Recent Developments in Employment Law

March 2006

Labor Code regulations were proposed on January 14 which would have clarified existing rules regarding employee meal break rights. The deadline for accepting the proposed regulations has now expired, so any clarifying regulations will have to result from brand new proposals. Accordingly, existing meal break laws and regulations remain in effect. They require generally that employees who work more than five (5) hours must be provided a thirty (30) minute, uninterrupted meal break. The meal break must begin before the start of the fifth hour of work.

Minimum Wage

In Armenta v. Osmose, Inc., the California Appellate Court has found that employees are entitled to be paid at least minimum wage for each hour they work, plus statutory penalties and interest, irrespective of the average hourly rate they receive. Employers cannot average the hourly pay employees receive to assess whether minimum wage was paid. The Appellate Court held that the federal rule which permits averaging is not allowed under California state law.

Perceived Mental Disability

In Josephs v. Pacific Bell, the Ninth Circuit Court of Appeals ruled that an employee who failed to disclose a significant criminal history during his employment application, nevertheless successfully pursued a wrongful termination action against his employer. The court affirmed the judgment in favor of plaintiff on the grounds that "the evidence simply did not compel the conclusion that, in the eyes of Pac Bell, Josephs was not qualified for the service technician position because of his past (criminal) violent acts." Rather, the jury found that the employer refused to reinstate him because they regarded him as mentally disabled. This case underscores the need for employers aggressively to engage in the interactive process before terminating an employee for a disability or refusing to return him to work for that reason.

Safety of Others

In EEOC v. UPS, the Ninth Circuit Court of Appeals ruled that employee drivers with monocular vision are "disabled" under California law, but nevertheless may pose an undue safety risk. The court found that the risk to the "safety of others" trumped the disability rights of UPS truck driver applicants. This decision is significant because it arose under California disability discrimination law, which is far more liberal than federal disability discrimination law (ADA). It follows federal law precedent that excludes from ADA protection employees who pose a substantial risk of injury to themselves or others.

Dismissal of Frivolous Suit

In Greka Integrated, Inc. v. Lowrey, the California Appellate Court found that the lower court properly dismissed an employer's suit against a former manager for breach of a non-disclosure agreement and conversion stemming from the employee's taking and disclosing documents to third parties. The employee contended that he discovered many violations of workers' safety and environmental regulations and that the company refused to correct the conditions, which caused him to experience debilitating stress. The trial court granted the employee's motion to dismiss (anti-SLAPP) on the grounds that the employee had met his burden of showing that the complaint arose from protected speech (depositions and trial testimony in response to subpoena) and that the employer had little probability of success on the merits. Courts seem willing to scrutinize employer suits against former employees to determine whether they had been brought for ulterior motives. If so, courts are willing to dismiss the suit and award fees and costs against the employer.

Employee Loyalty

In Jocer Enterprises v. Attig, the California Court of Appeal ruled, in an unpublished opinion, that an employer's lawsuit against a former employee was correctly dismissed as frivolous because there were so few instances of inappropriate conduct that amounted to significant monetary loss to the employer. The court further found that the company had sued in bad faith and awarded attorney's fees of $100,000 to the former employee. Once again, employers must use care in choosing their battles against former employees. Courts will usually scrutinize such lawsuits to determine whether they are driven by ulterior motive.

Arbitration

In Gentry v. Superior Court, the California Court of Appeal upheld the validity of a mandatory pre-dispute arbitration agreement that precluded class actions. The arbitration agreement required all employees to (1) bring their covered disputes to arbitration instead of court, and (2) bring those disputes only as individuals and not as representing a class. This is a significant development for employers, because it ostensibly eliminates the potential for employment class actions against them. Employers should consider immediately including such provisions in their arbitration agreements.

WARN Act

In MacIsaac v. Waste Management Collection and Recycling, Inc., the California Court of Appeal ruled that employees who are transferred from one employer to another were not "laid off" under California's WARN Act. California's WARN Act requires that employers laying off fifty (50) or more employees must provide sixty (60) days notice of the lay off. The court found that an employer who protected its employees' rights through reemployment with the successor corporation did not have to comply with WARN.

Workers' Compensation

In Davenport v. WCAB, the California Court of Appeal ruled that an injured worker who was not notified by either his employer or his lawyer about his eligibility for workers' compensation benefits was not later barred from bringing a tardy claim. When a worker is injured on the job, the employer must supply a notice that includes information about how to start a proceeding for workers' compensation benefits and what happens after the claim is filed. He must be advised that he also has a right to disagree with the decision about the claim; provided a description of available benefits; told how he might obtain treatment; informed of his rights concerning the physician and treatment; advised that he can obtain information from the California division of Workers' Compensation; and provided the prohibition against employers discriminating for seeking benefits. This decision reminds employers that they should notify their workers' compensation carrier upon receiving notice of any work-related injury/accident.

FMLA/CFRA

In Calomarde v. Central State Credit Union, the California Court of Appeal ruled, in an unpublished opinion, that an employee who failed to return to work after protected leave, and who failed to request an extension of leave (per company policy), was foreclosed from later bringing an action. The employer provided in its policies that an employee could request additional leave in compliance with its procedures. But here, plaintiff made no such request. If an employer wishes to offer the potential for an extended leave, it should clearly state the procedures for making such a request and clearly reserve to the employer the right to deny any such extended leaves.

Sexual Harassment

The training regulations proposed by the Fair Employment and Housing Commission (FEHC) will not take effect until after all members of the public have had a chance to comment or until February 10. The law requires employers doing business in California that have more than fifty (50) employees (regardless of where those employees are located), to have trained their California supervisors in harassment prevention before January 1, 2006. The following are the more important aspects of the proposed regulations:

  • Training must be "interactive," using live, audio, video or computer technologies, with the opportunity to obtain feedback, ask questions and have questions answered, and it must include testing that measures the progress and acquisition of knowledge. The feedback or participation component must occur every fifteen (15) minutes, so that employees are "measurably engaged in the training."
  • Having "fifty (50) or more employees" means employing fifty (50) or more employees for each working day in any twenty (20) consecutive week period.
  • An "employer" includes any entity who employs fifty (50) or more employees, contract workers, or agents, directly or indirectly.
  • An "employee" includes fulltime, part-time, temporary and contract work, and the fifty (50) employees need not work at the same location or reside in California.
  • "Supervisory personnel" need not be located in California, so long as they supervise California employees.
  • "Training" includes classroom training, in-person instructor training, "e-learning" and "webinar" (web-based seminar created by a qualified instructional designer).


By Ronald J. Souza