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Employment law-trends

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  • 1. By: Jennifer Brown Shaw, Esq., and Jasmine Anderson, Esq.Call (800) 331-8877 or visit HRCalifornia.comWhere Advocacy Meets Compliance™Employers faced more lawsuits in 2012 than 2011, according to international legal services firm Fulbright &Jaworski’s newest Litigation Trends Survey, with labor and employment disputes and contract litigation at theforefront. Employers also sought assistance from outside counsel in increased numbers to comply with stricterregulatory requirements, the survey found.Employers should not expect these trends to slow in 2013.In recent months, courts issued important decisions that impact California employers. In addition, new regulationsunder both California and federal law will increase compliance obligations. Finally, the U.S. Equal EmploymentOpportunity Commission (EEOC) recently issued its Strategic Enforcement Plan for Fiscal Years 2013-2016. TheEEOC’s top priorities include eliminating barriers in recruitment and hiring, protecting immigrant, migrant andother vulnerable workers, and enforcing equal pay.This white paper summarizes key developments in employment law and provides practical steps employersshould take to ensure compliance.Page 1 | Disability Discrimination and Reasonable Accommodations Page 2 | Discrimination Page 3 | Retaliation Page 3 | Wage and Hour Page 5 | Arbitration Agreements Page 6 | Regulatory Enforcement Disability Discrimination and Reasonable AccommodationsAppropriately addressing employee disabilities and providing effective reasonable accommodations can bechallenging. However, courts provided some good news in this area for employers.Disability DiscriminationThe Ninth Circuit ruled that a retail store manager was not a “qualified individual with a disability” protected byCalifornia’s Fair Employment and Housing Act (FEHA). The employee admitted that her disability prevented herfrom performing the “essential functions” of her position (hiring, training and supervising sales staff; overseeingand developing customer relations; administrating stocking and inventory; cleaning; creating store displays; andpreparing sales reports). The court ruled that her inability to perform those functions was a legitimate reason forfiring her. Lawler v. Montblanc North America, LLC, 704 F.3d 1235 (9th Cir. 2013)Page 1 of 8Employment Law Trends®
  • 2. Call (800) 331-8877 or visit HRCalifornia.comWhere Advocacy Meets Compliance™Reasonable AccommodationThe Ninth Circuit ruled that an employer is not obligated under the Americans with Disabilities Act (ADA) toexcuse an employee from complying with its attendance policy, if regular attendance is an “essential function”of the job. Regular attendance may be an “essential function” if a job requires: (1) the employee to work as partof a team; (2) face-face interactions with other employees, clients or customers; or (3) on-site use of items andequipment. In this case, because the employee was a neo-natal intensive care nurse and part of a patient deliveryteam, the court determined that regular attendance was an essential function of her job. Samper v. ProvidenceSt. Vincent Medical Center, 675 F.3d 1233 (9th Cir. 2012)These cases demonstrate that employers must communicate expectations and remain flexible when consideringpotential accommodations for employees with disabilities.Practical StepsExplain the “Essential Functions” of the Position. An employer must provide an accommodation only if it willallow the employee to perform the “essential functions” of the position. Courts will look to current, accurate jobdescriptions and other employer-initiated documents, such as performance reviews reflecting an employee’s jobduties, to determine which functions are essential.Consider All Potential Accommodations. An employer must offer an accommodation that is reasonable andeffective, but is not necessarily obligated to offer the specific accommodation an employee requests. Employersshould think broadly and flexibly about all potential accommodation options, in addition to considering theemployee’s stated preference.DiscriminationThe California Supreme Court recently answered a question that has long confounded California employers:Is an employer legally liable for a decision to terminate an employee if the employer has both a legitimate,nondiscriminatory reason for the decision and an arguably discriminatory reason? This is generally referred to asa “mixed motive” case.In Harris v. City of Santa Monica, the employee claimed she was fired because she was pregnant (an illegalreason), which she believed primarily based on her supervisor’s negative reaction when she told him the news.The employer contended that it would have made the same decision based on her poor performance, regardlessof her pregnancy.The court ruled that under the FEHA, an employee in a “mixed motive” case cannot recover damages or backpayand is not entitled to reinstatement, but can obtain declaratory or injunctive relief and attorneys’ fees. The court’sruling encourages employers to comply with the law, but prevents employees from obtaining a “windfall” becausethe employer would have made the same decision, anyway. Harris v. City of Santa Monica, 56 Cal.4th 203 (2013)The court also specified that an employer is not liable for “discrimination in the air.” So, even if the supervisor inHarris had a discriminatory motive, the employer would not be liable if the supervisor’s statements were unrelatedto the termination decision. The Harris case highlights the importance of ensuring employment decisions are notinfluenced by a discriminatory motive.Practical StepsConduct Equal Employment Opportunity Training. Employers must train supervisors and managers on basicEEO principles so they respond appropriately to situations that could lead to liability, such as notification of aproblem employee’s pregnancy.Page 2 of 8
  • 3. Call (800) 331-8877 or visit HRCalifornia.comWhere Advocacy Meets Compliance™Provide Policies. Current, clear policies provide useful guidance to supervisors, managers and employees, andhelp ensure consistent, fair employee discipline.RetaliationCalifornia courts recently provided employers with important guidance about the limits of “retaliation” claims whenemployees file a complaint or participate in an investigation of a complaint:• The Second District Court of Appeals dismissed an employee’s retaliation claim after he was fired for filing afalse harassment complaint against another employee. The court ruled that participating in the investigationdid not insulate the employee from discharge for conduct that warranted termination (i.e., lying or makingfalse accusations). Joaquin v. City of Los Angeles, 202 Cal.App.4th 1207 (2012)• The Sixth Appellate District ruled that an employer could lawfully terminate an employee who refused toparticipate in or cooperate with an internal investigation. The court reasoned that employees are protected forrevealing information, not for refusing to reveal it. McGrory v. Applied Signal Technology, Inc., 212 Cal.App.4th1510 (2013)• The Second District Court of Appeals ruled that the close proximity of an employee’s complaint to an adverseaction does not automatically suggest retaliation. In the court’s view, the employer had a legitimate reason forfiring an employee with a history of poor work performance. The fact that the employee complained of “racediscrimination” days before his discharge, on its own, did not suggest that the employer retaliated againsthim. Baker v. Mulholland Security and Patrol, Inc., 204 Cal.App.4th 776 (2012)Taken together, the cases illustrate that employers should make legitimate employment decisions, even in theface of employee complaints.Practical StepsExplain Investigatory Obligations. Employers should explain their commitment to investigating complaints, aswell as the consequences for dishonesty or failing to participate meaningfully.Make Consistent Personnel Decisions. Employers should not be dissuaded from taking legitimate actionsimply because an employee complains or participates in an investigation. Instead, employers can prevail inretaliation claims when they show adverse actions are consistent and fair.Wage and HourWage-and-hour claims continue to create significant risk for employers, but courts provided some relief in thisarea in the last year. A few important decisions relating to wage-and-hour issues are summarized below.Meal and Rest BreaksThe California Supreme Court ruled that employers must “provide” off-duty meal periods to non-exemptemployees but need not “ensure” they take them. The court ruled that employers satisfy their obligation by: (1)relieving employees of all duty; (2) relinquishing control over their activities; (3) permitting a reasonable opportunityto take an uninterrupted 30-minute meal period; and (4) not impeding or discouraging employees from taking ameal period.The court also explained the required timing of meal periods: the first meal period must begin before the endof the fifth hour of work, with a second meal period (if applicable) beginning before the end of the tenth hour ofwork.Page 3 of 8
  • 4. Call (800) 331-8877 or visit HRCalifornia.comWhere Advocacy Meets Compliance™Page 4 of 8Employers must also “authorize and permit” rest breaks of at least 10 minutes for every four hours worked or“major fraction thereof,” which is more than two hours. However, an employer need not provide a rest period ifan employee works a total of three and half hours or less. As to the timing of rest breaks, the court held generally,“one rest break should fall on either side of the meal break” for employees working an eight-hour shift. BrinkerRestaurant Corporation v. Superior Court, 53 Cal.4th 1004 (2012)ClassificationImproperly classifying employees as exempt from wage-and-hour laws can be a costly mistake. Luckily, courtscontinue to provide useful guidance to help employers understand these exemptions:• The U.S. Supreme Court ruled that pharmaceutical sales representatives may be properly classified as outsidesalespeople under the Fair Labor Standards Act, even though they are legally prohibited from selling theirproducts to their clients (doctors). In so doing, the Court rejected a contrary position taken by the federalDepartment of Labor. Christopher v. SmithKline Beecham Corp., 132 S. Ct. 2156 (2012)• The Fourth District Court of Appeals ruled that employment recruiters may be properly classified as outsidesalespeople. The recruiters in this case spent most of their time recruiting candidates for clients (“selling”)and engaging in activities that were prerequisites to selling, such as searching for candidates and reviewingresumes. The court further ruled that the exemption does not require that an employee’s commission be adirect percentage of the employer’s profits. Muldrow v. Surrex Solutions Corporation, 202 Cal.App.4th 1232(2012)• The Fourth Appellate District ruled that an employee may be exempt as a “personal attendant” under WageOrder 15 even if the employee performs a few “health-related tasks,” such as taking vital signs and testingblood sugar levels, as long as the employee does not spend more than 20 percent of work time performingduties other than supervising, caring for and feeding the supervised person. Cash v. Winn, 205 Cal.App.4th1285 (2012)Pay PracticesIn three significant decisions for California employers, courts upheld the employers’ pay practices:• California’s Wage Orders provide that if an employee reports for a usual or scheduled shift and works lessthan half the shift, he or she is entitled to a minimum of at least two hours of “reporting time” pay. The SecondDistrict Court of Appeals ruled that employees who report to work for regularly scheduled short meetings,such as a 30-minute staff meeting, are entitled to be paid only for the hours they work, even if it is lessthan two hours. Such employees are entitled to reporting time pay only if they “work” less than one-half theshift (for example, less than 15 minutes for a 30-minute meeting). The court also explained how to properlycalculate when an employee is due a “split shift” premium (an extra hour of pay at minimum wage) when anemployee works two separate periods in one day. The court clarified that the employer need only pay thepremium when the employee’s compensation for the entire day is less than the minimum wage plus oneadditional hour at the minimum wage. Aleman v. AirTouch Cellular, 209 Cal.App.4th 556 (2012)• The Fourth Appellate District ruled that employers may implement a timekeeping policy that “rounds”employee time to the nearest one-tenth of an hour so long as the policy is fair, neutral on its face and will notunfairly favor the employer over time. See’s Candy Shops, Inc., v. The Superior Court Of San Diego County,210 Cal.App.4th 889 (2012)• The Second Appellate District ruled that an employer may lawfully pay vacation time at a reduced rate. Thecourt reasoned that such a practice does not violate the law because employers are not required to providevacation. However, the court also ruled that the employer could not refuse to pay employees for accrued butunused vacation because vacation, once earned, is a vested “wage.” Bell v. H.F. Cox, Inc., 209 Cal.App.4th62 (2012)
  • 5. Commission AgreementsEmployers with commissioned employees must be aware of two recent developments in California law.Effective January 1, 2013, California law requires written commission agreements signed by the employee andthe employer. However, the law generally does not apply to short-term productivity bonuses, temporary variableincentive payments that increase but do not decrease under a written contract (e.g., special, short term salesincentive programs), or bonus and profit-sharing plans. Labor Code sec. 2751The Second District Court of Appeals ruled that commission “charge back” agreements are lawful. Theemployer’s commission plan allowed it to recover (or “charge back”) commission payments to cell phonesalespeople if a customer disconnected his or her service during a specified period of time (the “charge backperiod”). The court ruled that the commission payments were advances that did not become wages until theconditions in the agreement were satisfied, including expiration of the charge back period. DeLeon v. VerizonWireless, LLC, 207 Cal.App.4th 800 (2012)Practical StepsKnow the Law. Because wage and hour laws change frequently and the potential risks of collective employeelawsuits (such as class action lawsuits) are serious, employers must keep abreast of changes in this area.Audit Wage Practices. To ensure compliance and take advantage of favorable new rulings, employers shouldregularly audit their wage practices, either internally or with the help of experts in this field.Arbitration AgreementsEmployers continue to face resistance when attempting to enforce arbitration agreements in California. Unlessan agreement is clear, unambiguous and conspicuously presented to the employee, it will not be enforceable inCalifornia:• The Third District Court of Appeals ruled that arbitration agreements contained in employment applicationsare unenforceable. Wisdom v. AccentCare, Inc., 202 Cal.App.4th 591 (2012)• The Second Appellate District ruled that employees are not bound by an arbitration clause contained in anemployee handbook that the employees never saw or agreed to. Sparks v. Vista Del Mar Child and FamilyServices, 207 Cal.App.4th 1511 (2012)• The Second Appellate District also ruled that independent contractors are not bound to agreements toarbitrate claims under the California Labor Code. Elijahjuan v. The Superior Court of Los Angeles County, 201Cal.App.4th 15 (2012)The California Supreme Court recently granted review of several employment arbitration agreement cases,including Wisdom, and will hopefully provide more guidance in this area.Practical StepsEvaluate the Benefits and Costs of Arbitration. Although employers hope arbitration will resolve employeedisputes efficiently, they face increased costs when employees challenge the validity of the agreements.Moreover, some employers find that even when they proceed to arbitration, the costs can meet or exceed thecost of litigation.Carefully Draft Arbitration Agreements. Given the difficulty of drafting enforceable arbitration agreements,employers should work with expert legal counsel when doing so.Call (800) 331-8877 or visit HRCalifornia.comWhere Advocacy Meets Compliance™Page 5 of 8
  • 6. Regulatory EnforcementSeveral regulatory agencies, including the California Fair Employment and Housing Commission (FEHC), thefederal Department of Labor (DOL), the National Labor Relations Board (NLRB) and the California Department ofIndustrial Relations (DIR), recently issued regulations or decisions that will create a significant impact on Californiaemployers.New Pregnancy and Disability RegulationsIn December 2012, California’s FEHC (now replaced by the Fair Employment and Housing Council) issuedregulations addressing the state’s pregnancy disability leave (PDL) law and disability discrimination law.Some of the significant revisions related to pregnancy include:• An explanation of how employers must calculate the “four-month” period of leave guaranteed by the PDL law.• A broader definition of when a woman is “disabled by pregnancy.”• Changes to the written notices that employers are required to post and provide to employees who areaffected by pregnancy.• Broader protections to pregnant employees, requiring not only time off but also transfer or other reasonableaccommodation.• Mandatory reinstatement in almost all cases, and requiring employers to notify employees of availablevacancies for 60 days if they deny reinstatement.• Clarifying that an employee who takes leave under the PDL law and leave under the California Family RightsAct (CFRA) is entitled to continue health benefits through the entire PDL leave and the entire CFRA leave.Some of the significant revisions related to disability discrimination include:• An emphasis on potential accommodations and responsibilities, not on whether an employee is “disabled.”• Broader definitions of terms “physical” and “mental” disability.• Clarification that an employee has the burden in a discrimination case of proving that he or she is “qualified”(i.e., can perform essential functions of the position, with or without accommodation).• An explicit prohibition against requiring an employee to take leave as a reasonable accommodation whenanother accommodation would be effective.• A mandate to permit service animals in the workplace as a reasonable accommodation, including emotional“support” animals.• A description of the interactive process and an explanation of the employer’s and employee’s obligationsas part of the process, including the affirmative obligation to engage in the process before denying anaccommodation.Protected Leave Under the Family and Medical Leave Act (FMLA)The federal DOL recently published new FMLA regulations, primarily impacting leave for military caregivers,military servicemembers and airline flight crew employees.Call (800) 331-8877 or visit HRCalifornia.comWhere Advocacy Meets Compliance™Page 6 of 8
  • 7. The new regulations:• Extend military caregiver leave to eligible family members of recent veterans with a serious injury or illnessincurred in the line of duty.• Extend military caregiver leave to cover serious injuries or illnesses for current service members and veteransthat result from aggravation of pre-existing conditions during service.• Extend “qualifying exigency leave” to eligible employees with covered family members in the regular ArmedForces, but require that servicemembers must be serving in foreign countries.• Change the hours of service requirements for airline flight crew employees to qualify for FMLA.• Provide specific rules for calculating the amount if FMLA leave used by flight crew employees.The DOL also issued an “Administrator’s Interpretation” explaining the conditions under which an employee cantake FMLA leave to care for an adult child with a disability. The Interpretation provides that the broad definition of“disability” under the Americans with Disabilities Amendments Act of 2008 also applies to FMLA leave to care fora disabled adult child.The DOL also clarified that the age of the child at the onset of the disability is not relevant for determining anemployee’s eligibility for leave.NLRB Guidance for Non-Union EmployersThe federal NLRB continues to issue guidance and rulings that affect non-union employers. However, the statusof recent NLRB rulings is in flux because in Noel Canning v. NLRB, a District of Columbia court invalidated theappointments of some NLRB members. Although some legal experts believe the Noel Canning ruling invalidatesall NLRB rulings by those members, the NLRB takes the position that the ruling applies only to the specific case.Social Media PoliciesIn May 2012, the NLRB released a report invalidating several employer social media policies because the policiesviolated the National Labor Relations Act (NLRA). The NLRB explained that a social media policy violates theNLRA if employees would reasonably construe the policy to prohibit “protected concerted activity” about theterms and conditions of employment (called Section 7 activity); the policy was promulgated in response to unionactivity; or the policy was applied to restrict employees from exercising their Section 7 rights.The report includes a two-and-a-half page social media policy that the NLRB found did not violate the NLRA.Employers seeking to avoid the NLRB’s scrutiny of their social media policies should consider using this NLRB-approved policy. As this is an ever-changing area of the law, employers may also wish to seek the advice of legalcounsel.The NLRB approved the policy because its language:• Prohibits using social media for “harassment, bullying, discrimination or retaliation.”• Informs employees that they are “more likely” to resolve complaints by speaking with a co-worker or goingthrough company’s complaint procedure, rather than posting complaints online.• Gives examples of “inappropriate postings,” such as specific threats of violence or discriminatory remarks.• Instructs employees not to reveal trade secrets or confidential information, and defines what information isconsidered confidential.Call (800) 331-8877 or visit HRCalifornia.comWhere Advocacy Meets Compliance™Page 7 of 8
  • 8. Internal InvestigationsThe NLRB found that requiring employees to not discuss with their co-workers information shared during aninternal investigation may violate Section 7. An employer may not impose a blanket rule requiring confidentiality inall investigations, and must decide whether to require confidentiality on a case-by-case basis, taking into accountfactors such as whether witnesses need protection; whether evidence may be destroyed; whether witnesses mayfabricate evidence; or there is a need to prevent a cover up. Banner Health System, 358 NLRB No. 93 (July 30,2012)“At-Will” DisclaimersFinally, the NLRB found that overbroad “at-will” disclaimers may infringe upon Section 7 rights becauseemployees may believe they cannot negotiate the terms of their employment. Thus, the NLRB invalidated anat-will disclaimer stating that the employment relationship could not be “amended, modified, or altered in anyway,” but upheld one that allowed specific individuals within a company, such as the president, to alter the at-willrelationship.California’s “Underground Economy”The DIR recently commissioned the Labor Enforcement Task Force (LETF) to combat California’s “undergroundeconomy.” The underground economy is “unlawful business activity done ‘off the books’ to avoid providingworkers’ compensation insurance coverage, paying taxes and complying with basic safety requirements thatprotect workers.”The LETF, in conjunction with Cal/OSHA and other regulatory agencies, increased inspections of businesses toensure compliance with California’s workplace laws.Final ThoughtsIn 2013, employers can anticipate that the courts and regulatory agencies will continue to break new ground ininterpreting and enforcing employment laws.Because of the ever-changing landscape of employment law, employers must keep abreast of recentdevelopments, craft comprehensive compliance strategies, update policies and make sure to train staff regularly.CalChamber Can Help!We hope you found this information helpful. For more information on California employment laws and HRcompliance, sign up for a free trial of HRCalifornia. Your HRCalifornia free trial includes access to ourHR Library and many HR forms and tools.To learn more about our tools and resources, please call our Customer Service Representatives at (800) 331-8877, Monday through Friday, 8 a.m. to 5 p.m. PT. Created 04/23/2013Call (800) 331-8877 or visit HRCalifornia.comWhere Advocacy Meets Compliance™Page 8 of 8