Employers Must Reimburse Employees for Using Their Personal Cell Phones

August 25, 2014

Reimbursing employees for expenses has been the source of confusion for employers. One area, not generally considered, is reimbursing employees for the use of their personal cell phones for company business. Well, the bell has been rung.

Last week a California Court of Appeal held that a class action lawsuit against one employer was appropriate when the employer failed to reimburse employees for expenses associated with using their personal cell phones for work calls. At the trial court level, the employer successfully opposed the class action, arguing that liability could not be established on a class wide basis because it required individualized inquiry regarding whether an employee purchased a plan over and above what he normally would have had for purely personal use, and/or whether the employee incurred charges over and above his personal plan. The employer also argued that if someone other than the employee paid the employee’s cell phone bill, the employee would not have standing to pursue a claim for relief and this also created individualized issues. In addition to the individualized issues bearing on liability under Labor Code section 2802, the employer also successfully argued that damages would be highly individualized. The trial court denied the class action on the predominance of individualized issues.

The Court of Appeal reversed, holding that the trial court abused its discretion in denying the class action. The Court of Appeal held that the trial court relied on the wrong standard for liability for a reimbursement claim under Labor Code section 2802. According to the Court of Appeal, all that is required to prove liability under Labor Code section 2802 is that the employee necessarily incurred expenses in the course of his job duties. The employee does not need to prove that he incurred expenses over and above what he would have incurred absent the job, nor does he have to prove that he actually paid his cell phone bill. The court held that if the rule were otherwise, the employer would receive a windfall by being able to pass on some of its operating expenses to employees. Thus, the court held that to be in compliance with Labor Code section 2802, “the employer must pay some reasonable percentage of the employee’s cell phone bill” if the employee uses a personal cell phone for work purposes. In other words, “reimbursement is always required.” The court did not define what a “reasonable percentage” is, but instead held that “the calculation of reimbursement must be left to the parties and the court in each particular case.”

In short, the reality is employers need to reimburse employees if they are using their cell phones for business purposes. On the other hand, it may be a cheaper alternative than providing a company cell phone because employee lose their phones, abuse the use of the phones, and do not turn them in when they leave the company. Do the math.

FMLA Procedure for Paperwork Has Changed

August 18, 2014

Last week, a federal appellate court took a sledgehammer to the mailbox rule (mailing a letter during the normal course of business are deemed received by the addressee), finding it to be a relatively weak indicator that the addressee actually received the correspondence sent to the employee. As a result, employers and third party administrators responsible for sending these notices are left wondering whether notice by U.S. mail is acceptable anymore. Apparently it is not!

The Facts

The employee worked for a College an as instructor. During the relevant time period, she was dealing with some personal issues and, as it turns out, she was battling depression. Her boss encouraged her to take some personal leave. The employee agreed, and she completed a leave of absence request form seeking “personal leave.” A short time later, the employee provided complete FMLA medical certification to the College supporting her need for leave. As a result, the College properly converted her request for “personal leave” into one for FMLA leave, and it sent by U.S. mail the appropriate FMLA notices designating her absence as such.

The employee required a leave from December through mid-March, which was 14 weeks later. Several weeks thereafter, the employee provided documentation from her physician fully releasing her to return to work. By this point, however, the College told her she no longer had a job because she didn’t return to work after her 12 weeks of FMLA leave expired.

The employee claimed she never received any paperwork that it was a FMLA and sued the College alleging that it violated the FMLA when it failed to give her notice that her absence was covered by the FMLA.
The Ruling

The issue of whether the employee received the FMLA notices was central to her FMLA lawsuit. According to the court, if the College could show that the employee actually received its FMLA correspondence, her FMLA claims would fail.

The court then analyzed the strength of different forms of notice. Certified mail, for example, offers a “strong presumption” of receipt by the addressee. Regular mail, however, assures only a “weaker presumption.” The court determined that this “weaker” presumption is nullified whenever the addressee’s denies receipt of the mailing.

Think about that: a letter is not considered delivered by regular U.S. Mail whenever the addressee proclaims he or she did not receive it. And here, the employee’s denial allowed her the opportunity to submit her FMLA claims to a jury.

In its reasoning, the court explained what kind of delivery should be required in today’s day and age:

In this age of computerized communications and handheld devices, it is certainly not expecting too much to require businesses that wish to avoid a material dispute about the receipt of a letter to use some form of mailing that includes verifiable receipt when mailing something as important as a legally mandated notice. The negligible cost and inconvenience of doing so is dwarfed by the practical consequences and potential unfairness of simply relying on business practices in the sender’s mailroom.

Insights for Employers

I fear this decision is a bit of a game changer when it comes to confirming that an employee actually has received FMLA notice. And it poses a very real and costly problem for employers and TPAs. Let’s face it — employees regularly claim they failed to receive a notice given to them or sent to them in the U.S. mail. In nearly every Plaintiff’s deposition I take, they deny receiving some kind of notice from their employer. Now, they can defeat summary judgment simply by denying that they failed to receive an FMLA notice sent by regular mail?

Disagree as we might with this decision, what do we learn from it?

1. If you hand-deliver the notices to an employee, have the employee sign and date a receipt for the documents.

2. If you mail, send via a method that permits you to track the delivery whether it is certified mail with a green card return, or an express delivery service with a tracking number.

3. If you email, click the box on Outlook that will send a delivery notice upon receipt. This decision also is a reminder of what not to do when FMLA leave ends.

On another note, what else did the College do wrong? First, it
insisted that the employee return without restrictions. This case now changes the game. Be careful moving forward that requiring an employee to return without restrictions could be an ADA problem depending on the type of leave. Second, the College did nothing to engage the employee as FMLA leave was expiring as to whether any accommodations were necessary to help the employee return to work. Talk to your employee well before expiration of FMLA leave to begin determining whether they might need some assistance to return to work.

The Most Common Employer Harassment Mistakes

August 11, 2014

The Top 12 employer harassment mistakes

In my continuing quest to make sure that none of our clients ever get sued — or, if that fails, never lose a lawsuit — here are the most common employer harassment mistakes. Are you guilty of any of these? If so, I would suggest that changes be made immediately.

1. Having a harassment policy that covers sexual harassment only — nothing about race, national origin, disability, age, or religion, much less all of those “cutting edge” protected categories (such as sexual orientation) that we have discussed in our seminars.

2. Having a policy that requires the accuser to report the harassment through the chain of command. It’s ok to recommend doing it this way, but you need to have an alternative in case the harasser is in the chain of command. An employee hotline is very helpful. If you do not have one we can assist with this.

3. Policy or training that is too legalistic. One of my pet peeves is a harassment policy (or training) that simply recites the legal definition of unlawful harassment with no further explanation. No normal person knows what that legal definition means. It’s much better to provide real life experiences as examples so that managers and supervisors know the behavior expectations.

4. No training. Any employer that is not providing training to their managers and supervisors is playing with fire.

5. Training that does not occur unless you’ve been sued. (If you get sued all the time, I guess this is all right.)

6. Supervisors who, when receiving a harassment complaint, start investigating (or, heaven forbid, making determinations) on their own.

7. Related to No. 6, failure to timely notify Human Resources about a complaint of harassment.

8. Not promptly separating the accuser and the accused, to (a) prevent further incidents, or (b) prevent further false accusations. (Consider suspending the accused with pay while you investigate. For everybody’s protection.)

9. Overreaction. For example, firing the accused, a 25-year employee with a clean record, because he told a mildly off-color joke that offended somebody.

10. Improper reaction. For example, giving a write up to the accused after you’ve determined that he sexually assaulted his assistant in the supply closet.

11. Failure to follow all leads when conducting your investigation. Unless the accused admits to the harassment right off the bat, interview every witness identified by the accuser and the accused, as well as any witnesses identified by the witnesses.

12. Failure to follow up with the accuser after the investigation is over. This is crazy, especially if the accuser and accused will continue working together, or if the accusations were serious but you couldn’t do much because your investigation was inconclusive. Follow-up will give the accuser the chance to let you know if any new harassment occurs. It will also show her (or him) that you care about her (or his) well-being. And, if everything is now fine, you can document that each time you check in — the documentation will help you in the event of a lawsuit later.

SCORE – How did you do? 0= Get immediate help!!; 1-3 = The fuse is lit ; 4-6 = No rush but let’s get proactive; 7-9 = Not bad!; 10-12 = Want a job??Just kidding but congrats!

Supreme Court Makes Key Decision Regarding Commissioned Salesperson

August 4, 2014

Recently the California Supreme Court continued its trend of issuing employee-friendly decisions, this time in a case involving the commissioned salesperson exemption. In Peabody v. Time Warner Cable, the plaintiff was a commissioned salesperson who sold advertising spots for Time Warner Cable. She was classified as exempt from overtime under California’s commissioned salesperson exemption, which applies to a sales employee whose earnings exceed at least one and one-half times the minimum wage if more than half of those earnings represent commissions. Time Warner paid plaintiff her regular wages on a biweekly basis, but only paid her commission wages once per month. Thus, at least one paycheck per month was comprised only of base hourly pay and did not reflect earnings exceeding more than one and one-half times the minimum wage. However, the monthly commission check, which represented commissions earned for a monthly period (not just for a bi-weekly period), brought the employee’s wages for the month to more than one and one-half times the minimum wage.

Plaintiff sued, arguing that she was not properly paid overtime wages for hours worked in excess of eight per day or forty per week. The trial court granted summary judgment for Time Warner, agreeing with Time Warner that it properly paid plaintiff under the commissioned salesperson exemption and that plaintiff was not entitled to additional overtime compensation. Plaintiff appealed to the Ninth Circuit, which certified a question to the California Supreme Court concerning whether an employer could properly allocate commission wages over the pay periods in which they were “earned,” or whether the commission wages could only be attributed to the pay period in which they were actually paid. The California Supreme Court said the latter.

In so holding, the California Supreme Court reasoned that California overtime exemptions are narrowly construed and must be interpreted in favor of the employee and against the employer. The Court’s holding certainly accomplishes that. The Court acknowledged that California law permits commission wages to be paid less frequently than regular wages and that monthly, or even less frequent, payment of commission wages is permissible (given that commission wages often are not “earned” until certain conditions are satisfied and are not calculable with the same frequency as the regular payroll schedule). However, the Court reasoned that just because California law allows less frequent payment of commission wages that aren’t “earned” every pay period does not mean that an employer can use a monthly or less frequent schedule to pay commission wages that are earned. The Court reasoned that California law requires that all wages earned for work performed generally be paid no less frequently than twice per month. Time Warner was arguing that it could allocate commission wages to the pay periods in which they were “earned,” but the Court said that permitting this would be tantamount to authorizing monthly pay periods for wages earned. Because monthly pay periods are not authorized by the California Labor Code, the Court held that Time Warner had not properly paid the plaintiff and she did not qualify for the commissioned salesperson exemption.

The Court acknowledged that Time Warner’s pay system was proper under the federal commissioned salesperson exemption, but declined to find it proper under California law because California law, unlike federal law, requires at least semi-monthly pay periods.

The California Supreme Court’s decision makes it much more difficult for employers to satisfy the commissioned salesperson exemption under California law. Employers that look back and allocate commission wages over the pay periods in which they were “earned” as a means of ensuring that the employee’s pay is at least one and one-half times the minimum wage, should revise their practices in light of this decision.