California
Governor Vetoes
"Card Check" Bill for Agricultural Workers (SB 104)
Governor Jerry Brown recently
vetoed this bill which would have permitted agricultural employees to
select their labor representatives by submitting a petition to the Agricultural
Labor Relations Board signed by a majority of the bargaining unit (rather
than under the current process using secret ballot elections.
Former Governor Schwarzenegger had vetoed similar bills on multiple
occasions, but it was unclear how Governor Brown would respond.
In his veto message, Governor Brown acknowledged the frustrations prompting
this bill's passage and pledged to be personally involved in addressing
issues in this area, but cited a desire to carefully consider and involve
all interested parties in this discussion before enacting a bill that
would fundamentally transform California's Agricultural Labor Relations
Act (ALRA), which Governor Brown had helped implement during his prior
tenure.
AGENCY
Federal
IRS Increases Mileage Reimbursement
Rate to 55.5 Cents per Mile Effective July
1, 2011 Through December 31, 2011
In response to increased gasoline
prices, on June 23, 2011, the Internal Revenue Service announced it
was increasing the optional standard mileage rate from 51 cents to 55.5
cents from July 1, 2011 through December 31, 2011. This optional
business standard mileage rate is used to compute the costs of operating
an automobile for business use in lieu of tracking actual costs, and
is used as a benchmark by the federal government and many businesses
to reimburse their employees for mileage.
Department of Defense Extends
Arbitration Prohibitions in Final Rule
In the 2010 Appropriations
Bill, the Department of Defense (DOD) included a provision precluding
contractors or subcontractors that receive more than $1 million in contracts
appropriated by the Act from requiring employees, as a condition of
employment, to agree to arbitrate any claim under Title VII or any tort
related to or arising out of sexual assault or harassment. In June
2011 the DOD issued a Final Rule extending these restrictions for DOD
appropriations in 2011, and stated these restrictions will be an ongoing
requirement and automatically apply to all subsequent fiscal year appropriations
unless subsequently revoked.
NLRB Proposed Changes to
Streamline and Expedite Union Election Process
On June 21, 2011, the National
Labor Relations Board (NLRB) announced new proposed rules designed to
streamline and expedite union election procedures under the National
Labor Relations Act (NLRA). The NLRB has stated these proposed
rule changes are intended to fix flaws in current procedures that result
in unnecessary delays and wasteful litigation, but some have suggested
these administrative changes are intended to implement through agency
action provisions of the legislatively-dormant Employee Free Choice
Act.
The NLRB has published a "fact
sheet"(http://www.nlrb.gov/node/525) outlining these proposed changes,
which include the following:
- Require pre-election
hearings to be held within seven days after a petition is filed (reduced
from the current fourteen-day period);
- Require parties
to file a Statement of Position form no later than the start of this
hearing and prior to evidence being heard at the hearing;
- Defer many voter
eligibility issues from the current pre-election hearing until the post-election
challenges;
- Require the non-petitioning
party (i.e., the employer) to produce a preliminary voter list, including
names, work location, shift and classification by the opening of the
pre-election hearing;
- Require employers
to provide a final voter list including not only the name and address,
but also for the first time include phone numbers and e-mail addresses
within two days rather than the current seven days;
- Require post-election
disputes to be heard within fourteen days of the election, and make
NLRB review of such disputes discretionary rather than mandatory; and
- Allow election petitions,
election notices and voter lists to be transmitted electronically.
The NLRB has scheduled a public
hearing for July 18-19, 2011 in Washington D.C., and it will accept
written comments on these proposed rules until August 22, 2011.
The entire proposed rule is available at http://federalregister.gov/a/2011-15307.
OSHA Proposes to Expand
Illness and Injury Reporting Requirements
The Occupational Safety and
Health Administration (OSHA) has recently unveiled a proposed rule to
make several changes to the occupational injury and illness recording
and reporting requirements. Specifically, this rule would update
its list of industries that are partially exempt from maintaining records
of occupational injuries and illnesses due primarily to their relatively
low rate of occupational injury or illness. (A complete list of
these partially exempt industries is contained in Appendix A to Subpart
B of the Injury and Illness Recording and Reporting regulation).
This rule would update Appendix A by replacing it with a list of industries
based on the North American Industry Classification system rather than
the current Standard Industrial Classification system.
Secondly, OSHA's regulations
(specifically section 1904.39) require an employer to report to OSHA,
within eight hours, all work-related fatalities and in-patient hospitalizations
of three or more employees. The proposed rule would require an
employer to report to OSHA, within eight hours, all work-related fatalities
and all work-related in-patient hospitalizations (i.e., dispensing with
the three employee threshold), and require reporting to OSHA within
24 hours all work-related amputations. OSHA will accept written
comments on this proposed rule until September 20, 2011. The full
text of this proposed rule can be found at 29 CFR Part 1904 or at www.gpo.gov/fdsys/pkg/FR-2011-06-22/html/2011-15277.htm
JUDICIAL
California
California Supreme Court
Holds Labor Code's Overtime Provisions Apply to Non-California
Residents Working in California
Several non-California residents
sued their California-based employer under the California Labor Code
for unpaid overtime for work performed while on assignment in California.
These employees generally worked in the employer's Arizona and Colorado
locations but periodically worked in California and other states.
After a lengthy and complicated procedural history, the California Supreme
Court unanimously held that California's overtime provision (Labor
Code section 510) applies to work performed by non-residents while in
California, including for work in excess of eight hours a day, or more
than forty hours a week. The Court also held that failure to pay
overtime under Labor Code section 510 for work performed in California
could serve as the predicate for claims under California's unfair
competition law (UCL) (Business and Professions Code section 17200),
but that employees could not sue under the UCL for overtime compensation
under the federal Fair Labor Standards Act (FLSA) for work performed
in other states.
The Court noted that whether
California's overtime provision (Labor Code section 510) applied to
work performed by non-resident employees in California involves two
separate inquiries: (1) whether the relevant provisions of the Labor
Code apply as a matter of statutory construction; and (2) whether "conflict
of law" principles require California law to be applied to extent
other states have laws regulating work performed by its residents while
in California. On the statutory construction issue, the Court
noted the Labor Code's relevant overtime provisions (sections 510
[outlining when overtime is owed] and 1194 [enforcement actions for
overtime violations] were drafted broadly to apply to "any work"
and "any employee" and contained no language suggesting they applied
only to California residents.
The Court also noted salient
public policy goals supported applying Labor Code section 510 to all
non-exempt overtime work within California regardless of residence,
including California's stated goals of protecting health and safety
of workers, protecting employees in weak bargaining positions from overwork,
and expanding the job market by providing an economic incentive to hire
more workers rather than incur overtime obligations. In contrast,
the Court noted that "to exclude nonresidents from the overtime laws'
protection would tend to defeat their purpose by encouraging employers
to import unprotected workers from other states."
Interestingly, the Court noted
that Labor Code section 510 might not apply to non-resident employees
who enter California temporarily during the course of a workday before
returning to their state, but concluded it did not need to reach that
issue since plaintiffs in this case were suing only for entire days
and weeks worked in California. Interestingly also, the Court
noted its conclusion that the Labor Code's overtime provision applied
to non-resident employees did not necessarily mean the state's other
wage and hour provisions (including those governing pay-stubs [section
226] and vacation accrual [section 227.3] would also apply because those
issues were not before the Court. The Court also side-stepped
the employer's argument this holding would impose significant burdens
on out-of-state employers noting this employer was based in California.
Applying choice of law principles,
the Court concluded California's overtime provisions should still
apply. The Court noted that while California's overtime provisions
differed from plaintiffs' states of residence (Arizona and Colorado)
which did not authorize daily overtime, there did not appear to be a
conflict since none of those states' overtime provisions regulated
work performed by their residents in other states (e.g., in California).
Even if a conflict existed, the Court observed California's overtime
provisions would still apply to work performed in California given the
public policy goals mentioned above.
The Court next noted that it
had previously held failure to pay required overtime compensation falls
within the UCL's definition of an "unlawful business act or practice,"
and, thus, non-resident employees could sue under the UCL for work performed
entirely in California. However, the Court declined to allow suit
under the UCL for alleged violations of the FLSA occurring in other
states, even if the employer was headquartered in California.
The Court noted that the adoption of an allegedly erroneous classification
policy is not unlawful in the abstract, and that what creates liability
under the FLSA is the failure to pay required overtime and the plaintiffs
had not demonstrated the underpayment for work performed outside of
California had occurred in California. In other words, the mere
fact an employer is headquartered in California does mean it is necessarily
subject to UCL liability for FLSA violations occurring in other states,
even if the violation allegedly flowed from a policy adopted in the
California headquarters.
(Sullivan v. Oracle Corp. (2011) ___ Cal.4th __, 2011 Cal.LEXIS 6537.)
(NOTE: in light of Sullivan's holding California's overtime provision (Labor Code section 510) applies
to non-resident employees working in California, employers need to be
familiar with this section and how it may differ from federal law and
the state in which the employee normally resides. Very simply
summarized, Section 510 requires overtime compensation at the rate of
one-and-a-half times the regular rate of pay for work in excess of eight
hours in one workday, 40 hours in one workweek, and the first eight
hours on the seventh workday in one workweek (and increases to double
the regular rate for more than twelve hours in a single workday, and
in excess of eight hours on the seventh workday.) Moreover, while
the Court also specifically declined to address whether the same rule
would apply to other Labor Code provisions (ex. itemized wage statements)
since not confronted with that issue, employers should become familiar
with these other wage and hour provisions to assess whether they might
also apply.)
Employee Subjected to Demeaning
Sexual Taunting by Supervisor Could Not Pursue FEHA Sex Harassment Claim,
but Permitted to Proceed with Co-Worker Retaliatory Harassment Claim
A male ironworker sued for
FEHA sexual harassment after his male supervisor made a number of offensive
and demeaning comments to him one day at work (e.g., repeatedly referring
to him as a "B****," suggesting he had a "nice a**"and that
he wanted to "f*** him in the a**"). The employee also sued
for FEHA retaliation claiming that following his complaint, his co-workers
harassed him because of his complaint about the supervisor's conduct.
The California court of appeal affirmed summary judgment on the FEHA
harassment claim, but allowed the employee to proceed with the co-worker
retaliatory harassment theory.
The appellate court noted FEHA
prohibits so-called "same sex" sexual harassment (i.e., male vs.
male, etc.), but also observed FEHA does not prohibit all sexual discussions
or vulgar language, and only prohibits the disparate treatment of an
employee on the basis of sex. The court noted an employee could
show such disparate treatment through various methods, including explicit
or implicit proposals of sexual activity, or the sex-specific and derogatory
terms reflected a general hostility to a particular sex, or if the employee
demonstrates the harasser treats both sexes differently.
The court noted, however, there
was no evidence this supervisor was motivated by sexual desire or that
his sexual jokes were intended to be taken literally (i.e, that he actually
wanted to have sex with the male subordinate), but rather they simply
reflected anger at or an attempt to embarrass the employee. The
court agreed these comments were "crude, offensive and demeaning,"
but emphasized that in this particular construction environment, "sexually
taunting comments by supervisors and employees were commonplace, including
gay innuendo, profanity and rude, crude and insulting behavior."
Regarding the post-complaint
co-worker interactions, the court reiterated that mere ostracism will
not create an adverse employment decision for retaliation purposes,
but active workplace harassment might if sufficiently severe or pervasive.
The court noted that FEHA's retaliation provision does not specifically
address employer liability for retaliation by non-management employees.
However, analogizing to the co-worker harassment context, the court
concluded an employer may be liable for a co-worker's retaliatory
conduct (including harassment and physical threats) if the employer
knew or should have known of the co-workers retaliatory conduct and
either participated in and encouraged the conduct, or failed to take
reasonable actions to end the retaliatory conduct. In this case,
the employer did not orchestrate the co-workers retaliation campaign,
but it failed to respond to the complaining employee's reports of
ongoing retaliatory harassment. (Kelley v. The Conco Companies (2011) ___ Cal.App.4th ___, 2011 Cal.App.LEXIS ___.)
(NOTE: Employers should be
careful about relying too heavily upon this court's analysis of the
same-sex harassment claims. First, as a practical matter, employers
have an affirmative obligation to investigate harassment claims, which
in this case was genuinely held even if mistaken on the law, and this
conduct clearly also violated the employer's harassment/professional
conduct policies. Second, this court specifically declined to
follow two reported appellate court decision reaching a different conclusion
on very similar facts, and this split in appellate court decision may
attract the California Supreme Court's attention, assuming this case
remains on the books.)
National Bank Act Preempts
FEHA Provisions that Exceed its Federal Counterparts
A national bank argued Section
24 of the National Bank Act, which allows national banks to appoint
and dismiss its officers "at pleasure," preempted a former vice
president's FEHA disability discrimination claim. Applying standard
preemption analysis, the California court of appeal concluded Section
24 did not completely preempt state law discrimination claims, but rather
only preempted them to the extent they exceeded the equivalent federal
discrimination statutes (i.e., the ADA), which impliedly amended Section
24. The appellate court concluded Section 24 did not preempt
FEHA's longer statute of limitations period (one year compared to
the ADA's 300-day period to file an administrative charge) since the
ADA expressly incorporates state law discrimination procedures under
its work-sharing arrangements, but it did preempt the FEHA harassment
claim against the bank's supervisor since the ADA does not authorize
individual liability. (Quinn v. US Bank NA (2011) ___ Cal.App.4th ___, 2011 Cal.App.LEXIS ___.)
Federal
United States Supreme Court
Precludes Title VII Class Action Involving 1.5 Million Plaintiffs from
Proceeding against Wal-Mart
One-and-a-half million current
and former Wal-Mart female employees filed a Title VII gender discrimination
class action lawsuit alleging Wal-Mart's policy of allowing its local
managers to exercise substantial discretion in promotion decisions had
an unlawful disparate impact on female employees. The federal
district court and the Ninth Circuit Court of Appeals certified the
proposed class, but in a potential landmark 5-4 decision, the United
States Supreme Court reversed holding these plaintiffs could not demonstrate
the requisite commonality to proceed on a class action basis.
The Court observed that "commonality"
requires more than class members working for the same company and alleging
the same type of injury (e.g., Title VII gender discrimination); rather,
their claims must arise from a common contention (e.g., discriminatory
bias by a common supervisor or a corporate policy of discrimination).
The Court suggested such commonality may be demonstrated in a Title
VII case by demonstrating the employer used a biased testing procedure
to evaluate candidates or employees, or alternatively, by "significant
proof" the employer operated under a general policy of discrimination
if the discrimination manifested itself both in hiring and promotion
practices through entirely subjective decision-making processes.
In this case, however, the
Court noted Wal-Mart had an express policy prohibiting sex discrimination
and imposing penalties on individuals who violated this policy, thus
largely negating any claim of a common corporate-wide policy of discrimination.
The Court rejected Plaintiffs' contention that Wal-Mart's policy
of vesting local supervisors with discretion constituted a common policy
of discrimination; to the contrary, the Court observed this policy creating
individualized decisions at the store or district level effectively
constituted a policy against having uniform employment practices for
class action purposes. The Court also concluded Plaintiffs could
not establish commonality through statistical analysis or anecdotal
testimony from approximately 120 of the 1.5 million employees, noting
these anecdotes about violations at particular stores or regions did
not demonstrate a company-wide policy of discrimination.
The Court also unanimously
concluded that the class action plaintiffs' claims for back pay were
improperly certified under Federal Rule of Civil Procedure 23(b)(2).
The Court noted that Rule 23(b)(2) applies only when a single injunction
or declaratory judgment would provide relief to each class member.
The Court observed monetary damage awards involve individualized inquiries
that may be certified under Rule 23(b)(3) and its different procedural
protections and standards (e.g., mandatory notice and the right to opt
out), but not under Rule 23(b)(2). (Wal-Mart Stores, Inc. v.
Dukes (2011) ___ S.Ct. ___, 2011 U.S.LEXIS 4567.)
Supreme Court Limits Prevailing
Defendant's Ability to Recover in Civil Rights Cases
While federal law authorizes
a court to award reasonable attorney's fees to a "prevailing party"
in certain civil rights cases, federal courts have held prevailing plaintiffs
are entitled to recover these fees as a matter of right while prevailing
defendants may only recover if the suit was frivolous. These courts
have also held that a prevailing defendant may recover its fees without
providing that the plaintiff's entire lawsuit was wholly frivolous
(i.e., the inclusion of a non-frivolous claim will not completely insulate
from fees for the frivolous aspects). In this case, the
Court held that where a plaintiff asserts both frivolous and non-frivolous
claims, the prevailing defendant may recover fees but only for those
costs the defendant would not have incurred but for the frivolous claims.
(Fox v. Vice (2011) ___ S.Ct. ___, 2011 U.S.LEXIS 4182.)
Ninth Circuit Holds Unlicensed
Accountants are not Categorically Excluded from California's Professional
Exemption
Two thousand unlicensed junior
accountants filed a wage and hour class action seeking unpaid overtime
claiming they were ineligible for the professional overtime exemption
because they were unlicensed. In 2009, a California district court
issued a published decision concluding these unlicensed individuals
were categorically excluded from California's professional exemption
because they were not licensed or certified. (See Campbell
v. PricewaterhouseCoopers LLP (E.D. Cal. 2009) 602 F.Supp.2d 1163,
1185.) The Ninth Circuit Court of Appeals reversed concluding
that the absence of a license precluded these individuals from meeting
the first prong of the professional exemption, but did not necessarily
preclude them from satisfying the second prong which exempts the so-called
"learned or artistic" professional.
The ninth circuit noted Wage
Order 4-2001 contains two subsections outlining individuals who might
be considered "professionals:" subsection (a) which requires an
individual to be licensed or certified and to work in one of eight specifically
enumerated professions (law, medicine, dentistry, optometry, architecture,
engineering, teaching or accounting)) and subsection (b) for individuals
primarily engaged in an occupation commonly recognized as a learned
or artistic occupation. In this case of first impression, the
ninth circuit noted these two subsections are alternative, not exclusive,
tests for the eight professions enumerated in subsection (a).
In other words, the fact an employee from one of these professions lacks
a license and could not satisfy subsection (a) did not categorically
preclude them meeting subsection (b) if they satisfied the elements
of that section, including engaging in work that is "predominantly
intellectual and varied in character." The court concluded sufficient
factual disputes existed concerning these individual's actual work
duties for subsection (b) purposes that a jury trial was warranted to
determine whether plaintiffs qualified for either the professional or
administrative overtime exemptions. (Campbell v. PriceWaterHouseCoopers,
LLP (9th Cir. 2011) ___ F.3d ___, 2011 U.S.App.LEXIS
___.)
(NOTE: while this case involved
the "accounting" profession, the Ninth Circuit's opinion suggested
that a similar analysis applies to the other seven professions identified
in subsection (a), meaning unlicensed professionals in medicine (e.g.,
medical school residents), law (attorneys who have not yet passed the
bar), etc. might still qualify under subsection (b).)
Ninth Circuit Clarifies
Who May be Sued for ERISA Violations Under
29 U.S.C. § 1132
Section 1132(a)(1)(B) of the
Employee Retirement Income Security Act (ERISA) authorizes a participant
or beneficiary to pursue a civil action to recover benefits due or to
enforce his rights under the plan, but does not specify which parties
may be proper defendants in that civil action. In this case, a
former executive sued the insurer for her employer's disability benefits
program after the insurer refused to pay disability benefits based on
the higher salary retroactively agreed to by her and the employer to
settle a Title VII sex discrimination claim. The federal district
court dismissed the ERISA claim concluding only the plan or plan administrator
(but not the third-party insurer) could be sued under section 1132,
but the Ninth Circuit Court of Appeals reversed. The appellate
court observed section 1132 neither enumerated nor limited the potential
defendants but instead focused upon act or practice which violates any
ERISA provision, and concluded that this third-party insurer potentially
could be a defendant if the plaintiff established all other elements
for liability purposes. (Cyr v. Reliance Standard Life Ins.
Co. (9th Cir. 2011) ___ F.3d. ___, 2011 U.S.App.LEXIS 12601.)
Public Employer Failed to
Demonstrate Threat of Workplace Disruption to Justify Demoting Employee
Simply for Associating with Former Boss
Courts have attempted to balance
a public employer's ability to discipline public employees for conduct
disrupting the workplace against the public employee's First Amendment
rights to free speech and association. Accordingly, the courts
have afforded public employers considerable discretion to discipline
public employees for conduct that disrupts or reasonably threatens to
disrupt the workplace; on the other hand, given the Constitutional rights
implicated, the employer cannot simply rely upon speculation or conjecture
about future problems. In this case, the Ninth Circuit Court
of Appeals concluded the mere fact a public employee sat next to her
former boss during a disciplinary meeting involving that boss did not
disrupt the workplace or provide reasonable prediction of future disruption
to justify demoting that public employee. (Nichols v. Dancer (9th Cir. 2011) 2011 U.S.App.LEXIS 12783.
