Are You Calculating Overtime Properly? Maybe Not!

There have been some recent class action lawsuits that demonstrated employers may not be calculating overtime correctly.  To be clear, I am not speaking of the required “over eight hours in a day or over forty hours in a week.” As I am sure you already know, non-exempt employees in California must be paid at an overtime rate of pay for overtime hours. The overtime rate is calculated by applying a multiplier of 1.5 or 2.0 to the employees’ “regular rate of pay.” Ordinarily the regular rate of pay is the employees’ straight time rate of pay, BUT not always! Employers sometimes fail to include other types of compensation when calculating the regular rate of pay, which can result in liability.

The rule in California is that the regular rate of pay must include all remuneration from the employer. Here is an example for our clients who provide free lunch and dinner during their shifts. If the employee makes $10.00 per hour, in an eight hour shift their regular rate of pay would be $80. However, their regular of pay must be calculated adding the $80 to the cost of the meals. If the cost of the meal to the employer is $7, (or whatever the determined number is based upon the fair market value) the equivalent of an extra $14.00 is added to the regular rate of compensation of $80. Therefore, the employees are receiving a total of $94.00 per day which is the true dollar amount of their “regular pay” or $11.75 per hour and not $10.00 per hour. Based upon these numbers the rate of overtime would be “$17.63 and not $15.00 per hour. The difference creates a shortfall of $2.63 which would lead to potential liability including penalties, liquidated damages, interest, and attorney fees.

Keep in mind that the above concern may well include bonuses, incentives, gratuities (mandatory 15% for tips on large groups), free or subsidized lodging, or even winning a free trip for making a sales goal. As many of you have heard me preach over and over again, the wage and hour lawsuits are out of control. Employers have to scrutinize their payroll policies, practices, and procedures very closely.

Is The Inability To Have Sex A Protected Disability?

I see I really got your attention with this title! I pulled this from the internet and thought you might get a kick out of this. I tell you, just when I thought that I have seen it all, up jumps another far reaching decision.  

Human Resources Executive Online recently published an article by author Mark McGraw on the Kathy E. Adams vs. Condoleezza Rice decision by the DC Circuit and the recent trend of expanding the protections of the ADA.  CDF LLP Partner Mark S. Spring was quoted in the article about the difficulties employers face in managing these disability issues and the need for skilled human resources professionals to help train managers and supervisors to recognize and properly deal with these issues.  Click here for article: http://www.hreonline.com/HRE/story.jsp?storyId=115377289.

In Adams v. Rice, the plaintiff, a cancer survivor, claimed she was limited in a major life activity because she was unable to have sexual relations.  The issue in the case was whether such limitation would enable the plaintiff, Adams, to qualify as a “disabled” individual.  After holding that sex is “a cornerstone of family and marital life, a conduit to emotional and spiritual fulfillment, and a crucial element of intimate relationships…,” the Court of Appeals reversed the granting of summary judgment and held that Adams has proven that she has a record of disability as a result of her limitation.  Cases like Adams v. Rice, combined with the looming ADA Amendments Act of 2008 http://www.callaborlaw.com/archives/new-laws-legislation-congress-attempting-to-expand-americans-with-disabilities-act-protections.html, illustrate the trend to expand the ADA’s protections to an unprecedented level that is far beyond what Congress and former President Bush intended when the law was enacted in 1991. 

Look for disability discrimination to remain a hot button issue and major challenge for employers in the next few years.

New Traffic Law-$754 fine, 3 points & Mandatory Court Appearance

Effective January 1, 2010 California has enacted the “Move-Over” law specifically designed to protect police officers who are parked on the side of the road, or freeway, and other parked emergency vehicle personnel from being run over by motorists not paying attention. The new law brings stiff penalties, a $754.00 fine, 3 points on your license, and a mandatory court appearance.

Employers have to understand the impact on them as well. Employees who drive company vehicles, or their own vehicles for company business, must be informed that any fine incurred as a result of this new law is completely their libility and will not be paid by the company. This is consistent with any moving violation which attaches to the driver and not to the vehicle.

Let’s take this one step further. An employee, on their day off, gets cited for this new law and now has 3 three points added on their license (and what if they already had 1 or 2 points!) and their job duties include driving a company vehicle (making deliveries, demonstration drives, etc.). The three points could dramatically alter the status of their license (suspension or loss depending if they had an other points) thereby rendering them incapable of performing their duties. In addition, the 3 points alone could send up the insurance premiums that the employer pays or the insurance company could inform the employer that they will no longer provide insurance coverage on that individual. Now what??? And by the way, if you terminate the employee because they can no longer drive, the EDD has previously determined that under the above circumstances the employee is eligible for unemployment because the behavior that caused them to loose their job was not work related. Yep!

Okay, what should you do? For those of you who do not already have a policy in place, immediately put one out  (which they will sign) explaining that they understand that as a condition of continued employment they must keep their drivers license in good standings and if they fail to do so, they could be subject to disciplinary action up to and including termination.  You can also create a form for the new hire packet and include the policy in your handbook the next time it is revised

Keep point: You can not make them pay for the increase in premium so please do not ask!LOL 

For more information: www.moveoveramerica.com

Employers By Law Have To Give The Reason For Termination In Writing

Whenever an employer discharges, lays off, or places an employee on leave of absence, the employer must give the employee a written notice regarding the change in status.  The notice must contain, at a minimum, the employer’s name, the employee’s name, the employee’s social security number, the date of the action, and whether the action was a discharge, a layoff, or a leave of absence. Significantly, the notice need not address the reason for the change in status.  As an example, if you are terminating an employee for theft, you are not required to commit that to writing.

Employers should be very careful when providing a reason for a termination decision.  It can be tempting to blame the decision on factors outside the employee’s control, such as a slow-down in business, when the real reason is poor performance or misconduct.  If litigation follows, the employer will want to rely on the poor performance as the true reason.  However, at that point it will look like the employer either lied in the termination notice, or is now lying regarding the misconduct.  Either way, the employer will have lost all credibility and will be at a significant disadvantage in the litigation.  Therefore, the employer should either (1) give the true reason at the time of discharge, (2) give no reason at the time of discharge; or (3) give a reason that is sufficiently broad and vague that the employee is satisfied, but that will not preclude a more precise explanation later. This information can be found under 22 Cal. Code Regs. section 1089-1 (d)(2) and Cal. Unemployment Ins. Code section 1089.

We have electronic separation reports available for your use. If the employee refuses to sign it give them a copy anyway. If they refuse to accept it mail it to their last known address and make a note that it was mailed. Do not worry about sending it certified.
 

L.A. Leads New York, Chicago In Abuse Of Low-wage Workers

I recently came across a study by UCLA that found widespread violations of minimum wage and overtime laws in Los Angeles County. The study focused on low-wage workers who, when surveyed, stated that they had experienced some form of pay-related workplace violation and almost one in three reported being paid less than minimum wage and 80% reported not being for overtime. Furthermore, it was also reported that employees had been forced to work off the clock, not receiving proper meal breaks, and some had been forced to work despite having a workplace injury. Those working for restaurants also offered that employers or supervisors illegally pocketed all or part of their tips.

The report is part of a larger study (over a 5 year period), released last year, that examined the predicament of low-wage workers in Los Angeles, Chicago and New York. The study also suggests that low-wage workers in Los Angeles County seldom benefit from workers’ compensation. The study offers that the reason for the pervasiveness of the abuses is that certain industries have embraced business strategies that involve widespread violations of labor laws. Proponents of immigration restrictions argued that the very presence of so many illegal immigrants creates a climate of exploitation.

These type of studies draws the attention of the Department of Labor Standards Enforcement and although all employers do not engage in this type of behavior it forces the DLSE to aggressively go after employers. I continue to press the issue that employers have to ensure that they are in compliance with the wage and hour laws. On a weekly basis we are investigating labor board claims and finding employers are STILL in violation. You need to check and re-check your policies and do not assume that your managers and supervisors are following policy. In addition, they have to understand that employees may agree to a practice that is illegal but after they leave they will file a claim everytime.

Employer Liable When Employee Is Enroute To The Doctor?

Do you think it is obvious that an employer should not be held liable for injuries suffered by an employee as a result of running a stop sign outside of work hours?  A California Workers’ Compensation judge apparently did not think so.  In Esquivel v. WCAB, an employee who worked in San Diego and was receiving regular medical treatments in the San Diego area for an industrial injury decided to travel to Los Angeles some 130 miles away to visit her family.  Shortly after leaving Los Angeles to drive back to San Diego to attend a medical appointment the employee ran a stop sign, caused a collision and sustained serious injuries as a result.  She sought worker’s compensation benefits for the injuries caused by the car accident, contending that because she was on her way to a medical appointment for an industrial injury, her employer bore responsibility for the further injuries (albeit unrelated) she sustained en route to her appointment.  The workers’ compensation judge agreed with the employee and found that the motor vehicle accident injuries were a compensable consequence of the employee’s existing industrial injuries. 

The employer rightfully sought reconsideration from the Workers’ Compensation Appeals Board and the Board agreed with the employer, reversing the award of additional benefits.  The WCAB held that the accident occurred too remotely from the employee’s home and doctor’s office to hold the employer responsible for the risk of that injury.  The employee appealed from the WCAB order.

On appeal, the California Court of Appeal agreed with the WCAB and held that the employee’s injuries occurred outside the reasonable geographic area of her employer’s compensability risk.  To be clear, the court did not hold that an employer is never liable for injuries sustained by an employee en route to a medical appointment for an industrial injury.  To the contrary, the court held that an employer bears the risk and responsibility for new injuries an employee suffers while en route to or from a medical appointment within a “reasonable geographic area.”  The court explained that there is no “bright line” test for what constitutes a “reasonable geographic area” and that it must be determined on a case by case basis.  However, on the facts before the court, the employee was, for purely personal reasons, some 130 miles away from her work, her residence, and the location of her medical appointments at the time of her car accident.  The court held that in these circumstances, the injury was clearly outside the reasonable geographic area the employer could have assumed risk for.

Interestingly, the court did not address the employer’s additional argument that the employer should not have been liable for the employee’s injuries (regardless of where they occurred geographically) because the injuries were caused by the employee’s own fault in running a stop sign (according to the CHP report of the accident).  What are we missing here?

New Cobra Laws Going Into Effect

President Obama Extends COBRA Subsidy Duration and Eligibility Period

As we originally reported in our February 2009 Client Alert and subsequent alerts, the American Recovery and Reinvestment Act of 2009 (“ARRA”) provided for a 65% COBRA premium subsidy for a period of up to 9 months for certain eligible employees who were involuntarily terminated from employment during the period from September 1, 2008 through December 31, 2009, and their eligible family members.  [The American Recovery and Reinvestment Act – COBRA Revisions; U.S. Department of Labor Issues Model COBRA Subsidy Notices And Other Guidance; Finally: Answers To Unanswered Questions - IRS and DOL Issue Guidance On The COBRA Premium Subsidy]  ARRA has now been amended by the Department of Defense Appropriations Act (“DDAA”), which was signed by President Obama on December 19, 2009.  The DDAA increases the maximum COBRA subsidy period to 15 months and extends the eligibility period so that individuals involuntarily terminated from employment through February 28, 2010 (rather than December 31, 2009) (and eligible family members) may now qualify for the subsidy. 

Longer Subsidy Period

The DDAA amends ARRA to extend the 9-month subsidy period for an additional 6 months.  Accordingly, the subsidy will now be available for up to a maximum of 15 months.  The amount of the subsidy (i.e., 65% of the required premium) remains unchanged.

 Extended Eligibility Period

 The DDAA amends ARRA to extend the eligibility period for the COBRA subsidy for two additional months.  Accordingly, individuals who experience involuntary terminations of employment between January 1, 2010 and February 28, 2010 also will be eligible for the subsidy.  In addition, the law clarifies that COBRA eligibility (i.e., the loss of coverage) need not occur by February 28, 2010 in order for an individual to qualify for the subsidy.  (This changes prior guidance from the government.)  Accordingly, an individual may now qualify for the subsidy if he or she is a COBRA “qualified beneficiary” whose qualifying event is an involuntary termination of employment that occurred between September 1, 2008 and February 28, 2010, even if the COBRA coverage does not commence until after February 28, 2010.      

 Individuals Who Exhausted the 9-Month Subsidy Period Prior to Extension

 The law includes a provision that allows eligible individuals who exhausted the original 9-month subsidy period to take advantage of the 6-month extension.  These individuals must pay the reduced premium within 60 days of the DDAA’s enactment or, if later, within 30 days of notice of their right to do so (which is a required notice as described below).   

 In addition, “assistance eligible individuals” who pay the full COBRA premium for a period of coverage during the new 6-month extension will be entitled to a credit for, or refund of, the excess amounts paid for coverage periods to which the subsidy applies.      

 Notice Requirements

 Notice of the changes made by the DDAA must be provided to individuals who were “assistance eligible individuals” at any time on or after October 31, 2009 and to individuals who experience a COBRA qualifying event of termination of employment (either voluntary or involuntary) relating to COBRA coverage on or after that date.  The notice must be provided within 60 days of the DDAA’s enactment or, if the qualifying event occurs after that date, in accordance with the timing rules otherwise set forth in ARRA.  In addition, notice must be provided to individuals who exhausted their premium subsidy (before the effective date of the new extension) and either failed to timely pay for COBRA coverage after exhausting the subsidy or paid the full premium for a period during which the new 6-month extension would apply.  This notice must inform them of their right to pay a reduced premium (including for the retroactive period) and must be provided within 60 days of the date the 9-month subsidy expired.

 For example, suppose a 9-month ARRA subsidy period expired November 30, 2009 (9 months after March 1, 2009).  The individual needs to be provided with notice of the new ARRA extension within 60 days of December 1, not 60 days from the date of enactment.  Therefore, it is essential that administrators get ready to provide new ARRA extension notices as soon as possible.

 Conclusion

 As explained above, ARRA’s COBRA subsidy provisions have been extended so that eligible individuals may receive the subsidy for a longer period of time and a greater number of individuals will qualify for the subsidy.  As a result, plan sponsors and administrators will need to revise their existing COBRA notices to account for these changes and also provide a separate, supplemental notice to certain affected individuals who are (or were) receiving COBRA coverage.  The DOL has stated that it intends to issue a new set of model notices incorporating the new requirements within 30 days.  In addition to providing the required notifications, changes will need to be made to internal administrative processes in order to take into account the new eligibility period and the longer subsidy period.   We also note that plan sponsors and administrators should continue to monitor developments, as there has been talk of possible additional subsidy changes coming in early 2010. 

Note: The above information was obtained from one of our sources but because of the complexity of COBRA I wanted to ensure that the information was conveyed exactly how we received it.

Employee Text Messages On Employers Equipment-A Protected Right Of Privacy?

In another case that addresses work place privacy, the United States Supreme Court has granted review of a California case whereby the employer was found liable for reading text messages on an employer-provided two-way pager.  Apparently, and with good reason, the employer had a general computer usage policy applicable to all employees that basically stated that the use of such equipment was limited to company business, and that users should have no expectation of privacy or confidentiality when using email or the Internet. Furthermore, the policy was very specific that the using the equipment for personal use was a “significant violation” of the stated policy.

The problem with text messaging, be it a pager or cell phone, are the charges. This particular employer had begun to notice that the amount of charges were increasing each month. After several months the supervisor started to become frustrated with the overage charges for the plaintiff and other employees and decided to review transcripts of the  text messages to determine if they were business or personal. The transcripts revealed personal messages sent by the plaintiff to his wife and co-workers, some of which were sexually explicit in nature. The supervisor discussed the matter with the plaintiff and he, and the recipients of the messages, brought suit alleging violation of their privacy rights under the Fourth Amendment and Article 1, Section 1, of the California Constitution.

The initial superior court decision was in favor of the employer because the jury felt (weighing the difference between the employee’s expectation of privacy and the reasonableness of the search) that the supervisor’s actions were based on trying to determine  the basis for the overage charges. Upon review, the Ninth Court Circuit of Appeals reversed the decision because, in their opinion, although the search was intended for a valid reason, the scope of the search as “too broad.” The Court further stated that there was a “less intrusive means” of finding the desired information, such as simply “asking the plaintiff to redact the personal content of any text messages” so that the company could still obtain the desired information.

The U.S. Supreme Court will now make the decision on this one. In the interim, put out a memo (whether you have a computer policy in place or not) that specifically “Text messages on company issued phones, or other such electronic devices, are not private and that the company reserves the right to conduct searches at any time.” 

I will keep you posted.

Does “At Will” Really Mean “At Will”??

The California Labor Code does state that California is an “At Will” state. That’s not the problem! It’s how the term is improperly used that creates the headache. The California Supreme Court has actually strengthened the employers ability to terminate employees without cause. Okay, that’s a good thing. However, let me point out for unemployment purposes if an employer uses “At Will” as the reason for termination, the former employee will more than likely be found qualified for benefits. The Employment Development Department requires the employer to give a “reason” why the employee was terminated. If it was due to some form of misconduct, they want to know “what” was the behavior and the specific policy that was violated. The language in the at will statement does state “with or without cause.” Well the EDD wants the portion “with” or they will grant the benefits.

Some employers put the at will statement in offer letters, employee handbooks and other documentation setting forth the status of employment to ensure there is no room for doubt concerning the at will status of their employees. With respect to the offer letter, the langauge has to be clear. It cannot just state that the employment relationship is “at will.’ It must read:

“…your employment with________ is at will. This simply means that________has the right to terminate your employment at any time with or without cause just as you have the right to terminate your employment with_________with or without cause.” 

This same basic language can appear in your handbook or other documentation. But you also have to understand that the at will provision does not protect you from a wrongful termination lawsuit based on a violation of public policy (i.e. discrimination or retaliation).  As many of you have heard me state over and over again “I wish employers would forget the at will statement!” You should always have a “reason” why you’re ending the relationship. Have your documentation in place and don’t worry about being an at will employer (but still have the policy in place LOL!).

California Courts Do It Again!”Negligent Failure To Prevent Retaliation” Supervisors Personally Liable!!

Well, it never stops! The California Court of Appeals handed plaintiffs lawyers another favorable holding to use against employers in retaliation lawsuits. The Fair Employment & Housing Act (FEHA) already contains an express provision stating that employers must “take all reasonable steps necessary to prevent discrimination and haraasment.” In drafting this particular section the legislators elected to omit any reference to retaliation claims so, as a result, the court of appeals decided to extend the reach of this statutory provision to include retaliation as its own form of discrimination.

In the Court’s opinion, the Court specifically held that retaliation is different from discrimination when it comes to imposing personal liability on supervisors which means that “a supervisor may be held personally liable for retailiation under a FEHA (California claim for discrimination) claim.” In short, retaliation may be treated as either the same or different from discrimination, depending on which one provides the most “liberal construction” for plaintiffs in suing the employer.

With this decison in mind, you have to understand that once an employee lodges a potentially protected complaint, ANY subsequent job changes in his job assignments or status may be cited as a form of alleged “retaliation.” My best advice is to take all reasonable steps to advise managers and supervisors that they have to leave out emotional knee jerk reactions when an employee complains about any form of harassment whether it is based upon a portected class (race, religion, age, disability, etc.) or sexual harassment. Remember, the employee can loose on a discrimination allegation and still win on a retaliation claim. The Court will look at the perception of the individual, the facts that appear to support that some adverse action was taken, and not consider your intent (just the act that took place).

As always you must understand that documentation plays a key role. If you were consistent with your documentation before and after the employee complained and that documentation is consistent, it goes a long way toward your defense.