How Many “Incidents” Qualifies as Creating a “Hostile Work Environment”?

May 17, 2015

A common question from our clients is “how many incidents does it take to create a hostile work environment?” Good question, and now at least one Court of Appeals has given us what might be a growing trend.

According to the Fourth Circuit Court of Appeals, sometimes once is enough.  In a just issued a decision that overturns established circuit precedent, the Fourth Circuit held that a single workplace incident was sufficiently severe to trigger Title VII’s protection.

In Boyer-Liberto v. Fontainebleau Corp.(May 7, 2015), an African-American hotel worker was fired after she complained that a white employee had called her a “porch monkey” twice within 24 hours.  During the initial litigation process, the employer won summary judgment because of established Fourth Circuit precedent that a single workplace incident is never severe enough to raise a triable Title VII claim, per Jordan v. Alternative Resources Corp., (2006).  A divided Fourth Circuit panel (2-1) affirmed.

Now, In a 12-3 decision, the court overturned circuit precedent to hold a single workplace incident can be “severe” enough to trigger Title VII’s protection, particularly when the alleged harasser asserts supervisory authority and threatens to get the employee fired.  The Fourth Circuit also held that the employee had also raised a triable Title VII retaliation claim because she opposed conduct that she reasonably believed was unlawful racial harassment.

The Fourth Circuit overruled Jordan to the extent that it suggests a viable hostile work environment claim always requires more than a single incident of alleged harassment.  The Fourth Circuit also overruled Jordan‘s holding that an employee fired after complaining about a single incident of alleged harassment cannot claim retaliation unless there is evidence that there was a plan in motion a hostile work environment.

As explanation for the departure and change in courts’ direction, the full Fourth Circuit explained that the “Jordan standard is at odds with the hope and expectation that employees will report harassment early, before it rises to the level of a hostile environment.”   “Rather than encourage the early reporting vital to achieving Title VII’s goal of avoiding harm, the Jordan standard deters harassment victims from speaking up by depriving them of their statutory entitlement to protection from retaliation,” the court said.  The court concluded the Jordan standard was “incompatible” with Supreme Court precedent that “Title VII’s anti-retaliation provision be interpreted to provide ‘broad protection from retaliation.’”

Now look, you have heard us say many times that every complaint must be taken seriously. Take the appropriate action even when there is only one incident. This my at least help to minimize any potential damages if the plaintiff is successful.


December 15, 2014

IRS Issues New Guidelines for Mileage Reimbursement

Last week, the IRS issued the 2015 optional standard mileage rates used to calculate the costs of operating a vehicle for business, charitable, medical or moving purposes.  Beginning on January 1, 2015, the standard mileage rates are as follows:

  • 57.5 cents per mile for business miles driven, up from 56 cents in 2014;
  • 23 cents per mile driven for medical or moving purposes, down half a cent from 2014; and
  • 14 cents per mile driven in service of charitable organizations.

Under California Labor Code section 2802, California employers are required to reimburse employees for reasonable expenses necessarily incurred in the performance of their job duties.  This includes expenses associated with the use of their personal vehicles for business purposes.  Most employers use the standard mileage rate to satisfy their obligation to reimburse employees for expenses associated with using their personal vehicles for business travel.  Although employers are not required to use the IRS optional standard mileage rate, and can instead try to calculate an employee’s “actual” expense associated with personal vehicle use (which includes more than just the cost of gas, but also the cost of wear and tear, etc.), the latter method carries risk of being challenged for not providing adequate reimbursement.

 

Supreme Court Rules Employer Need Not Pay for Worker Security Screenings

The issue in this case was whether the employer had to compensate employees for having to go through a security screening process. The case was brought under the Fair Labor Standards Act (FLSA) whereby warehouse workers sued Integrity Staffing under the FLSA for uncompensated time they were required to spend in lengthy security screenings (lasting up to 25 minutes) at the end of their shifts during their assignments to work in Amazon warehouses. The Court held that the employees at Integrity Staffing Solutions facilities in Nevada could not claim compensation for the time spent going through security screenings aimed at protecting against theft because these activities were not integral and indispensable to their principal duties.

In addition, the Court observed that, unlike requiring pre-shift donning and doffing of protective gear, Integrity Staffing could have completely eliminated the security screenings altogether without impairing the safety or effectiveness of the employees’ principal activities.

Under the FLSA, as amended by the Portal-to-Portal Act, employers generally need not compensate employees for “preliminary” (pre-shift) and “postliminary” (post-shift) activities, unless the activities are “integral and indispensable” to an employee’s principal activities. To be “integral and indispensable,” an activity must be (1) “necessary to the principal work performed” and (2) “done for the benefit of the employer.” The FLSA distinguishes between activities that are essentially part of the ingress and egress process and those that constitute the actual “work of consequence performed for an employer.” Finding the security screenings were clearly part of the former, the Court cited an early Department of Labor opinion interpreting the Portal-to-Portal Act in 1951, where the Department had found non-compensable a pre-shift security search of employees in a rocket-powder plant “‘for matches, spark producing devices such as cigarette lighters, and other items which have a direct bearing on the safety of the employees,’” as well as a post-shift security search of the employees done “‘for the purpose of preventing theft.’” The Department of Labor had drawn no distinction between the two types of searches (employee safety versus theft prevention), finding them both non-compensable under the Portal-to-Portal Act.

What Does the Integrity Staffing Decision Mean for Employers?

Of immediate concern, the Supreme Court’s decision provides a clear, final answer for employers on security screenings, which have become more common. The decision also wipes out the spate of class and collective action lawsuits filed by employees seeking back pay for time spent undergoing pre- or post- shift security checks that were filed in the wake of the Ninth Circuit’s decision, eliminating some tremendous potential liability for those employers. More broadly, even though this case focused only on security checks, the decision could further limit the scope of what constitutes “integral and indispensable” activities. Over time, a more limited view of an employee’s principal activities should prove valuable to employers looking for certainty about the compensability of a host of pre- and post-shift activities with the exception of the current “donning and doffing of uniforms which employers still have to pay for.

Note: The Podcast this week discusses “Dress Code Policies” and the rights of employers and employees. Go to http://www.pottsandassociates.com or find us on ITunes.


Premium Holiday Pay & Minimum Wage Increase Acceleration

December 8, 2014

Proposed Bill to Accelerate Minimum Wage Increases

Last week, on the first day of the California legislative session, State Senator Mark Leno introduced a bill to accelerate the proposed increase to California’s statewide minimum wage.  Leno has been a strong proponent of an increased statewide minimum wage.

I am not sure at this point what will happen with this bill.  However, the bill, as introduced, would raise California’s minimum wage to $11 in 2016 (instead of $10 under current legislation passed in 2013) and $13 in 2017.  After 2017, the bill calls for regular minimum wage increases indexed to inflation.

Senator Leno introduced a similar bill last year, but it died in committee.  Given the current climate on minimum wage, this year’s version likely has a better chance of ultimate success.  I will continue to keep you posted on the progress of this and other employment-related bills as they are introduced and move forward during the legislative session.

Premium Pay for Certain Holidays Being Proposed

First, San Diego Assemblywoman Lorena Gonzalez announced that she is going to introduce a bill that guarantees that all California workers (part-time and full-time) receive double their regular rate of pay if they are required to work on Thanksgiving or Christmas.  (Note: In Ohio, state representative Michael Foley already introduced a bill that would require stores in Ohio to pay triple the regular hourly rate for workers who are required to work Thanksgiving).  Assuming Gonzalez’ bill does get introduced, we expect it to have substantial support from her fellow lawmakers.  This bill would be introduced in next year’s legislative session (2015) and will not affect Christmas this month.  Currently, Gonzalez plans to only include Thanksgiving and Christmas as days requiring premium pay.  However, it is certainly possible that amendments to expand the scope of the bill are debated and that additional holidays or other dates (Black Friday, Christmas Eve etc.) are considered.

Sacramento Considering Citywide Minimum Wage Ordinance

Second, Sacramento Mayor Kevin Johnson has announced that he will put together a task force shortly after January 1 to consider the issues surrounding raising Sacramento’s minimum wage above the current state level ($9 currently increasing to $10 in 2016).  Mayor Johnson claimed that the task force will include representatives from the business community and from organized labor.  He announced that he will ask the group to look into a variety of issues surrounding a potential Sacramento minimum wage including whether to do it, the timing of it, and what if any exemptions should be provided.  The Mayor has not identified a particular dollar figure for the new minimum wage and that issue will likely also be considered and proposed by the task force.  We expect that any minimum wage increase is likely to be supported by the City Council and the citizens of Sacramento.

I will keep you updated on these issues as they develop.

 


Planning your workplace holiday party? Read this first!

December 1, 2014

Every year I try to put out reminders regarding the “holiday” season. If you are planning your holiday party now, and you want answers to your burning questions while you still have time to do something about it, read on! These are the typical inquires I have received over the years.

What do you consider to be the Number One risk factor for employer liability resulting from workplace holiday parties?

I would say crystal meth, except that the employers I know don’t typically serve it at their parties. They do, however, serve alcohol. For this reason, I say alcohol. Alcohol (1) loosens inhibitions, which can result in sexual harassment, inappropriate comments, or fighting, and (2) impairs judgment and reaction times, which can result in accidents when guests leave the party.

Employers having parties where drinks are served need to do what they can to protect intoxicated guests and their potential victims.

What can an employer do to make sure that it isn’t liable for a drunk driving accident after a workplace party?

There is probably no way to eliminate the risk of liability (assuming that alcohol is going to be served), but you can minimize risks by doing some or all of the following: (1) paying for cabs to take impaired employees home, (2) having the party at a hotel, or within walking distance of a hotel, and providing rooms for anyone who may not be able to get home safely, (3) having designated drivers, (4) having a cash bar with drinks so expensive that your employees won’t want more than a couple (but be prepared to be called a cheapskate if you do this), (5) closing the bar after about two hours, and (6) serving lots of free food to soak up all that booze.

Another good thing to do, if you can afford it, is invite spouses and significant others to the party. They aren’t called “better halves” for nothing – they will frequently be forces for moderation.

Is it against the law to call our party a “Christmas party”?

Not if you’re a private employer. Although city and county governments get sued for things like putting Nativity scenes in the town square, that’s because they are governments. The First Amendment prohibits governments from establishing a “state religion.”

If you’re a private employer, then go ahead and call the party what you want, but be sensitive to employees who are not Christians. Trees, greenery, and lights should be fine. Santa (the Coca-Cola Santa, not the real St. Nicholas) is probably ok, too. I love the idea of including Chanukah decorations with Christmas decorations when Chanukah is occurring around the same time (just a thought).

Make sure that employees of all faiths (and non-believers, too) know that they are welcome at your party. And don’t forget that some employees — most notably, Jehovah’s Witnesses — do not believe in having parties at all. (Note: Jehovah’s Witnesses are not opposed to all parties, but only to those connected with religious celebrations or that may be poorly managed — for example, by having free-flowing alcohol.) Allow employees to opt out of your party without penalty if they consider attendance to be a sin, or if they have some other type of sincere religious objection. (This would be a religious accommodation, which the law requires if it’s not an undue hardship. I feel safe in predicting that no court would find it an “undue hardship” for you to let an employee skip your holiday party.)

Can we require, or “strongly encourage,” employees to attend the holiday party?

Sure, but I don’t recommend it. For two reasons: (1) employer liability for injuries, and (2) wage and hour.

Your liability as an employer for something bad that happens at a workplace party is going to depend primarily on whether the party was within the course and scope of employment. If attendance is required, then it’s a good bet that the party is within the course and scope of employment. That means that if an employee gets hurt at your party or hurts another employee, the injuries will be compensable under your workers’ compensation policy. If an employee hurts a non-employee (spouse, date, unfortunate driver who happened to be on the road at the wrong time), you could be legally responsible for your employee’s negligence. If attendance is truly voluntary, on the other hand, then the party may not be in the course and scope of employment, and as a result, you may not have these liabilities as an employer.

(It should be noted that an employer can always be liable – either under workers’ comp or tort law – for injuries caused by its own negligence.)

Mandatory attendance is a bad idea from a wage and hour standpoint, too. If non-exempt employees are required to attend, then you must pay them for their party time, and if the party hours — added to their actual work hours for the workweek — put them over 40, then you have to pay overtime for those extra hours. (California requires daily overtime.) If attendance is truly voluntary, you shouldn’t have to pay for the party time unless the employee performed actual work (for example, handing out name tags, or performing set-up/clean-up duties, or acting as a company-appointed designated driver).

 

“No, I’m not sayin’ you have to come. I’m just sayin’ your presence would be very much appreciated.”

And why do I keep saying “truly voluntary”? Because if you tell employees that their attendance is “encouraged” or “expected,” then their attendance is probably not “truly voluntary.” Employees tend to feel compelled to do what their employer “suggests” or “expects.” (At least, the good ones do.)

In closing, I hope that everyone who is planning a workplace party this year will have a blast. But not too much of a blast. And with due respect for all viewpoints. And without coercion. And in full compliance with applicable wage and hour laws.

Happy holidays! Be safe!

 

NOTE: Speaking English only in the workplace is the topic for the podcast. Listen to one employee who called in. http://www.pottsandassociates.com or ITunes (Listen up wit Jim Potts).


Should You Rehire “Boomerang” Employees? Part Two

November 24, 2014

For those of you who did not read last week’s Blog “Should You Rehire “Boomerang” Employees” you need to go back and read that article first.

Number 1: Circumstances of the Departure

The number one consideration is to determinate why and how the employee left. Not surprising, employees who left voluntarily on good terms are best suited to return to work, as opposed to those employees who left involuntarily or on bad terms. Did the employee leave because of dissatisfaction with the company, or because of some personal reason, like spouse job relocation, pregnancy, or some other reason?

If an employee left because of lack of growth opportunities, because the employee thought he was underpaid, or because he had a less-than-stellar relationship with a supervisor or co-workers, unless the company has undergone a significant change since the employee left, it is unlikely that the employee’s issues with the company will have resolved or stabilized in a manner that will result in long term, sustained employment.

In addition, if the employee was fired or forced out, they should not be considered for re-hire, unless of course the person or persons who forced them out were discovered to be the source of the problem. Similarly, if an employee left involuntarily because of poor performance, the employer would generally be foolish to rehire them.

Some employers also refuse to re-hire an employee who left to go to a competitor. There may be non-compete issues to consider in this type of situation. It could be become a very expensive rehire decision is if it results in litigation with the employee’s most recent employer.

These considerations are examples of why it is important for employers to conduct and document exit interviews when employees resign or are terminated. An exit interview gives the employee an opportunity to provide the employer constructive feedback about their job, co-workers, supervisors, and the company overall. If the employer documents what the individual said during the exit interview and retains that information, it can be an invaluable resource to refer back to when considering that individual for rehire a few years down the road.

Number 2: Length of Departure

Another consideration is how long the employee was away from the workforce. Employees gone for short periods take less time to train and re-acclimate to the organization, its culture, and the demands of the job given the current organizational climate. Bottom line, the shorter the leave, the more money the company can save.

Number 3: Past Performance

This largely follows Number 1. One reason to keep good employment records is to determine if an employee should be considered for re-hire. Of course no employer wants to re-hire a poor performer or a chronic attendance problem. But for large employers or employers with high turnover, there may be little or no institutional knowledge of an employee’s prior employment tenure. This means, if details about the employee’s prior employment are not in the records, the employer may not discover it.

This is also why it is important for employers to ask on the employment application if the applicant has ever worked for the company before and, if so, why the employee left. If the employee was terminated, it should come out at this time. If the employee lies and is hired, once the lie is discovered, the employee could perhaps be terminated for lying during the application process.

Number 4: Performance at Current Employer and Reason for Returning

During their absence, there is a good chance that boomerang employees have learned new skills, expanded their network, and had other successes. It is important to have a candid conversation with the employee and find out exactly why the employee wants to return. There are right reasons to return and there are wrong ones. If an employee wants to return because the employee misses former colleagues, it is not a good reason. If the employee wants to return because the employee has not had success in subsequent employment, it is not a good reason.

The best case is when an employee wants to return because the employee has had time to learn, grow, develop new skills, and believes the former employer can take advantage of the employee’s newly-expanded skillset and network.

Number 5: Needs of the Company

No matter how great a former employee might have been or currently is, ultimately the decision to re-hire comes down to whether the company needs the skills of the employee, the money to hire the employee, and has a job open for the employee.

In addition, hiring a boomerang can be political, and the re-integration of a boomerang precarious. The players may have changed since the employee left and interpersonal relationships may have changed too. Dynamics may also prove tense if the boomerang leapfrogged over an incumbent employee, who might feel slighted by not getting the job.

 


Should You Rehire “Boomerang” Employees?

November 17, 2014

When the question used to come up of whether to re-hire a former employee, many employers aligned with one school of thinking: “If you thought the grass was greener on the other side, you can stay there.”

This particular mindset, however, has increasingly becoming the minority view. This attitude shift is forcing recruiters and employers to rethink not only their recruiting strategies, but also their hiring and exit strategies.

Skill Specialization

A factor to consider is skill specialization. The professional workforce has changed, and the demand for employees with specialized skills is high. As such, employees with the covetable skills are constantly offered opportunities. Some employees leave, not because they are disloyal, but because they can and because, these days, money and job flexibility talk. Some employees stay, not because they are loyal, but because they have to. This is just as much the employer’s fault though as it is the employee’s, because employers need to learn how to retain top talent through more flexibility, creative fringe benefit options like onsite day care, etc.

The combination of generational disparity, the economy, changing/expanding gender roles and skill specialization have made life-long employment a thing of the past. The present and the future is the free-agent generation. The good news is that employers seem to be getting on board. To many, leaving a company is no longer viewed as a betrayal, and many companies have changed their thinking about boomerang employees. They no longer see them as “ex-employees,” or “traitors”; rather, they consider them “alumni,” and continue to maintain their connections to these former employees.

Advantages

There is no denying that there is value in hiring a boomerang employee. The cost of losing an employee and hiring and training a new one is expensive. Studies suggest that hiring a boomerang employee has one of the highest returns on a recruiting investment – 1/3 to 2/3 the cost of hiring a newbie employee. It often makes sense then for an employer to rehire a former worker to offset some of these costs.

Social media sites like LinkedIn make it even easier to keep track of former employees, and it is typically less expensive to rehire them directly and bypass the search and recruitment process altogether. With these employees, employers know what they are getting.

Another advantage with boomerang employees is saving time on training and ramp-up time, and they tend to acclimate more easily as they re-enter the workforce because they understand the organization’s work structure and culture. They may also know most of the key players (if the company has not had a lot of turnover).

Another value, boomerang employees have gotten their chance to see if the grass really is greener on the other side. Returning employees who have gotten to see firsthand that it is not, are many times better workers, more committed, more loyal, and better brand ambassadors.

The Risks

But it is not all positive. There are risks involved in hiring a boomerang employee because not all boomerang employees are created equal, and it is not always the “one that got away” that tries to return.

There are five considerations when deciding whether to return a boomerang employee. Next week I will present these five areas. I will take you through the circumstances of the departure, the length of the departure, past performance, reasons for returning, and the needs of the company.

Until then!


An Emerging Workers Compensation Defense for Unwarranted Claims!

November 10, 2014

Detailed, written job descriptions and or employee handbooks could be vital to employer’s defense in workers’ compensation claims. An emerging defense for employer against workers’ compensation claim is that the employee’s own actions – rather than the work-related injuries — have led to the employee being off work. The theory is that an employee’s actions constitute a voluntary abandonment of employment thereby precluding receipt of temporary total disability compensation.

The key to the concept is that employers must provide employees with a written job description that establishes job duties and responsibilities. It would be important to ensure that every current employee, and new hire, be provided with a copy of an employee handbook detailing the employer’s policies and procedures. Of importance, is that once the policies are distributed, employees are disciplined in writing for violating work rules, and that they have an understanding that any future violations would result in termination from employment.

Now, once the employee is terminated, the argument is he/she voluntarily abandoned her employment as a result of her termination for violating a written work rule and is not entitled to receive compensation. In essence, it is an employee’s own actions which takes them out of the workforce, rather than the work injury, and therefore, the employee is not entitled to compensation. They key to this is a discharge from employment is considered to be a voluntary abandonment only when the discharge arises from a violation of a written work rule that (1) clearly defined the prohibited conduct, (2) identified the misconduct as a dischargeable offense, and (3) was known or should have been known to the employee.

Ok, before you tell me this will never work, it has! The Ohio Supreme Court and the Industrial Commission found that an employee who knew her actions violated the employer’s standard of conduct could result in her termination. The Industrial Commission noted that the employee was in receipt of an employee handbook that contained policies, rules and disciplinary processes. Further, the employee knew her job responsibilities were articulated in her job description. Thus, the Ohio Supreme Court found that she was on notice that her actions in failing to abide by the rules could result in her termination of employment.

This is a case that highlights the continuing importance of conveying to employees their exact responsibilities and consequences for the failing to abide by rules, policies and procedures, whether this is done through an employee handbook or in job descriptions. A useful job description includes details of job duties, responsibilities assigned to the employee and any applicable standards of care or conduct. Job descriptions and handbooks containing policies, procedures, rules and disciplinary processes should be reviewed and updated as necessary to ensure they actually reflect current practice. Whenever a new update is issued, employees should be trained on the changes and sign an acknowledgement of receipt of the new information. Whenever possible, a termination letter should refer to the exact rule, policy or procedure violated. If these simple steps are followed, an employee is injured on the job and terminated for violating a written work rule should be precluded from receiving compensation based on the employee’s “voluntary abandonment” abandonment of employment.

I realize this approach may appear to be radical but the underlying premise is sound. Put job descriptions in place and get an employee handbook. Let’s start with these basics and hopefully both or either may help with holding off some of these unwarranted claims. Just food for thought!

NOTE: The Podcast this week presents a “Wage & Hour Checklist” can use to double their internal procedures to ensure compliance with some of the more litigated areas. Simply go to www.pottsandassociates.com and click on the podcast link.


The Use of Criminal Background Checks In Hiring Decisions

November 3, 2014

The Equal Employment Opportunity Commission (“EEOC”) has published new guidelines related to (a) how employers should manage and handle inquiries into arrest and criminal conviction records of applicants and employees, and (b) making employment and hiring decisions where criminal backgrounds are part of the consideration.  Although the EEOC Enforcement Guidance memorandums are not binding precedent, many judges review and consider them when issuing and deciding litigated matters.  In addition, they will be relied on heavily by the EEOC (and probably the DFEH), in any relevant administrative inquiry being conducted under Title VII (or FEHA).

According to the Enforcement Guidance, statistical evidence demonstrates that broad exclusions for employment or promotion for anyone that has any type of criminal record has an adverse impact on certain minorities including Hispanics and African-Americans.  This simply means unless the employer can demonstrate a legitimate and necessary business reason for such a broad exclusion, an employer who implements a broad automatic exclusion from employment/promotion for any criminal conviction will be risking a disparate impact lawsuit or claim.  In light of the EEOC’s Enforcement Guidance, employers in most cases should avoid implementing broad exclusion policies or practices for anyone with a criminal record and, instead, should conduct an individualized assessment that considers (a) the nature of the crime, (b) the time elapsed, and (c) the nature of the job to determine if the conviction should serve as a bar to employment/promotion.

The EEOC Enforcement Guidance contains a series of suggested best practices for employers who are considering criminal record information when making employment decisions.  The Enforcement Guidance best practices provide:

General

  • Eliminate policies or practices that exclude people from employment based on any criminal record.
  • Train managers, hiring officials, and decision makers about Title VII and its prohibition on employment discrimination.
  • Developing a Policy
  • Develop a narrowly tailored written policy and procedure for screening applicants and employees for criminal conduct.
  • Identify essential job requirements and the actual circumstances under which the jobs are performed.
  • Determine the specific offenses that may demonstrate unfitness for performing such jobs.
  • Identify the criminal offenses based on all available evidence.
  • Determine the duration of exclusions for criminal conduct based on all available evidence.
  • Include an individualized assessment.
  • Record the justification for the policy and procedures.
  • Note and keep a record of consultations and research considered in crafting the policy and procedures.
  • Train managers, hiring officials, and decision makers on how to implement the policy and procedures consistent with Title VII.
  • Questions about Criminal Records
  • When asking questions about criminal records, limit inquiries to records for which exclusion would be job related for the position in question and consistent with business necessity.
  • Confidentiality
  • Keep information about applicants’ and employees’ criminal records confidential.  Only use it for the purpose for which it was intended.

Keep in mind the above represents federal guidelines. Each state may vary as to their particular practices. California, as an example, does not permit applicants to be asked about arrests, just convictions. This issue of criminal background checks is not going away. We will keep you posted on any further updates. For now, we are not recommending a change in any policy that you may have in place.

NOTE: The Podcast this week discusses the financial obligations of an employer when there is a shutdown do to emergency situations within, and beyond, the control of the employer. Go to http://www.pottsandassociates.com or look for me on ITunes. Just search for “Listen Up with Jim Potts.” As always, thanks for listening!


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.


The Definition of “Spouse” to Legally Married Same-Sex Couples

June 30, 2014

There appears to be some confusion when employers are attempting to accommodate FMLA leave requests for the “spouse” of a same-sex couple. Well, to clarify this issue, the Department of Labor (“DOL”) has announced a notice of proposed rulemaking to revise the definition of “spouse” under the FMLA to make it clear that the FMLA applies to legally married same-sex spouses, regardless of where they live. Before last year, the FMLA applied only to opposite sex spouses. Last year, the United States Supreme Court issued its decision in United States v. Windsor, holding that federal laws that discriminate against same-sex married couples are unconstitutional. As a result of the Windsor decision, the FMLA’s provisions allowing family and medical leave to care for a “spouse” became applicable not only to opposite-sex spouses but also to same-sex spouses – so long as the employee requesting leave resides in a state that recognizes same-sex marriage. This is because the FMLA currently defines “spouse” in a way that is tied to the law of the state where the employee resides. The problem with the current spousal definition is that many states still do not recognize same-sex marriage, and even if an employee was married in a state that does recognize same-sex marriage, he or she technically is not eligible for FMLA leave (to care for a spouse) if currently living in a state that does not recognize same-sex marriage. This has resulted in administration difficulties for employers, many of whom would prefer not to have to engage in an inquiry about whether the employee resides in a state that recognizes same-sex marriage in order to determine whether to allow the employee leave. However, employers who have decided that they will provide the same leave benefits to same-sex spouses regardless of the state in which they reside, run the risk of deducting from an employee’s FMLA leave bank if the employee actually resides in a state that does not recognize same-sex marriage. Because the FMLA technically does not apply to spousal leave for that employee, any leave allowed should not be deducted from the employee’s FMLA leave bank. If the leave was deducted and the employee improperly was deemed to have exhausted all available leave only to later be denied leave that did fall under the FMLA, the employer could face liability for wrongful denial of FMLA leave.

The proposed amendment to the FMLA’s “spouse” definition eliminates this problem. Under the proposed rule, “spouse” would be defined to include individuals legally married in any state (including common law marriage where recognized under the law of the state). The definition would also extend to individuals validly married abroad if the individuals could have been legally married in any U.S. state.

The proposed rule has not yet been published. Once it is, it will be subject to a public comment period and approval process before it is actually approved and implemented. I will keep you posted of developments in this regard. Employers covered by the FMLA will want to check back with us and, once the rule is finalized, revise their FMLA policies and practices to ensure that their FMLA administration practices are in compliance with the new rule. For now, I would suggest extending the leave and not get into the issues surrounding same-sex couples.