GPH Lawyers

One Worker, Two Related Employers

2009-05-10T07:34:00.000-07:00

Allegations in a recent lawsuit against several McDonald's franchisees in Monterey County raise an issue about application of the wage and hour laws to employees who work for more than one employer. The complaint filed on behalf of several hundred employees alleges that the franchisees used a "dual-shift" practice whereby a worker would be paid by two employers for the same pay period in an attempt to avoid paying overtime. Garcia v. Forza Management LLC, Case No. GNM 98240 (Monterey County Superior Court Apr. 13, 2009). While we do not know what the evidence in the case will show, we can examine the legal principles used to decide such cases.

The applicable U.S. Department of Labor regulation is found at 29 CFR section 791.2. The California Labor Commissioner does not have a formal regulation, but the Division of Labor Standards Enforcement Enforcement Policies and Interpretations Manual appears to follow federal principles. Under those principles, there are three possible scenarios:

1. If two or more employers act entirely independently of each other, and are completely dissociated from each other, their wage and hour obligations to an individual whom they both employ are treated separately. Assume that Ginnie works an eight-hour shift at McDonald's, takes a nap for a couple of hours, and then works four hours selling hot dogs at Dodger Stadium. Although Ginnie worked 12 hours that day, she is not entitled to overtime pay from either employer.

2. If two or more employers act jointly with respect to an individual employed by both, they are jointly responsible for the total number of hours worked by both. Any overtime hours that the employee works must be apportioned among the employers based on the number of hours worked for each. Assume that ABC Petroleum employed Hector as a security guard eight hours a day. After a one hour break, Hector continued working as a security guard for another four hours, but transferred his attention to the facilities of XYZ Pipeline, which transported ABC's product from the oil fields to a shipping terminal. ABC and XYZ are not related and each issues its own paycheck to Hector, but XYZ relies on ABC to hire all security guards. Hector is entitled to four hours of overtime pay, with two-thirds paid by ABC, and one-third by XYZ. See Mid-Continent Pipe Line Co. v. Hargrave, 129 F.2d 655 (10th Cir. 1942).

3. If two or more employers are not completely disassociated with respect to the employment of a particular employee and may be deemed to share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer, the controlling employer is responsible for all hours worked. Assume that Sammy works eight hours for Janice in her oil fields, and then four hours at other oil fields as an employee of Janice Corp., of which Janice is the sole shareholder, board member and officer. All Janice's employees are also employees of Janice Corp. Sammy is entitled to four hours of overtime pay from Sammy. See Durkin v. Waldron, 130 F.Supp. 501 (D. La. 1955).

FLSA Applies To Retail Business on Indian Reservation

2009-04-27T11:53:00.000-07:00

The Ninth Circuit Court of Appeals has ruled that the overtime requirements of the Fair Labor Standards Act apply to employees of a retail store owned and operated on the Puyallup Indian Reservation by members of the tribe. The store owners had argued that their tribe's retained sovereignty barred overtime claims under the FLSA. Solis v. Matheson, Case No. 07-35633 (9th Cir. Apr. 20, 2009). The full text of the decision is available here.

The Ninth Circuit explained that Indians and their tribes are subject to federal statutes of general applicability, just like any other United States citizen. There are exceptions if (1) the law touches exclusive rights of self-governance in purely intramural matters, or (2) if the application of the law would abrogate rights guaranteed by Indian treaties. An example of the first is Snyder v. Navajo Nation, 382 F.3d 892 (9th Cir. 2004), where the Ninth Circuit refused to apply the FLSA to tribal law enforcement officers, because law enforcement was a traditional governmental function. An example of the second is United States v. Smiskin, 487 F.3d 1260 (9th Cir. 2007), where a treaty that granted "the right, in common with citizens of the United States, to travel upon all public highways" barred prosecution for violation of the Contraband Cigarette Trafficking Act (which barred transportation of unstamped cigarettes).

The exceptions did not apply to the store owners. There was nothing sufficiently intramural about the employment of Indians and non-Indians by a retail business engaged in interstate commerce to invoke the first exemption. The tribe's right to occupy and exclude others under the treaty did not exempt the store owners from the FLSA because the tribe did not purport to regulate employment and there was no evidence that non-Indians had agreed to subject themselves to tribal jurisdiction.

By contrast, state laws are generally not applicable to operations on reservations. State law has no effect on the reservation unless the tribe has waived its sovereignty, or Congress has authorized an exercise of jurisdiction. See, for example, Middletown Rancheria of Pomo Indians v. Workers Compensation Appeals Bd., 60 Cal.App.4th 1340, 71 Cal.Rptr.2d 105 (1998), in which the California Court of Appeal ruled that the WCAB had no jurisdiction over a tribal gaming casino.

Office Romance

2009-04-13T10:40:00.000-07:00

The Risks

Careerbuilder.com reports that 40 percent of respondents to a recent survey say that they have dated a co-worker. When employees get involved romantically, the employer can wind up getting sued, under several theories:

1. There is the case of the employee who will not take "no" for an answer. He or she pursues an object of affection at the workplace to the point where the object of affection is uncomfortable being at work. The object of affection now has a sexual harassment lawsuit. A Sav-On store manager convinced a Los Angeles Superior Court jury that she was the subject of such attention and of retaliation for resisting her male manager's advances, and recovered $3 million in damages, which was affirmed on appeal. See Clifford v. American Drug Stores, Inc., Case No. B158635, (Cal. Ct. App. Aug. 22, 2005).

2. There is the case of two employees in what at least appears to be a consensual relationship. Eventually, the relationship sours, and one romantic partner makes life miserable at work for the other partner. This is a particular problem when one partner has a higher position at the workplace, as there may be a viable claim of coercion. In one such case, a Los Angeles Superior Court jury awarded a secretary at Northrop Corporation $500,000 in compensatory damages and $250,000 in punitive damages. The case settled for $1.3 million after plaintiff filed a motion for her attorney fees. Darrow v. Northrop Corp., Case No. BC067428 (L.A. Superior Ct. Aug 1, 1997). In another such case, a federal court jury awarded a security guard $827, 500 in compensatory damages and $4,137,500 in punitive damages (which the court reduced to $300,000). Paterson v. California Dept. of General Services, Case No. 05-CV-00827 (E.D. Cal. Apr. 10, 2008).

3. There is the case of a high-level manager who flaunts his or her romantic relationships with subordinates in the workplace. Even if the subordinates who are romantically involved with the manager do not complain, other employees may have claims that they felt demeaned by the conduct. The California Supreme Court recognized the validity of such a claim in Miller v. Department of Corrections, 36 Cal.4th 446, 115 P.3d 77 (2005).

What To Do

To reduce sexual harassment liability risk associated with two employees' being involved in an office romance, some employers have such employees sign relationship agreement, or love contract. Through the agreement, the employees acknowledge that they are in a voluntary and mutual consensual romantic relationship and that no harassment has taken place. The efficacy of such agreements has not yet been validated by any court decision. For an example of what such an agreement might look like, click here.

Whether or not an employer chooses to implement a love contract procedure, it must make sure that it follows accepted anti-harassment procedures. That means (1) have a strong anti-harassment policy written into the employee handbook and posted prominently in the workplace, (2) provide anti-harassment training for all your employees, (3) ensure that the policy includes an effective complaint procedure that all managers and supervisors have been trained in, (4) if a complaint is received, make sure that it is investigated immediately, (5) if an investigation reveals a violation of policy, take prompt and effective action to deal with the wrongdoing.

If an employer acts promptly and effectively when first notified of a harassment situation, it may reduce or eliminate its liability. For a case where an employer escaped liability for an employee dating relationship that went sour, see Forrest v. Brinker International Payroll Company, LP, Case No. 07-1714 (1st Cir. Dec. 19, 2007).

I-9 Revamp Delayed

2009-02-15T13:15:00.000-08:00

The Department of Homeland Security's United States Citizenship and Immigration Services has delayed the effective date of its I-9 form revisions until April 3, 2009. Read the full text of the announcement.

The revisions, announced in December 2008, will end authorization to accept expired documents, remove documents that are no longer issued from the list of acceptable documents, and make other technical changes. The original federal register announcement is available here.

For now, you should continue to use the existing I-9 Form, which is available here. After April 3, 2009, you should use the new form.

On The Clock Or On Your Own

2009-02-08T20:11:00.000-08:00

A recent decision in a class action by limousine drivers against their employer reminds us that sometimes employers may have to pay their employees for doing nothing. The Second District Court of Appeal in Los Angeles directed the trial court to consider whether the class of drivers should have been paid for gap time, which is what the drivers called their on-call time between assignments. Ghazaryan v. Diva Limousine, Ltd., Case No. B201509 (Dec. 22, 2008).

Although the appellate court did not rule on the merits of the drivers' claims, the facts referred to in the complaint afford an opportunity for exploring the wage and hour aspects of on-call time. In Ghazaryan, the company prohibited the drivers from using their vehicles for personal use, required them to stay near the vehicle and to remain in uniform between assignments. Some drivers were, nonetheless, were able to use gap time for their own purposes. Some drivers were paid on an hourly basis for all their time, including any gap time. Others were paid by the trip. The company's exposure will in large part depend on its obligation to pay for gap time.

An employer must pay for all "hours worked," which Section 3(H) of the California wage orders defines as "the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so." (Wage Order No. 9 applied to the limousine drivers.) Whether or not an employer must pay for time that an employee spends waiting to be called to work depends upon the degree of control that the employer exercises over the employee's activities during the on call time.

Two advisory letters from the Division of Labor Standards Enforcement may help employers understand the principles. In a March 31, 1993 letter, a writer described the following practice: "Assume a regularly-scheduled non-exempt employee who works at a hospital located in a rural area and is not required to remain at or about the hospital or any premises designated by the employer; during his off-duty hours, but is required to be 'on-call' for designated periods of time and arrive at the hospital within 20 minutes from the time he is called by pager or telephone." The Division declined to say whether such circumstances would never require compensation, because the answer to the question is heavily dependent upon all the facts of each case. It pointed out that geographical restrictions and strict time frames for response will often lead to a determination that the time is compensable.

In a December 28, 1998 letter, the Division was asked about the hours worked of apartment managers who lived in the complexes where they worked. Again, the Division was unable to give a definitive answer as to which hours should be paid for, because the requester of the opinion did not provide enough specifics. However, the opinion letter identifies a number of factors that are important to the determination: geographic restrictions, how quickly an employee must respond to a page on a beeper, how frequently the employee is called to work, whether the employee is free to engage in personal activities, and the consequences of failing to respond within the required time.

Layoffs Mean Lawsuits

2009-02-01T08:35:00.000-08:00

An article in The New York Times on Saturday, January 31, reports on a trend that should come as no surprise -- Layoffs Herald a Heyday for Employee Lawsuits. While the article is concerned chiefly with WARN notification requirements, other statutes pose much greater liability risks for employers who have to let employees go because of difficult economic circumstances. We'll discuss WARN briefly, and then turn to the other statutes.

WARN

WARN is the Worker Adjustment and Retraining Notification Act, a federal statute that requires most employers with 100 or more employees to provide notification 60 calendar days in advance of plant closings and mass layoffs. Failure to comply with WARN makes the employer liable for the pay and benefits during the period of the violation up to 60 days. The court in an enforcement action may also award a prevailing plaintiff his or her attorney's fees. The United States Department of Labor has detailed information about WARN at this web page. California has its own WARN statute that applies to employers with 75 or more employees and defines the circumstances requiring notice somewhat differently. The California Employment Development Department compares the two statutes on this web page.

Wage and Hour Liability

A discharged employee can make easy extra money if his or her employer is not in compliance with the federal and state wage and hour laws. Misclassification of employees, failure to follow the overtime rules, not providing meal and rest periods, and other violations can easily lead to awards in the several thousands of dollars from the California Labor Commissioner. Read our 10 Tips for Avoiding Wage and Hour Violations to make sure that you are in compliance before you discharge any employees.

Discrimination Liability

That anti-discrimination statutes prohibit discrimination based on race, religion, color, national origin , ancestry, physical disability, mental disability, medical condition, marital status, sex, sexual identity, age, and sexual orientation. That means that every discharged employee has at least four characteristics that could form the basis for a discrimination claim.

Further, the prima facie case approach that applies to discrimination lawsuits makes it relatively easy for the plaintiff in a lawsuit to burden on the employer to justify the discharge. All the employee need show is showing (i) that she has a protected characteristic, (ii) that she was performing her job competently; (iii) that, despite her job performance she was discharged; and (iv) that the position remained open to qualified applicants after her discharge. If the employee makes that showing, the employer must prove that it had a legitimate reason for the discharge.

Retaliation Liability

Discharged employees may also file retaliation claims. We have explored the risks of such claims in two previous posts -- August 17, 2008 and November 16, 2008.

To establish a prima facie case of retaliation, the employee need only establish that he or she engaged in protected activity and was discharged, and that there was a causal link between the two. To establish the link, it is enough to show that the adverse action followed closely on the heels of the protected activity. Such a showing then places the burden on the employer to establish that it had a legitimate reason for the adverse employment action.

What Employers Should Do

The key to limiting the risk of liability is to put yourself in a position to be able to prove the legitimate reason for the discharge or layoff. That means if layoffs are necessary for financial reasons, you must be ready to show the financial difficulties and the reasons why those laid off were chosen.

If performance is the reason, follow this advice:

Make sure that each employee's personnel file includes a job description acknowledged by the employee. This will avoid disagreement over job duties if an issue arises about an employee's ability to continue working.
Develop a set of written performance expectations for each employee. This will avoid an employee's argument after being subjected to adverse employment action that he or she never understood what was expected.
Insist on honest annual performance evaluations. This will avoid an employee's argument that nobody ever told him or her that there were performance issues.
Document every communication with an employee about performance or misconduct, no matter how minor. This will avoid a possible argument that it never happened.

Tip Pooling in Casinos

2009-01-25T11:15:00.000-08:00

The Second District Court of Appeal in Los Angeles has ruled that casinos may insist on tip pooling among their employees, but found that the Hawaiian Gardens Casino may have violated the ban on participation in tip pools by supervisors. Lu v. Hawaiian Gardens Casino, Inc., Case No. B194209 (Jan. 22, 2009). We previously wrote about tip pooling in this blog on July 6, 2008, in our report on the Starbucks settlement with its baristas.

Labor Code section 351 prohibits employers from taking tips or crediting tips toward minimum wage obligations. However, under a 1990 Court of Appeal decision, employers may insist that employees pool their tips so that all are treated fairly. Leighton v. Old Heidelberg, Ltd., 219 Cal.App.3d 1062 (1990). That decision explained: "To the contrary, the restaurant business has long accommodated this practice which, through custom and usage, has become an industry policy or standard, a "house rule and is with nearly all Restaurants," by which the restaurant employer, as part of the operation of his business and to ensure peace and harmony in employee relations, pools and distributes among those employees, who directly provide table service to a patron, the gratuity left by him, and enforces that policy as a condition of employment."

The Hawaiian Gardens Casino dealers argued in their class action lawsuit that the rule permitting tip pooling should not apply to them because the tips were handed directly to them, and were not intended to be left for all the employees in the casino who provided service. The court rejected the argument. "As in restaurants, a tip pool in a casino promotes good service among all of the employees who come in contact with the patron, which enhances the casino's reputation and increases its business."

However, that did not get the casino out of the lawsuit. There was evidence that some of those who participated in the tip pool acted in a supervisory capacity by participating in evaluations and by directing and advising dealers on their conduct. That would make such employees "agents" who are barred by section 351 from receiving any tip money.

Although there is no private right to sue under section 351, any violation of the statute may form the basis for a claim under the Unfair Competition Law, Business and Professions Code section 17200.

Criminal Background Questions

2009-01-19T20:07:00.000-08:00

Although most employers would prefer not to hire workers with criminal records, there are restrictions on what applicants can be required to disclose. For example, Labor Code section 432.7 bars prospective employers from inquiring about arrests that did not lead to a conviction. And, Labor Code section 432.8 bars prospective employers from asking about convictions for certain drug offenses more than two years old.

For each violation, an applicant may recover actual damages or $200, whichever is greater. If the violation is intentional, the applicant may recover three times actual damages or $500, whichever is greater. Those easily available penalties have provided the basis for numerous class actions based on applications with banned questions. See the reports from Mitchell Silberberg & Knupp, Morgan Lewis and Sonnenschein Nath & Rosenthal.

One set of employers has a federal exemption from those restrictions. Under the Combat Methamphetamine Epidemic Act of 2005 amendment to the Controlled Substances Act (found at 21 U.S.C. section 830(e)(1)(G)), retail pharmacies may ask applicants for employment whether they have ever been convicted of any crime involving controlled substances, without regard to any restrictions imposed by California law. That provision helped Longs Drug Stores defeat a recent class action in the Court of Appeal. See Rankin v. Longs Drug Stores California, Inc., Case No. D052124 (Cal. Ct. App. Jan. 6, 2009).

Other types of employers should review their applications to make sure that they do not require applicants to disclose arrests or or marijuana drug convictions that are over two years old.

Pre-Employment Testing

2009-01-14T07:16:00.000-08:00

Employers who want good employees who are able to perform their jobs often engage in some form of pre-employment testing -- a typing test, a personality test, a test that measures knowledge needed on the job, and so on. It should come as no surprise that disappointed applicants may challenge such tests as discriminatory.

Disability Law

The federal Americans with Disabilities Act and the California Fair Employment and Housing Act prohibit employers from requiring applicants to undergo medical examinations before an offer of employment is extended. Once the employer has made an offer, it may condition the start of work on submission to a medical examination that tests whether the employee can perform the job. A "medical examination" is a procedure or test that seeks information about an individual's physical or mental impairments and health, including vision tests, blood tests, blood pressure and cholesterol screening, range of motion tests and psychological tests designed to identify mental disorders or impairments. Examples of procedures that are not medical examinations (and are, therefore, allowed at the pre-employment stage) are: testing for illegal drugs, physical agility tests, tests of ability to perform actual job tasks and tests that measure personality traits such as honesty, preferences, and habits. The EEOC has published a guidance that discusses the rules.

Sometimes the distinction between a prohibited and a permitted examination is a fine one. In Karraker v. Rent-A-Center, Inc., 411 F.3d 831 (7th Cir. 2005), the employer had management applicants take the MMPI, a standard psychological test that considers where the subject falls on scales measuring depression, hypochondriasis, hysteria, paranoia and mania. Although the employer argued that it was only concerned with personality traits, the court of appeals ruled that the MMPI was a medical examination because it was designed to reveal mental illness. Read the full opinion here.

Disparate Impact Discrimination

Both Title VII of the Civil Rights Act of 1964 and the California Fair Employment and Housing Act prohibit disparate impact discrimination, which means the use of neutral tests or selection procedures that have the effect of disproportionately excluding persons based on race, color, religion, sex, or national origin or other protected characteristics, where the tests or selection procedures are not job-related and consistent with business necessity.

For example, the EEOC obtained a $3.3 million judgment on behalf of 52 female job applicants not hired because they failed a 7-minute strength test that required them to carry 35-pound weights back and forth, lifting them to heights of 35 and 65 inches. More than 95 percent of male applicants passed, but fewer than 40 percent of female applicants passed. Because the employer did not prove that the test was sufficiently representative of actual job performance in its sausage packing operation, it was liable for disparate impact discrimination. EEOC v. Dial Corp., 469 F.3d 735 (8th Cir. 2006).

In a landmark United States Supreme Court decision, the employer required applicants to have a high school diploma for a certain plant position. That policy disproportionately discriminated against African Americans because their rate of graduation was twelve percent compared to a rate of thirty-four percent for whites. Since the evidence did not establish that the requirement was significantly related to successful job performance, the employer was liable for disparate impact discrimination. Griggs v. Duke Power Co., 401 U.S. 424 (1971).

What You Should Do

1. Prepare a detailed job description before you begin the hiring process for any position.

2. If you are concerned about physical or mental requirements of a job, make those the subject of post-offer testing. Do not attempt to screen out applicants yourself based on strength or personality tests, Even though such tests may be permissible, it would be very easy for a disappointed applicant to claim that your testing had crossed over into an impermissible medical examination.

3. If you wish to use tests of knowledge or intelligence, or academic qualifications to screen out applicants, have a professional validate your screening criteria. If challenged, you will have to prove that the criteria are significantly related to successful job performance.

Employer New Year Resolutions

2009-01-05T10:00:00.000-08:00

As the New Year begins, here are four suggestions for New Year resolutions to help reduce the risk of employment law liability during the coming year.

1. Prepare job descriptions for every position in your organization. The job description is the most important document in an employee's personnel file. It provides the basis for evaluation of performance. It is the foundation for determining disability and workers compensation issues. To get started, take a look at the MS Word templates for job descriptions on the Microsoft website.

2. Review the job duties of every exempt employee. In recent years, the greatest exposure to liability for employers has been in wage and hour class actions. The most important factor in the multi-million dollar verdicts and settlements is misclassification of nonexempt employees as exempt. You must decide whether or not to treat employees as exempt based on actual job duties not on whether they are paid a salary or by job title. If you need an incentive, the December 26, 2008 issue of "Daily Journal Verdicts and Settlements" reports the following recent settlements: $21 million by Edward D. Jones & Co., $11.2 million by SBC and AT&T, $8.5 million by Unisource, $5.4 million by Kaiser, $2.25 million by EMC and Legato Systems, $1.3 million by Valley Farm Transport, and $900,000 by E-Trade Securities. We discussed wage and hour compliance in a June 29, 2008 post to this blog.

3. Review changes to the FMLA. Congress and the Department of Labor made important changes to the Family and Medical Leave Act rules last year. There is a new form of leave for members of military families, and there are changes to the existing regulations. We discussed these changes in a December 9, 2008 post to this blog, with links to the new rules.

4. Make sure that you are complying with immigration laws. All indications are that the federal government will continue to insist on strict compliance with the laws that prohibit employment of workers who lack authorization to work in the United States. If you knowingly employ someone who lacks such authorization, you have committed a federal crime. To assure that your workplace is in compliance, follow the rules for the I-9 Form. We discussed immigration compliance in an August 3, 2009 post to this blog.

Bonus Effect On Overtime Wages

2008-12-28T08:11:00.000-08:00

A recent decision from the First District Court of Appeal in San Francisco explains how bonus payments affect overtime wages. Marin v. Costco Wholesale Corp., Case No. A116847 (Cal. Ct. App. Dec. 23, 2008).

General Principles

Under the federal Fair Labor Standards Act and the California wage orders, employers must calculate overtime based on the "regular rate of pay." Although that is easy to do if the employee only earns a set hourly wage, employee compensation often includes other components. Some nonexempt employees are paid a salary. A paycheck may also include commissions, gifts, profit-sharing, bonuses and other items.

The regular rate must be computed workweek by workweek. For each workweek, total all compensation paid, but omit overtime payments, premium pay for work during off-hours, such as nights and holidays, gifts, profit-sharing and other benefit plans, and discretionary bonuses. These concepts are described in the U.S. Department of Labor's regulations at 29 C.F.R. sections 778.200 through 778.225. Divide the total by the number of hours actually worked (federal method) or the number of hours worked up to 40 (California method) to get the regular rate of pay.

Non-discretionary bonuses (those earned by by meeting performance standards, or based on formulas) are included in the regular rate calculation. (The distinction between discretionary and non-discretionary is described in 29 C.F.R. section 778.208.) But, such bonuses often cover more than one workweek. That requires an allocation of the bonus across the entire period, as explained in 20 C.F.R. section 778.209, and in section 49.2.4 of the California DLSE Enforcement Policies and Interpretations Manual.

The Marin Decision

Costco offered a formulaic bonus to its long-term hourly employees, which the Court of Appeal explained as follows: "To be eligible for the bonus, paid in April and October, these employees must: (1) have been paid a specified number of hours for continuous service—8,000 hours (approximately four years) for those hired before March 15, 2004, and 9,200 hours (approximately 4.6 years) for those hired after that date; (2) generally be at the top of their pay scale; and (3) have been employed by defendant on April 1 for the April bonus and October 1 for the October bonus. The maximum semi-annual base bonus amount is $2,000 for those with less than 10 years of service, $2,500 for those with 10 to 14 years of service, $3,000 for those with 15 to 19 years of service, and $3,500 for those with 20 or more years of service. To qualify for the maximum base bonus, the employee must have been paid for at least 1,000 hours in the six-month period preceding April 1 and October 1. Bonuses are prorated for those paid for less than 1,000 hours; the formula for the base bonus is thus: hours paid up to 1,000 ÷ 1,000 × maximum bonus amount."

Costco calculated the overtime attributable to the bonus by dividing the employee’s maximum base bonus by the minimum number of paid hours required to achieve that maximum bonus (1,000), and then by multiplying the number of overtime hours worked during the bonus period by one-half of that regular bonus rate. Attorneys for a class of Costco employees contended that Costco should have divided the base bonus the employee earned by the number of straight time hours worked during the bonus period, and then multiplied the number of overtime hours by 1.5 times that regular bonus rate. For an employee who earned a $2,500 bonus, the two methods could yield a difference of $350. The trial court adopted the plaintiffs' method with a modification, and entered judgment against Costco for $5.3 million.

The Court of Appeal reversed the judgment, and ruled that Costco had properly calculated the overtime due. The Court ruled that the DLSE manual did not have the force of law with respect to including bonuses in the regular rate of pay, because it had not been adopted as a regulation and did not cite any authority. Nonetheless, the Court also explained that Costco's method of calculating the regular rate of pay satisfied the standards set out in the manual.

Courts Can Discriminate, Too

2008-12-21T14:45:00.000-08:00

The First District Court of Appeal in San Francisco has ruled that a Sonoma County Superior Court Commissioner may pursue an age discrimination claim against the Court over the Superior Court's claim of discretionary immunity under Government Code section 820.2. See DeJung v. Superior Court, Case No. A116911 (Dec. 19, 2008).

DeJung (age 64) alleged that the Executive Committee of the Superior Court judges refused to appoint him to a full time position because they preferred a younger candidate. Relying on the California Supreme Court's decision in Caldwell v. Montoya, 10 Cal.4th 972 (1995), the Superior Court argued that the decision to appoint a commissioner was a discretionary one immune from liability under section 820.2. The Court of Appeal explained that Caldwell only immunized individual government officials for their discretionary decisions. The Supreme Court had expressly declined to rule whether section 820.2 would provide immunity from a direct liability claim under the Fair Employment and Housing Act against a government entity, like the one alleged by DeJung. The Court of Appeal decided that it did not.

On the merits, DeJung provided evidence that the presiding judge had said twice that the judges wanted someone younger than DeJung. The Superior Court attempted to overcome that evidence by arguing that the decision was made by a committee, of which the presiding judge was just one member. The argument was punctured by the claws of the "cat's paw" doctrine, that is, as the Court explained, "showing that a significant participant in an employment decision exhibited discriminatory animus is enough to raise an inference that the employment decision itself was discriminatory."

[The phrase cat's paw is derived from a La Fontaine fable entitled The Monkey and the Cat, in which a monkey convinces a cat to pull chestnuts out of hot coals for him, and refers to using another (the cat's paw) to accomplish one's purposes.]

Is Boot Up Time Work Time?

2008-12-15T09:36:00.001-08:00

Over the past several months there has been much ado about the status of time employees spend waiting for their computers to boot up. Class actions have been filed against Cigna Corp., AT&T and BellSouth, and United HealthGroup, in which employee lawyers allege that the employers have not been paying for time employees spend waiting for their computers to start up and shut down.

Although the press has labeled these a new type of lawsuit, they involve straightforward application of settled principles about the concept of hours worked. Under both the federal Department of Labor regulations and the California Division of Labor Standards Enforcement guidelines, time that employees spend waiting for something to happen after they get to work constitute hours worked, because the employee remains subject to the control of the employer. The time does not count toward hours worked only if there is a sufficient break in work for employees to devote time to their own pursuits. For the federal and state administrative interpretations see 29 CFR sec. 785.14 and section 46 of the DLSE Enforcement Policies and Interpretations Manual.

Section 785.15 of the federal regulations gives the following examples: "A stenographer who reads a book while waiting for dictation, a messenger who works a crossword puzzle while awaiting assignments, fireman who plays checkers while waiting for alarms and a factory worker who talks to his fellow employees while waiting for machinery to be repaired are all working during their periods of inactivity."

While it is impossible to state a definitive view based on the bare bones information reported in the stories about the booting up cases, waiting for a computer to boot up would appear to be constitute work under the applicable principles. If employers are truly concerned about work time lost to boot up time, they should develop technological solutions that assure their computer systems are ready when employees arrive for work.

New FMLA Regulations

2008-12-09T07:12:00.000-08:00

The U.S. Department of Labor has issued its long-awaited amendments to its regulations under the Family and Medical Leave Act. Published on November 17, 2008, the new rules will take effect on January 16, 2009. The Department issued a press release that summarizes the changes. The full text of the publication in the Federal Register is available here. The Department has also published a fact sheet that describes the amendments.

The basics of FMLA remain the same, but employers should take note of the following significant changes:

1. The Department has exercised its authority under the new military family leave provisions of the FMLA to define the qualifying exigencies for which employees with relatives who are in the National Guard or Reserves can use FMLA leave as follows: (1) short-notice deployment, (2) military events and related activities, (3) childcare and school activities, (4) financial and legal arrangements, (5) counseling, (6) rest and recuperation, (7) post-deployment activities, and (8) other activities that the employer and employee agree on.

2. When paid leave is substituted for FMLA leave, all forms of employer paid leave (vacation, sick leave, personal time off, and so on) will be treated the same.

3. The regulations revamp the employer notice obligations. Employers must provide (1) a general notice about FMLA rights, (2) an eligibility notice, (3) a rights and responsibilities notice, and (4) a designation notice. The regulations include new forms to assist employers in complying with their notice obligations. The forms (which include ones tailored to the new military family leave provisions) do not yet appear independently on the Department's website, but are included as appendixes to the regulations.

4. The regulations rework the medical certification process, and provide a new suggested form for obtaining certification. California employers should note that the new Form WH-380 medical certification still asks the medical provider for "medical facts" (including "diagnosis") about the employee's condition. A California Family Rights Act regulation prohibits employers from obtaining such information without patient authorization.

Retaliation Lawsuits Cost Millions

2008-11-16T17:25:00.000-08:00

Yet another multi-million dollar verdict highlights the substantial stakes in retaliation lawsuits. In Donald Bender v. City of Los Angeles, Case No. BC361139 (Nov. 12, 2008), an LAPD officer claimed that he was demoted and kicked out of the department's canine bomb unit after standing up for the only woman in the unit. The LAPD's lawyers argued that the plaintiff had improperly stored dangerous equipment, was insubordinate, and had problems getting along with others in the unit. The jury agreed with the officer an awarded him $3.6 million.

The Los Angeles Times reported that another jury last year awarded over $1 million to a female LAPD detective who said she was demoted after complaining that her former boss promoted women in exchange for sexual favors. Ya-May Christle v. City of Los Angeles, Case No. BC351899 (Oct. 3, 2007). In another 2007 case, a police commander received a $650,000 settlement based on allegations that he was denied a promotion after clashing repeatedly with the police chief.

A previous post on this blog described steps employers should take to reduce the risk of liability for retaliation claims, which included (1) preparing job descriptions, (2) preparing performance expectations, (3) preparing regular performance evaluations, and (4) documenting performance problems. If you have not taken these steps, these recent retaliation cases should provide the motivation to do so.

Is An Athletic Shoe A Uniform?

2008-11-09T09:24:00.000-08:00

A decision published this week reminds us that California employers must pay for their employees' uniforms. Kullar v. Foot Locker Retail, Inc., Case No. A119697 (1st Dist Ct. App. Oct 14, 2008). Although the decision itself deals with the requirements for approval of a class action settlement, one of the underlying claims was that Foot Locker required its employees to wear shoes of a "distinctive design or color," the basis for a uniform reimbursement claim.

Labor Code section 2802 generally provides that employers must indemnify employees for all necessary expenses or losses. The specific requirement to pay for uniforms appears in section 9 of the wage orders, which states: "When uniforms are required by the employer to be worn by the employee as a condition of employment, such uniforms shall be provided and maintained by the employer. The term 'uniform' includes wearing apparel and accessories of distinctive design or color." Read the provision in Wage Order No. 4 here. The requirement does not apply to public employers, who typically negotiate responsibility for the cost of uniforms in collective bargaining.

Further guidance appears in section 45.5 of the DLSE Enforcement Policies and Interpretations Manual, which says: "The Division has historically taken the position, based upon notes of the Com mission, that nurses can wear their white uniforms wherever they work, and the employer, consequently, need not pay for them . Other workers in occupations for which the particular white uniform is generally usable would fall into the same category."

The employer may specify the basic wardrobe items which are used and generally usable in an occupation, but when the employer specifies clothes of a particular design, they may become sufficiently distinctive to constitute uniforms. For example, one of the Labor Commissioner's opinion letters concluded that an employer had to pay for the tropical shirts and rugby pants that it required its waiters and waitresses to wear. See O.L. 1990.09.18. Another letter stated that requiring employees to wear clothing, including undergarments and shoes, that did not contain metal (the employer had employees go through a metal detector because of concern about thefts) would require the employer to pay for the clothing. See O.L. 1994.02.16-1.

Employers concerned about theft or loss of uniforms may require employees to provide a deposit to be refunded upon return of the uniform, under the procedure set out in Labor Code sections 400-410. The employer may not deduct from the deposit for normal wear and tear. Although the wage orders provide that employers may deduct the cost of lost uniforms from the final paycheck, case law and the Labor Code are contrary.

Employers who do not pay for uniforms risk substantial liability. The Foot Locker settlement had a value of $2 million. In June 2003, Abercrombie & Fitch agreed to pay up to $2.2 million, and to stop requiring employees to wear outfits from its stores. Other retailers who had to settle include Gap and Banana Republic ($1.8 million in January 2005), and Ralph Lauren Polo ($1.5 million in January 2006).

Employment Cases on US Supreme Court Docket

2008-11-02T10:00:00.000-08:00

The 2008-09 term of the United States Supreme Court will bring decisions in the following cases that involve employment law issues. We will report on the decisions themselves when they are handed down.

Locke v. Karass, Case No. 07-610. Question Presented: "In Ellis v. Railway Clerks, this Court unanimously “determined that the [Railway Labor Act], as informed by the First Amendment, prohibits the use of dissenters’ [union] fees for extraunit litigation.” Lehnert v. Ferris Faculty Ass’n, 500 U.S. 507, 528 (1991) (opinion of Blackmun, J., citing Ellis, 466 U.S. 435, 453 (1984)). In Lehnert, a four-member plurality therefore held “that the Amendment proscribes such assessments in the public sector.” Id. Moreover, Justice Scalia’s separate opinion, concurring in part in the judgment announced by Justice Blackmun, reasoned that “there is good reason to treat [Ellis and the Court’s other statutory cases] as merely reflecting the constitutional rule.” Id. at 555. May a State, nonetheless, consistent with the First and Fourteenth Amendments, condition continued public employment on the payment of agency fees for purposes of financing a monopoly bargaining agent’s affiliates’ litigation outside of a nonunion employee’s bargaining unit? Oral Argument: 10/06/2008. Merits Briefs

A unanimous Court answered "yes" in a decision issued on January 21, 2009. A local may charge for its national's litigation expenses so long as (1) the subject matter of the national litigation bears an appropriate relation to collective bargaining and (2) the arrangement is reciprocal—that is, the local’s payment to the national affiliate is for "services that may ultimately inure to thebenefit of the members of the local union by virtue of their membership in the parent organization."

Crawford v. Metro. Gov't of Nashville & Davidson County, Case No. 06-1595. Question Presented: "Does the anti-retaliation provision of section 704(a) of Title VII of the 1964 Civil Rights Act protect a worker from being dismissed because she cooperated with her employer's internal investigation of sexual harassment? Oral Argument: 10/08/2008. Merits Briefs

The Court answered "yes" in a decision issued on January 26, 2009. Justices Alito and Thomas concurred, but wrote separately to emphasize that the Court was not adopting a broad definition of "oppose" that might encompass non-purposive conduct.

AT&T Corp. v. Hulteen, Case No. 07-543. Questions Presented: "Before the passage of the Pregnancy Discrimination Act of 1978 (PDA), it was lawful to award less service credit for pregnancy leaves than for other temporary disability leaves. Gilbert v. Gen. Elec. Co., 429 U.S. 125 (1976). Accordingly, the questions presented are: 1. Whether an employer engages in a current violation of Title VII when, in making post-PDA eligibility determinations for pension and other benefits, the employer fails to restore service credit that female employees lost when they took pregnancy leaves under lawful pre-PDA leave policies. 2. Whether the Ninth Circuit’s finding of a current violation of Title VII in such circumstances gives impermissible retroactive effect to the PDA. Oral Argument: 12/10/2008. Merits Briefs

14 Penn Plaza LLC v. Pyett, Case No. 07-581. Question Presented: " Is an arbitration clause contained in a collective bargaining agreement, freely negotiated by a union and an employer, which clearly and unmistakably waives the union members’ right to a judicial forum for their statutory discrimination claims, enforceable?" Oral Argument: 12/01/2008. Merits Briefs

Resources for Following the Court

United States Supreme Court (official site)
FindLaw US Supreme Court Center
LII Supreme Court Collection
A-Z Merit Briefs for Supreme Court (from ABA)

$14.4 Million To FedEx Drivers Misclassified As Independent Contractors

2008-10-26T17:38:00.000-07:00

This past week a referee appointed by the Los Angeles Superior Court recommended that the court award FedEx drivers in California $14.4 million for unreimbursed job-related expenses and accrued interest. This is the latest in a long-running nationwide battle between FedEx and its drivers over how they should be classified for employment law purposes. Other employers should learn from FedEx's experience. For information on this and other cases against FedEx, visit FedEx Drivers Lawsuit.

Last year, the California Court of Appeal had affirmed the trial court ruling that the drivers were employees, and not independent contractors. It explained that the test for determining employee status is "whether the principal has the right to control the manner and means by which the worker accomplishes the work." Even though FedEx's written agreements with its drivers stated that they were independent contractors, "FedEx’s control over every exquisite detail of the drivers’ performance, including the color of their socks and the style of their hair, supports the trial court’s conclusion that the drivers are employees, not independent contractors." The full text of the decision is available here.

Some employers think it is as simple as choosing between IRS Form 1099 reporting, and IRS Form W-2 Reporting. As the IRS explains in its "Independent Contractor or Employee ..." publication, the nature of the relationship, not the form, determines whether or not a person is an employee. Making the wrong choice can lead to serious consequences, such as liability for unreimbursed expenses as in the FedEx case, for overtime obligations, for employee benefits, for workers compensation premiums and penalties, and unpaid taxes.

What should an employer do to avoid difficulties like those encountered by FedEx? Begin with the assumption that any worker who is a regular part of your business is an employee. If you are convinced that the worker may have sufficient independence to qualify as an independent contractor, then conduct a thorough analysis. To assist you in that analysis, the California Employment Development Department publishes the Employment Determination Guide, which contains a thorough explanation of the subject, and a series of yes or no questions that explore the determinative factors.

If you determine after your analysis that the worker is indeed an independent contractor, document the relationship in a written contract. You can find some sample contracts through the Employment Forms page at FindLaw.

Wage/Hour Violations Continue To Cost Employers Millions

2008-10-19T10:00:00.000-07:00

Almost every week brings word of a new verdict, court decision or settlement involving wage and hour violations. Many employers just do not seem to understand the federal and state statutes and regulations on these subjects mean what they say. The fact that you have not been caught so far does not mean that your policies and practices would pass muster with the enforcement agencies.

This week's news is a $2.5 million settlement of a class action against MJM, Inc., an insurance investigative company, on behalf of a class of 372 of its investigators. The settlement provided up to $1.7 million to settle claims for unpaid overtime and meal period violations, and $833,000 for attorney fees. The company had claimed that there were no meal period violations because the business realities of investigation work exempted it from providing meal breaks. Labor Code section 512 and the wage order provision contain no such exemption. Read the motion for preliminary court approval, which describes the background of the case and the details of the settlement.

Because the consequences of non-compliant practices can be so serious, employers should consider having an audit conducted of their wage and hour policies and practices. To set up an appointment to discuss the scope and cost of such an audit, send an email to calvin.house@gphlawyers.com. For further information, you will find a GPH Lawyers blog entry about recent developments in the law related to meal periods here, and a set of tips on how to avoid wage and hour violations here.

Election Day Reminders

2008-10-13T07:22:00.000-07:00

Election Day is Tuesday, November 4, 2008, and with it come concerns for employers. Here are some things to keep in mind:

1. Employees are eligible for paid time off for the purpose of voting if they do not have sufficient time outside of working hours to vote. Since voting hours are from 7:00 am to 8:00 pm, most employees will be able to vote outside of working hours. Employees can be given as much time as they need in order to vote, but only a maximum of two hours is paid. Employers may require employees to give advance notice that they will need additional time off for voting. Employers may require time off to be taken only at the beginning or end of the employee's shift. Employers must post a notice of the time off entitlement 10 days before November 4. Sample notices are available in English and Spanish from the website of the California Secretary of State.

2. Labor Code sections 1101 and 1102 prohibit employers from trying to control their employees' political activities. They may not prevent employees from engaging or participating in politics, or control or direct the political activities or affiliations of their employees, or influence or attempt to coerce or influence their employees to adopt or follow or refrain from adopting or following any particular course or line of political action or political activity by threat of discharge. While employers may prohibit employees from engaging in political activities while in the course of their employment, they may not attempt to influence activities outside the workplace.

3. In February 2006, a San Diego County employee filed suit under the Labor Code provisions. She alleged that her manager fired her after seeing a bumper sticker for "1360 Air America Progressive Talk Radio" on the woman's car. There have been no reports of the disposition of the case. An article on the lawsuit appeared in the North County Times on March 8, 2006.

4. In October 2003, the Second District Court of Appeal reinstated a newspaper columnist's claim under the Labor Code provisions. He alleged that he had been fired in retaliation for supporting Antonio Villaraigosa on a local radio show during the 2001 mayoral election, and criticizing Congresswoman Maxine Waters for supporting James Hahn. Although the newspaper could control what the columnist published in its pages, it could not subject him to adverse action for views expressed in other forums. Ali v. L.A. Focus Publication, Case No. B159820 (Cal. Ct. App. Oct. 31, 2003).

Liability For Bullying And Microinequities

2008-10-05T10:35:00.000-07:00

Over the past few years, workplace bullying and microinequities not obviously based on protected characteristics have received much attention. Although the California Workers' Compensation Act preempts civil lawsuits for such claims unless a recognized exception to preemption applies, such conduct can pose liability risks. Such matters have been the subject of law firm commentary and an entire website.

The Workers Compensation Act preempts claims by an employee against the employer or a fellow employee for any injuries (including emotional injuries) that arise out of the employment relationship, even if based on conduct that is "manifestly unfair, outrageous, harassment, or intended to cause emotional disturbance resulting in disability." See Cole v. Fair Oaks Fire Protection Dist., 43 Cal.3d 148 (1987).

The Act itself expressly exempts some injury claims from preemption, such as those resulting from a willful and unprovoked physical act of aggression of another employee (Labor Code section 3603(a)(1)) and from failure to install or removal of a guard on a power press (Labor Code section 4558). The courts have determined that claims based on other conduct may survive preemption if the conduct contravenes fundamental public policy or exceeds risks inherent in employment relationship. See Livitsanos v. Superior Court, 2 Cal.4th 744 (1992). The most important court-created exceptions are for claims under the anti-discrimination laws, and for wrongful termination in violation of public policy. See City of Moorpark v. Superior Court, 18 Cal.4th 1143 (1998) and Shoemaker v. Myers, 52 Cal.3d 1 (1990).

Although these principles would appear to severely limit liability, the reality is that the plethora of protected characteristics in the anti-discrimination laws and the multitude of public policies that can provide a basis for wrongful termination claims make almost any workplace unpleasantness a potential source of civil liability.

If an employee treats female employees unpleasantly, but is neutral to male employees, there may be a sexual harassment claim, even if the conduct is not expressly based on sex. See EEOC v. National Educ. Ass'n, Alaska, 422 F.3d 840 (9th Cir. 2005). An employee who appears equally abusive to all will create liability for an unlawful hostile environment by letting one epithet slip, even though a single epithet alone would not create liability. See Dee v. Vintage Petroleum, Inc., 106 Cal.App.4th 30 (2003) ("it is your Filipino understanding versus mine" created liability for harassment when combined with other abusive behavior).

To limit the risk of liability for hostile environment claims, the employer must intervene when an employee makes life unpleasant for other employees. Any such situation may turn into an unlawful harassment claim. Preventing unpleasant conduct will also make the workplace more comfortable for all, and promote employee productivity.

Pay Final Wages On Time

2008-09-28T10:00:00.000-07:00

A recent $18.5 million settlement points up the potential liability for employers who do not promptly pay departing employees all wages owed. The settlement with the corporate owner of Albertson's, Lucky Stores and Sav-on Drugs, allocates $15 million for compensation of approximately 200,000 class members and $3.5 million for attorney's fees and costs. Ward v. Albertson's, Inc., Case No. BC237646 (Apr 14, 2008).

Liability hinged on Labor Code section 203, which provides that all final wages are due on an employee’s last day of work, except that if the employee quit with less than 72 hours notice before their last day of work, all final wages are due within 72 hours of the employee giving notice. Failure to pay on time results in a penalty of an additional day's pay at the regular rate of pay for every day the employee had to wait. In addition, section 227.3 provides that an employer who offers paid vacations must pay all vested vacation at the departing employee's final rate, if there is no collective bargaining agreement.

The notice of intended settlement, which describes the details of the settlement, is available here.

Meal Periods Mandatory?

2008-09-21T10:00:00.000-07:00

One of the California Courts of Appeal has rejected the common wisdom about the meal period rule. While other courts and the Labor Commissioner have ruled that employers must ensure (that is, force) employees to take their 30-minute meal periods, the San Diego Division of the Fourth District has ruled it sufficient for employers to make meal periods available. There is no need to police employee compliance. Brinker Restaurant Corp. v. Superior Court, 165 Cal.App.4th 25 (2008) (ruling on a class certification motion by restaurant workers).

The Law

California Labor Code section 512 bars employers from having an employee work more than five hours without providing the employee with a meal period of not less than 30 minutes. The wage orders promulgated by the Industrial Welfare Commission mimic that provision. See, for example, IWC Order No. 5, page 7, section 11, which was applicable in this case. The statute and the wage orders also provide that the meal period may be waived by mutual consent of the employer and the employee if the work period is less than six hours.

Earlier Interpretations

The limitation of the express waiver provision to work periods of less than six hours had led the Labor Commissioner and at least one Court of Appeal to conclude that employers had an obligation to police the meal period provision. In a January 2002 opinion letter, the Labor Commissioner stated that employers had an "affirmative obligation" to ensure that employees were relieved of all duty. In Cicairos v. Summit Logistics, Inc., 133 Cal.App.4th 949 (2005), the Third District Court of Appeal in Sacramento quoted the language from the opinion letter. As a result, many lawyers have advised their employer clients to "ensure" that their employees take meal periods.

The Brinker Case

The Brinker court, relying on recent decisions from federal district courts in California, rejected the common wisdom, and ruled that there was no duty to ensure that employees take meal periods. It looked to the Merriam-Webster Collegiate Dictionary definition of "provide" to conclude that it is sufficient for employers to make meal periods "available."

UPDATE > While the Brinker case is good news for employers, it will not be the final word. The California Supreme Court granted review of the decision on October 22, 2008. That depublished the opinion from the official reports, and makes it no longer citable. It may take up to two years to get a final decision from the Supreme Court.

The Department of Labor Standards Enforcement has revised its Enforcement Manual (see Section 45-2-1 on page 45-4) to account for the Brinker decision. This should still be persuasive while we await final word from the Supreme Court.

Disability Pitfalls for Employers

2008-09-14T19:05:00.000-07:00

A recent decision from the California Court of Appeal in San Francisco demonstrates how hard employers must work to avoid liability under the disability discrimination laws. The Court ruled that the plaintiff employee was entitled to a trial on her disability claims because there was some evidence that the employer had not tried hard enough to accommodate her disability. Nadaf-Rahrov v. Neiman Marcus Group, Inc., Case No. A114016 (Cal. Ct. App. 9/10/2008).

Facts

Forough Nadaf-Rahrov was a clothes fitter for Neiman Marcus. She developed carpal tunnel syndrome in both hands and osteoarthritis in her fingers. Her doctor certified that she was unable to perform work of any kind, and she went out on Family and Medical Leave Act leave. After she exhausted her FMLA entitlement, Neiman Marcus extended her leave, and asked her to call when she was released to return to work. That would permit Neiman Marcus could look for alternative vacant positions in the San Francisco store where she worked.

On June 28, 2004, Nadaf-Rahrov's doctor wrote that she "may be able to return to work on 8/19/04 but not in her previous position." On July 14, 2004, Neiman Marcus terminated her employment. The human resources manager noted that Nadaf-Rahrov did not have a release from her doctor to perform work of any kind, and believed that the employee's condition was unlikely to change in the near future.

Analysis

The trial court granted summary judgment dismissing Nadaf-Rahrov's claims for (1) disability discrimination, (2) failure to accommodate and (3) failure to engage in an interactive process, but the Court of Appeal reversed.

1. The disability discrimination laws prohibit an employer from discharging a disabled employee who is able to perform the essential functions of her existing position, or of any vacant position for which she is qualified. There was a disputed issue of fact because the employee's doctor said his initial certification only meant that she could not do her existing job, and was not meant to foreclose all work. There was evidence of vacant positions that only required office work.

2. With respect to accommodation, the Court adopted the federal rule that Nadaf-Rahrov had the burden of proving that she could perform the essential functions of an available job with accommodation. It disagreed with a contrary rule adopted in Bagatti v. Department of Rehabilitation, 97 Cal. App. 4th 344 (2002).

3. The Court also adopted the federal rule on the interactive process claim, which requires the employee to prove that the employer did not interact in good faith and that a reasonable accommodation was available. There was evidence from which a jury could conclude that Neiman Marcus caused a breakdown in the interactive process by refusing to provide information about available positions that might have assisted Nadaf-Rahrov in preparing a list of her work-related medical restrictions.

What The Case Means For Employers

This case highlights the importance of care and precise documentation when dealing with disability issues. Employers should

1. Make sure that there is an up-to-date written job description for every position.

2. When an employee says that a physical or mental condition is making it difficult to perform his or her job, provide as much information as possible about vacant positions.

3. Insist on precise medical opinion about the employee's ability to perform the essential functions of vacant positions.

4. Rather than discharge an employee who has been out on medical leave for an extended period of time, let the employee remain in a leave status, and address the issue of whether there is a job available when a doctor certifies the employee's ability to return to work.

Whistleblower Protection for Consumer Product Complaints

2008-09-07T16:05:00.000-07:00

A federal statute that became law on August 14 provides remedies against employers for employees who suffer adverse employment action for having complained about unsafe consumer products made or sold by their employer. The Consumer Product Safety Improvement Act of 2008 establishes an administrative complaint procedure backed by the possibility of a civil lawsuit if the agency does not act.

The protection is limited to employees of manufacturers, private labelers, distributors and retailers. It prohibits such employers from discharging or otherwise discriminating against employees who provide the federal government or a state attorney general with information about a violation of any law enforced by the federal Consumer Product Safety Commission, or who participate in a proceeding concerning such a violation, or who objected or refused to participate in any activity that the employee reasonably believes is a violation.

The Commission is concerned with "consumer" products, which means products (i) for sale to a consumer for use in or around a permanent or temporary household or residence, a school, in recreation, or otherwise, or (ii) for the personal use, consumption or enjoyment of a consumer in or around a permanent or temporary household or residence, a school, in recreation, or otherwise, but does not include on-road motor vehicles, boats, aircraft, food, drugs, cosmetics, pesticides, alcohol, tobacco, firearms, and medical devices.

According to the Department of Labor, the enforcement agency for the whistle blower provision, "otherwise" discriminating includes laying off, blacklisting, demoting, denying overtime or promotion, disciplining, denying benefits, failing to hire or rehire, intimidation, reassignment affecting promotion prospects and reducing pay or hours.

A person who believes that his or her employer has violated the new whistle blower provision may file a complaint within 180 days with the closest OSHA office (the responsible bureau within the Department of Labor). If the OSHA office determines that there was a violation it may order reinstatement with the same seniority and benefits, payment of back pay with interest, and compensatory damages, including compensation for special damages, expert witness fees, and reasonable attorney's fees. The losing party may seek a hearing before an administrative law judge, from which there is one administrative appeal.

A party dissatisfied with the final result may obtain review of the Department's decision in the United States Court of Appeals for the circuit in which the violation occurred. The employee may file a civil action in federal district court if the Department does not issue a final order within 210 days from the filing of the complaint, or within 90 days after issuance of a written determination by the OSHA office.

Although the statute does not say so directly, the administrative enforcement procedure appears to be the exclusive means for a private party to seek relief for a whistle blower violation.

The full text of the new statute is available at the Consumer Product Safety Commission website. Further information about enforcement is available at OSHA's Office of the Whistleblower Protection Program.