NLRB Finds Employer Acted Unlawfully When It Terminated Employees Who Disparaged Employer During Newscast

By Thomas A. Lenz, Jonathan Judge, and Christopher S. Andre

As we previously reported here and here, in May, the National Labor Relations Board filed complaints against at least two employers alleging the employers violated the National Labor Relations Act ("NLRA") by disciplining employees on account of disparaging statements the employees posted on Facebook statements criticizing their employers.   In one of those cases, the employer terminated an employee for posting on his Facebook page photographs and comments criticizing the dealership for serving only hot dogs and water to customers at a dealership sales event promoting a new model.  Salespersons complained that serving only hot dogs and water could negatively impact their sales commissions. The NLRB alleges in both both of the cases that the employees statements posted on Facebook are protected concerted activity within the meaning of Section 7 of the NLRA because the statements involved a discussion among employees about their terms and conditions of their employment.

Consistent with the enforcement policy it adopted in the two cases the NLRB brought in May involving Facebook postings, on July 21, in MasTec Advanced Technologies, a division of Mas-Tech, Inc. and Joseph Guest and Direct TV, Inc. and Joseph Guest, Cases 12-CA-24979 and 12-CA-25055, the NLRB ruled that MasTec violated the NLRA when it terminated employees who appeared on a television newscast wearing their uniforms and made disparaging statements about MasTec.  The NLRB ruled that employees who make disparaging statements about their employer are engaging in protected activity when the statements are related to a work-dispute and the statements are not disloyal, reckless or maliciously untrue.

   

According to the NLRB's decision: MasTec installs and maintains satellite television equipment for DirecTV.  MasTec service technicians were encouraged to persuade customers to permit the DirectTV satellite receivers to be connected to the customers' telephone line, which provides customers additional features and provides DirectTV with a record of what customers are viewing, which assists DirecTV in making programming decisions.  Many customers resist having the connection completed for various reasons. 

 

In 2006, DirecTV reportedly informed MasTec that MasTec would be penalized if MasTec did not  increase the percentage of telephone line connections.  In turn, MasTec reportedly informed its service technicians they would be back-charged $5 for every non-phone-line-connected receiver installed if they failed to achieve a telephone line connection rate of at least 50 percent.  The service technicians voiced opposition to the new policy at several employee meetings.  MasTec supervisors reportedly suggested ways around customers’ reluctance to agree to connected receivers, with one manager reportedly telling them to do “whatever you have to tell them” and “whatever it takes” to make the connection. 

 

After a number of service technicians were reportedly back charged in accordance with the new policy, one of the service technicians contacted a local television station, and a group of service technicians drove from the MasTec facility to the television station in their company vans.  A reporter met with the workers and interviewed them on film as a group.  The station broadcast a story concerning the technicians, in which the technicians recounted MasTec’s new policy and what their supervisors reportedly told them to tell customers to persuade customers to connect their DirectTV receivers to their telephone lines, insinuating they were asked to lie to customers.

 

After the story aired, MasTec terminated the employees who appeared on the broadcast.  The employees filed an unfair labor practice charge with the NLRB.  After the NLRB investigated the charge, the case went to hearing, and an administrative law judge ruled in favor of MasTec, finding MasTech did not violate the NLRA when it terminated the employees.  The employees appealed the decision to the NLRB Panel in Washington, D.C.

The NLRB Panel began its analysis by citing Section 7 of the Act, which provides, in part, that employees “shall have the right … to engage in … concerted activities for the purpose of … mutual aid or protection.”  The NLRB Panel noted that under Section 7, “employee communications to third parties in an effort to obtain their support are protected where the communication indicated it is related to an ongoing dispute between the employees and the employers and the communication is not so disloyal, reckless or maliciously untrue as to lose the Act’s protection.”  Based on this standard, the NLRB Panel stated that it has held that the mere fact that statements are false, misleading or inaccurate is insufficient to demonstrate that they are maliciously untrue.  Under this standard the NLRB Panel found that none of the technicians’ statements made during the newscast were maliciously untrue.  The NLRB also found that the statements were not disloyal or reckless, reasoning, “[w]hile the technicians may have been aware that some consumers might cancel [DirecTV’s] services after listening to the newscast, there is no evidence that they intended to inflict such harm on [DirecTV], or that they acted recklessly without regard for the financial consequences to [DirectTV’s] businesses.”

These recent actions by the NLRB provide two important takeaways for employers: 

First, the NLRA's reach is not confined to unionized workplaces.  When communications by non-unionized employees are related to a work dispute, the communications may still qualify as protected activity under the NLRA even if the communications are false, misleading, inaccurate, or highly objectionable to management.

Second, these recent actions may signal a more aggressive enforcement posture by the NLRB, particularly given the rise of various forms of social media, such as Facebook and Twitter.

As we previously observed, employers should be aware that both the NLRA and the California Labor Code generally prohibit discipline of or discrimination against employees for disclosing to others the amount of their wages or information about the employees' working conditions.  In light of those prohibitions and in light of the recent enforcement activity by the NLRB, employers should consult with experienced employment and labor law counsel when considering discipline of employees on  account of  communications related to or potentially related to employees' wages, hours, and/or working conditions.

Governor Brown's Nomination Of Goodwin Liu May Bring The California Supreme Court One Step Closer To Deciding The Long Pending Brinker Meal Period Decision

By Christopher S. Andre and Scott K. Dauscher

As we previously reported here, the California Court of Appeals decided in Brinker Restaurant Corporation v. Superior Court that an employer's obligation to "provide" to non-exempt employees meal periods required by the Labor Code and the applicable Industrial Welfare Commission Wage Orders is to make those meal periods available and not to ensure that employees take the meal periods provided to them.  

On October 22, 2008, the California Supreme Court granted review of the Court of Appeal's decision in Brinker to decide "the proper interpretation of California's statutes and regulations governing an employer's duty to provide meal and rest breaks to hourly workers."  Over two years later, the case still has not been scheduled for oral argument, and it remains to be seen when the California Supreme Court will decide the case.  Since that time, the California Supreme Court has granted review thereby rendering unciteable six Court of Appeal decisions holding as in Brinker that an employer's obligation to "provide" meal periods to non-exempt employees is to make the required meal periods available and not to ensure that non-exempt employees take the meal periods provided to them: Brinkley v. Public Storage, Faulkinbury v. Boyd & Associates, Brooker v. Radioshack Corporation, Hermandez v. Chipotle Mexican Grill, Tien v. Tenet Healthcare, and, most recently, Lamps Plus Overtime Cases.

During a recent interview reported by the Daily Journal, the recently appointed Chief Justice of the California Supreme Court, Tani Cantil-Sakauye, "declined to say when the court would hear argument, which is the only way to tell that a decision is forthcoming."  The Daily Journal reported further that some commentators believe Justice Cantil-Sakauye will not schedule Brinker for oral argument until after Governor Jerry Brown appoints replacement for Justice Carlos R. Moreno, who stepped down to take a position in private practice in order to ensure that the deciding vote in Brinker is not made by a temporary justice.  

Yesterday, Governor Brown may have brought the court one step closer to deciding the long pending Brinker meal period decision by nominating UC Berkeley law professor Goodwin Liu to fill the seat vacated by former Justice Moreno.  Although Mr. Liu's nomination to the United States Ninth Circuit Court of Appeals by President Barrack Obama was effectively blocked by Senate Republicans who criticized Mr. Liu on various grounds, it is generally expected that his nomination to the California Supreme Court will be swiftly confirmed by the California Commission on Judicial Appointments, consisting of three members:  California Supreme Court Presiding Justice Tani Cantil-Sakauye (appointed by former Governor Arnold Schwarzenegger), California Attorney General Kamala Harris (a Democrat elected in 2010 after serving as the District Attorney for the City and County of San Francisco), and Senior Presiding Justice of the California Court of Appeal  Joan Dempsey Klein (appointed by Governor Brown during his first term as Governor of California).

Although it remains difficult to predict when the California Supreme Court will decide Brinker and difficult to predict how the California Supreme Court will rule on the case, we think Governor Brown's appointment of Mr. Liu increases the likelihood the Supreme Court will decide the case adversely to California employers.

California Supreme Court Gives No Clues About When It Will Decide The Long Pending Brinker Meal Period Case

By Christopher S. Andre and Scott K. Dauscher

As we previously reported here, the California Court of Appeals decided in Brinker Restaurant Corporation v. Superior Court that an employer's obligation to "provide" to non-exempt employees meal periods required by the Labor Code and the applicable Industrial Welfare Commission Wage Orders is to make those meal periods available and not to ensure that employees take the meal periods provided to them.  

On October 22, 2008, the California Supreme Court granted review of the Court of Appeal's decision in Brinker to decide "the proper interpretation of California's statutes and regulations governing an employer's duty to provide meal and rest breaks to hourly workers."  Over two years later, the case still has not been scheduled for oral argument, and it remains to be seen when the California Supreme Court will decide the case.

During a recent interview reported by the Daily Journal, the recently appointed Chief Justice of the California Supreme Court, Tani Cantil-Sakauye, "declined to say when the court would hear argument, which is the only way to tell that a decision is forthcoming."  The Daily Journal reports further that some commentators believe Justice Cantil-Sakauye will not schedule Brinker for oral argument until after Governor Jerry Brown appoints replacement for Judice Carlos R. Moreno, who stepped down to take a position in private practice in order to ensure that the deciding vote in Brinker is not made by a temporary justice. 

Currently, the court appears to be more focused on a pending Proposition 8 case in which the court is called upon to decide whether proponents of the Proposition 8 same-sex marriage ban have standing to defend that ballot initiative in federal court.  When asked about that case, Justice Cantil-Sakauye reiterated her decision to conduct oral argument of that case in early September, stating, '"It needs to get going.  It needs to move forward.'"

Meanwhile, as we previously reported here, also, the California Supreme Court has repeatedly granted review of subsequent Court of Appeal decisions holding as in Brinker that an employer's obligation to "provide" meal periods to non-exempt employees is to make the required meal periods available and not to ensure that non-exempt employees take the meal periods provided to them: Brinkley v. Public Storage, Faulkinbury v. Boyd & Associates, Brooker v. Radioshack Corporation, Hermandez v. Chipotle Mexican Grill, and, most recently, on May 18, 2011, Tien v. Tenet Healthcare.  As a result, those favorable decisions can no longer be cited to and are no longer binding precedent, and employers' obligations regarding meal periods for non-exempt employees remain uncertain as it is difficult to predict how the California Supreme Court will decide the issue.

Court Of Appeal Decision Gives Employers Basis For Resisting Fishing Expeditions Seeking Records Of Non-Party Current And Former Employees

By Christopher S. Andre and Scott K. Dauscher

Employment litigation often gives rise to discovery demands by the plaintiff(s) seeking information about the employer's other current and former employees who are not parties to the litigation and, often, employment records of such non-party employees.  This occurs in both class action cases and in non-class action cases. In many cases, such discovery demands are little more than thinly disguised fishing expeditions at the employer's expense.  Although existing case law recognizes the privacy rights of non-party current and former employees and generally requires courts to balance those privacy rights against the legitimate discovery needs of plaintiffs in employment cases and to employ certain safeguards, those laws are not always consistently applied by trial courts.

Yesterday, in Life Technologies Corporation v. Superior Court, the California Court of Appeal issued a decision reversing a trial court order requiring the defendant employer to provide to the plaintiff alleging he was discriminated against because of his age detailed information about the employer's current and former employees and set forth steps trial courts must take to protect the privacy rights of current and former employees who are not parties to the lawsuit.  

In the decision, the Court of Appeal first recognized and reiterated current and former employees have a recognizable privacy interest in their personal contact information and, to an even greater degree, in their employment records.  Although in some circumstances a plaintiff's legitimate need to obtain certain information will outweigh the recognized rights to privacy, "the balance will favor privacy for confidential information in third party personnel files unless the litigant can show a compelling need for the particular documents and that the information cannot reasonably be obtained through depositions or from nonconfidential sources."  Emphasis in original.  Further, "Even when the balance does weigh in favor of disclosure, the scope of disclosure must be narrowly circumscribed."  Emphasis in original.

The court went on to articulate the steps trial courts must take to determine whether information about non-party current and former employees must be disclosed or not and, if so, what safe guards should be used.

Trial courts must first balance the privacy rights of non-party current and former employees against, again, the legitimate discovery needs of the plaintiff(s).  Each separate category of documents or information sought must be separately analyzed.  For example, with respect to personal contact information of current and former employees, the court noted that such information is not always discoverable, particularly when the party seeking that information does not show that the persons whose personal contact information is being sought are percipient witnesses to relevant events.  

When a trial court determines that information about non-party current or former employees is discoverable, the trial court must then provide such non-parties the opportunity to object to the disclosure of documents or information before the documents or information is released.  The Court of Appeal explained that such safeguards exist when such documents and information is sought by way of a subpoena and states: "We do not believe a nonparty employee/former employee should be deprived of such protections simply because the discovery vehicle used is a set of special interrogatories, rather than a subpoena. . . ."

When a trial court determines that information about non-party current or former employees is discoverable, the trial court must also take steps "for maintaining the confidentiality of any disclosed information, by sealing it and/or limiting its use and dissemination."  

We are pleased by today's decision.  We think it likely provides employers a much needed basis for resisting the sort of fishing expeditions that have become all too common in employment litigation in California. 

Court Of Appeal Holds Employer-Employee Arbitration Agreement Is Unconscionable And Therefore Unenforceable

By Christopher S. Andre and Scott K. Dauscher

In Zullo v. Superior Court, the California Court of Appeal once again struck down an employer-employee arbitration agreement based on the court's conclusion that the arbitration agreement was both procedurally and substantively unconscionable and therefore unenforceable.  The decision serves as a reminder to employers that arbitration provisions considered to be overly one-sided in favor of the employer are likely to be struck down by California courts.

The arbitration agreement at issue contained terms providing: (1) that employment related claims by employees must be resolved by binding arbitration (excepting only certain claims) but permitted the employer to bring claims against employees in court,  (2) that claims by employees would be arbitrated according to American Arbitration Association Employment Dispute Resolution rules, which were apparently not provided to employees, (3) that employees must request arbitration within one year of the date a dispute occurred or the claim(s) are waived, and (4) that employees must respond within ten calendar days to communications regarding selection of an arbitrator and scheduling the arbitration hearing or the claim(s) are waived.

Relying heavily on the California Supreme Court's decision in Armendariz v. Foundation Health Psyschcare Services, Inc. (2000) 24 Cal.4th 83, the Court of Appeal held the arbitration agreement at issue is both procedurally and substantively unconscionable.  In that case, the California Supreme Court held, among other things, that the agreements at issue impermissibly required employees to submit claims to arbitration while permitting the employer to bring suit in court and impermissibly limited the damages available to aggrieved employees.

Taking its guidance from the Supreme Court's decision and from subsequent decisions applying it, the court in Zullo concluded the arbitration agreement at issue "is a contract of adhesion, fails to give adequate notice of the arbitration rules that will apply, and allows [the employer] the full range of remedies and forums for resolution of whatever claims it might have against [its employees] while limiting [its employees] to binding arbitration of [their] claims against [the employer].  It also imposes strict time limits within which petitioner must respond to any arbitration-related communication without imposing similar requirements on [the employer]."

The court in Zullo held, also, that the arbitration agreement at issue was so "permeated by unconscionability" that the provisions of the arbitration agreement the court found unconscionable could not be stricken ,and the remainder of the agreement could not be enforced according to the remaining permissible terms.  The court states: "The illegality cannot be excised here.  Striking the forfeiture provision would not cure the other problem, which is that the agreement applies only to the [employee].  There is no single provision we can strike in order to remove that unconscionable taint."

Two AALRR Attorneys Named To The Daily Journal Annual List Of Leading California Labor And Employment Law Attorneys

The Daily Journal issued today its annual list of leading California Labor and Employment Law attorneys. We are pleased to report that two AALRR attorneys were recognized on this year's list, Nate J. Kowolski, a partner in the Firm's Employer Services Practice Group, and Howard A. Sagaser, also a partner in the Firm's Employer Services Practice Group.  Click here to read more. 

California Court of Appeal Holds Arbitration Agreements Waiving Right To Pursue California Labor Code Private Attorneys General Act Claims Are Unenforceable

By Christopher S. Andre and Scott K. Dauscher

Today, the California Court of Appeal held in Brown v. Ralph's Grocery Company that the decision of the trial court denying enforcement of a class action waiver contained in an arbitration agreement between Ralph's Grocery Company and its employees was not supported by substantial evidence but held, also, that a provision of that arbitration agreement barring employees from pursuing claims under the California Labor Code Private Attorneys General Act of 2004 ("PAGA") is unenforceable because, according to that court, the recent decision of  Supreme Court of the United States in AT&T Mobility v. Concepcion, previously discussed here, does not apply to representative actions brought under PAGA.  Further, the Court of Appeal remanded the case back to the trial court for a determination of whether the arbitration agreement is enforceable except for the PAGA waiver or is unenforceable in its entirety because of the PAGA waiver.  

Notably, one member of the three justice panel that decided the case dissented from that part of the decision holding that that waiver of the right to file a representative action under PAGA is unenforceable and expressed the view that "[t]he preemptive effect of the Federal Arbitration Act (FAA) requires enforcement of the PAGA waiver in the employment arbitration agreement [at issue in the case] under the holding of AT&T v. Concepcion."  That dissenting opinion suggests reasons why a higher court might later disagree with the Court of Appeal and hold that PAGA waivers are enforceable under the FAA despite contrary state law.

Today's decision if left undisturbed by higher courts is a significant setback for California employers.  Plaintiffs bringing class action wage and hour lawsuits now routinely include allegations that their claims fall under PAGA, which provides for awards of very sizable penalties for violations of many provisions of the California Labor Code 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.  Further, as we previously reported here and here, California courts hold that PAGA penalties apply, also, to violations of Industrial Welfare Commission Wage Orders.  

Given the significance of the issues involved in today's decision, we anticipate further developments, regarding those issues, which we will report on here.  

In the meantime, in light of today's decision, we think employers that have in place or are considering implementing arbitration agreements containing PAGA waivers should promptly consult competent employment law counsel.

Court Of Appeal Affirms Denial Of Class Certification In Wage And Hour Case Brought By Accountants

By Ronald W. Novotny 

In another of several recent decisions in class action cases issued by California appellate courts, the Second District Court of Appeal last week upheld the denial of class certification in a case brought on behalf of accountants for unpaid overtime. (Soderstedt v. CBIZ, July 7, 2011).  The court found that because the responsibilities of each of the alleged class members differed with their levels of experience, the particular engagements they worked on, the clients and clients’ industries, and the other accountants they worked with, common questions of law and fact did not predominate and the proposed class could not be certified.

The plaintiffs who brought the suit were employed by an accounting and financial services firm that provided tax, attest, and litigation support in the greater Southern California area.   The firm maintained an office with 55 accountants in Los Angeles who mainly performed audits for public companies, a Bakersfield office of 43 accountants who served a diverse client base including non-profits and government clients, and an Oxnard office of 21 accountants who mainly performed services for construction industry clients.  The firm submitted 38 declarations establishing that each assignment was different and required the accountants to utilize their accounting knowledge and judgment in performing the services required for the engagement.    Evidence was also submitted demonstrating how the level of client contact differed based on the accountants’ ability and experience, and establishing that their level of supervision normally decreased with each further engagement.

The firm relied upon the administrative exemption to justify the non-payment of overtime, based on the assertion that they performed “under only general supervision work along specialized or technical lines requiring special training, experience, or knowledge.”  The appeals court stated that if the issues presented by this defense predominated over common issues, class certification could be defeated on this basis. Finding that the evidence presented on the motion for class certification showed a wide degree of variance in the amount of independent judgment and discretion exercised by the accountants on any given assignment, the court held that class treatment was not appropriate because of the individualized inquiries that would be required to determine if the exemption applied on a case-by-case basis.

Although not essential to its decision, the court also found that class certification was properly denied because the plaintiffs had submitted absolutely no evidence as to how numerous the class was or how they qualified as adequate class representatives.  As to the latter point, the court noted that there was no statement by the plaintiffs that they understood the obligations of being a class representative, or any recognition of the “substantial burden that they would be undertaking” to represent absent class members.  These findings will also likely prove helpful to employers in defending future class certification motions in wage and hour cases.

AALRR Named To The National Law Journal 2011 Midsize Hot List

By Christopher S. Andre and Scott K. Dauscher

The National Law Journal announced today it named Atkinson, Andelson, Loya, Ruud & Romo to The National Law Journal's 2011 Midsize Hot List.  The National Law Journal reports it "settled on 20 firms that demonstrated excellence in the courtroom or boardroom; that spotted a niche that eluded their competitors or that excelled on many fronts . . . firms that clearly stand apart from your everyday law firm."

Proposed Department Of Labor And National Labor Relations Board Rule Changes Will Likely Energize Labor Unions

By Thomas A. Lenz

This week proposed changes in the rules affecting labor relations have come from two federal agencies.

The Department of Labor (DOL) has, for many years, enforced the Labor Management Reporting and Disclosure Act.  That law requires reporting by unions on their financial health and business transactions.  It also requires reporting by employers and management consultants on arrangements by which management communicates to employees on labor relations issues.  The management obligations have not extended to attorney-client relationships or otherwise invaded attorney-client privilege.  The proposed regulations would expand the reporting obligations to include arrangements that employers enter into for direct or indirect communication with employees about labor issues.  The DOL will receive comments on the proposed regulations in the weeks ahead.  The debate is likely to be quite intense, particularly as questions arise on the scope of the reporting obligation and the potential invasion of attorney-client privilege.

A prior effort to expand management reporting obligations was attempted during the Clinton Administration, but it failed.  An expanded reporting obligation for management has long been a goal of the current Administration.

The day after DOL announced its proposals, the National Labor Relations Board (NLRB) announced that it would pursue changes to its representation election process.  NLRB has typically held workplace elections, for employees to decide on union representation, within 42 days of the filing of an election petition.  The 42 days period became the norm during the Clinton Administration, shortening the period that had previously existed.  There has been much speculation over what the NLRB's changes would mean for the election process.  Basic points include that the pre-election period would be shorter than 42 days and that the Labor Board would try to eliminate pre-election hearings and litigation over voter eligibility, saving such issues for a post-election review phase.  Much remains to be clarified.  The Labor Board will be receiving public comments in the weeks ahead.  Debate is already quite intense on these issues. 

Since proposed legislation to stimulate union organizing in the Employee Free Choice Act failed during the 2008-2009 period, the Labor Board's internal regulatory process has gained attention from advocates of labor law reform as the next best vehicle to promote organizing and to restore labor's reliance on the NLRB and its processes.

Debate, developments, and media attention are likely to follow through the summer.  Employers should, at minimum, stay tuned and, consider whether it is in their interest to make public comment on these issues before new rules take effect.

U.S. Supreme Court Reverses Ninth Circuit Court of Appeals And Holds Lower Court's Certification Of Class Of Approximately 1.6 Million Women Employees In Alleged Discrimination Case Was Error

By Christopher S. Andre and Scott K. Dauscher

As we previously reported here, on April 26, 2010, in Dukes v. Wal-Mart Stores, Inc., a divided Ninth Circuit Court of Appeals decided 6-5 en banc to affirm the decision of the trial court to grant class certification in a discrimination lawsuit alleging Wal-Mart Stores discriminates against its women employees. The nationwide class is reputed by the Los Angeles Daily Journal to number upward of 1.6 million women employees, which would make the class the largest class in United States history.

In 2001, the Impact Fund, a Berkley, California based organization many plaintiff's attorneys donate money to, filed on behalf of Betty Dukes and other current or former employees of Wal-Mart a lawsuit alleging Wal-Mart discriminates against its women employees regarding promotions and pay practices in violation of Title VII of the Civil Rights Act of 1964. The trial court later certified a class consisting of "all women employed by Wal-Mart at any time after December 26, 1998."

On Appeal, the Ninth Circuit Court of Appeals affirmed the trial court's grant of class certification but remanded to the trial court for further consideration the issue of whether to certify for class treatment the plaintiffs' claims for punitive damages and the issue of whether to certify an additional class or classes consisting of women who were no longer employed by Wal-Mart when the lawsuit was filed.

As we previously reported here, on December 23, 2010, only 17 days after it granted Wal-Mart's petition for review on December 6, 2010, the Supreme Court set the case for oral argument on March 29, 2011.

Today, the Supreme Court of the United States reversed the decision of the Ninth Circuit Court of Appeals and held, among other things, the trial court decision to certify a class was error because common issues of law and fact do not predominate.  Click here to download and read a copy of the decision, which we are analyzing and will comment about further soon.  In the meantime, suffice it to say today's decision is a  terrific decision for employers nationwide.

Appellate Court Afirms $187 Million Verdict Against Wal-Mart In Meal And Rest Period Case

By Christopher S. Andre and Scott K. Dauscher

MSNBC reports today that a Pennsylvania appellate court affirmed a $187.6 Million verdict against Wal-Mart Stores, Inc., in a class action lawsuit for allegedly denying hourly employees meal and rest breaks.  Although the appellate court affirmed the damages verdict, it did order the trial court to recalculate the $45.6 Million award of attorneys fees to the employees' attorneys, indicating the trial court erred by "double-counting" some factors when calculating the attorney's fees award. Click here to read the story. 

Meal and rest period cases continue to be a significant source of potential exposure for employers large and small.  Employers concerned about such potential exposure should consider consulting experienced employment law counsel about strategies for reducing potential meal and rest period liability.  Among other things, having in place appropriate written meal and rest period policies and documenting the company's adherence to those policies is often the best defense to meal and rest period claims. 

NLRB Issues A Complaint Against Another Employer Over Employee Facebook Postings

By Christopher S. Andre and Thomas A. Lenz

As we previously reported here, the National Labor Relations Board (NLRB)  issued on May 18, 2011, a press release announcing the NLRB issued a complaint against a non-profit employer for allegedly violating the National Labor Relations Act (NLRA) by terminating five employees who posted on a co-worker's Facebook page comments critical of their working conditions.  According to the NLRB's press release, "The complaint alleges that the Facebook discussion was protected concerted activity within the meaning of Section 7 of the National Labor Relations Act, because it involved a conversation among coworkers about their terms and conditions of employment, including their job performance and staffing levels."  Click here to download and read the press release.  

Today, the NLRB issued another press release stating it issued a complaint against a Chicago car dealership alleging the dealership violated Section 7 of the National Labor Relations Act when it terminated an employee for posting on his Facebook page photographs and comments criticizing the dealership for serving only hot dogs and water to customers at a dealership sales event promoting a new model.  Salespersons complained that serving only hot dogs and water could negatively impact their sales commissions.  According to the NLRB's press release, "[t]he complaint alleges that the employee’s Facebook posting was protected concerted activity within the meaning of Section 7 of the National Labor Relations Act, because it involved a discussion among employees about their terms and conditions of employment, and did not lose protection based on the nature of the comments."  Click here to download and read the press release.

Employers should be aware that both the NLRA and the California Labor Code generally prohibit discipline of or discrimination against employees for disclosing to others the amount of their wages or information about the employees' working conditions.  In light of those prohibitions and in light of the recent enforcement activity by the NLRB over employee Facebook postings, employers should consult with experienced employment and labor law counsel when considering discipline of employees for postings on social media websites, such as Facebook.

California Supreme Court Grants Review Of Another Meal Period Decision Favorable To Employers

By Christopher S. Andre and Scott K. Dauscher

As many of our readers know, the California Court of Appeals decided in Brinker Restaurant Corporation v. Superior Court that an employer's obligation to "provide" to non-exempt employees meal periods required by the Labor Code and the applicable Industrial Welfare Commission Wage Orders is to make those meal periods available and not to ensure that employees take the meal periods provided to them.  

On October 22, 2008, the California Supreme Court granted review of the Court of Appeal's decision in Brinker to decide "the proper interpretation of California's statutes and regulations governing an employer's duty to provide meal and rest breaks to hourly workers."  Over two years later, the case still has not been scheduled for oral argument, and it remains to be seen when the California Supreme Court will decide the case.

Meanwhile, the California Supreme Court has repeatedly granted review of subsequent Court of Appeal decisions holding as in Brinker that an employer's obligation to "provide" meal periods to non-exempt employees is to make the required meal periods available and not to ensure that non-exempt employees take the meal periods provided to them: Brinkley v. Public Storage, Faulkinbury v. Boyd & Associates, Brooker v. Radioshack Corporation, Hermandez v. Chipotle Mexican Grill, and, most recently, on May 18, 2011, Tien v. Tenet Healthcare.  As a result, those favorable decisions can no longer be cited to and are no longer binding precedent, and employers' obligations regarding meal periods for non-exempt employees remain uncertain as it is difficult to predict how the California Supreme Court will decide the issue.  We will continue to monitor these issues and will report on further developments when they occur.

NLRB Issues Complaint Against Non-Profit Employer For Disciplining Employees For Facebook Posts Critical Of The Employees' Working Conditions

By Christopher S. Andre, Scott K. Dauscher and Thomas A. Lenz

The National Labor Relations Board (NLRB)  issued today a press release announcing the NLRB issued a complaint against a non-profit employer for allegedly violating the National Labor Relations Act (NLRA) by terminating five employees who posted on a co-worker's Facebook page comments critical of their working conditions.  According to the NLRB's press release, "The complaint alleges that the Facebook discussion was protected concerted activity within the meaning of Section 7 of the National Labor Relations Act, because it involved a conversation among coworkers about their terms and conditions of employment, including their job performance and staffing levels."  Click here to download and read the press release. 

Employers should be aware that both the NLRA and the California Labor Code generally prohibit discipline of or discrimination against employees for disclosing to others the amount of their wages or information about the employees' working conditions.

California Supreme Court Declines To Review Or Depublish Court of Appeal Decision Upholding Explicit Mutual Wage Agreement Doctrine Permitting Non-Exempt Employees To Be Paid A "Salary" If Certain Requirements Are Met

By Christopher S. Andre and Andres C. Hurwitz

As we previously reported here, on February 7, 2011, in Arechiga v. Dolores Press, Inc., the California Court of Appeal upheld California’s “explicit mutual wage agreement” doctrine.  “Under that doctrine,” said the court, “an employer and [non-exempt] employee may lawfully agree to a guaranteed fixed salary so long as the employer pays the employee for all overtime at least one and one-half times the employee’s basic rate” so long as the employer and the employee enter into an agreement specifying: (1) the days the employee will work each workweek, (2) the number of hours the employee will work each workday, (3) the specific amount of the salary the employee is guaranteed to be paid, (4) the employee is informed and agrees to the basic hourly rate of pay upon which the salary will be based, (5) the employee is informed and agrees the agreed-upon salary covers the employees straight-time hours and overtime hours, and (6) the agreement is reached before the work is performed. 

Last week, the California Supreme Court denied requests to review and to depublish the Court of Appeal's decision.  This means the Court of Appeal's decision stands and explicit mutual wage agreements meeting the six requirements stated above and otherwise complying with the court's holding in Arechiga v. Kores Press, Inc., remain lawful.  We recommend that employers wishing to maintain or adopt such mutual explicit wage agreements consult with experienced employment law counsel. 

Department of Labor Rolls Out Smart Phone Application That Enables Employees To Track Hours Worked And Submit Complaints

By Christopher S. Andre, Scott K. Dauscher, and Thomas A. Lenz

The United States Department of Labor ("DOL") recently announced the release of a free smart phone application available in English and Spanish that will enable employees to "independently track the hours they work and determine the wages they are owed."  According to the DOL, "users conveniently can track regular work hours, break time and any overtime hours for one or more employers."  The DOL goes on to state, "[t]his new technology is significant because, instead of relying on their employers’ records, workers now can keep their own records. This information could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records."  In addition, the application "includes easy-to-understand information about workers’ rights and how to file a wage violation complaint." Click here to learn more.  Click here to download the iPhone version of the application. 

Whether the DOL's new smart phone application will become widely used by employees remains to be seen.  However, the release of the application reflects what we believe is a more aggressive enforcement posture by the DOL and underscores the need for employers to keep accurate, contemporaneous records of hours worked by employees. 

California Supreme Court Declines To Review Helpful Court of Appeal Decision Regarding Penalties For Wage Statement Violations

By Scott K. Dauscher and Christopher S. Andre

As we previously reported here, in in Drake Price v. Starbucks Corporation,, the Court of Appeal held, among other things, that a plaintiff does not state a viable claim for Labor Code Section 226.7 penalties merely because a wage statement does not contain all of the required information. 

 Labor Code Section 226(a)  requires employers to provide to employees with their paychecks a wage statement (sometimes referred to as a check stub) accurately stating the following nine items of information:  (1) gross wages earned, (2) total hours worked by the employee (except exempt salaried employees), (3) the number of piece-rate units earned and any applicable piece-rate(s) if the employee is paid on a piece-rate basis, (4) all deductions, (5) net wages earned, (6) inclusive dates of the pay period, (7) the name of the employee and the last four digits of the employee's social security number or the employee's identification number other than the social security number, (8) the name and address of the legal entity that is the employer, and (9) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate.

When an employee suffers injury as a result of an employer's knowing and intentional failure to provide a compliant wage statement, the employee can recover the greater of either the employee's actual damages or $50.00 "for the initial pay period in which a violation occurs" and $100 "per employee for each violation in a subsequent pay period, not exceeding an aggregate penalty of four thousand dollars, and is entitled to an award of costs and reasonable attorney's fees."  See Labor Code section 226(e).

Drake Price, who was employed by Starbucks for a total of 13 shifts before he was fired after failing to report to work for a scheduled shift, alleged, among other things, that Starbucks was liable to him and to each member of the purported class for Labor Code section 226.1 damages because, according to Mr. Price, the wage statements Starbucks issued do not list total hours worked, net wages earned, and all applicable hourly rates."  Mr. Price contended "'total' means grand total, the sum of the regular and overtime rates."  Price contended Starbucks' use of the words "'amount paid' following gross pay and deductions does not comply with the requirement to show 'net wages.'"  Mr. Price contended, also, that the wage statements "lists the regular rate of pay, but fails to list the overtime rate of pay, requiring him to ensure that the overtime rate is one and one-half his regular rate of pay."  

Recognizing that a non-compliant wage statement is not actionable without injury, Mr. Price contended he was injured because, according to him, "[t]his lack of information 'caused confusion and possible underpayment of wages due,' required the putative class to file [suit], and forced the putative class to attempt to reconstruct their time and pay records."

Notably, the Court of Appeal distinguished a troublesome decision of the United States District Court for the Central District of California in Wang v. Chinese Daily News, Inc. (C.D. Cal. 2006) 435 F.Supp.2d 1042 essentially holding that injury occurs if the employee must perform mathematical calculations to determine whether he or she was paid correctly.  Distinguishing Wang v. Chinese Daily News, the court explained: "Price alleged a 'mathematical injury,' that required him to add up his overtime and regular hours and to ensure his overtime rate of pay is correct, but the allegedly missing information from Price's wage statement is not the type of mathematical injury that requires 'computations to analyze whether the wages paid in fact compensated [him] for all hours worked.'"  Simply put, "[t]he injury requirement in section 226, subdivision (e), cannot be satisfied simply if one of the nine itemized requirements in section 226, subdivision (a) is missing from a wage statement."

On May 12, 2011, the California Supreme Court denied the plaintiff's petition for review of the Court of Appeal's helpful decision.  This means the Court of Appeal's decision stands, and it means the District Court's troublesome decision in Wang v. Chinese Daily News now has even less persuasive value than it previously had.

Although the Court of Appeal's decision makes California employers less vulnerable to claims for Labor Code section 226.7 penalties based on essentially non-material violations of the requirements of Labor Code section 226.7, the best defense to claims for such penalties is to make certain wage statements are fully compliant with all of the requirements of Labor Code section 226.7. 

DFEH Clinic Partners With UC Irvine Law School To Combat Workplace Discrimination

By Thomas A. Lenz

In a memo dated May 3, 2011, it was announced that the Department of Fair Employment and Housing ("DFEH") would begin a new collaborative effort with the University of California at Irvine Law School to combat allegations of systemic discrimination.  DFEH and UC Irvine have established a clinic in which law students will assist DFEH agents on tasks which include evaluation, investigation, and prosecution of discrimination claims.  The clinic is prompted by a $6+ million class action settlement of discrimination claims against Verizon and can expand into other cases.  In this time of tightened public budgets and a difficult hiring market for new law graduates, we are likely to see additional efforts by public agencies and law schools to enhance training and future employment opportunities in government service.  Employers facing DFEH or other administrative claims arising in the workplace may well see heightened activity on their cases through this partnership and law students the DFEH describes as the "civil rights leaders of the future."

Landmark Supreme Court Decision Likely Permits Employers To Require Employees To Pursue Claims Individually And Not By Way Of Class Action Lawsuits

By Christopher S. Andre, and Scott K. Dauscher

As we previously reported here,  a report issued by the Judicial Council of California, Administrative Office of the Courts, Office of Court Research, shows that employment cases were the most frequently filed class actions, representing 29.3% of the class actions filed, and that over half of the employment cases filed alleged violations of Labor Code provisions governing payment of wages, rest and meal periods, and related claims.  This is consistent with our experience representing numerous employers against such class action lawsuits.

Many employers have attempted to require current and former employees to pursue claims individually and not by way of class action lawsuits by requiring employees to agree to arbitrate individually whatever claims they might have.  California courts repeatedly struck down such arbitration agreements in whole or in part by finding such agreements to be "unconscionable" or "contrary to public policy."  Those courts have declined to apply the Federal Arbitration Act ("FAA") to such arbitration agreements.  Among other things, the FAA states:  

A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. 

However, a recent decision by the Supreme Court of the United States has the real potential to change all that for many if not most California employers.  In AT&T Mobility LLC v. Vincent Concepcion, the Supreme Court  reversed a decision of the United States Court of Appeals for the Ninth Circuit holding (1) that an arbitration agreement between AT&T and its cell phone customers requiring customers to bring claims in their "'individual capacity, and not as a plaintiff or class member in any purported class or representative proceeding'" is unconscionable and therefore unenforceable because,"AT&T had not shown that . . . arbitration adequately substituted for the deterrent effect of class actions" and (2) that the basis for the finding of unconscionability "was not preempted by the [FAA]."  In other words, the Supreme Court rejected lower courts' analyses of the issue and held that arbitration agreements are generally enforceable according to their terms under the FAA, and neither California courts nor other courts can evade the FAA merely by declaring an arbitration agreement to be "unconcionable" in whole or in part.  The Court explained "the judicial hostility towards arbitration that prompted the FAA had manifested itself in 'a great variety' of devices and formulas' declaring arbitration against public policy."

Although the Supreme Court's landmark ruling concerned an arbitration provision of a consumer contract and not an arbitration agreement between and employer and an employee, we think the holding and the reasoning of the decision applies with equal or nearly equal force to arbitration agreements between employers and employees. In Southland Corp., v. Keating, the Supreme Court held the FAA applies to state courts and is intended to preempt state anti-arbitration laws to the contrary, and in Circuit City Stores, Inc., v. Saint Clair Adams, the Supreme Court held the FAA generally applies to employment contracts. 

Unfortunately, not all employers will be able to take advantage of this landmark decision.  The FAA expressly exempts from its reach "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce," which the Supreme Court held in Circuit City Stores, Inc., v. Saint Clair Adams applies to and is limited to "transportation workers, defined, for instance, as those workers 'actually engaged in the movement of goods in interstate commerce," such as truck drivers.  In other words, the FAA cannot be used as a basis for requiring such employees to arbitrate employment claims on an individual basis and not by way of a class action lawsuit.

Also, and predictably, there are already moves afoot to unwind legislatively the effect of Supreme Court's ruling..  The day the decision came down, United States Senators Al Franken (D-Minn.), (of  Saturday Night Live fame) and Richard Blumenthal (D-Conn.), and Representative Hank Johnson (D-Ga.) announced they will introduce legislation called the "Arbitration Fairness Act," which would eliminate "forced arbitration clauses in employment, consumer, and civil rights cases. . . ."  Click here to see the press release.  Whether such moves will prove to be successful given the present constitution of the Congress and the present political and economic climate remain to be seen.  

In any event, based on this landmark ruling and its potential to effectively immunize many employers against class action lawsuits by current or former employees, we think employers should promptly consult competent employment law counsel about either revising existing employer-employee arbitration agreements to require arbitration of employment claims on an individual basis and not on a class basis or about requesting or requiring employees to now enter into such arbitration agreements.

We are continuing to study this important decision and what other impact it might have on California employers and will likely post further commentary.

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.

Employers Can Be Held Liable For Violating Uniformed Services and Reemployment Rights Act of 1994 Based On Discriminatory Animus of Non-Decision Making Supervisors

By Andres C. Hurwitz and Christopher S. Andre

In Staub v. Proctor Hospital. the Supreme Court of the United States affirmed a lower court's application of what is known as the "cat's paw" theory of liability whereby an employer can be held liable for discrimination in violation of the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA") when an otherwise non-discriminatory adverse employment decision made by a decision maker is influenced by discriminatory animus toward military service on the part of a non-decision making suprvisor of the employee in question

Vincent Staub worked as a hospital technician, and was a member of the United States Army Reserves. Staub’s military service required him to attend military training a few days each month, and two weeks per year, and he was required to be prepared to be called to active duty. Two of Staub’s supervisors were overtly unsympathetic to his military commitments and,displayed hostility towards it. After Staub failed to comply with a requirement that he be at a certain location at a specific point in time, his supervisors reported this to the Vice-President of HR, who made the decision to terminate Staub. The Vice-President’s decision was unrelated to Staub’s military service but had been prompted by the supervisors who were found to be hostile to Staub's military service

Staub brought an action pursuant USERRA which prohibits discrimination against employees who serve in the military. Staub prevailed at trial, establishing that the discriminatory animus of the supervisors influenced the decision maker, who was herself not acting in a discriminatory manner. The Seventh Circuit Court of Appeals reversed the verdict based upon what it determined to be improper consideration of discrimination by the non-decision-making supervisors, neither of whom were the decision maker.

The Supreme Court disagreed with the Seventh Circuit, holding that “if a supervisor performs an act motivated by antimilitary animus that is intended by the supervisor to cause an adverse employment action,[] and if that act is a proximate cause of the ultimate employment action, then the employer is liable under USERRA.” As the Court noted, “it is axiomatic under tort law that the exercise of judgment by the decisionmaker does not prevent the earlier agent’s action (and hence the earlier agent’s discriminatory animus) from being the proximate cause of the harm.” The supervisor’s biased reports had been taken into account by the Vice-President, which was sufficient to establish liability. “An employer’s authority to reward, punish, or dismiss…” the Court pointed out, “is often allocated among multiple agents.” The Supreme Court sent the matter back to the District Court to either reinstate the verdict or to proceed with a new trial consistent with its opinion.

While lawsuits alleging discrimination against employees on account of military service in violation of USERRA have not yet become as commonplace in our experience as other types of discrimination claims, we think such lawsuits will be filed more frequently as more plaintiff's attorneys learn about the USERRA. Employers with employees who serve in the military reserves in particular should consider training supervisors at all levels to be mindful of the employer's obligations under USERRA.  Such training could be incorporated into other types of discrimination and harassment training.