Court Holds: No Paid Vacation in the First Year!

August 14, 2017

California has a unique law regarding vacation benefits.  Unlike the laws of many other states, California law requires an employee to be paid for all earned but unused vacation benefits at the time of termination of employment.  California law thus prohibits “use it or lose it” policies and policies that otherwise provide for forfeiture of earned vacation benefits.  That said, California law does not require employers to provide paid vacation benefits to employees, and employers generally are permitted to decide whether to provide paid vacation, how much to provide, and which employee classifications will be eligible for the benefit.  Employers may impose reasonable “caps” on the maximum carryover and accrual of vacation benefits and may control the scheduling of vacations.  Employers may also choose to pay out accrued, unused vacation benefits at the end of each year in lieu of allowing carryover of unused benefits.  As long as an employer provides clear written notice of its vacation policy terms and conditions to employees, those terms generally will be enforced – as long as they do not provide for a forfeiture of earned vacation.  This sounds simple enough, but sloppy drafting of a policy can lead to a claim that a policy operates to cause an illegal forfeiture of vacation benefits.  A recent case, Minnick v. Automotive Creations, Inc., illustrates this.

In Minnick, the employer had a vacation policy providing that employees do not earn vacation during their first year of employment.  However, once they completed their first year, they would be eligible to take one week of vacation, and after completing two years, they would be eligible to accrue up to two weeks of vacation.  The plaintiff worked for the employer for just six months.  Pursuant to its policy, the employer did not pay the plaintiff for any accrued vacation time on his final paycheck because the plaintiff had not earned any vacation.  The plaintiff sued on behalf of himself and all similarly situated employees, alleging that the employer’s policy violated California law by causing employees who worked for them for less than one year to forfeit “earned” vacation benefits.  The plaintiff’s theory was that even though the policy stated on its face that employees did not earn or accrue vacation during their first year of employment, they implicitly did, in fact, earn such vacation because the policy allowed them to take one week’s vacation upon completing their first year.  Thus, the vacation time “must have” been earned during the first year of employment and, as such, it should not have been subject to forfeiture.  The plaintiff argued that he should have been paid six months’ worth of accrued vacation benefits on termination of employment.

The trial court disagreed with the plaintiff, throwing out his claims on a motion to dismiss.  The Court of Appeal agreed with the trial court, finding that the employer’s policy was lawful and did not operate to cause an illegal forfeiture of vacation benefits.  In so holding, the court explained that an employer is free to impose conditions on the right to earn vacation benefits, including a condition that an employee be employed for at least one year before earning any vacation benefits.  The court focused heavily on the express wording of the employer’s policy and the fact that it explicitly stated that employees do not earn or accrue vacation during their first year of employment.  Based on this language, the court held that the plaintiff did not have a valid legal claim that he had earned or accrued any vacation benefits during his first six months of employment.  Also based on the clear language of the policy, the court rejected the plaintiff’s argument that the policy nevertheless “implied” that employees earn vacation during their first year of employment and that there was really just a waiting period (one year) before they could “take” the vacation they had already earned.  The court reasoned that an employer is free to “front load” vacation benefits (making the entire amount available for use at the beginning of a benefit year rather than having benefits accrue over time) and that it appeared that the employer’s policy did just that (even though the policy later talked about employees with two years of service “accruing” a “maximum” of two weeks of vacation).

Although this case resulted in a positive outcome for the employer, it still serves as a good reminder that vacation pay claims are alive and well in California, and that California has unique laws prohibiting forfeitures of earned vacation.  Careful and clear drafting of vacation policies is of critical importance to ensure that any waiting periods for vacation eligibilty (as well as certain accrual caps) are lawful and will not be deemed a subterfuge for an illegal forfeiture policy.

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New I-9s Update

August 6, 2017

Sorry, there was not a Blog last week! I was on the Alaskan cruise and some technical difficulties prevented my posting.

The United States Citizen and Immigration Services (“USCIS”) has issued a new Form I-9. The only significant change is to add a new List C document, a Consular Report of Birth for a U.S. citizen board abroad. Employers must begin using the new form by September 18, 2017. The new Form I-9 is now available online.

On another note, the federal Department of Labor (“DOL”) is seeking public comment on possible revisions to the federal overtime exemption rules. As employers will recall, last year a new overtime rule was published that dramatically increased the salary threshold to qualify for exempt status under the executive, administrative, and professional exemptions to over $47,000 per year. However, just prior to the rule’s effective date, a Texas court enjoined the rule. The DOL (still under the Obama administration at that time) appealed the injunction ruling and that appeal is currently pending before the Fifth Circuit. Many wondered whether the DOL, now under the Trump administration, would abandon the appeal. It did not do so, but it did recently file a reply brief before the Fifth Circuit defending the DOL’s authority to adjust the salary level threshold for exempt status under the Fair Labor Standards Act, but stating that it did not intend to enforce the $47,000 salary threshold set forth in the challenged 2016 rule. Instead, the DOL indicated that it intended to solicit public comment on a different salary threshold and to propose a new rule. It is unclear how the Fifth Circuit ultimately will rule.
In the meantime, the DOL recently issued its request for public comment on both the 2016 rule and on other possible revisions to the overtime exemption rules. The request seeks comments on several topics, including whether the salary threshold should be adjusted for inflation and, if so, what the measure of inflation should be; whether changes to the duties test are warranted; whether exempt status should be determined solely based on a duties test and not on a salary threshold; whether there should be multiple salary thresholds that vary depending on employer size and/or locale; the impact of the 2016 rule changes on employers; and whether the compensation level for the highly compensated employee exemption should be indexed to inflation.
Employers may submit comments electronically or by mail between now and September 24, 2017. Send comments to the U.S. Department of Labor.

Drugs on the Job: What employers need to know!

July 24, 2017

California voters have made the use of marijuana in California legal, but this raises significant questions as to how companies can adopt policies that prohibit using cannabis at work. The California Drug-Free Workplace Act and other legislation gives employers the right to enforce their policies, even when an employee uses marijuana products outside of work which do not impair performance on the job.  Generally, an employer’s anti-cannabis policy should explain why the restriction promotes the legitimate business interests of the company

California legalized the use of marijuana for medical purposes under the Compassionate Use Act of 1996.  In November 2016, Californians passed Proposition 64, a ballot measure allowing the possession and use of moderate amounts of marijuana for recreational purposes. In June 2017, California enacted the Medical and Adult Use Cannabis Regulation and Safety Act, which effectively repealed the Medical Marijuana Regulation and Safety Act.

The current laws permit employers to enforce workplace policies pertaining to marijuana.” The laws state that the legalization of cannabis use does not (i) restrict the rights of employers to maintain a drug free workspace, (ii) require an employer to permit or accommodate cannabis use in the workplace, or (iii) affect the ability of employers to have policies prohibiting the use of cannabis by employees and prospective employees

In Loder v. City of Glendale, the California Supreme Court ruled that employers have the right to undertake pre-employment drug testing “[i]in light of the well-documented problems that are associated with the abuse of drugs and alcohol by employees – increased absenteeism, diminished productivity, greater health costs, increased safety problems and potential liability to third parties, and more frequent turnover.” The ruling held that the California Fair Employment and Housing Act does not require employers to accommodate the use of illegal drugs.

In 2008, the California Supreme Court found that neither the Compassionate Use Act nor the accommodation requirements of the Fair Employment & Housing Act and that an employer could fire an employee who failed a pre-employment drug test after he disclosed that, at his physician’s recommendation, he was using medicinal marijuana for back spasms as a result of injuries suffered while serving in the Air Force.  Ross v. RagingWire Telecommunications, Inc., 42 Cal.4th 920 (2008).

Despite the enactment of laws permitting companies to prohibit marijuana use among employees, employers should carefully consider incorporating language into their policies that expresses the rationale behind their prohibition.  An examination of factual, scientific evidence of the impact of being under the influence at work, rather than mere speculation, should precede policy development.

On July 17, 2017 the Massachusetts Supreme Court ruled that an employee taking lawfully prescribed marijuana to alleviate effects of Crohn’s disease and was terminated for being under its influence at work may pursue a civil remedy.  In Barbuto v. Advantage Sales and Marketing LLC, the plaintiff used medicinal marijuana at home on two to three nights a week.  When asked to take a drug test, she i\told her supervisor that she would test positive.  After a human resources officer reviewed the test results, she was fired.  She sued.  The Massachusetts Supreme Court held that the plaintiff could seek a civil remedy under the state’s handicap discrimination law, but not under the Massachusetts voter initiative permitting the use of marijuana which does not permit a private lawsuit.

Most municipalities expressly prohibit the consumption of cannabis on the premises of cannabis businesses. For example, the City of Los Angeles has proposed commercial cannabis regulations.  If adopted, the regulations will require businesses to monitor employee conduct to assure that employees do not consume cannabis on the premises and within the parking areas and require employers to post “No…Smoking of Cannabis” signs in and outside the business.

In the meantime, California employers may conduct pre-employment drug testing and refuse to employ individuals who test positive for marijuana use.  While a few cases allow employers to terminate an employee when the drug test is administered after the employee is on the payroll, the better practice is to conduct the test prior to on-boarding the candidate.  Random testing of current employees, however, must be justified by compelling employer interests.  Failure to articulate such interests may expose an employer to substantial damages in post-termination litigation claiming a violation of the right to privacy.

Arthur F. Silbergeld is an employment litigation attorney at Thompson Coburn LLP and may be reached at (310) 282-9412. He has worked closely with Potts & Associates for over 35 years.



Guns at Work? Some States say “Yes”!

July 17, 2017

With the growing fear associated with domestic terrorism and violence in the workplace the issue presenting itself concerns employees bringing guns to work. More and more counties, and states, are permitting citizens to acquire consent to carry permits. The employee, of course, who has obtained the CCW feels that they can now carry on the employer’s property or leave their weapon in their car on company property. Not good!

One state has even gone so far as to have place bill into motion to include gun ownership as a protected class and therefore making it discriminatory to take any action against the weapon carrier. With all of the issues confronting our nation, why add the possibility of a disgruntled employee becoming an active shooter? This makes no sense.

The proposed law states in part:

2923.1210. (A) A business entity, property owner, or public or private employer may not establish, maintain, or enforce a policy or rule that prohibits or has the effect of prohibiting a person who has been issued a valid concealed handgun license from transporting or storing a firearm or ammunition when both of the following conditions are met:           (1) Each firearm and all of the ammunition remains inside the person’s privately owned motor vehicle while the person is physically present inside the motor vehicle, or each firearm and all of the ammunition is locked within the trunk, glove box, or other enclosed compartment or container within or on the person’s privately owned motor vehicle;           (2) The vehicle is in a location where it is otherwise permitted to be.

All signals point the House and Senate passing this bill. Logically, if a law is going to permit employees to store handguns in their cars on the employer’s property, what is a business owner to do to protect their business, its employees, customers, vendors, and others? One option is to engage in pre-work security screenings, including posting guards, installing metal detectors, and engaging in pat-down searches. The expense, however, is cost prohibitive for most businesses, and nevertheless it is the epitome of overkill. One ridiculous action deserves another? These are the times we are living in. A logical and more cost-effective starting point for most businesses is with an Active Shooter / Emergency Action Plan, so that your business knows how to respond in the event a unexpected event enters their workplace.

This issue is not going away. If you need any more information please feel free to contact us. We are now offering training in this area that includes procedures and protocols to follow, a workplace security plan and active shooter training.

Hopefully Governor Kasich of Ohio will not sign the bill but it should be noted that other states are considering the same type of law or already have them in place. There are also individual counties in California granting CCW’s as well. Employer’s need to implement a “zero tolerance” in this area and strictly enforce it.

Is Gender Dysphoria a Protected Disability?

July 10, 2017

The issue is whether or not “gender dysphoria” is a “disability” within the meaning of the Americans with Disabilities Act when an individual identifies with a gender other than his or her biological one?

Transgender individuals don’t usually invoke the ADA, presumably because they don’t consider themselves to be “disabled.” But more importantly from a legal standpoint, the ADA specifically excludes gender identity disorder as a “disability” within the meaning of the law.

In fact, the ADA contains a number of exclusions, including homosexuality and bisexuality (on the ground that they are not “impairments” at all). It also excludes “transvestism, transsexualism, pedophilia, exhibitionism, voyeurism, gender identity disorders not resulting from physical impairments, or other sexual behavior disorders; compulsive gambling, kleptomania, or pyromania; or psychoactive substance use disorders resulting from current illegal use of drugs.” )

“Transsexualism” and “gender identity disorders not resulting from physical impairments” seem to be 1990s-era terms for the state of being what we call today “transgender.” And based on the other conditions that “transsexualism” and “gender identity disorders” are grouped with, it appears that in 1990 Congress considered these to be anti-social behaviors like peeping, child molestation, compulsive stealing, and compulsively setting things on fire.

Well, in a recent case, a federal judge in Pennsylvania found that the plaintiff’s gender dysphoria could be an ADA-protected condition, despite the exclusion under the ADA.

The plaintiff had argued that excluding gender dysphoria from ADA protection violated the Equal Protection Clause of the Fourteenth Amendment. But the judge apparently didn’t want to go there, so he found, instead, that gender dysphoria that caused “clinically significant stress and other impairments that may be disabling” could be.

The judge is correct that a person with an ADA-excluded condition may also have medical conditions that are covered by the ADA. For example, pregnancy is not an ADA-protected disability in itself. But if a pregnant woman develops preeclampsia, high blood pressure associated with pregnancy that can result in a stroke or permanent liver damage, she may have a protected disability based on the pregnancy-related medical condition, although not based on the pregnancy itself. Similarly, although homosexuality is not an ADA-protected disability, a gay man with HIV would have a disability based on the HIV condition.

Now, let’s analogize this back to the transgender individual. Clinical depression caused by, let’s say, discrimination against an individual because she was transgender would clearly be an ADA-protected condition. But her transgender status in itself would not be because the statute says it isn’t.

Like it or not, you almost always have to go with what the statute says.

I think the judge starts down a rabbit hole when he begins discussing “associated disabilities” in the context of a transgender individual. He notes that the plaintiff alleged that she was substantially limited in “interacting with others, . . . and social and occupational functioning.” Wouldn’t these be issues with just about any transgender individual, if for no other reason than because of societal prejudice? The judge also references substantial limitation in “reproducing.” But isn’t a gay or lesbian cisgender individual — who is excluded from ADA coverage — just as limited in this regard? (In other words, he or she also has to choose between going childless, or adopting, or conceiving through artificial insemination or in vitro fertilization, or through a surrogate.)

In other words, it seems to me that, if we follow the judge’s reasoning, we are reading Congress’s exclusion right out of the statute. And we can’t do that unless the provision is unconstitutional, as the plaintiff has argued but no court has ruled.

In any event, employers should be aware that at least one federal court says that gender dysphoria is an ADA-protected disability that may require reasonable accommodation. It will be interesting to see whether any other courts follow, or whether the U.S. Court of Appeals will agree.



Employer’s Attorney Sued for Retaliation!

July 3, 2017

Well, I thought I had heard it all when it comes to wacky decisions by the 9th Court Circuit of Appeals! In a recent decision (Arias v. Raimondo), the Court found the employer’s attorney liable for retaliation under the Fair Labor Standards Act (FLSA) against his client’s employee because the employee sued his client for unpaid overtime. This decision is flat out ridiculous and typical of the kind of nonsense coming out of that Court which is in San Francisco. The facts are fairly simple. After José Arias, sued his employer, Angelo Dairy, for unpaid overtime under the FLSA, he alleges that Angelo’s attorney, Anthony Raimondo, reported him to Immigration and Custom Enforcement as an undocumented worker and put a plan in motion for ICE agents to detain him for deportation as his deposition in the FLSA lawsuit. Arias claimed that Raimondo, acting as Angelo’s agent, retaliated against him in violation of FLSA for filing his overtime lawsuit. Raimondo did not deny his role in setting up the sting, and claimed instead that he could not be liable under the FLSA for retaliating against someone who was never his employee.

The 9th Circuit sided with the employee and stated in part:

“In our case, the difference in reach between FLSA’s substantive economic provisions and its anti-retaliation provision is unmistakable. The wage and hour provisions focus on de facto employers, but the anti-retaliation provision refers to “any person” who retaliates. In turn, section 203(d) extends this concept to “any person acting directly or indirectly in the interest of an employer in relation to an employee.” Thus, Congress clearly means to extend [the anti-retaliation section]’s reach beyond actual employers. Raimondo’s activity in this case on behalf of his clients illustrates the wisdom of this extension.”

They added:

The FLSA is “remedial and humanitarian in purpose. We are not here dealing with mere chattels or articles of trade but with the rights of those who toil, of those who sacrifice a full measure of their freedom and talents to the use and profit of others. … Such a statute must not be interpreted or applied in a narrow, grudging manner.”

My comment is simple—“Have hey lost their minds?” Attorneys, should be free to advise their clients without fear of retribution from, or liability to, opposing parties in their client’s litigation. But, they say bad facts make bad law, and the attorney’s conduct in this case would certainly qualify as bad facts.

If you are looking for an employment attorney to help set up an ICE sting at a deposition to detain and deport a plaintiff in the hopes of prematurely ending a lawsuit, then you better think twice. In fact, if you asked me about this strategy, I would advise you about the liberal standard for retaliation (adverse action = any act that would reasonably deter one from exercising their statutory rights), and suggest that contacting ICE would likely subject you, the employer, to a retaliation claim. I would not aid or abet that strategy. In fact I have told employers consistently not to wear their emotions on their sleeves when dealing with employees. This is another reason why. Employers could get caught up after the fact with a second lawsuit if not careful.

While this attorney may have crossed the line in this case (he should have stayed within his role as a representative regarding the main issue), I am very concerned about a legal standard that appears to open the liability door to attorneys for retaliation against their clients’ employees.

Color v. Race Discrimination. Do You Know the Difference?

June 26, 2017

Under Title VII of the Civil Rights Act of 1964, it is illegal to make an employment decision because of “color.” How, exactly, is color different than race?

The EEOC gives us some guidance:

“Color” means: pigmentation, complexion, or skin shade or tone. Thus, color discrimination occurs when a person is discriminated against based on the lightness, darkness, or other color characteristic of the person. Even though race and color clearly overlap, they are not synonymous. Thus, color discrimination can occur between persons of different races or ethnicities, or between persons of the same race or ethnicity.

The EEOC also provides some hypothetical examples of color discrimination:

  • An African American employer violates Title VII if she refuses to hire other African Americans whose skin is either darker or lighter than her own. For example, it would be an act of unlawful color discrimination for an employer to refuse to hire a dark-skinned person to work at a cosmetics counter because the vendor prefers a “light skinned representative.”
  • A dark-complexioned African American manager violates Title VII if he frequently makes offensive jokes and comments about the skin color of a light-complexioned subordinate. This example is based on the EEOC’s settlement of a claim against Applebee’s.

Moreover, the EEOC’s E-RACE Initiative is targeting these types of claims for special enforcement efforts:

Color discrimination in employment seems to be on the rise. A recent study conducted by a Vanderbilt University professor “found that those with lighter skin earn on average 8 to 15 percent more than immigrants with the darkest skin tone — even when taking into account education and language proficiency. This trend continued even when comparing people of the same race or ethnicity.” Similarly, another study conducted by the University of Georgia survey revealed that a light-skinned Black male with only a Bachelor’s degree and basic work experience would be preferred over a dark-skinned Black male with an MBA and past managerial positions. However, in the case of Black female applicants seeking a job, “the more qualified or experienced darker-skinned woman got it, but if the qualifications were identical, the lighter-skinned woman was preferred.”

While these claims are still rare, it is significant that EEOC charges of color discrimination have risen more than 330% since back in 1992. These are alarming numbers! Moreover, the EEOC’s E-RACE initiative calls for stepped up enforcement in this area.

It may not be a defense to a discrimination claim that two African American employees were treated differently if one is light complexioned and the other is dark complexioned. For employers, it’s important to keep in mind that color discrimination is illegal, and is different than race discrimination.

As many of you have heard me state in my seminars every employee needs to be treated and if they have an invisible shell. They have no race, gender, age, national origin, disability etc. It’s getting tougher! Don’t loose the focus.