Corp. v. Florida Gulf Coast Bldg. Trades, the Board concluded that the bannering merely attempted to “persuade” members of the public to assist it in its objectives, and not to “coerce” or “restrain” anyone in violation of the law.
The case involved efforts by the Carpenters Union in Arizona to publicize its disputes with three construction contractors by stationing banners outside of three hospitals on which they had performed work. The banners were between 3 and 4 feet high and 15 to 20 feet long, and bore the words “SHAME ON” followed by the name of the hospital and “Labor Dispute” on each of them. While two or three people held the banner, others distributed handbills explaining that the union’s dispute was with the non-union contractors and that by using their services the hospitals were “contributing to the undermining of area labor standards.”
In a split decision supported by only three of the agency’s five members, the Board found that this activity did not constitute the same kind of “confrontational conduct” that picketing normally does, and that most passing motorists and others to whom it was directed would not feel intimidated by the banners. The majority noted that the banner holders did not move, shout, impede access, or otherwise interfere with the secondary employers’ (i.e., the hospitals’) operations, and “did not engage in any other activity that is considered confrontational within the context” of the dispute. Accordingly, while a complaint alleging a violation of the secondary boycott laws was dismissed in that case, union bannering activity which becomes confrontational can presumably still be challenged as unlawful in the future. (Carpenters Local 1506 and Eliason & Knuth of Arizona, Inc., 355 NLRB No. 159)
Thursday, September 2, 2010
California Employment Legislation Affecting Credit Checks, Meal & Rest Periods, and Leaves of Absence Await Governor’s Consideration
By Jonathan Judge
The following employment-related legislation met the August 31, 2010 deadline for passage by the California Legislature. Among the legislation are bills limiting the use of credit checks, allowing exemptions from meal and rest periods for certain employees covered by collective bargaining agreements, requiring paid bereavement leave, and extending paid marrow and organ donation leave to certain private employers. Governor Schwarzenegger has until September 30, 2010 to sign, veto, or let the bills become law without his signature.
AB 482 (Mendoza) Consumer Credit Reports - This bill would prohibit employers, with the exception of certain financial institutions, from obtaining a consumer credit report for employment purposes unless the information is (1) substantially job-related, meaning that the position of the person for whom the report is sought has access to trade secrets, money, other assets, or confidential information, and (2) the position of the person for whom the report is sought is a position in the state Department of Justice, a managerial position, that of a sworn peace officer or other law enforcement position, or a position for which the information contained in the report is required to be disclosed by law or to be obtained by the employer.
AB 569 (Emmerson) Meal & Rest Periods - This bill would exempt from meal and rest period provisions, employees in construction, commercial drivers, employees of local publically owned electric utilities, and security officers if such employees are covered by a valid Collective Bargaining Agreement (“CBA”) containing specified terms, including meal period provisions.
AB 1881 (Monning) Liquidated Damages in Wage Claims - This bill would, in cases of minimum wage violations, increase the amount of liquidated damages that may be awarded to an employee to twice the amount of wages unlawfully unpaid, plus interest.
AB 2187 (Arambula) Failure to Pay Final Wages Additional Penalty - This bill would create a new separate prohibition against a person, who, having the ability to pay, willfully fails to pay all wages due to an employee who has been discharged or quit within 90 days. The bill would impose a fine of between $1,000 and $10,000, up to six months jail time, or both, for such conduct. The violating individual would also be required to pay restitution to the aggrieved employee upon conviction.
AB 2340 (Monning) Bereavement Leave - This bill would allow for three days unpaid leave for bereavement purposes upon the death of a spouse, child, parent, sibling, grandparent, grandchild, domestic partner, or domestic partner’s child, within 13 months of the death of the bereaved individual. The provisions of the bill would not apply to an employee who is covered by a valid CBA that provides for bereavement leave and other specified working conditions.
AB 2468 (De Leon) Lactation Breaks - This bill would authorize an employer to use the designation "Mother-Friendly Worksite" in its promotional materials, if it submits its workplace breast-feeding policy to the Labor Commissioner and the Labor Commissioner determines that the employer's policy provides for specified criteria.
AB 2770 (Monning) Labor Code Enforcement - This bill would, until January 1, 2017, establish a pilot program to investigate employment and payment practices within the swimming pool and spa construction industry. The Employment Development Department (“EDD”), in conjunction with other agencies and industry representatives, would be required to establish criteria that would trigger a recommendation for an audit or investigation state authorities.
SB 903 (Wright) Statute of Limitations - This bill would extend the period within which the Division of Labor Standards Enforcement (“DLSE”) may commence a collection action, as defined, from one year to 3 years.
SB 1304 (DeSaulnier) Marrow Donation Leave - This bill would require employers with 15 or more employees to permit employees to take paid leaves of absence for organ donation (up to 30 days) and bone marrow donation (up to five days), and to restore an employee returning from such leave to the same or equivalent position. The bill would also prohibit an employer from interfering with, or retaliating against, an employee taking such leave, or opposing an unlawful employment practice related to such leave. The bill would also create a private right of action for aggrieved employees to seek enforcement of these provisions. Covered employers would be able to require an employee take up to five days of earned but unused sick or vacation leave for bone marrow donation, and up to two weeks of earned but unused sick or vacation leave for organ donation as a condition of receiving such leave.
SB 1370 (Ducheny) Commission Agreements - Effective January 1, 2012, this bill would require all employers entering into commission agreements with employees to enter into written agreements or face liability in a civil action to the employee for treble damages.
SB 1474 (Steinberg) Agricultural Employee Labor Representatives - This bill would authorize the Agricultural Labor Relations Board, under specified circumstances, to set aside an election where there has been misconduct by the employer affecting the outcome of the election and to certify a labor organization as the exclusive bargaining representative for a bargaining unit if the organization had previously presented the board with authorization cards signed by more than 50% of the employees in that bargaining unit.
Please check back regularly for updates on these bills.
The following employment-related legislation met the August 31, 2010 deadline for passage by the California Legislature. Among the legislation are bills limiting the use of credit checks, allowing exemptions from meal and rest periods for certain employees covered by collective bargaining agreements, requiring paid bereavement leave, and extending paid marrow and organ donation leave to certain private employers. Governor Schwarzenegger has until September 30, 2010 to sign, veto, or let the bills become law without his signature.
AB 482 (Mendoza) Consumer Credit Reports - This bill would prohibit employers, with the exception of certain financial institutions, from obtaining a consumer credit report for employment purposes unless the information is (1) substantially job-related, meaning that the position of the person for whom the report is sought has access to trade secrets, money, other assets, or confidential information, and (2) the position of the person for whom the report is sought is a position in the state Department of Justice, a managerial position, that of a sworn peace officer or other law enforcement position, or a position for which the information contained in the report is required to be disclosed by law or to be obtained by the employer.
AB 569 (Emmerson) Meal & Rest Periods - This bill would exempt from meal and rest period provisions, employees in construction, commercial drivers, employees of local publically owned electric utilities, and security officers if such employees are covered by a valid Collective Bargaining Agreement (“CBA”) containing specified terms, including meal period provisions.
AB 1881 (Monning) Liquidated Damages in Wage Claims - This bill would, in cases of minimum wage violations, increase the amount of liquidated damages that may be awarded to an employee to twice the amount of wages unlawfully unpaid, plus interest.
AB 2187 (Arambula) Failure to Pay Final Wages Additional Penalty - This bill would create a new separate prohibition against a person, who, having the ability to pay, willfully fails to pay all wages due to an employee who has been discharged or quit within 90 days. The bill would impose a fine of between $1,000 and $10,000, up to six months jail time, or both, for such conduct. The violating individual would also be required to pay restitution to the aggrieved employee upon conviction.
AB 2340 (Monning) Bereavement Leave - This bill would allow for three days unpaid leave for bereavement purposes upon the death of a spouse, child, parent, sibling, grandparent, grandchild, domestic partner, or domestic partner’s child, within 13 months of the death of the bereaved individual. The provisions of the bill would not apply to an employee who is covered by a valid CBA that provides for bereavement leave and other specified working conditions.
AB 2468 (De Leon) Lactation Breaks - This bill would authorize an employer to use the designation "Mother-Friendly Worksite" in its promotional materials, if it submits its workplace breast-feeding policy to the Labor Commissioner and the Labor Commissioner determines that the employer's policy provides for specified criteria.
AB 2770 (Monning) Labor Code Enforcement - This bill would, until January 1, 2017, establish a pilot program to investigate employment and payment practices within the swimming pool and spa construction industry. The Employment Development Department (“EDD”), in conjunction with other agencies and industry representatives, would be required to establish criteria that would trigger a recommendation for an audit or investigation state authorities.
SB 903 (Wright) Statute of Limitations - This bill would extend the period within which the Division of Labor Standards Enforcement (“DLSE”) may commence a collection action, as defined, from one year to 3 years.
SB 1304 (DeSaulnier) Marrow Donation Leave - This bill would require employers with 15 or more employees to permit employees to take paid leaves of absence for organ donation (up to 30 days) and bone marrow donation (up to five days), and to restore an employee returning from such leave to the same or equivalent position. The bill would also prohibit an employer from interfering with, or retaliating against, an employee taking such leave, or opposing an unlawful employment practice related to such leave. The bill would also create a private right of action for aggrieved employees to seek enforcement of these provisions. Covered employers would be able to require an employee take up to five days of earned but unused sick or vacation leave for bone marrow donation, and up to two weeks of earned but unused sick or vacation leave for organ donation as a condition of receiving such leave.
SB 1370 (Ducheny) Commission Agreements - Effective January 1, 2012, this bill would require all employers entering into commission agreements with employees to enter into written agreements or face liability in a civil action to the employee for treble damages.
SB 1474 (Steinberg) Agricultural Employee Labor Representatives - This bill would authorize the Agricultural Labor Relations Board, under specified circumstances, to set aside an election where there has been misconduct by the employer affecting the outcome of the election and to certify a labor organization as the exclusive bargaining representative for a bargaining unit if the organization had previously presented the board with authorization cards signed by more than 50% of the employees in that bargaining unit.
Please check back regularly for updates on these bills.
Tuesday, August 24, 2010
California Employment Legislation Nears Completion as Deadline Looms
By Jonathan Judge
With the August 31, 2010 deadline for legislative bills to be passed a week away, several employment-related bills are working their way through the California legislature to Governor Schwarzenegger’s desk.
A trio of bills were recently enrolled and should reach the Governor’s desk shortly:
AB 2340 (Monning) Bereavement Leave - This bill would allow for three days unpaid leave for bereavement purposes upon the death of a spouse, child, parent, sibling, grandparent, grandchild, domestic partner, or domestic partner’s child, within 13 months of the death of the bereaved individual. The provisions of the bill would not apply to an employee who is covered by a valid CBA that provides for bereavement leave and other specified working conditions.
SB 903 (Wright) Statute of Limitations - This bill would extend the period within which the Division of Labor Standards Enforcement (“DLSE”) may commence a collection action, as defined, from one year to three years.
SB 1474 (Steinberg) Agricultural Employee Labor Representatives - This bill would authorize the Agricultural Labor Relations Board, under specified circumstances, to set aside an election where there has been misconduct by the employer affecting the outcome of an election and to certify a labor organization as the exclusive bargaining representative for a bargaining unit if the organization had previously presented the board with authorization cards signed by more than 50% of the employees in that bargaining unit.
Once enrolled and to the Governor’s desk, the Governor has 10 days to sign, veto, or let a bill become law without his signature during the legislative session.
Also, earlier this month, legislation amending the Fair Employment and Housing Act (“FEHA”) affecting the provision of health benefits to retirees was signed by the Governor and will become law effective January 1, 2011:
AB 1814 (Buchanan) Discrimination in Employment - This bill amends FEHA to provide that FEHA does not prohibit an employer from providing health benefits or health care reimbursement plans to retired persons that are altered, reduced, or eliminated when the retiree becomes eligible for Medicare benefits.
Please check back regularly for updates on California legislation.
With the August 31, 2010 deadline for legislative bills to be passed a week away, several employment-related bills are working their way through the California legislature to Governor Schwarzenegger’s desk.
A trio of bills were recently enrolled and should reach the Governor’s desk shortly:
AB 2340 (Monning) Bereavement Leave - This bill would allow for three days unpaid leave for bereavement purposes upon the death of a spouse, child, parent, sibling, grandparent, grandchild, domestic partner, or domestic partner’s child, within 13 months of the death of the bereaved individual. The provisions of the bill would not apply to an employee who is covered by a valid CBA that provides for bereavement leave and other specified working conditions.
SB 903 (Wright) Statute of Limitations - This bill would extend the period within which the Division of Labor Standards Enforcement (“DLSE”) may commence a collection action, as defined, from one year to three years.
SB 1474 (Steinberg) Agricultural Employee Labor Representatives - This bill would authorize the Agricultural Labor Relations Board, under specified circumstances, to set aside an election where there has been misconduct by the employer affecting the outcome of an election and to certify a labor organization as the exclusive bargaining representative for a bargaining unit if the organization had previously presented the board with authorization cards signed by more than 50% of the employees in that bargaining unit.
Once enrolled and to the Governor’s desk, the Governor has 10 days to sign, veto, or let a bill become law without his signature during the legislative session.
Also, earlier this month, legislation amending the Fair Employment and Housing Act (“FEHA”) affecting the provision of health benefits to retirees was signed by the Governor and will become law effective January 1, 2011:
AB 1814 (Buchanan) Discrimination in Employment - This bill amends FEHA to provide that FEHA does not prohibit an employer from providing health benefits or health care reimbursement plans to retired persons that are altered, reduced, or eliminated when the retiree becomes eligible for Medicare benefits.
Please check back regularly for updates on California legislation.
Thursday, August 12, 2010
AALRR Defeats Union Demand For Arbitration Over Card Check And Ongoing Representation At Ninth Circuit
AALRR represents Flooring Solutions of Nevada, Inc. ("FSI") in a dispute with the Painters Union. After FSI's labor agreement expired in early 2007 the Painters claimed to continue to represent FSI's employees. The Painters' claim was based upon a card check clause in the expired agreement and unilateral steps the Painters took just before contract expiration. A National Labor Relations Board ("NLRB") administrative law judge rejected the Painters' position and ruled in late 2007 that the Painters did not represent FSI's employees following expiration of FSI's labor agreement. Likewise, the Judge dismissed similar allegations against other contractors whose employees the Painters claimed to continue to represent after contract expiration. The Painters appealed the Judge's ruling. The appeal remains pending with the NLRB in Washington, DC.
After the NLRB judge ruled, the Painters requested arbitration under the expired labor agreement to determine whether employees of FSI and the other contractors remain represented by the Painters. At no time had the Painters filed a grievance under the expired labor agreement on the issue they sought to arbitrate. The Painters did, however, file a lawsuit nearly a year after the agreement expired to compel arbitration.
The federal district court in Las Vegas dismissed the lawsuit on summary judgment, as the representation issue was already pending at NLRB. The Painters appealed to the Ninth Circuit Court of Appeals. In December 2009 the Ninth Circuit held oral argument on the case. Then, in a July 30, 2010 ruling, the Ninth Circuit's three judge panel ruled that the lawsuit was properly dismissed by the district court. The Court observed that the representation sought by the Painters through arbitration was the same presented as an issue in the pending NLRB case now on appeal. The Court acknowledged NLRB supremacy on questions of representation as well as labor policy favoring arbitration of labor disputes. The Court advised that not all representation issues would be barred from arbitration. However, under the circumstances in the present case, the Court determined that the NLRB was the better forum to determine the question of ongoing union representation and whether it has been achieved by a card check consistent with NLRB standards.
It is not clear when the NLRB will rule on the Painters' pending appeal from the 2007 administrative law judge's ruling. Nor is it clear at this time whether the Painters will challenge the Ninth Circuit's ruling.
Monday, August 9, 2010
California Supreme Court Rejects “Stray Remarks” Doctrine in Age Discrimination Case
By Ronald W. Novotny
Last week, in a long-awaited decision, the California Supreme Court handed employers a setback by holding that age-related comments by non-decision makers can be relevant and admissible as evidence in age discrimination cases. In the case of Reid v. Google, Inc., the Court specifically rejected the "stray remarks doctrine," by which any remarks made by non-decisionmaking co-workers or decision-making supervisors outside the decisional process were deemed irrelevant and insufficient to support an age discrimination claim.
The case was brought by Brian Reid, who was hired as Google's director of operations and engineering at age 54 but was removed from that position and then terminated less than two years later. Reid attempted to prove his claim for age discrimination by use of comments made by his superiors and co-workers that his opinions were obsolete and "too old to matter," that Reid was "slow," "lazy," and "lethargic," and "lacked energy," and that he was an "old fuddy duddy" whose office placard should be an LP instead of a compact disc. Reid was first removed from his director position and put in charge of a graduate program after being criticized for failing to keep up with the corporation's "super-fast pace," and was then removed from that position when the program was eliminated and management determined that he was "not a good cultural fit."
The Supreme Court unanimously held that the categorical exclusion of age-related comments of this nature was impermissible because they both can influence a decision-maker and provide relevant circumstantial evidence of discrimination. The Court wrote that:
Last week, in a long-awaited decision, the California Supreme Court handed employers a setback by holding that age-related comments by non-decision makers can be relevant and admissible as evidence in age discrimination cases. In the case of Reid v. Google, Inc., the Court specifically rejected the "stray remarks doctrine," by which any remarks made by non-decisionmaking co-workers or decision-making supervisors outside the decisional process were deemed irrelevant and insufficient to support an age discrimination claim.
The case was brought by Brian Reid, who was hired as Google's director of operations and engineering at age 54 but was removed from that position and then terminated less than two years later. Reid attempted to prove his claim for age discrimination by use of comments made by his superiors and co-workers that his opinions were obsolete and "too old to matter," that Reid was "slow," "lazy," and "lethargic," and "lacked energy," and that he was an "old fuddy duddy" whose office placard should be an LP instead of a compact disc. Reid was first removed from his director position and put in charge of a graduate program after being criticized for failing to keep up with the corporation's "super-fast pace," and was then removed from that position when the program was eliminated and management determined that he was "not a good cultural fit."
The Supreme Court unanimously held that the categorical exclusion of age-related comments of this nature was impermissible because they both can influence a decision-maker and provide relevant circumstantial evidence of discrimination. The Court wrote that:
Although stray remarks may not have strong probative value when viewed in isolation, they may corroborate direct evidence of discrimination or gain significance in conjunction with other circumstantial evidence.The likely effect of the ruling is to make it more difficult for employers to obtain summary judgment on age discrimination claims when additional evidence of discrimination beyond such stray remarks exists to support the claims.
Friday, July 30, 2010
Governor Vetoes Agricultural Overtime Bill
On July 28, 2010 Governor Schwarzenegger vetoed a bill that would have removed the exemption for agricultural employees from overtime and meal period requirements under California law.
As previously reported, on July 20, the bill was enrolled and sent to the Governor’s desk. With the veto, the bill is likely dead, as a legislative override requires a two-thirds vote in each house and has not occurred in over 30 years.
In his veto message, Schwarzenegger said “this measure, while well-intended, will not improve the lives of California's agricultural workers and instead will result in additional burdens on California businesses, increased unemployment, and lower wages.”
Please check back regularly for updates on California legislation.
Thursday, July 22, 2010
California Legislative Update: Governor Approves Bill on Appeal Bonds as Agriculture Bill Slowly Makes its Way to His Desk
By Jonathan Judge
Late last week, Governor Schwarzenegger approved a clarification of the law on appeals of Labor Commissioner decisions. Meanwhile, SB 1121, concerning overtime for agricultural workers, reached the Governor's desk on July 20, and the Senate amended a bill concerning background checks. A summary of these bills and key developments follow below.
AB 2772 (Swanson) Appeal Bonds - This bill clarifies that an employer wishing to appeal an administrative judgment by the Labor Commissioner is required to first post a bond.
As previously reported, the Legislature sent this bill to the Governor on July 6. The Governor approved the bill on July 15, and the Secretary of State Chaptered the bill the same day. As a non-urgency bill, the changes will take effect January 1, 2011.
Labor Code Section 98.2 currently provides: “Whenever an employer files an appeal pursuant to this section, the employer shall post an undertaking with the reviewing court in the amount of the decision, order, or award.”
The bill will amend Section 98.2 to read: “As a condition to filing an appeal pursuant to this section, an employer shall first post an undertaking with the reviewing court in the amount of the order, decision, or award.”
This bill was in response to a California appellate court decision (Progressive Concrete Inc.,v. Parker, 136 Cal. App. 4th 540, 548 (2006)) that held that the language in Section 98.2 was merely “directory,” and that a specific court order was necessary before an employer can be required to post a bond.
The effect of the court’s holding was to leave entirely to the discretion of a court whether or not to issue an order requiring the positing of the bond. Section 98.2 will expressly state that as a condition to filing an appeal of an administrative judgment, an employer must first post a bond with the reviewing court.
SB 1121 (Florez) Overtime - This bill would remove the exemption for agricultural employees from overtime and meal period requirements.
As previously reported, the California Legislature passed this bill on July 1 and it was expected to go to the Governor’s desk for veto or signature shortly thereafter. However, it appears the bill had been stalled in the enrollment process, according to the online official California Legislation Report.
On July 20, the bill was enrolled and sent to the Governor’s desk. During the legislative session, the Governor must sign or veto legislation within 12 days of the day of transmittal or it becomes law without signature.
AB 482 (Mendoza) Consumer Credit Reports - This bill would prohibit employers, with the exception of certain financial institutions, from obtaining a consumer credit report for employment purposes unless the information meets specified requirements (see below).
Updating a previous report, the California Senate recently amended this bill to include an exception for trade secrets.
The bill language now allows for consumer credit reports for employment purposes if the information sought is (1) substantially job-related, meaning that the position of the person for whom the report is sought has access to money, other assets, or trade secrets or other confidential information, and (2) the position of the person for whom the report is sought is a position in the state Department of Justice, a managerial position, that of a sworn peace officer or other law enforcement position, or a position for which the information contained in the report is required to be disclosed by law or to be obtained by the employer.
Please check back regularly for updates on these and other bills.
Late last week, Governor Schwarzenegger approved a clarification of the law on appeals of Labor Commissioner decisions. Meanwhile, SB 1121, concerning overtime for agricultural workers, reached the Governor's desk on July 20, and the Senate amended a bill concerning background checks. A summary of these bills and key developments follow below.
AB 2772 (Swanson) Appeal Bonds - This bill clarifies that an employer wishing to appeal an administrative judgment by the Labor Commissioner is required to first post a bond.
As previously reported, the Legislature sent this bill to the Governor on July 6. The Governor approved the bill on July 15, and the Secretary of State Chaptered the bill the same day. As a non-urgency bill, the changes will take effect January 1, 2011.
Labor Code Section 98.2 currently provides: “Whenever an employer files an appeal pursuant to this section, the employer shall post an undertaking with the reviewing court in the amount of the decision, order, or award.”
The bill will amend Section 98.2 to read: “As a condition to filing an appeal pursuant to this section, an employer shall first post an undertaking with the reviewing court in the amount of the order, decision, or award.”
This bill was in response to a California appellate court decision (Progressive Concrete Inc.,v. Parker, 136 Cal. App. 4th 540, 548 (2006)) that held that the language in Section 98.2 was merely “directory,” and that a specific court order was necessary before an employer can be required to post a bond.
The effect of the court’s holding was to leave entirely to the discretion of a court whether or not to issue an order requiring the positing of the bond. Section 98.2 will expressly state that as a condition to filing an appeal of an administrative judgment, an employer must first post a bond with the reviewing court.
SB 1121 (Florez) Overtime - This bill would remove the exemption for agricultural employees from overtime and meal period requirements.
As previously reported, the California Legislature passed this bill on July 1 and it was expected to go to the Governor’s desk for veto or signature shortly thereafter. However, it appears the bill had been stalled in the enrollment process, according to the online official California Legislation Report.
On July 20, the bill was enrolled and sent to the Governor’s desk. During the legislative session, the Governor must sign or veto legislation within 12 days of the day of transmittal or it becomes law without signature.
AB 482 (Mendoza) Consumer Credit Reports - This bill would prohibit employers, with the exception of certain financial institutions, from obtaining a consumer credit report for employment purposes unless the information meets specified requirements (see below).
Updating a previous report, the California Senate recently amended this bill to include an exception for trade secrets.
The bill language now allows for consumer credit reports for employment purposes if the information sought is (1) substantially job-related, meaning that the position of the person for whom the report is sought has access to money, other assets, or trade secrets or other confidential information, and (2) the position of the person for whom the report is sought is a position in the state Department of Justice, a managerial position, that of a sworn peace officer or other law enforcement position, or a position for which the information contained in the report is required to be disclosed by law or to be obtained by the employer.
Please check back regularly for updates on these and other bills.
Wednesday, July 21, 2010
California Anti-Labor Injunction Law Held Invalid as Applied to Picketing on Private Property
By Ronald W. Novotny
In one of the first decisions interpreting the legal enforceability of California’s anti-labor injunction statute, a California appellate court held on July 19, 2010 that the law did not prevent a grocery store from obtaining an injunction against a union for picketing on its private property. The court specifically held that the statute, Labor Code section 1138.1, was unconstitutional as applied to that dispute because it conferred greater legal protection on picketing than other forms of speech, and declared labor protests on private property to be legal even though a similar protest concerning a different issue would constitute trespassing.
In Ralphs Grocery Co. v. U.F.C.W. Local 8, a union picketed a Ralphs Grocery store in Sacramento with 8 to 10 pickets for an extended period of time, after Ralphs opened the store using non-union employees in 2007. The picketing occurred at an “apron” leading into a parking lot, which the court found to constitute private property. When Ralphs went to court to seek an injunction against such picketing, a trial court denied it based on the anti-labor injunction statute, which placed onerous burdens on property owners to show entitlement to such relief including the need to establish that they would suffer “substantial irreparable injury” if it were not granted.
The Court of Appeal reversed the decision and held that an injunction should issue, on the ground that application of the statute in this instance would “effectively force Ralphs to provide a forum for speech with which it disagrees. . .” The court also stated that the Union’s continuing trespass constituted “irreparable harm” for injunction purposes because there was no way of knowing or quantifying how much business Ralphs lost by reason of the picketing.
The decision is welcome news to employers who face picketing by labor unions on private property such as malls and shopping centers.
In one of the first decisions interpreting the legal enforceability of California’s anti-labor injunction statute, a California appellate court held on July 19, 2010 that the law did not prevent a grocery store from obtaining an injunction against a union for picketing on its private property. The court specifically held that the statute, Labor Code section 1138.1, was unconstitutional as applied to that dispute because it conferred greater legal protection on picketing than other forms of speech, and declared labor protests on private property to be legal even though a similar protest concerning a different issue would constitute trespassing.
In Ralphs Grocery Co. v. U.F.C.W. Local 8, a union picketed a Ralphs Grocery store in Sacramento with 8 to 10 pickets for an extended period of time, after Ralphs opened the store using non-union employees in 2007. The picketing occurred at an “apron” leading into a parking lot, which the court found to constitute private property. When Ralphs went to court to seek an injunction against such picketing, a trial court denied it based on the anti-labor injunction statute, which placed onerous burdens on property owners to show entitlement to such relief including the need to establish that they would suffer “substantial irreparable injury” if it were not granted.
The Court of Appeal reversed the decision and held that an injunction should issue, on the ground that application of the statute in this instance would “effectively force Ralphs to provide a forum for speech with which it disagrees. . .” The court also stated that the Union’s continuing trespass constituted “irreparable harm” for injunction purposes because there was no way of knowing or quantifying how much business Ralphs lost by reason of the picketing.
The decision is welcome news to employers who face picketing by labor unions on private property such as malls and shopping centers.
Wednesday, July 14, 2010
California Court Rejects Age Discrimination Claim Despite Failure to Interview or Consider Applicant
By Ronald W. Novotny
Sometimes, in refusal to hire cases, older applicants argue that they were victims of age discrimination if they were not offered job interviews or considered for the position applied for. In the case of Reeves v. MV Transportation, Inc. filed July 9, 2010, a California appellate court rejected just such a claim, in the case of a transportation company who hired a younger attorney for an in-house general counsel position based on a favorable general impression and a recommendation from a known colleague.
The 56-year old plaintiff in that case, David Reeves, had worked two stints as an attorney for the National Labor Relations Board and as an in-house attorney for two private companies over a period of 27 years. He applied for the position of a labor and employment attorney with MV Transportation, but was not interviewed for the job. Instead, a 40-year old attorney was hired for the job, after the company’s General Counsel John Baird formed an “extremely favorable impression of her” following her interview and her recommendation from an attorney he knew at the firm at which she worked. Baird did not interview Reeves for the job, based on both his positive interview of the successful candidate and the lack of time. He also considered a message Reeves sent about his qualifications to be arrogant, and was put off by Reeves responding to the ad for the position by sending his resume during working time from a government-owned computer.
The court noted that there is “nothing unlawful about an employer’s basing its hiring decision on subjective criteria, such as the impression an individual makes during an interview,” so long as the older candidate does not have demonstrably superior qualifications. Accordingly, although it is usually more preferable from a risk management perspective to interview all qualified candidates, the Reeves case provides support to employers who choose to cut short the hiring process due to time constraints or other factors once it is convinced that it has found the right person for the job.
Sometimes, in refusal to hire cases, older applicants argue that they were victims of age discrimination if they were not offered job interviews or considered for the position applied for. In the case of Reeves v. MV Transportation, Inc. filed July 9, 2010, a California appellate court rejected just such a claim, in the case of a transportation company who hired a younger attorney for an in-house general counsel position based on a favorable general impression and a recommendation from a known colleague.
The 56-year old plaintiff in that case, David Reeves, had worked two stints as an attorney for the National Labor Relations Board and as an in-house attorney for two private companies over a period of 27 years. He applied for the position of a labor and employment attorney with MV Transportation, but was not interviewed for the job. Instead, a 40-year old attorney was hired for the job, after the company’s General Counsel John Baird formed an “extremely favorable impression of her” following her interview and her recommendation from an attorney he knew at the firm at which she worked. Baird did not interview Reeves for the job, based on both his positive interview of the successful candidate and the lack of time. He also considered a message Reeves sent about his qualifications to be arrogant, and was put off by Reeves responding to the ad for the position by sending his resume during working time from a government-owned computer.
The court noted that there is “nothing unlawful about an employer’s basing its hiring decision on subjective criteria, such as the impression an individual makes during an interview,” so long as the older candidate does not have demonstrably superior qualifications. Accordingly, although it is usually more preferable from a risk management perspective to interview all qualified candidates, the Reeves case provides support to employers who choose to cut short the hiring process due to time constraints or other factors once it is convinced that it has found the right person for the job.
Friday, July 9, 2010
California Legislature Sends Two Employment-Related Bills to Governor Schwarzenegger
By Jonathan Judge
Two employment-related bills we have been tracking were sent to Governor Schwarzenegger this month:
AB 2772 (Swanson) Appeal Bonds - This bill would clarify that an employer wishing to appeal an administrative judgment by the Labor Commissioner is required to first post a bond.
Labor Code Section 98.2 currently provides: "Whenever an employer files an appeal pursuant to this section, the employer shall post an undertaking with the reviewing court in the amount of the decision, order, or award."
This legislation is in response to a recent California appellate court decision (Progressive Concrete Inc.,v. Parker, 136 Cal. App. 4th 540, 548 (2006)) that held that the language in Labor Code Section 98.2 is merely “directory,” and that a specific court order is necessary before an employer can be required to post a bond.
The effect of the court’s holding is to leave entirely to the discretion of a court whether or not to issue an order requiring the positing of the bond. This Bill would expressly state that as a condition to filing an appeal of an administrative judgment, an employer must first post a bond with the reviewing court.
The Legislature sent this bill to the Governor on July 6. During the legislative session, the Governor must sign or veto legislation within 12 days of the day of transmittal or it becomes law without signature. If this bill becomes law, it will place additional financial burdens on employers attempting to appeal rulings made by the Labor Commissioner.
SB 1121 (Florez) Overtime - This bill would remove the exemption for agricultural employees from overtime and meal period requirements.
In general, California law requires daily overtime after eight hours in a day for non-exempt employees. The law also requires a 30 minute unpaid meal period before the start of the fifth hour of work, unless the work period is no more than six hours, and both the employer and the employee choose to waive the meal period by mutual consent.
Currently however, under Labor Code Section 554, an exemption exists for agricultural employees as defined in Industrial Welfare Commission Wage Order 14 from the daily overtime and meal period requirements. The current exemption allows agricultural employers to employ such employees up to ten hours in a day without paying overtime. If passed, this bill would remove these exemptions for agricultural employers, driving up the cost of employment of such workers in California.
Dozens of farm groups oppose the bill, and plan to urge the Governor to veto the bill, out of concern that farmers faced with higher employment costs could be driven out of business. A spokesman for the Governor stated that the Governor has not taken a position on the bill.
Please check back regularly for updates on these and other bills.
Two employment-related bills we have been tracking were sent to Governor Schwarzenegger this month:
AB 2772 (Swanson) Appeal Bonds - This bill would clarify that an employer wishing to appeal an administrative judgment by the Labor Commissioner is required to first post a bond.
Labor Code Section 98.2 currently provides: "Whenever an employer files an appeal pursuant to this section, the employer shall post an undertaking with the reviewing court in the amount of the decision, order, or award."
This legislation is in response to a recent California appellate court decision (Progressive Concrete Inc.,v. Parker, 136 Cal. App. 4th 540, 548 (2006)) that held that the language in Labor Code Section 98.2 is merely “directory,” and that a specific court order is necessary before an employer can be required to post a bond.
The effect of the court’s holding is to leave entirely to the discretion of a court whether or not to issue an order requiring the positing of the bond. This Bill would expressly state that as a condition to filing an appeal of an administrative judgment, an employer must first post a bond with the reviewing court.
The Legislature sent this bill to the Governor on July 6. During the legislative session, the Governor must sign or veto legislation within 12 days of the day of transmittal or it becomes law without signature. If this bill becomes law, it will place additional financial burdens on employers attempting to appeal rulings made by the Labor Commissioner.
SB 1121 (Florez) Overtime - This bill would remove the exemption for agricultural employees from overtime and meal period requirements.
In general, California law requires daily overtime after eight hours in a day for non-exempt employees. The law also requires a 30 minute unpaid meal period before the start of the fifth hour of work, unless the work period is no more than six hours, and both the employer and the employee choose to waive the meal period by mutual consent.
Currently however, under Labor Code Section 554, an exemption exists for agricultural employees as defined in Industrial Welfare Commission Wage Order 14 from the daily overtime and meal period requirements. The current exemption allows agricultural employers to employ such employees up to ten hours in a day without paying overtime. If passed, this bill would remove these exemptions for agricultural employers, driving up the cost of employment of such workers in California.
Dozens of farm groups oppose the bill, and plan to urge the Governor to veto the bill, out of concern that farmers faced with higher employment costs could be driven out of business. A spokesman for the Governor stated that the Governor has not taken a position on the bill.
Please check back regularly for updates on these and other bills.
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