The U.S. Court of Appeals for the 9th Circuit, after asking for guidance from the California Supreme Court, revived a class-action overtime lawsuit against Oracle Corp.

The company is being sued by Arizona and Colorado residents who claim they traveled to California and worked more than eight hours per day for Oracle and were not paid for it.

California’s overtime laws are more employee-friendly than the Fair Labor Standards Act’s overtime requirements. The California Labor Code says employers must pay non-exempt workers overtime for any hours they work over eight in a day. The FLSA only requires that employees pay overtime for any hours worked over 40 in a week.

Oracle fought the suit, claiming the California Labor Code’s overtime requirements don’t cover overtime work performed in the state by non-residents.

A federal district court ruled in favor of the company. It agreed with Oracle, saying the state’s labor code didn’t cover workers who primarily lived and worked outside the state.

Overruled

But that ruling was overturned by the appeals court, which has sent the case back down to the district court for further proceedings.

According to the appeals court, Oracle could be liable for unpaid wages if it’s proven the company didn’t pay the employees for overtime work.

During the appeal, the 9th Circuit court asked the California Supreme Court for guidance on whether California law applies to non-resident employees who perform work in the state.

The state’s high court ruled it did, saying that by not applying California law to non-residents performing work in the state, employers would be encouraged to bypass state residents and look for lower-paid temporary out-of-state workers.

In a nutshell, the court ruled Cali employers can’t treat out-of-state workers differently than they treat residents.

Business groups and lawyers on Oracle’s side had argued the ruling would drive business away from California and lead to a spike in wage-and-hour claims, but neither the state supreme court nor the appeals court were swayed by that argument.

Do you think the appeals court and state supreme court got this right? Share your opinions in the Reply box below.

You remember the VCSP — it is the IRS’ initiative designed to help businesses clear up their tax problems associated with employee misclassification. It was introduced last fall.

Under the VCSP, employers that’ve misclassified employees as independent contractors can reclassify those workers — while potentially saving them a ton in back payroll taxes.

Sounds great, right? Not so fast, employers have had their concerns about the program, namely:

• Would participation in the VCSP lead the IRS to share info about a company’s classification practices with the Department of Labor and state labor agencies? Just prior to the VCSP introduction, the IRS, DOL and several states announced they’d be teaming up to find wage and hour violators, and possibly assess them multiple fines.
• Will an employer’s participation in the VCSP essentially amount to admitting that it misclassified workers — and thus denied them overtime pay and benefits? If so, it could prove very costly should the employer ever get sued by previously misclassified employees.

FAQ clears the air

Here’s what the IRS had to say about those issues in an FAQ it released recently:

• The IRS says it will not share information about VCSP applicants with the DOL or state agencies.
• Signing the VCSP closing agreement is not an admission of any liability or wrongdoing for prior years.
• Rejection of a VCSP application will not automatically trigger a federal audit.
• An employer that has been contacted by the IRS regarding an SS-8 determination letter is not under audit — therefore it is still eligible for the VCSP.
• An audit of a parent, subsidiary or another member of an applicant’s consolidated group is considered an audit of the applicant — thus making the employer ineligible for the VCSP.

Info: To apply for the VCSP, employers must submit Form 8952 at least 60 days before they want to begin treating the workers as employees.

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The Department of Labor just proposed rules that would make some major changes to the Family Medical Leave Act. They’d affect how just about every employer handles FMLA leave.

Here’s what the proposed rules would do:

Change FMLA calculation requirements

The biggest proposed change: Companies would be required to track FMLA leave in the smallest increments their payroll systems use to track work time.

So if your payroll system tracks time worked in five-minute increments, you’ll be required to track FMLA time in five-minute increments.

Sounds familiar? It should. This is how employers used to be required to calculate FMLA leave before the rules were changed in 2009. The current rules allow employers to track FMLA leave in the same manner they track other forms of leave, most often in one-hour increments.

Change ‘physical impossibility’ provision

The DOL also wants to change the rule that allowed employers to delay a workers’ reinstatement from FMLA when it was physically impossible for the employee to return to work in the middle of his or her shift.

Example: If a flight attendant took two hours of FMLA leave due to a migraine and
missed his flight, the airline could dock him a full day of FMLA time because it was physically impossible for him to go back to work — because his assigned plane was already airborne.

The DOL says employers are misinterpreting this rule by applying it in circumstances where it’s merely inconvenient for them to reinstate an employee mid-shift.

That won’t happen under the proposed rules. They state delaying a worker’s reinstatement will only be permitted in the most limited circumstances where it is, in fact, physically impossible to allow a worker to return to work in his/her position — or an equivalent position.

Change military leave provisions

The proposed rules also make major changes to military family leave, including:

• Expanding caregiver leave so it can be taken to care for veterans discharged within the past five years
• Allowing caregiver leave to be taken for a pre-existing injury or illness that was aggravated in the line of duty
• Extending exigency leave to family members of the Regular Armed forces
• Requiring that service members be deployed to a foreign country in order for their family members to qualify for exigency leave, and
• Extending the amount of time an employee can take during a military family member’s “rest and recuperation” period from 5 to 15 days.

Employers have until the end of March to comment on the proposed rules here.

If these changes become official, they will no doubt call for employers to update their FMLA policies and forms.

Info: The DOL’s Fact Sheet on the proposed rules is available here.

The new deadline: Aug. 31, 2012. That is the date by which plan sponsors must disclose all 401(k) plan fees and expenses to plan participants. The participant fee disclosure rule had previously been pushed back to May 31.

The reason for the further postponement? The Department of Labor (DOL) is pushing back the date retirement service providers (like Fidelity Investments and Vanguard) have to disclose their fees to employers who sponsor plans.

Final disclosure rules issued — finally

In the long-awaited final version of its 401(k) plan fee disclosure rules, the DOL announced retirement service providers now have until July 1 to spell out the direct and indirect compensation their administrators receive, as well as any possible conflicts of interest, to their plan sponsor clients.

The DOL had previously pushed back the retirement service disclosure deadline to April 1. But after members of the retirement service industry complained the April 1 deadline didn’t leave enough time for service providers to comply, the DOL decided to push back the compliance deadline one last time.

Plan sponsors now have at least 60 days (ending Aug. 31) after receiving cost info from their retirement service providers to create and distribute plan fee disclosure documents to workers saving within the plans.

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In 2011, the number of companies offering perquisites to CEOs fell drastically to 61.5% from 89.8% in 2009, according to Compdata’s Executive Compensation 2011/2012 survey of 4,500 organizations nationwide.

What are companies cutting back on?

• Company cars — 23.5% of employers offered their CEO a company car in 2011, compared to 28.3% in 2009.
• Voluntary deferred compensation programs — 21.2% offered them in 2011, down from 24.4% in 2009.
• Annual physical exams — 16.9% offered them in 2011, compared to 21.4% in 2009.
• Bonuses — the survey summary broke down bonus figures in the three industries impacted most (see below).

The largest drops in the number of bonuses paid out occurred in three industries:

• Hospitality — 40% of CEOs received bonuses in 2011, down from 65% in 2009.
• Insurance — 53.2% received bonuses in 2011, compared to 62.4% in 2009.
• Utilities — 12.5% received bonuses in 2011, down from 20.9% in 2009.

As things stand now, when a 401(k) plan participant retires, he or she has just two choices in where to put funds — take it all out in a lump sum or stash it all in an annuity.

The Treasury Department has announced a proposal to make things a little more flexible.

Many retirees find it difficult to determine how to formulate a plan for drawing down retirement assets over an uncertain, and potentially lengthy, time — in other words, to arrange their finances so they don’t outlive their money.

An annuity is a lump sum deposit to an insurance company, which then sends the individual a monthly check beginning on an agreed-upon date. In addition, the Treasury proposal would allow retirees to stash some of their funds in an annuity while keeping the rest of their cash liquid.

According to a report from the President’s Council of Economic Advisers, annuities can help to mitigate some of the risk faced by retirees. In particular, annuities protect retirees against the risk of outliving assets.

In 2007, the average 65 year-old male could expect to live an additional 17.2 years, but many will live much longer, the report says. Nearly a fifth of 65-year-old men could expect to live to at least age 90.

The proposal would also make it easier for retirees to use a limited portion of their savings to purchase an annuity that would begin paying out at an advanced age. Annuities of this type would provide an efficient way for  65- or 70-year-olds (or even younger savers) to address the risk of outliving their assets by purchasing a predictable income stream starting at age 80 or 85, for example.

To see a fact sheet on the new proposal, go here.

That the question being raised in a recent lawsuit brought by six scientists who had reported alleged irregularities in the Food and Drug Administration’s medical device review process.

The staffers alleged that “the FDA scientists noted that in the past, computer-aided detection devices (‘CAD’) to be used with breast mammograms were not safe or effective, but the FDA approved the devices anyway in a flawed process that ignored the science.”

The whistleblowers claim the agency launched “a covert and secret search and seizure operation” in retaliation for their speaking up.

FDA officials pried into private, third-party, non-Governmental, password protected and encrypted email accounts on Google and Yahoo, the whistleblowers allege, using the information gathered to retaliate against them.

A First Amendment issue?

Jaikumar Vijayan, writing on computerworld.com, quoted Hanni Fakhoury, staff attorney for the Electronic Frontier Foundation, who said the case presents some “really interesting questions about the right to use your email at your workplace.”

Adding to the complexity of the case, Fakhoury said, is the fact that whistleblowers were at the center of the dispute:  “That may be a whole separate legal issue under First Amendment law,” he said.

We’ll keep you posted. To read a redacted version of the whistleblowers’ full complaint, go here.

As Valentine’s Day nears, many HR pros are thinking about one of the trickiest parts of the job: dealing with workplace romance.

What can companies do to prevent romantic relationships between employees? Although some firms have strict anti-fraternization policies, the real-world answer is – not much.

As long as people spend time together at work, romance is a distinct likelihood. Research indicates a significant number of married people meet their spouses on the job – probably not surprising, considering how much time is people spend at work.

Many employers realize a blanket ban on employee dating is unnecessary and unworkable. But companies should have a framework or policy for managing those relationships.

For the most part, employers steer clear of legislating workplace relationships until they present some kind of problem for individual, team or organizational productivity.

No doubt, employee dating can carry some undesired consequences: If a relationship goes sour, the breakup can lead to charges of sexual harassment, retaliation and hostile work environment claims. Other times it’s just a matter of hard feelings, and people take sides, further polarizing the workplace.

Even if the pairing goes well, it could lead to charges of favoritism from other employees.

Here’s the latest thinking on workplace dating policies:

Supervisor/subordinate relationships

Not too tough to spot the pitfalls here: The boss and a direct report begin a relationship. From the moment the pair is exposed as a couple, every move the manager makes is suspect in the eyes of other department workers.

Although some employers flat-out ban manager/employee dating, many feel that’s too Big Brother – and if a top performer breaks the rules and must be fired, the organization suffers. So the company’s penalized for preventing problems that might never have come up.

Best practice: Set up a policy that requires supervisors who become involved with a subordinate to report the relationship to upper management as early as possible.

This gives management the chance to transfer one of the parties (usually the subordinate) to another department. With that, the potential for charges of favoritism or special treatment is eliminated.

Manager training

Addressing a situation when two employees start seeing each other is not often a manager’s favorite issue to deal with. It can feel like an invasion of privacy – after all, aren’t two grownups entitled to conduct their romantic lives however they choose?

Second, emotions are involved. That’s often slippery ground for supervisors who are far more comfortable with cut-and-dried topics like production numbers and scheduling.

Nonetheless, it’s an issue that’s got to be faced. Office relationships are often the focus of intense discussion – which can lead to workplace distractions and even unprofessional conduct on the part of co-workers.

Better to get everything out in the open. Managers must make sure both the romantic partners and their co-workers understand that cooperation and productivity expectations remain unchanged, no matter how personal relationships may develop.

Employee training

Managers aren’t the only ones who need to be aware of the rules surrounding workplace romance – employees do, too.

Organizations that don’t provide guidance about employee relationships do so at their own risk.

While it may not warrant formal training, smart companies give employees a heads up on the kind of conduct that’s acceptable.

A couple examples:

•  management expects both parties to perform their job duties to the same standards as any other employee – meaning that getting a romantic partner to “cover” for the other party, or swapping tasks without permission is not acceptable
•  employees are banned from displays of affection at work, which can make co-workers uncomfortable. Such displays qualify as unacceptable and unprofessional behavior.

Stay vigilant

Naturally, these rules apply to relationships that are truly consensual.

HR should monitor these situations closely, because it’s possible that a supposed consensual relationship isn’t what it seems – like when a person is forced to “date” a supervisor as a condition of keeping his or her job.

If such a situation is uncovered, the company should immediately begin its normal sexual harassment investigation process.

Adapted from The 7 Most Disruptive Workplaces Issues and How to Handle Them from PBP Executive Reports.