California
The initial deadline for new
legislation to be introduced has expired, and as expected with a new
administration, a number of employment-related bills are now pending
either in the California Assembly or Senate. Page constraints preclude
covering every employment-related bill, but some of the more significant
bills progressing in the Legislature include the following:
Minimum Wage Increase Proposed
(AB 10)
This bill would increase California's
minimum wage from $ 8.00 to at least $8.50 effective January 1, 2012,
and provide for automatic annual increases beginning in 2013 based upon
the California Consumer Price index.
Bill Limiting Credit Checks
in Employment Decisions Re-introduced (AB 22)
This bill would prohibit employers,
other than certain financial institutions, from obtaining consumer credit
reports for employment purposes unless (1) the information is substantially
job-related, meaning that the person for whom the report is sought has
access to financial or confidential information, or (2) the position
at issue is in the state Department of Justice, a managerial position,
that of a sworn police officer of other law enforcement position or
a position for which the law requires the employer to obtain this type
of information.
Similar versions of this bill
passed the California Legislature in 2008, 2009 and 2010 but were vetoed
by the then-Governor Schwarzenegger. This history suggests this
bill will again pass the Legislature and advance to Governor Brown's
office for signature or veto.
CFRA Expansion Proposed
(AB 59)
This bill would increase the
circumstances upon which employees would be entitled to protected leave
under California's Family Rights Act (CFRA). Specifically, this
bill would (1) eliminate the age and dependency elements from the definition
of "child," thus permitting employees to take protected leave to
care for independent adult children suffering from a serious health
condition; (2) expand the definition of "parent" to include an employee's
parent-in-law; and (3) permit an employee to take leave to care for
a seriously ill grandparent, sibling, grandchild, or domestic partner,
as defined.
Assembly Considering Bill
Authorizing Debit Cards for Paycheck Purposes and Electronic Wage Statements
(AB 196)
Labor Code section 213 presently
authorizes an employer to deposit an employee's wages in a "bank,
savings and loan association or credit union" of the employee's
choice. This bill would also authorize an employer to deposit
an employee's wages in "an industrial bank or trust company."
This bill would also permit an employer to transfer an employee's
wages or advance on wages to a card issued by a specified financial
institution (e.g., a "payroll card" or "debit card"), provided
the employee voluntarily authorizes the transfer and the card can be
used to access funds at an automated teller machine in California, and
the employee is entitled to at least one pay card transaction without
charge per pay period.
This bill would also amend
Labor Code section 226 to specify employers may provide "electronic"
itemized wage statements, provided the electronic statement contains
all required information and the employer provides the employee with
electronic access in a confidential setting during normal business hours
to print the statement. This bill would essentially codify two
prior DLSE opinion letters authorizing "pay cards" for payroll purposes
and "electronic" wage statements under certain instances.
Increased Penalty for Minimum
Wage Violations (AB 196)
Labor Code section 1194.2 presently
authorizes an employee to recover liquidated damages equal to the amount
of wages unlawfully unpaid in minimum wage violations. This bill
would increase the amount of liquidated damages that may be awarded
to twice the amount of wages unlawfully unpaid, plus interest.
A similar version (AB 1881) was vetoed in 2010.
Bill Targets Non-California
Choice of Law and Forum Provisions (AB 267)
This bill would prohibit employment
contract provisions (including in applications or handbooks) requiring
an employee, as a condition of obtaining or continuing employment, to
use a forum other than California or to agree to a choice of law other
than California law, to resolve any employment-related issues that arise
in California.
Increased Time for Employers
to Respond to EDD Notices? (AB 274)
This bill would provide employers
30 days, rather than the current 10 days, to submit information to the
Employment Development Department concerning an employee's request
for unemployment insurance benefits.
DLSE to Offer Consultation
Services and an Opportunity to Cure? (AB 311)
This bill would establish in
the DLSE a "Labor Standards Consultation Unit" to provide consulting
services to an employer or employee regarding compliance with labor
standards, at a fee not to exceed the actual cost to the unit.
This bill would also prohibit the DLSE from citing an employer for labor
standard violations discovered as a result of the employer requesting
or accepting such consulting services provided the employer remedies
the violation within 30 days.
Bereavement Leave Bill Re-Introduced
(AB 325)
This bill would allow employees
to take up to four days of unpaid bereavement leave within a thirteen
month period following the death of a spouse, child, parent, sibling,
grandparent, grandchild or domestic partner, and authorize civil actions
for violations of this new leave right. In 2010, Governor Schwarzenegger
vetoed a prior version of this bill proposing three days of unpaid bereavement
leave.
"Card Check" to Replace
Secret Ballot Elections for Agricultural Employees? (SB 104)
California law currently requires
secret ballot elections for employees in agricultural bargaining units
to select labor organizations to represent them for collective bargaining
purposes. This bill would permit agricultural employees, as an
alternative procedure, to select their labor representatives by submitting
a petition to the Agricultural Labor Relations Board signed by a majority
of the bargaining unit. A similar bill (SB 1474) was vetoed in
2010.
Employment Protections for
Medical Marijuana Users (SB 129)
This bill would make it unlawful
for employers to discriminate against or penalize an applicant or employee
because that person is a "qualified patient" under California's
Compassionate Use Act of 1996, or because the person tested positive
for marijuana, unless the employer demonstrates the employee is impaired
while at work. This bill is intended to legislatively overrule
the California Supreme Court's decision in Ross v. Ragingwire
Telecommunications, Inc. (2008) 42 Cal.4th 920, which
held employers need not accommodate employee medical marijuana usage.
Similar versions of this bill have previously passed the Legislature
but were vetoed by the former Governor.
Bill Would Require Employers
to Maintain Insurance Coverage during Pregnancy-Related Leaves (SB 299)
Government Code section 12945
currently prohibits employers from refusing female employees disabled
by pregnancy, childbirth or a related medical condition to take up to
4 months leave from work. This bill would prohibit employers from
refusing to maintain and pay for coverage under a group health plan
for an employee who takes such qualifying leaves. However, the
employer would potentially be entitled to recover from the employee
the premiums paid if the employee failed to return to work after the
leave expires unless the employee qualified for one of the bill's
identified statutory exceptions.
Meal Period Exemption Proposed
for Transportation Industry Employees (SB 316)
In 2010, then-Governor Schwarzenegger
approved a bill (AB 569) exempting from the Labor Code's meal period
provisions employees in particular industries (e.g., construction, commercial
drivers, etc.) if covered by a collective bargaining agreement containing
specified items, including meal period provisions. This bill would
add employees in the transportation industry, as defined in IWC Wage
Order Number 9, to the list of employees exempt from California's
meal period requirements. A fairly similar bill (SB 319) would
exempt transportation industry employees whose work places them in an
armored car in shifts during a workday.
Several Bills Propose Amendments
to California's Alternative Workweek Schedule Requirements (SB 367
and SB 378)
Labor Code section 511 authorizes
employers to utilize so-called "alternative workweek schedules"
to avoid paying daily overtime in certain situations, but the fairly
rigorous requirements for enacting such schedules limits their usage.
The first bill, known as the Small Business Workplace Flexibility Act
of 2011 (SB 367), would permit individual employees at small employers
(less than 25 employees) to request a flexible workweek schedule, thus
bypassing the "work unit" approval process. A second bill
(SB 378) would permit employers to offer "regularly scheduled alternative
workweek" schedules authorizing more than 10 hours a day provided
the employer pays overtime as set forth in Labor Code section 511(b).
Increased Workplace Smoking
Prohibitions Proposed (SB 575)
Labor Code section 6405.5 currently
prohibits smoking of tobacco product inside an "enclosed space"
(as defined) at a place of employment, and authorizes civil fines for
violations. This bill would expand the prohibitions on workplace
smoking to include "owner-operated businesses" (except where the
owner-operator is the only employee) and eliminate most of the currently
specified exceptions that permit smoking in certain work environments
(e.g., hotel lobbies, bars and taverns, tobacco shops, banquet rooms,
warehouse facilities and employee break rooms).
FEHA and Unruh Act to Prevent
Genetic Information Discrimination? (SB 559)
This bill would amend the Unruh
Civil Rights Act (Civil Code § 51 et seq.) and FEHA, as
well as other statutory anti-discrimination provisions (e.g., contained
in the Education Code, etc.), to prohibit discrimination on the basis
of "genetic information" as defined in the bill.
Employer Good Faith Defense
Proposed (SB 883)
This bill would preclude employers
from being liable for Labor Code or Wage Order violations if the employer
establishes that at the time of the alleged violation, it was acting
in good faith and in compliance with or reliance upon an applicable
employment statute or regulation (e.g., a Labor Commissioner or Department
of Labor opinion, etc.)
AGENCY
Federal
DHS' E-Verify Self-Check
Program Takes Effect March 18, 2011
The Department of Homeland
Security (DHS) has recently announced that its new E-Verify Self-Check
program will be effective March 18, 2011. Under this voluntary
program, an individual may check his or her work authorization status
through E-Verify prior to employment, and prior to an employer conducting
a similar E-Verify inquiry regarding this individual. Previously,
only employers had access to the E-Verify database. The DHS states
this program is intended to allow individuals to identify and correct
potential errors prior to the individual's application for employment.
The DHS' proposed rule is available at http://edocket.access.gpo.gov/2011/2011-3490.htm.
JUDICIAL
California
California Supreme Court
Holds Arbitration Agreements May Not Require Employees to Waive Labor
Commissioner Hearing Regarding Wage Disputes
An employee seeking to recover
unpaid wages may either pursue judicial relief by filing a civil action
or pursue administrative relief by filing a claim with the Labor Commissioner
pursuant to a special statutory scheme codified in Labor Code sections
98 through 98.8 (a so-called Berman hearing). In this case,
after an employee initiated Berman proceedings with the DLSE
to recover vacation pay, the employer moved to compel arbitration pursuant
to the parties' agreement requiring arbitration for all employment-related
disputes (except for several narrow inapplicable exceptions).
The trial court refused to compel arbitration finding it premature until
after the Berman hearing, but the appellate court reversed and
ordered arbitration. In a 4-3 decision, the California Supreme
Court held that an employer-imposed arbitration agreement cannot require
an employee to waive his or her entitlement to a Berman hearing
for wage disputes, although the employer can require arbitration for
a post-Berman hearing appeal.
The Court concluded that an
employee's entitlement to recover wages is an unwaiveable statutory
right, and that a Berman hearing provides a number of legislatively-enumerated
procedural and substantive advantages that would be jeopardized if an
employee must immediately proceed to formal arbitration. Amongst
these, the Court noted Berman hearings are relatively informal
(i.e., an employee need not retain counsel) and can be resolved on an
expedited basis with limited discovery and pleadings. Moreover,
an employee who prevails at a Berman hearing can rely on the
Labor Commissioner to enforce an award and potentially represent the
employee, while an employer challenging the award through appeal must
post an undertaking equal to the award and has almost no chance of recovering
its attorneys' fees. Thus, the Court concluded an employer cannot
require as a condition of employment that an employee waive his or her
entitlement to a Berman hearing if the employee elects an administrative
rather than a judicial remedy for a wage dispute.
However, the Court also held
that an arbitration agreement may be enforced either if an employee
initially elects civil litigation rather than an administrative remedy,
or if either party attempts to appeal the Labor Commissioner's determination;
in those instances, the parties' dispute or the post-Berman
appeal would proceed before an arbitrator rather than in civil court.
Significantly, the Court also noted that not only would the statutory
protections afforded an employee after a successful Berman hearing
(i.e., employer must post undertaking, potential Labor Commissioner
representation of employee, etc.) still apply in the arbitration proceeding,
but also that the arbitration agreement must also satisfy the heightened
requirements for other non-waiveable statutory claims (e.g., FEHA, etc.).
In other words, and for example, the employee would not bear any unique
arbitration-related costs (e.g., arbitrator fees, etc.) and would be
entitled to recover all remedies otherwise available. (Sonic-Calabasas
A, Inc. v. Moreno (2011) ___ Cal.4th ___, 2011 Cal. LEXIS 1831.)
(NOTE: the Court did not say
employers could not enforce arbitration agreements for wage disputes,
but held only that these arbitration provisions did not apply until
after the administrative Berman hearing if the employee so elected.
As a practical matter, however, the Court inclusion of the Berman
hearing protections along with the other employee-protections in arbitrations
(e.g., employer pays all arbitrator fees) makes it unlikely employers
will attempt to enforce arbitration provision after a Berman
hearing).
Employees May Recover up
to Two Premium Wage Payments per Day for Missed Meal and Rest Periods
Labor Code section 226.7 requires
an employer who fails to provide an employee with a meal or rest period
to pay that employee one additional hour of pay (a so-called "premium
payment") for each day that the meal or rest period is not provided.
An undecided issue has been the number of premium payments an employee
may receive each day, with employees arguing they may receive up to
two payments if both a meal and rest period is missed, and employers
arguing employees may recover only a single premium payment per "work
day." In 2009, a federal district court in California
held the Industrial Wage Orders treat these as separate violations and,
thus, employees may recover up to two premium payments in a single day
if both a meal and rest period is missed. (See Marlo v. UPS
(C.D. Cal. 2009) 2009 U.S.Dist.Lexis 41948.) However, since lower
federal district court decisions are not binding in California, it remained
to be seen whether California state courts would adopt a similar rule.
A California court of appeal
has recently followed Marlo and held that employees may recover
up to two additional hours of pay on a single work day for meal and
rest period violations if both a meal and rest period is missed.
The California appellate court first concluded that the legislative
history to section 226.7 supported this interpretation, noting it was
enacted concurrently with the Industrial Wage Orders which are structured
such that meal and rest period violations are treated as separate violations.
The court also concluded allowing up to two premium payments would further
public policy by dissuading employers who had already failed to provide
a rest period (and already owed an hour premium pay) from also not providing
a meal period. (United Parcel Service, Inc. v. Superior Court
(ex rel Allen) (2011) ___ Cal.App.4th ___, 2011 Cal.App.LEXIS 181.)
Appellate Court Applies
Armendariz' Factors to Independent Contractors and Invalidates
Arbitration Agreement
In Armendariz v. Foundation
Health Psychcare Services, Inc. (2000) 24 Cal.4th 83,
the California Supreme Court identified certain "minimum requirements"
for arbitration agreements involving non-waiveable statutory claims,
including under FEHA (e.g., neutral arbitrator, written arbitration
decision, reasonable discovery, no limitation on remedies, employer
bears arbitrators fees, etc.). In this FEHA sex harassment suit
filed by several independent contractors, a California appellate court
held these factors also apply to independent contractor claims under
FEHA, and concluded this agreement was unenforceable because it was
procedurally and substantively unconscionable.
The court found procedural
unconscionability from the fact the agency presented this agreement
on a "take it or leave it" basis with only several minutes to review
and did not provide a copy of the agreement to the contractors.
The court also noted the agreement improperly shortened the limitations
period for filing claims (from one year to 180 days) and authorized
the arbitrator to automatically award arbitration fees to the employer
if it prevailed. The court also declined to sever these multiple,
offending provisions which made the agreement "rife with unconscionability,"
and instead invalidated the entire arbitration agreement. (Wherry
v. Award, Inc. (2011) ___ Cal.App.4th ___, 2011 Cal.App.LEXIS 199.)
Employee Who Shows up to
Work Simply to be Notified of Termination Decision Entitled to Only
Two Hours Reporting Time Pay, and must Demonstrate Actual Injury to
Recover for Wage Statement Violations
A discharged employee filed
a class action alleging the employer failed to provide the proper amount
of "reporting time" pay when he went to the employer to learn of
his termination. Although the employee had not been scheduled
to work that day and had been paid 2 hours reporting time pay to attend
a brief-termination meeting, he claimed he was entitled to reporting
time pay equal to half of his normal work schedule (i.e., 4 hours pay).
The California appellate court concluded the employer properly paid
the two hours owed under Wage Order 5-2001, and also rejected the employee's
wage statement claim, noting the employee could not demonstrate an actual
injury.
The court noted that Section
5(A) of Wage Order Number 5-2001 requires employers to pay their employees
no less than 2 hours and no more than 4 hours at the employee's regular
rate of pay for each workday the employee is required to report to work
and does report, but is not put to work for less than half of the employee's
regularly scheduled workday. The court noted this provision provides
two alternative reporting time mechanisms: if the employee is required
to work that day the employee is entitled to a half-shift reporting
wage not to exceed 4 hours, but if the employee is not scheduled to
work and only reports for a meeting, the employee is entitled to the
minimum payment of 2 hours. In this case, the employer paid the
employee the requisite two-hour reporting time payment which adequately
compensated him for a termination meeting lasting less than a minute.
The court also rejected the
employee's wage statement claim under Labor Code section 226 noting
an employee must suffer actual injury as a result of a knowing and intentional
failure by an employer to comply with the statute. The court held
an employee cannot simply claim one of the nine itemized requirements
is missing from a wage statement, but instead must demonstrate how that
allegedly missing information actually caused injury. (Price v. Starbucks
(2011) ___ Cal.App.4th ___, 2011 Cal.App.LEXIS 186.)
Another California Appellate
Court Concludes Employers Need Only
"Provide" Employees with Opportunity
to Take a Meal Period
Employees and employers continue
to await the California Supreme Court's long-awaited decision in
Brinker concerning an employer's meal period obligations, and
specifically whether an employer need only "provide" an opportunity
to take a meal period, or must "ensure" the meal period is actually
taken. Unfortunately, although Brinker appears fully briefed,
no oral argument has been set and a final decision is not expected until
at least mid-2011.
In the interim, another California
court of appeal has defeated a class certification request in a wage
and hour class action on the grounds the Labor Code only requires employers
to make meal periods available, but need not compel or ensure the employee
actually takes the meal period. The appellate court also precluded
class certification on the employees' rest period claims on the grounds
the employer demonstrated it maintained policies authorizing paid rest
periods, and since employees can decide not to take such rest periods,
individualized questions would predominate regarding any employee's
reason for not taking an authorized rest period. The court also
denied class certification on the employees' wage statement claim
under Labor Code section 226 on the grounds the employees must demonstrate
actual injury to recover the identified statutory penalties.
(Tien v. Tenent Healthcare
Corp. (2011) ___ Cal.App.4th ___, 2011 Cal.App.LEXIS 182.)
(NOTE: the California Supreme
Court will likely soon grant review in Tien, thus rendering it
unciteable pending a final decision in Brinker.)
California Court Upholds
"Explicit Mutual Wage Agreement" that Pre-determines Overtime Compensation
An employee sought substantial
amounts of overtime claiming the parties' written agreement to pay
him $880 per week did not include the approximate 26 hours of overtime,
thus entitling him to 26 hours per week of overtime at a rate of $33
(1 ½ times the $22 hourly rate resulting from dividing $880 by 40).
The employer countered that the parties' written agreement constituted
an "explicit mutual wage agreement" which lawfully compensated him
both for his regular rate at $11.14 and provided an hourly overtime
wage of $16.71. Both the trial court and the California court
of appeal ruled in the employer's favor concluding the parties'
agreement constituted an enforceable explicit mutual wage agreement
that remains valid under California law notwithstanding the DLSE's
contrary conclusion.
The court first concluded that
Labor Code section 515 does not invalidate explicit mutual wage agreements
despite subsection (d)'s language that "[f]or purposes of computing
the overtime rate of compensation required to be paid to a nonexempt
full-time salaried employee, the employee's regular hourly rate shall
be 1/40th of the employee's weekly salary." The
court also declined to follow the DLSE Enforcement Manual's interpretation
that such agreements are no longer permissible following the enactment
of Labor Code §515 in 2000.
Instead, the court concluded
an employer and employee may lawfully agree before the employee starts
work to pay the employee a guaranteed salary so long as the employee
receives at least one and a half times the employee's basic rate for
any hours worked beyond the statutorily defined workday of eight hours.
The court noted this agreement must specify: (1) the days the employee
will work each workweek; (2) the number of hours the employee will work
each workday; (3) the specific amount of the salary the employee is
guaranteed to be paid; (4) the employee is informed and agrees to the
basic hourly rate of pay upon which the salary will be based; (5) the
employee is informed and agreed the agreed-upon salary covers the employees
straight-time hours and overtime hours; and (6) the agreement is reached
before the work is performed. (Arechiga v. Delores Press, Inc.
(2011) 192 Cal.App.4th 567.)
(NOTE: although a favorable
result for this employer, employers should be careful relying upon such
agreements at least until the review period has expired, given the potentially
very-high cost of making a mistake; a contrary result in this case would
have entitled the employee to 3 years worth of overtime (26 hours per
week at a rate of $33) plus attorneys' fees).
Appellate Court Concludes
Independent Contractor Issue Requires Trial
Teamster union member drivers
who owned their own trucks filed a wage and hour class action against
a "common carrier" transportation business alleging they were misclassified
as independent contractors. The trial court granted summary judgment
for the transportation company concluding the drivers were properly
classified as independent contractors, but the California court of appeal
reversed holding whether the drivers were employees or independent contractors
presented a question of fact. The appellate court first noted
that summary judgment would be appropriate only if the independent contractor
issue involved no disputed inferences or evidence, and it reiterated
that the parties' label for their relationship is not dispositive
(here, the parties' agreement stated the drivers were independent
contractors).
The court also reiterated that
the "right to control work" remains the most significant consideration,
but it must also consider other secondary factors, including the right
to discharge at will, and the nature of the business and services, including
whether the one performing services is engaged in a distinct occupation
or business. The court noted the fact the defendant/carrier did
not control the "manner and means" of the services (i.e., which
routes the drivers took to haul loads, etc.) was a factor suggesting
independent contractor status, but was not enough to establish this
status as a matter of law. The court also noted numerous factors
suggestive of an employee relationship including that the collective
bargaining agreement described the drivers as employees, that the carrier
issued W-2 forms to the plaintiffs and withheld taxes, and offered and
paid for health benefits for the drivers who were paid hourly and could
be summarily dismissed. (Arzate v. Bridge Terminal Transport,
Inc. (2011) 192 Cal.App.4th 419.)
Non-Union Members Entitled
to Notice and Opportunity to Object Before Private Information Provided
to Union
During collective bargaining,
the union sought disclosure of personal information (e.g., name, address,
phone number) for all non-union county employees. The California
court of appeal concluded disclosure was required, but also concluded
that the non-union members had a reasonable expectation of privacy in
this information provided to their employer. As such, they were
first entitled to notice and an opportunity to opt-out of the disclosure
even if the union otherwise had a legal entitlement to this information.
(LA County Employee Relations Commission v. Service Employees International
Union (2011) ___ Cal.App.4th ___, 2011 Cal.App.LEXIS 209.)
Appellate Court Concludes
Prevailing Employer Not Entitled To Recover Attorneys' Fees on Meal
and Rest Period Claims
An employer that successfully
defended various wage-related claims, including for missed meal and
rest periods, sought to recover its attorneys' fees under Labor Code
section 218.5 which authorizes a "prevailing party" to recover fees
and costs in actions for "nonpayment of wages, fringe benefits or
health and welfare or pension fund contributions." (The employer
did not seek attorneys' fees for successfully defending the overtime
claims since Labor Code section 1194 authorizes only employees to recover
fees for overtime disputes). In a somewhat interesting ruling,
a California appellate court concluded the employer could not recover
its fees because the "wages" owed for meal and rest period violations
under Labor Code section 226.7 are somehow different than the "wages"
contemplated under Labor Code section 218.5. However, the employer
was entitled to recover its statutory costs (approximately $20,000)
in defending against the employee's wage and hour claims. (McGann
v. United Parcel Service, Inc. (2011) ___ Cal.App.4th ___, 2011
Cal.App.LEXIS 211.)
Claims Adjusters for Third
Party Administrator Properly Classified as Exempt
Claims adjusters employed by
a third party administrator (TPA) filed a wage and hour class action
seeking unpaid overtime contending they were misclassified as administratively
exempt. A California appellate court affirmed summary judgment
in the TPA's favor finding the claims adjusters were exempt administrative
employees under Wage Order No. 4 applicable to professional technical,
clerical, mechanical and similar occupations.
The appellate court noted the
administrative exemption from overtime under Wage Order 4 applied to
persons whose duties and responsibilities involve the performance of
office or non-manual work directly related to general business operations
of either his or her employer, or his or her employer's customers.
The court first declined to apply the so–called "administrative/production"
dichotomy noting it is simply one possible analytical tool and only
to be applied in appropriate circumstances not present in this case.
The court also concluded the administrative exception applied because
these TPA adjusters applied "critical" and "vital" services
important to their employer's and employer's customer's business
operations, including setting reserves, determining litigation strategy,
managing outside counsel investigating claims and generally exercising
substantial discretion. In this respect, these claims adjusters'
substantially important duties contrasted with the "run of the mill"
or "go between" type duties performed by claims adjusters where
courts (e.g., Bell v. Farmers Ins. Exchange) had declined to
apply the administrative exemption. (Hodge v. AON Insurance
Services (2011) ___ Cal.App.4th ___, 2011 Cal.App.LEXIS 708.)
Another Appellate Court
Invalidates Statutes Favoring Union Picketing on Private Property
In late 2010, a California
appellate court deemed unconstitutional two statutes (Code of Civil
Procedure § 527.3 and Labor Code § 1138.1) that made it
difficult for private property owners to enjoin union picketing and
hand-billing on their property. (See Ralphs Grocery Co. v.
UFCW Local 8 (2010) 186 Cal.App.4th 1078.) However,
the California Supreme Court has granted review in Ralphs making
this decision presently unciteable, and a final decision is not expected
until 2011. In the interim, a second California appellate court
has recently similarly concluded (in an action involving these same
parties) that these two statutory provisions are unconstitutional on
the grounds they impermissibly distinguish between union and non-union
picketing and make it much more difficult to enjoin union picketing.
(Ralphs Grocery Co. v. UFCW Local 8 (2011) 192 Cal.App.4th 200.)
(NOTE: it is likely the California
Supreme Court will similarly grant review in the second Ralphs
case pending final decision in the first matter rendering it also unciteable.)
Federal
United States Supreme Court
Recognizes "Cats Paw" Liability in Discrimination Cases
A frequently recurring issue
in discrimination cases is whether and under what circumstances an employer
may be liable for intentional discrimination if the ultimate decision-maker
did not intend to discriminate but relied upon information from individuals
who intended to discriminate (the so-called "cats paw" theory of
imputing the misbehaving individual's motive to a decision-maker otherwise
lacking such motive).
In this USERRA discrimination
case, an employee argued his military reserve status was a "motivating
factor" in the employer's termination decision because the supervisors
who harbored such animosity unduly influenced the unknowing Human Resources
manager who made the final termination decision. The trial court
ruled in the employee's favor, but the Seventh Circuit Court of Appeals
reversed finding that an employer could only be liable under a "cats
paw" liability theory if the misbehaving exercised such a "singular
influence" that the final termination decision was the product of
"blind reliance."
In a unanimous decision, the
United States Supreme Court reversed and recognized the "cats paw"
liability theory to impute in appropriate circumstances one agent's
discriminatory animus to the employer even if the ultimate decision-maker
did not intend to discriminate. Applying tort-law principles, the Court
concluded that the wrongdoing supervisor's intent can potentially
still be imputed to the employer even if the decision-maker exercises
judgment or investigates unless the decision-maker's investigation
justifies the decision apart from the wrongdoing supervisor's recommendation.
In other words, an employer cannot insulate itself from a wrongdoing
supervisor's intent to discriminate or retaliate simply by delegating
the ultimate decision to a personnel manager who, although exercising
final discretion, effectively relies upon the wrongdoing supervisor's
recommendation. Applying this test, the Court concluded
a reasonable jury could infer the wrongdoing supervisor had proximately
caused the ultimate termination since the Human Resources manager did
not independently investigate but relied upon the supervisor's contention
the employee had denied his directive, which the employee denied. (Staub
v. Proctor Hosp. (2011) ___ U.S. ___, 2011 U.S.LEXIS 1900.)
(NOTE: the Supreme Court noted
that USERRA is "very similar" to Title VII, suggesting the Court
would apply the same analysis to other discrimination claims.
Also, while this case does not necessarily mean the "cats paw" liability
theory will automatically be applied, it underscores the importance
of ensuring upper management does not simply "rubber stamp" disciplinary
decisions, particularly where there has been conflicts between the parties
involved.)
Ninth Circuit Concludes
Pharmaceutical Sales Representatives Qualify for FLSA's
"Outside Salesman" Exemption
Pharmaceutical Sales Representatives
filed a class action seeking overtime pay contending they did not qualify
for the "outside salesmen" exemption under the Fair Labor Standards
Act (FLSA). The Ninth Circuit agreed with the federal district
court that the sales representatives qualified for this "outside sales"
exemption, thus creating a split in authority amongst the federal circuit
courts that may require final decision by the United States Supreme
Court.
To qualify under the FLSA's
"outside salesman" exemption, (1) an employee's primary duty must
be making sales or obtaining orders or contracts for services, and (2)
the employee must be primarily and regularly engaged away from the employer's
place or places of business in performing this primary duty. The primary
focus in this case was the first element, with the representatives and
the DOL arguing the employees did not actually "make sales" since
the highly regulated pharmaceutical industry precluded the physician
from actually purchasing directly from the representative. The
Ninth Circuit rejected this fairly rigid approach, noting that the physician's
non-binding commitment to the representative constituted a "sale"
in this industry. (Christopher v. Smithkline Beecham Corp.
(9th Cir. 2011) ___ F.3d ___, 2011 U.S.App.LEXIS 2834.)
(NOTE: as mentioned, the Ninth
Circuit expressly rejected the DOL's position and a contrary ruling
by the Second Circuit Court of Appeal's in In re Novartis Wage
& hour Litig., 611 F.3d 141 (2d Cir. 2010), meaning the United
States Supreme Court may soon weigh in on this issue.)
