Court of Appeal Clarifies Rules Regarding "Workweeks" And Compensability Of Off-Duty On-Call Or Standby Time

By Sun Hi Ahn and Christopher S. Andre

In Symore v. Metson Marine, Inc., the California Court of Appeal once again reversed a trial court decision in favor of the employer and, construing liberally the statutes and regulations at issue "with an eye toward promoting" protection and benefit of employees, held (1) an employer cannot avoid obligations to pay overtime by designating a workweek in order to deprive employees of overtime compensation they would be entitled to and (2) that off-duty on-call or standby time was compensable time based on the facts of the case.

Labor Code section 500 defines a "workweek" as "any seven consecutive days, starting with the same calendar day each week.  'Workweek' is a fixed and regularly recurring period of 168 hours, seven consecutive 24-hour periods."  Emphasis added.

Metson's employees worked 14-day hitches on Metson's ships, which handle emergency clean up of oils spills and other hazardous materials off the California coast.   Metson established for all of its employees a workweek beginning on Monday at 12:00 a.m., and ending on Sunday at 11:59 p.m., which is a relatively common workweek.  However, all of Metson's employees assigned to ships worked alternating 14-day hitches beginning on Tuesday at 12:00 noon and ending at 12:00 noon 14 days later.  Under Metson's workweek, the employees worked six days in the first workweek, seven days in the second workweek, and two days in a third workweek.  Accordingly, Metson paid the employees the required premium pay for the seventh consecutive day worked only for the seventh consecutive day worked during the second workweek.  The trial court determined that Metson's workweek was lawful and that Metson properly paid its employees.

Although the text of Labor Code section 500 permits an employer to designate "any seven consecutive days starting with the same calendar day each week" as a workweek and seeming grants to employers complete discretion to designate the workweek as the employer sees fit, on appeal, the Court of Appeal held an employer does not have such complete discretion.  The court held "an employer may not designate its workweek in a manner that is designed primarily to evade overtime compensation."  The court went on to explain:  "[F]or all employees working aboard its vessels Metson has established a single work schedule that begins on a Tuesday, while designating the 'workweek' to begin on a Monday, accomplishing nothing apparent in the record other than the elimination of overtime." Thus, "an employer may designate a workweek used to calculate compensation that differs from the work schedule of its employees only if there is a bona fide business reason for doing so, which does not include the primary objective of avoiding the obligation to pay overtime."

During their 14-day hitches, Metson's employees were paid 12 hours each day for on-duty time regardless of whether the employees performed work for the full 12 hours, four of which were paid at the overtime rate.  Metson deemed the remaining 12 hours as standby time and allowed 8 hours for sleep on Metson's ships and the remaining 4 hours as meal or free time.  During that time, employees were free to leave their ships, but they were not permitted to consume alcohol and were required to return to their ships within a maximum of 45 minutes when necessary.  The trial court determined that Metson was not required to pay its employees for any of the 12 off-duty hours each workday. 

On appeal, the Court of Appeal held Metson was not required to compensate its employees for any of the 8 hours each day allowed for sleeping because the employees worked 24 hour shifts and because the employees entered into a non-written agreement with Metson that the time allowed for sleeping would not be considered compensable time.   

As for the 4 hours designated as meal or free time, the Court of Appeal held this time is compensable time because of the restrictions Metson placed on how the employees could spend that time.   Applying a previous California Supreme Court decision stating "'[t]he level of the employer's control over its employees, rather than the mere fact that the employer requires the employees' activity, is determinative' of whether particular hours constitute hours worked,'" the Court of Appeal reversed the trial court and held the 4 hours designated as meal or free time is compensable time because "[t]he required response time [45 minutes] (and perhaps the alcohol ban) precluded plaintiffs from going places and pursing activities in which they might otherwise have engaged" and is compensable time even though "the undisputed evidence is that emergencies were rare and that plaintiffs were seldom called back to the ship during their off-duty hours." 

In light of this decision by the Court of Appeal, employers should be mindful that courts will scrutinize designated workweeks that differ from employees' actual work schedules to determine (a) whether a designated workweek deprives employees of overtime pay the employees would otherwise be entitled to and (b) whether the designated workweek is supported by a bona fide business reason for doing so apart from reducing or eliminating the payment of overtime compensation.  

Employers should be mindful, also, that courts will often deem non-work-time as compensable time if the employer places significant restrictions on how employees may use non-work-time based on the following seven factors: "(1) whether there was an on-premises living requirement; (2) whether there were excessive geographical restrictions on employee's [sic] movements; (3) whether the frequency of calls was unduly restrictive; (4) whether a fixed time limit for response was unduly restrictive; (5) whether the on-call employee could easily trade on-call responsibilities; (6) whether use of a pager could ease restrictions; and (7) whether the employee had actually engaged in personal activities during call-in time."

Court of Appeal Holds Employer Does Not Violate FEHA By Terminating Bipolar Employee Who Violated Employer's Policy Against Making Threats Of Violence Against Co-Workers

By Andres C. Hurwitz and Christopher S. Andre

Can an employer terminate an employee whose physician-diagnosed disability (bipolar disorder) caused her to make threats of violence against co-workers without violating the provisions of California's Fair Employment and Housing Act ("FEHA") forbidding discrimination against employees because of a disability or a medical condition?  

During the beginning stages of a manic episode, Linda Wills arrived for work and after waiting a few minutes to be admitted to a secured police department facility she was assigned to, Wills became angry, swore, and told police department employees at the facility she added them to her "Kill Bill" list for leaving her out in the heat.  A few days later, Wills' physician placed her on a medical leave to treat her manic episode.  

Other incidents followed.  While on medical leave, Wills forwarded to at least one co-worker a ring tone containing video who a coworker complained disturbed her on account of the tenor and the content of the angry ring tone culminating "in a shrieking directive: 'I'm going to blow this [explicative] up if you don't check your messages right now! . . . [explicative]."  Other email messages followed, including one which stated "I say that because I'm covering my [explicative], just in case one of you evil [explicative] feel like punishing me again by calling the police or showing them my numerous 'so called hate' emails."

After placing Wills on administrative leave and conducting an investigation, including an investigation of Wills' complaints that she was harassed, the Orange County Superior Court terminated Wills' employment for violating various policies, including a policy forbidding workplace violence or making threats of workplace violence.

The trial court granted summary judgment in favor of the Orange County Superior Court and against Wills on all of her claims that the Orange County Superior Court discriminated against her on account of her disability (bipolar disorder) and violated the FEHA in various ways when it terminated her employment on two grounds: (1) Wills failed to exhaust her administrative remedies by first submitting to the Department of Fair Employment and Housing a complaint identifying the alleged conduct that later formed the basis for her lawsuit, and (2) the Orange County Superior Court met its burden of showing a non-pretextual, non-discriminatory reason for terminating Wills' employment. 

 On appeal, in a narrowly drawn decision distinguishing between misconduct involving violence or threats of violence from other types of misconduct, in Wills v. Superior Court of Orange County the Court of Appeal held on the facts of the case before it that "Wills's disability discrimination claim fails because an employer may reasonably distinguish between disability caused misconduct and the disability itself when the misconduct includes threats or violence against coworkers." In so holding the Court of Appeal expressly rejected Wills' contention that the FEHA "prohibits an employer from terminating or disciplining an employee for workplace misconduct caused by a  disability in the same manner as it prevents an employer from discriminating against an employee for having a disability."  

On appeal, the Court of Appeal held, also, that all but one of Wills' claims failed for the additional reason she did not identify in the complaint she submitted to the DFEH before filing suit the alleged discrimination and marked the box stating she was denied family/medical leave, which is not what she later sued for. 

As welcome as this decision is, employers should remain mindful of what the Court of Appeal did not decide. While the Court clearly holds misconduct in the form of violence or threats of violence can be the subject of discipline without violating the FEHA, the Court of Appeal did not reach the question of what other types of misconduct would be subject to a similar rule.  Employers should therefore exercise caution when deciding whether to terminate or discipline employees for other types of misconduct when the misconduct is the result of a disability or a medical condition. 

Governor Brown Signs AB 36, Which Conforms California Law to Federal Law To Allow Tax Deductions For Employers Providing Health Care Coverage To Dependents Under Age 27

By Christopher S. Andre and Scott K. Dauscher

Yesterday, Governor Edmund G. Brown, Jr., signed Assembly Bill 36, which conforms California law to federal law to allow tax exclusions or deductions for employers that provide health care coverage to employee dependents who are under age 27.  The Legislative Counsel's Digest states:

AB 36, Perea. Income and employment taxes: federal conformity: Health Care and Education Reconciliation Act of 2010. The Personal Income Tax Law and the Corporation Tax Law, in specified conformity with federal income tax laws, provide certain gross income exclusions, as specified. This bill would, under both laws, provide additional conformity with federal income tax laws by adopting specified provisions of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 relating to gross income exclusions for reimbursements for medical care expenses under specified plans for dependents, as specified. Existing law excludes from the definition of "wages," for purposes of the unemployment insurance law, remuneration in excess of $7,000 paid to an individual by an employer during any calendar year, with respect to employment. That law also excludes from the definition of "wages" the amount paid by an employer for insurance or annuities, or into a fund to provide for any payment made to or on behalf of an employee or any of his or her dependents under a plan or system, as specified, on account of sickness or accident disability, medical or hospitalization expenses in connection with sickness or accident disability, or death. This bill would, under the unemployment insurance law, provide additional conformity with federal law by adopting specified provisions of the Health Care and Education Reconciliation Act of 2010 relating to an exclusion from wages for amounts expended for medical care. This bill would take effect immediately as a tax levy. 

Click here to download and read the text of this new law.

We recommend employers that provide such health care benefits or that are considering providing such health care benefits consult with competent tax professions to determine how to best take advantage of this new law that takes effect immediately.

Employer Tip: Be Sure To Comply With California's Sexual Harassment Avoidance Training Requirements

By Mathew S. D'Abusco

The State of California requires employers with 50 or more employees to provide their supervisors a minimum of two hours of sexual harassment prevention training every two years.  Mandated sexual harassment training must address, among other key topics, California and Federal statutes and cases prohibiting sexual harassment, the types of conduct typically found to constitute sexual harassment, information about the complaint process, investigation techniques, policy implementation, strategies to prevent sexual harassment in the workplace, as well as a discussion about liability and potential remedies available to a complainant.  To be sufficient, training must include questions, hypotheticals, and skill-building activities to ensure supervisors gain an understanding of their legal obligations.  Covered employers must also document and maintain records of sexual harassment training provided to supervisors for each two year cycle.

Sexual harassment training is not only required by law, it is critical for California employers.  Effective sexual harassment training can help supervisors identify and prevent sexual harassment before it becomes a serious issue or civil lawsuit and, most importantly, can help employers limit liability in the workplace.  For those reasons, all employers, not just those with 50 or more employees, should conduct regular sexual harassment training consistent with the law.

AALRR provides comprehensive sexual harassment prevention training to employers throughout the State of California.  Depending on circumstance and need, AALRR offers personalized, on-site group training and also conducts monthly trainings at our Cerritos office on the second Thursday of each month.  All trainings include two (2) hours of instruction, detailed materials, certificates of completions, and company verification and policy acknowledgement forms.  For more information please contact Jane Guesnon at jguesnon@aalrr.com.