Court Decides For Employer: Reporting Time Pay, Split Shift Premium, & Attorney Fees

September 24, 2012

This week a California court issued its decision in Aleman v. AirTouch Cellular, rejecting employees’ claims that they were entitled to reporting time pay for attending store meetings, further rejecting the employees’ split shift pay claim, and finally, awarding the prevailing employer its attorneys’ fees incurred in defending the reporting time pay claim.

Reporting Time Claim

California law provides that if an employee reports to work as scheduled and is not put to work or is furnished with less than half of the scheduled day’s work, the employee shall be paid for half of the scheduled day’s work, but in no event less than two hours nor more than four hours.  In this case, the employees claimed that they were owed reporting time pay for having to attend store meetings.  It was undisputed that the store meetings were scheduled, that they always lasted at least half the time scheduled, and that the employees were paid their regular wages for time spent attending the meetings (which were of less than two hours duration).  Nonetheless, the employees claimed that they were entitled to be paid for a minimum of two hours for every store meeting they had to attend, even if the meeting lasted only an hour.  The court rejected this claim, holding that California’s reporting time pay law does not require employers to pay employees for a minimum of two hours of work every time they report to work.  Rather, the focus is on whether the employee is furnished with at least half of the scheduled day’s work.  If a meeting is scheduled for an hour and lasts an hour (or even a half hour), the employee is entitled only to regular pay for time actually spent attending the meeting and is not entitled to any additional reporting time pay.

[Note to employers: It is significant that the meetings at issue in this case were of a scheduled expected duration.  The outcome may have been different (and a minimum of two hours pay owed) if there was no expectation as to how long the meetings would last from which it could then be determined whether the employees “worked” at least half the scheduled time.]
Split Shift Pay Claim

On certain occasions, the employees were required to attend a store meeting on the same day as a regular work shift.  The store meeting and the sales shifts were not back to back, but were separated by a block of time.  This constitutes a “split shift.”  Under California law, when an employee works a split shift, he/she is entitled to one hour additional pay at the minimum wage in addition to the minimum wage required for that workday. The AirTouch employees claimed that AirTouch failed to pay them the additional hour of pay on occasions when they worked split shifts.  AirTouch argued that no additional pay was owed because on every occasion the employees worked split shifts they were paid more than the sum of minimum wage for all hours worked plus an additional hour at minimum wage.  The court agreed with AirTouch’s analysis and rejected the employees’ split shift claim.  The employees had argued that the Wage Order simply means that the employee must be paid an additional hour at his or her regular wage when a split shift is worked.  Rejecting this argument, the court reasoned that the split shift provision refers not to “regular wages” but to “minimum wages” and that the provision is contained in the “Minimum Wage” section of the Wage Order, making it clear that the regulation is concerned solely with payment of minimum wage.

Court Awards Attorneys’ Fees to AirTouch

After prevailing on the merits of the case, AirTouch sought to recover its attorneys’ fees.  The court considered whether Labor Code section 218.5 permits a prevailing employer to recover its attorneys’ fees incurred to successfully defend reporting time and split shift pay claims.  In consideration of the California Supreme Court’s recent ruling on this subject in Kirby v Immoos, the court held that AirTouch could recover its fees on the reporting time pay claim but not the split shift pay claim.  The court reasoned that the split shift pay claim was a minimum wage claim and was thus governed by Labor Code section 1194, which has a one way fee shifting provision that does not allow a prevailing employer to recover its fees.  However, the court held that the reporting time pay claim was not a minimum wage claim and thus fell under Labor Code section 218.5’s two way fee shifting provision which allows the prevailing party (employee or employer) to recover its attorneys’ fees.  As such, the court held that AirTouch was entitled to fees incurred to defend the reporting time pay claim.


California Expands Religious Accommodation Requirements

September 17, 2012

California’s Governor has signed into law AB 1964, which modifies California’s Fair Employment and Housing Act’s provisions relating to employment discrimination based on one’s religious beliefs.  FEHA has always prohibited discrimination against applicants and employees based on their religious beliefs, and has also required reasonable accommodation of employees’ religious beliefs and observances, so this much is not new.  The new law makes clear that “religious beliefs” include religious dress practices and religious grooming practices, meaning that employers cannot discriminate against applicants or employees bases on these practices and must also reasonably accommodate such practices in the workplace.  According to the new law, “religious dress practice” shall be construed broadly to include the wearing or carrying of religious clothing, head or face coverings, jewelry, artifacts, and any other item that is part of the observance by an individual of his or her religious creed.  “Religious grooming practice” shall be construed broadly to include all forms of head, facial, and body hair that are part of the observance by an individual of his or her religious creed.  The new law further explains, in pertinent part, that it is an unlawful employment practice:

(l)  (1)  For an employer or other entity covered by this part to refuse to hire or employ a person or to refuse to select a person for a training program leading to employment or to bar or to discharge a person from employment or from a training program leading to employment, or to discriminate against a person in compensation or in terms, conditions, or privileges of employment because of a conflict between the person’s religious belief or observance and any employment requirement, unless the employer or other entity covered by this part demonstrates that it has explored any available reasonable alternative means of accommodating the religious belief or observance, including the possibilities of excusing the person from those duties that conflict with his or her religious belief or observance or permitting those duties to be performed at  another time or by another person, but is unable to reasonably accommodate the religious belief or observance without undue hardship. Religious belief or observance, as used in this section, includes, but is not limited to, observance of a Sabbath or other religious holy day or days, reasonable time necessary for travel prior and subsequent to a religious observance, and religious dress practice and religious grooming practice.

(2)  An accommodation of an individual’s religious dress practice or religious grooming practice is not reasonable if the accommodation requires segregation of the individual from other employees or the public.

While AB 1964’s changes to FEHA arguably are intended simply to clarify existing law, the express modification of FEHA and highlighting of religious discrimination issues may lead to increased focus and scrutiny in this area and, thus, a greater likelihood of religious discrimination suits against employers.


Court Rules an Employer Can Pay Vacation at Less than the Regular Rate

September 10, 2012

This week, a California court said an employer can pay vacation at a rate less than the regular rate.  The case, Bell v. H.F. Cox, Inc., was brought by trucking employees against their employer, alleging various wage and hour claims, including unpaid vacation, unpaid overtime, and missed meal and rest breaks.  With respect to the vacation, the employer had an unusual policy that provided vacation but expressly stated that vacation would only be provided at the rate of $500 (later increased to $650) per week, regardless of what the employee’s actual rate of pay was. The policy further stated that unused vacation was not paid out on termination of employment (which generally is not legal in California).  The employer moved for summary adjudication of the vacation claims, arguing that the employer’s vacation pay plan was governed by ERISA and that ERISA preempted California law in this area.  The trial court agreed and threw out the employees’ vacation claims.

The appellate court reversed in part.  The appellate court held that the trial court erred in finding the vacation claims preempted by ERISA as a matter of law.  The appellate court held that there were triable issues of fact as to whether ERISA preemption applied to the employer’s vacation plan in this case, and thus remanded the issue to the trial court for hearing on that issue. (ERISA preemption generally only applies where the employer’s plan provides for payment of vacation from a separate fund as opposed to the employer’s general assets.)  However, the appellate court determined that ERISA preemption only impacted the issue of whether the employees had a valid claim against the employer for failure to pay out unused vacation on termination of employment.  As for the claim that the employer illegally provided current employees vacation at a lower wage rate than the employees’ current wage rate, the court held that there was nothing unlawful about this policy under California law and thus it did not need to reach the issue of ERISA preemption as to this claim.  The court analyzed the statute at issue, Labor Code section 227.3, which states that accrued, unused vacation generally must be paid out at the employee’s final wage rate on termination of employment.  The court held that this statute only applies to payout of vacation on termination of employment, and that it does NOT contain any requirement that vacation benefits be provided at an employee’s regular rate of pay during employment.  As such, the court held that the trial court properly granted summary adjudication of the employees’ claim for vacation based on the rate at which it was paid during employment.

The H.F. Cox decision is a good one for employers however, employers may not want to run out and revise their policies to try to invoke ERISA preemption to avoid payout of vacation on termination of employment, or to provide current employees vacation benefits at a pay rate less than the employees’ regular rate of pay.  Employers are cautioned to seek legal advice in these areas.


Workplace Odors (Perfumes, Body Odor, Etc.) Another Landmine For Employers!

September 4, 2012

Workplace odors continue to be burdensome. Employees complain that a co-workers perfume, cologne or body odor is too strong thereby creating an uncomfortable working environment and placing employers in a dilemma as to their possible options. Well, a recent case may shed some light on one possible solution.

“Japanese Cherry Blossom” sounds like a lovely perfume. But one employer’s refusal to provide a “fragrance-free” workplace from that scent caused a major disability issue that landed an employer in court. Here are the facts. The employee suffered from asthma and a severe chemical sensitivity to certain perfumes and other scented products. When one of the employee’s co-worker began wearing a “Japanese Cherry Blossom” perfume. The impacted employee complained to her manager. The only problem: Her complaint wasn’t addressed. Her issues with the scent became so severe that she eventually had to have emergency medical treatment and when things went from bad to worse. Following her medical emergency, her co-workers began mocking her chemical sensitivity on Facebook. Those staffers also continued to wear the perfume on purpose, knowing it would have an adverse effect on her. A note from a nurse practitioner eventually convinced the company to email staff asking them not to approach the employee personally. They were asked to only communicate with her via phone or email however, the employee eventually was forced to take leave because her symptoms continued to worsen.

The employee asked to work from home as an accommodation, but her company said no. The firm eventually agreed to ask staff not to wear the Japanese Cherry Blossom perfume, but the employee said that wasn’t enough –she wanted every staff member to be prohibited from wearing any scent near her. The company said no. So the employee sued, alleging that the company failed to accommodate her request for a fragrance-free workplace.
The company asked the court to throw the case out. First, it said it was impossible to provide the employee with a fragrance-free workplace — her job required that she interact with members of the public. Second, the firm argued that it had already accommodated the employee’s disability by requesting that employees not wear the Japanese Cherry Blossom perfume. But the court ruled in the employee’s favor.

Here’s the kicker. Since the employee had worked with customers, the court said the company was right that it couldn’t provide a completely fragrance-free workplace. But it did say doing so would “at least minimize and limit the employee’s exposure to perfumes.” And the court found that the employee’s “no-fragrances” request might actually be reasonable — especially because of the employee’s co-workers’ behavior and the lack of disciplinary action taken by the company.

The case has a number of important takeaways for both accommodation and telecommuting requests. Employers need to consider that just because an accommodation would be unpopular with staff doesn’t mean it’s unreasonable. Second, the court punished the company for failing to take action sooner in stopping the harassment. But most importantly, the court went out of its way to note that telecommuting-as-reasonable-accommodation requests will be looked at differently than they have in the past. This is perhaps unsurprising — the court notes that technology has changed a lot since one of the first work-from-home accommodation requests was examined in court in 1995.

Employers may want to consider the following steps to be ready in case a staffer requests to work from home as an accommodation for a disability:

1. Prepare job descriptions detailing the need for time spent in the office;
2. Research the costs of maintaining a telecommuting program;
3. Engage in an interactive dialogue with disabled staff and come to agreement on alternatives;
4. Address all complaints immediately and;
5. Take disciplinary action against those who seek to create a hostile work environment.