HR That Works Blog

A California Appellate Court shut down a class action effort which, in a sense, would have provided employees for a minimum of two hours show up pay for attending weekly team meetings which were not concurrently conducted with their work schedules. For example, when employees show up for an all team meeting on a Saturday morning at 10:00. The court ruled that as long the meeting was a) scheduled, and b) the meeting lasted for at least half the time scheduled, and c) the employees were paid for the time they did attend, the law has been satisfied. However, if it’s not a scheduled meeting and say somebody is pulled into the office for only 15 minutes, then you may be required to pay between two and four hours of show up pay depending on their “normal work schedule.” Reporting time pay is defined in the following manner:

“Each workday an employee is required to report to work and does report, but is not put to work or is furnished less than said employee’s usual or scheduled day’s work, the employee shall be paid for half the scheduled or usual day’s work, but in no event for less than two hours no more than four hours, the employee’s regular rate of pay which shall not be than less than minimum wage.”

So, for example, if they normally work an 8-hour day, and they’re sent home, they have to be paid for four hours. If they normally work a 3-hour day and are sent home, they must be paid for at least 2 hours. In this case, the battle was over employees showing up for weekly meetings when they did not go to work immediately thereafter.

Bottom line: Identify how long the meeting will be, spend at least 50% of the scheduled time, and make sure they record their time.

As a farewell to 2011, the California Supreme Court went to great lengths to spell out the parameters of the administrative overtime exemption. This is the exemption from overtime laws that seems to get employers into trouble more than any other. If you are a human resource executive in California you must read this case. Yes, there is a lot of legal mumbo jumbo…but it’s something you must understand or you will unnecessarily expose your company to overtime claims. Perhaps as here on a class action basis.

In Harris v. Liberty Mutual Insurance, the court provided much guidance. Here is some of the instructive language:

[W]ork qualifies as administrative when it is directly related to management policies or general business operations. Work qualifies as directly related if it satisfies two components. First, it must be qualitatively administrative. Second, quantitatively, it must be of substantial importance to the management or operations of the business. Both components must be satisfied before work can be considered directly related‖ to management policies or general business operations in order to meet the test of the exemption. (Fed. Regs. § 541.205(a) (2000).)….

[T]he administrative/production worker dichotomy distinguishes between administrative employees who are primarily engaged in administering the business affairs of the enterprise and production-level employees whose primary duty is producing the commodity or commodities, whether goods or services, that the enterprise exists to produce and market.

The Court understands that:
[B]ecause the dichotomy suggests a distinction between the administration of a business on the one hand, and the production end on the other, courts often strain to fit the operations of modern-day post-industrial service-oriented businesses into the analytical framework formulated in the industrial climate of the late 1940‘s.

Bottom line: The administrative exemption causes the vast majority of mis-classification headaches. According to this decision even the judges and the DIR have a hard time getting it right. Read this case. Make sure your workers are not mis-classified. If they are, take a look at the report on HR That Works So You Have a Wage Claim Exposure–What Do You Do About It?

The Case of Salas v. Sierra Chemical (2011) caused quite a stir because the appellate court dismissed a disability discrimination claim of undocumented alien based on unclean hands. Now the California Supreme Court will decide this far ranging issue. The appellate court essential took much of the teeth out of a legislative amendment to protect illegal aliens against discriminatory and other illegal workplace conduct…regardless of their status. We’ll be keeping an eye out for this one!

Docket
Court of Appeal Opinion

ELK GROVE, CA — The California Department of Fair Employment and Housing (DFEH) announced today that United Parcel Service (UPS) must pay more than $96,000 in damages after the company fired employee Eva Linda Mason because of her disability. The Fair Employment and Housing Commission (Commission) found that UPS had unlawfully terminated Ms. Mason even though she could perform the essential functions of her job.

UPS hired Ms. Mason in 1997 primarily as an Operations Management Specialist to handle customer calls and complaints on shipments. Although she occasionally located packages in a warehouse, handling packages was not part of her job. After Ms. Mason had knee surgery and took a leave of absence to recover in 2007, she continued to carry out the essential customer service functions of her job. Nonetheless, UPS perceived Ms. Mason as disabled because she had some restrictions, such as limited standing, walking, bending, and kneeling. UPS had a 12-month cap on the length of time employees with disabilities could be reasonably accommodated from their regular duties. UPS applied this cap to Ms. Mason and fired her in August 2008.

“Using a 12-month cap to fire disabled employees is unlawful under the Fair Employment and Housing Act (FEHA),” said the Department of Fair Employment and Housing Director Phyllis Cheng. “Employees with disabilities must be allowed to work if they can perform their essential job duties with or without accommodation.”

The Commission ordered UPS to pay $96,170 in damages, including $10,000 in administrative fines to the State. UPS must also post a notice about its liability and develop a policy and train management on disability discrimination.

ELK GROVE, CA — The California Department of Fair Employment and Housing (DFEH) announced today that Air Canada must pay more than $325,000 in damages after the company fired one of its customer service representatives because of her disability. The Fair Employment and Housing Commission (Commission) found that Air Canada failed to accommodate the employee’s disability and then fired her because she could not lift cargo – a job function customer service representatives rarely perform.

“Employers must attempt to find reasonable modifications that allow employees with disabilities to keep working,” said the Department of Fair Employment and Housing Director Phyllis Cheng. “Using non-essential job functions as a pretext to deny employment to persons with disabilities is unlawful in California.” 

The employee, Caroline Messih Zemaitis, worked as a customer service agent for Air Canada at Los Angeles International Airport from 1993 to 2007.  Starting in 2004, she held a clerical position in the cargo division that did not involve physical labor.  In 2005 and 2006, Ms. Zemaitis injured her back, shoulder, knee and wrist, and her doctor restricted her from performing such tasks as heavy lifting and repeated bending.  She was able to keep working in the cargo division with minor accommodations such as Air Canada’s provision of a telephone headset and heating pad, and time off for physical therapy.  

When Ms. Zemaitis became pregnant, her back condition worsened and she took a medical leave of absence for about a year.  She tried to return to work in 2007 when her doctor released her with restrictions similar to those she had before, but Air Canada refused to respond to her many communications.  Instead, Air Canada terminated Ms. Zemaitis’s because she could not lift cargo, a job function the airline’s customer service agents rarely perform.

The Commission found during this precedential decision that Air Canada had violated the Fair Employment and Housing Act. It ordered them to pay Ms. Zemaitis $102,737 in back pay, $19,720 in lost benefits, and $125,000 for emotional distress.  Air Canada must further reinstate and pay Ms. Zemaitis $54,784 in wages plus interest and pay the State a $25,000 administrative fine.  The airline will also have to post a notice about their liability and develop a policy and train management on reasonable accommodations necessary to allow disabled employees to continue working.

By January 1, 2013, whenever an employer enters into a contract of employment with an employee for services to be rendered within California and the contemplated method of payment of the employee involves commissions, the  contract shall be in writing and shall set forth the method by which the commissions shall be computed and paid.

The employer shall give a signed copy of the contract to every employee who is a party thereto and shall obtain a signed receipt for the contract from each employee. In the case of a contract that expires and where the parties nevertheless continue to work under the terms of the expired contract, the contract terms are presumed to remain in full force and effect until the contract is superseded or employment is terminated by either party.

…. “Commissions” does not include short-term productivity bonuses such as are paid to retail clerks; and it does not include bonus and profit-sharing plans, unless there has been an offer by the employer to pay a fixed percentage of sales or profits as compensation for work to be performed.

California just passed legislation today which makes anyone other than a lawyer who “advises” employers to hire someone as an Independent Contractor jointly and severably liable for any mis-classification. And there’s more. Here’s the bill itself: http://www.leginfo.ca.gov/pub/11-12/bill/sen/sb_0451-0500/sb_459_bill_20110912_enrolled.pdf

1. Essentially, SB 495 makes it unlawful to willfully misclassify an individual as an independent contractor. If found guilty a company would have civil penalties of no less than $5,000 and no more than $10,000 per occurrence. If found guilty of repeated violations the result could be as much as $25,000 for each violation – willful is defined as with voluntary intent *( a very broad standard).
2. The company must maintain records by completing a document developed by the EDD for each independent contractor retained.
1. A notice indicating the individual will be engaged as an independent contractor
2. What EDD factors were included to determine the individual is an employee or an independent contractor
3. A statement explaining the impact the independent contractor status has on tax obligations and eligibility for labor and employment protections
4. Notice to the individual that they can seek advice from EDD or the Labor Commissioner regarding whether they were properly classified
3. Provides that any person who knowingly advises an employer to treat an individual as an independent contractor, to avoid employee status, shall be jointly and severably liable if the individual is found not to be an Independent Contractor. Of course, except for the lawyers.

No surprise, many entrepreneurs are livid about bills like this. As one entrepreneur stated:

“As a small business owner, if this passes I don’t see myself hiring any more contract programmers in state. It would be too risky. $25,000 fine and a required ‘Scarlet Letter’ on my web site? No thank you. It’s bills like this that force jobs to go overseas”

In contrast to the employer viewpoint another commentator on the bill said:

“I know an ‘employee’ working as an Independent Contractor, who stepped in a hole at San Quentin State Prison, where she worked as a registry nurse. By the time it was over, she lost half her leg, and ended up with no Worker’s Compensation Insurance, no Disability Insurance, no Unemployment Insurance, no nothing. Employers are totally bastardizing the definition of an Independent Contractor, and paying people who work only for them, 40 hours a week, under their supervision, as Independent Contractors. Great way for an employer to lure an “employee” to work for them, right up until either they’re injured on the job, are laid off, or of course when they get their 1099 at the end of the year, and find out they owe $38,000 of that $90,000 they earned in State and Federal Income Taxes. Great bill. About time. Pass it and enforce it!”

Bottom line is it is now the law. Here is the current info on it which will be updated in light of the new law. http://www.edd.ca.gov/payroll_taxes/independent_contractor_reporting.htm

The California Department of Fair Employment and Housing (DFEH) today announced its largest-ever administrative award of $846,300 against electrical supplier Acme Electric Corporation for firing an employee because he had cancer.  Headquartered in Lumberton, North Carolina, Acme Electric is a division of Actuant Corporation, a Wisconsin diversified industrial corporation that operates in more than 30 countries.

Charles Richard Wideman worked for Acme Electric as western regional sales manager overseeing sales operations in the company’s largest territory from February 2004 to March 2008.   He developed kidney cancer in 2006 and prostate cancer in 2007.  Mr.  Wideman’s cancers required two surgeries and numerous cancer-related outpatient appointments.  The company immediately granted his two requests for time off for surgery and recuperative leave.  However, Mr. Wideman requested further accommodation for the travel limitation his cancers caused from June 2006 through April 2007.  Acme Electric refused to grant or even acknowledge these accommodation requests.  Instead, in December 2007, Mr. Wideman’s supervisor gave him an unfavorable performance evaluation, criticizing him for insufficient travel.  On February 28, 2008, ignoring Mr.  Wideman’s need for accommodation the preceding year and failing to take into account his dramatically improved job performance, Acme Electric fired Mr. Wideman, relying on the insufficient travel pretext. 

After a three-day hearing, the State’s Fair Employment and Housing Commission found Acme Electric violated the FEHA by failing to accommodate Mr. Wideman’s known travel limitation due to his cancers, failing to engage in a good faith interactive process, discriminating against Mr. Wideman because of his disability, and failing to take all reasonable steps necessary to prevent discrimination from occurring.  To compensate Mr. Wideman for his losses, the Commission awarded him $748,571 for lost wages, $22,729 for out-of-pocket expenses and $50,000 for the emotional distress he suffered.  In addition, the Commission ordered Acme to pay $25,000 to the State’s General Fund as an administrative fine.  Acme must further comply with posting, policy changes, and training requirements ordered by the Commission.

Employer lesson: You can’t ignore ADA restrictions simply because it’s a pain to comply with. Any employee with a disability has to perform, with or without accommodations. In this case, had ACME attempted to accommodate Mr. Wideman…and he still could not perform to standard, then there is no liability. To learn about accommodating employees with cancer go to http://askjan.org/media/canc.htm

As stated in the preamble “The State of California has a compelling public interest in realizing the medical promise of genomics. It also has a compelling public interest in relieving the fear of discrimination and in prohibiting its actual practice….Although Congress enacted the federal Genetic Information and Nondiscrimination Act of 2008 (P.L. 110-233), its range of protections is incomplete for Californians”

While the law deals with insurance, housing and employment, we will focus on the employment law aspects.

Some notes:

• A violation of the right of any individual under the federal Americans with Disabilities Act of 1990 (P.L. 101-336) shall also constitute a violation of this section.
• The new law defines genetic information as being about an individual’s genetic tests, tests of family members, or the manifestation of a disease or disorder among an individual’s family members, and it covers information from genetics services and participation in clinical research.
• Federal GINA’s range of genetic information and nondiscrimination protections is limited to employment and health insurance coverage. SB 559 ensures that the range of protections for Californians applies to all California civil rights laws and would include genetic information as a prohibited basis for discrimination.

You can read the Act by going to http://leginfo.ca.gov/pub/11-12/bill/sen/sb_0551-0600/sb_559_bill_20110906_chaptered.pdf

Information on the bill posted by its author can be found by clicking here.

ELK GROVE, CA — The California Department of Fair Employment and Housing (DFEH) today announced the $70,000 settlement of a workplace sexual orientation harassment case against Limited Brands Store Operations, Inc., and Bath & Body Works, LLC.  A manager of a Bath & Body Works was accused of harassing her co-manager because of his sexual orientation.

The DFEH filed an accusation with the Fair Employment and Housing Commission after investigating a complaint from the co-manager, who began working at Bath & Body Works in August 2007.  The complainant claimed that from his first day on the job, his female supervisor referred to him multiple times a day using slurs based on his sexual orientation, drew pictures of male genitals, which she hung in the store’s back room, told his co-workers that he liked kissing boys, and falsely claimed that his attitude was affecting the work environment.  The Department’s accusation further alleged that, although another store manager witnessed the harassment and the employee complained to the district manager, Bath & Body Works failed to stop the harassment, ultimately forcing the complainant to quit.

“The Department of Fair Employment and Housing takes great pride in leading the enforcement of California’s civil rights laws,” said DFEH Director Phyllis Cheng.  “This compelling case should remind employers that they must have policies in place to prohibit discrimination and harassment against employees—and employ managers who can enforce those policies.”

As part of the $70,000 settlement, Bath & Body Works, LLC agreed to provide discrimination and harassment prevention training to its supervisors and managers, provide training to all new hires within 60 business days of hire, display posters informing employees of their right to report discrimination to the DFEH, and retain copies of all complaints of discrimination and harassment made by employees alleging a violation of the Fair Employment and Housing Act.  Bath & Body Works did not admit to any liability in the agreement to settle.