Employment Law

California Enacts Paid Sick Leave

Why it matters: Employers in California must now provide three paid sick days per year for workers, pursuant to a new law going into effect on July 1, 2015. The controversial legislation, also referred to as the Healthy Workplaces, Healthy Families Act – expected to cover an estimated 6.5 million workers in the state and impact almost all employers – was passed by the state Senate 22 to 8 and in the Assembly by a 50-to-20 vote just before the legislative session ended. While supporters argued that the bill will help with productivity and cut down on healthcare costs, opponents such as the California Chamber of Commerce dubbed it a “job killer.” Employers decried the bill’s additional burdens as well as the potential for penalties and litigation. By enacting the law, California joins a small but growing number of jurisdictions establishing paid sick leave, including cities such as Portland, Newark, Passaic, New York City, San Francisco, and Seattle, as well as the state of Connecticut and the District of Columbia. Massachusetts residents are voting on the issue this November.

Detailed Discussion

On September 10, Gov. Jerry Brown signed the Healthy Workplaces, Healthy Families Act into law. Here is a summary of some of its key provisions:

  • Who is covered: The Act applies to employees that have worked in the state for at least 30 days in a calendar year and allows workers to accrue one hour of sick leave for every 30 hours worked, regardless of whether they are full- or part-time employees. Accrued sick days may be used beginning on an employee’s 90th day of employment.
  • Who is exempt: Four categories of employees are exempt from the law: (1) those covered by collective bargaining agreements if the agreement meets certain requirements – such as paid leave or paid sick days; (2) certain construction workers; (3) providers of in-home supportive services; and (4) employees of an air carrier covered by the Railway Labor Act.
  • Scope of Leave: Leave can be used for an employee’s own health conditions, or those of a family member, as well as if the employee is a victim of stalking, sexual assault, or domestic violence. Family members are defined to include a spouse, registered domestic partner, grandparent, grandchild, and sibling – a broader definition than the California Family Rights Act, which does not include grandparents, grandchildren, or siblings.
  • Requesting and designating leave: A request for leave may be oral or written, and the law provides that employees may determine how much paid sick leave is necessary, although employers may set a reasonable minimum increment for use, not to exceed two hours.

    Employers are not required to pay out accrued, unused sick leave at the time of termination and may limit an employee’s use of paid sick days to 24 hours or three days in each year of employment and cap total accrual of paid sick days at six 8-hour workdays or 48 hours. Accrued but unused sick days must carry over into the following year, albeit subject to the 48-hour limit.

    If an employer denies workers the use of sick days or takes other adverse action within 30 days of an employee exercising his or her rights, the law creates a presumption of retaliation.
  • Notice: The law includes various administrative requirements for employers, such as posting, notice, and recordkeeping by documenting hours worked and paid sick days accrued over a three-year period.

The California Labor Commissioner has the power to enforce the Act, with the Attorney General also authorized to recover civil penalties, attorneys’ fees, costs, and interest against offending employers. The potential for a Private Attorney General Act lawsuit also looms over employers’ heads.

To read the Healthy Workplaces, Healthy Families Act, click here.

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Other States Pass Summer Legislation: New Legislation for California, Massachusetts, and New Jersey Employers

Why it matters: As summer came to a close, several state legislatures amped up their efforts to pass new employment-related legislation. Massachusetts approved a law providing leave for victims of domestic violence, and Gov. Chris Christie of New Jersey signed a “ban the box” bill addressing the use of background checks. As discussed, California notably enacted paid sick leave but also passed a new law allowing employees a longer time period for recovery of liquidated damages when pursuing minimum wage claims. Employers in the relevant states should familiarize themselves with the new laws and their new responsibilities.

Detailed Discussion

Massachusetts. In Massachusetts, employers must now provide up to 15 days of leave in a 12-month period for employees who are victims of “abusive behavior.” Effective upon Gov. Deval Patrick’s August 8 signature, the law covers employers with at least 50 employees and includes a private right of action with mandatory triple damages.

Employees and their family members are covered by the statute, which defines “abusive behavior” to include domestic violence, criminal stalking, or sexual assault. Leave may be taken for medical attention, to obtain counseling, to take action within the court system (to appear in court, meet with a district attorney, or attend child custody proceedings, for example), or “to otherwise address issues directly related to abusive behavior.”

The law allows employers to determine whether the leave is paid or unpaid, and employees can be required to exhaust available sick, personal, and vacation time. Absent a threat of imminent danger, employees must provide appropriate advance notice of the need for leave.

In addition to an anti-retaliation provision, the law provides for a private right of action for employees, as well as enforcement power for the state’s Attorney General. Any employee who prevails on a claim is entitled to mandatory triple damages and attorneys’ fees.

New Jersey. Just a few states away, the New Jersey Legislature responded to the current controversy surrounding criminal background checks by passing the Opportunity to Compete Act, a bill that limits an employer’s ability to inquire about an applicant’s criminal background.

Set to take effect March 1, 2015, the new law applies to employers with at least 15 employees over 20 calendar weeks. Covered employers are prohibited from requiring applicants to complete any employment application making inquiries about the applicant’s criminal record as well as making any oral or written inquiries about a criminal record during the “initial employment application process.”

As defined by the law, the “initial employment application process” lasts from an applicant’s first inquiry about a possible job until a first interview has been completed. Job advertisements or solicitations must also conform to the Act and refrain from stating that the employer will not consider an applicant who has been arrested or convicted of stated offenses.

New applicants as well as current employees are covered by the law. Employers are permitted to require applicants to complete an application with questions about a criminal record after the initial employment application process has concluded, however. And if an applicant voluntarily discloses information about criminal history prior to the completion of the first interview, the employer is permitted to follow up with a request for details.

Fines for violations of the law range from $1,000 for a first-time offense to $5,000 for a second and $10,000 for each subsequent violation.

California. California becoming the second state in the nation to mandate paid sick leave overshadowed another relevant piece of legislation for employers in the state – an update to the labor law providing more time to employees to seek liquidated damages against employers in suits alleging the failure to pay minimum wage.

Pursuant to the changes instituted by the Recovery of Wages: Liquidated Damages Act, employees may now recover liquidated damages in an amount equal to recovery for minimum wage violations of Sections 98, 1193.6, 1194, or 1197.1 of the state’s labor law.

Gov. Jerry Brown signed the bill into law on August 19 to deter employers from engaging in labor code violations, according to the bill’s sponsor, Assemblyman Roger Hernandez (D-West Covina). The measure does allow an employer to dodge the liquidated damages if it can demonstrate that it acted in good faith and had reasonable grounds for believing its conduct was not a violation of the minimum wage requirements.

To read An Act Relative to Domestic Violence, click here.

To read the Recovery of Wages: Liquidated Damages Act, click here.

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Ring, Ring…California Employers, This Cell Phone Bill Is for You

Why it matters: California employers can be required to reimburse employees for the cost of a cell phone plan – even if the plan in question did not result in extra expenses for the employee or a third party foots the bill, an appellate court in California has determined. A trial court agreed with the employer that the company was not required to reimburse an employee for a plan paid for by a third party that provided unlimited minutes, but the appellate court took a strict view of Section 2802 of the Labor Code, writing that “reimbursement is always required.” While the court was clear about liability, the calculation of damages will be complicated. Employers in the state should consider the potential ramifications of the decision and consider establishing a reimbursement policy or providing phones (or similar devices) for employees.

Detailed Discussion

As a customer service manager for Schwan’s Home Service, Inc., Colin Cochran claimed he used his personal cell phone for work-related calls and was entitled to reimbursement. He filed a putative class action on behalf of similar employees in California alleging violations of Labor Code Section 2802, among other causes of action.

Subdivision (a) of Section 2802 provides that “[a]n employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer[.]”

Cochran moved to certify a class of plaintiffs and a trial court denied the motion, finding that individual questions predominated because some employees would have unlimited data plans for which they did not incur an additional expense when using their phones.

On appeal, the court reversed. “Does an employer always have to reimburse an employee for the reasonable expense of the mandatory use of a personal cell phone, or is the reimbursement obligation limited to the situation in which the employee incurred an extra expense that he or she would not have otherwise incurred absent the job?” the panel asked. “The answer is that reimbursement is always required. Otherwise, the employer would receive a windfall because it would be passing its operating expenses onto the employee. Thus, to be in compliance with Section 2802, the employer must pay some reasonable percentage of the employee’s cell phone bill.”

Factors like whether a third party pays the cell phone bill and the details of the cell phone plan are irrelevant for the liability analysis, the court added. “Not only does our interpretation prevent employers from passing on operating expenses, it also prevents them from digging into the private lives of their employees to unearth how they handle their finances vis-à-vis family, friends and creditors,” the panel wrote. “To show liability under Section 2802, an employee need only show that he or she was required to use a personal cell phone to make work-related calls, and he or she was not reimbursed.”

Damages, however, raise more complicated issues, the court noted. Because of the difference in cell phone plans and work-related scenarios, the court said the calculation of reimbursement must be left to the trial court and parties in each particular case.

On remand, the panel instructed the trial court to reconsider the motion for certification in light of its ruling and contemplate the use of statistical sampling evidence to establish damages.

To read the opinion in Cochran v. Schwan’s Home Service, Inc., click here.

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Thumbs-Down? NLRB Rules Employer Illegally Terminated Employee Over Facebook “Like”

Why it matters: According to a three-member panel of the National Labor Relations Board (NLRB), an employee who “liked” a comment a former coworker made on Facebook criticizing her employer was engaging in protected, concerted activity – and therefore, she was illegally discharged in violation of the National Labor Relations Act (NLRA). The Board also said the employer’s Internet/Blogging policy violated the Act, finding it “sufficiently imprecise” that employees would reasonably believe it encompassed protected discussions. The lesson for employers? Use caution with regard to employees and social media activity and be forewarned that the NLRB is keeping a close eye on employer policies, see here.

Detailed Discussion

A conversation on Facebook between two current employees of Triple Play Sports Bar and Grille and a former employee (among others) led to a significant ruling from the NLRB. .

Jamie LaFrance, a former employee at the bar, posted a status update which read: “Maybe someone should do the owners of Triple Play a favor and buy it from them. They can’t even do the tax paperwork correctly!!! Now I OWE money…Wtf!!!” After several comments were made in response, current employee Vincent Spinella “liked” the initial status update. Another current employee, Jillian Sanzone, commented: “I owe too. Such an asshole.”

The owners of the restaurant learned about the Facebook conversation and discharged Sanzone when she reported to work two days later, telling her that she was not loyal enough to be working there because of her comment. Spinella was called into a meeting with the owners, who terminated him because he liked the “disparaging and defamatory” comments, and it was “apparent” that he wanted to work somewhere else.

Triple Play’s owners did not dispute that the Facebook activity was concerted or that the employees engaged in protected activity. Rather, they took the position that Sanzone and Spinella lost the protection of the NLRA by adopting the former employee’s allegedly defamatory and disparaging comments.

Noting that the Facebook discussion “clearly disclosed the existence of an ongoing labor dispute concerning [Triple Play’s] tax-withholding practices,” the three-member panel said the evidence did not establish that the employees’ participation was directed to the general public.

“The comments at issue were posted on an individual’s personal page rather than, for example, a company page providing information about its products or services,” the panel wrote. “Although the record does not establish the privacy settings of LaFrance’s page, or of individuals other than Sanzone who commented in the discussion at issue, we find that such discussions are clearly more comparable to a conversation that could potentially be overheard by a patron or other third party,” and not clearly directed at the public.

Further, the comments at issue did not even mention Triple Play’s products or services, “much less disparage them,” the Board said. “Where, as here, the purpose of employee communications is to seek and provide mutual support looking toward group action to encourage the employer to address problems in terms or conditions of employment, not to disparage its product or services or undermine its reputation, the communications are protected.”

Therefore, the actions of Spinella and Sanzone did not lose the protections of the Act, and their discharge violated it, the panel wrote. A majority of the panel additionally concluded that Triple Play’s Internet/Blogging policy also violated the NLRA, as it frowned upon “engaging in inappropriate discussions about the company, management, and/or co-workers.” The rule lacked illustrative examples for employees about what Triple Play considered “inappropriate,” the Board said, and “employees would reasonably interpret [the policy] as proscribing any discussions about their terms and conditions of employment deemed ‘inappropriate’ by [Triple Play].”

One Board member disagreed, writing that the policy did not expressly or implicitly restrict protected activity under the Act and that it was not applied illegally, as Sanzone and Spinella were discharged for their allegedly disloyal and defamatory actions and not for violating the policy.

The panel ordered Triple Play to refrain from future violations of the NLRA, revise its Internet/Blogging policy, offer Sanzone and Spinella their jobs back, and make them whole for any loss of earnings.

To read the NLRB’s decision, click here.

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Ninth Circuit: FedEx Workers Are Employees, Not Independent Contractors

Why it matters: In a blow to FedEx, the Ninth U.S. Circuit Court of Appeals reversed summary judgment in the company’s favor, finding that its workers were in fact employees and not independent contractors. The cases involved classes of workers in California and Oregon who alleged they were misclassified by the company and did not receive required wages or benefits. Applying the “right to control” test, the panel said FedEx’s control of the workers overshadowed any other factors. The delivery company already announced its intent to seek en banc review of the decision, which could prove extremely costly for FedEx.

Detailed Discussion

Are FedEx drivers employees or independent contractors? Drivers across the country filed suit against the delivery company, alleging that although FedEx characterized the workers as independent contractors, they were in fact employees missing out on wages for meal and rest periods, overtime pay, and compensation for equipment.

Cases from 40 states were consolidated in multidistrict litigation proceedings in Indiana federal court. A judge granted summary judgment to FedEx, ruling that the drivers were independent contractors. The plaintiffs in the Oregon (Slayman) and California (Alexander) cases appealed.

In a pair of decisions, a three-judge panel of the Ninth Circuit reversed summary judgment for FedEx and ordered the MDL court to enter summary judgment for the plaintiffs. The panel applied the “right to control” test in both the Slayman and Alexander decisions.

Each driver signed an Operating Agreement, which governed his or her relationship with FedEx. The agreement laid out various requirements for drivers, from a dress code and grooming policy to the size and layout of shelves in the back of a delivery truck. While drivers are not required to follow specific delivery routes, FedEx provides routes that will “reduce travel time” and allow drivers to meet the window customers are given for delivery.

Working hours are not dictated by FedEx, but managers structure a workload to ensure a window of 9.5 to 11 hours each day, and the agreement gives the company the power to “reconfigure” a driver’s service area to reach the proper hours. Training is provided by the company and managers are allowed to conduct four ride-along performance evaluations each year (and instructed to observe details like whether the driver “demonstrates a sense of urgency”).

FedEx managers may refuse to let drivers work if their vehicles or personal appearance do not meet the company requirements.

“FedEx can and does control the appearance of its drivers and their vehicles. FedEx controls its drivers’ clothing from their hats down to their shoes and socks,” while vehicles must be painted a specific shade of white and shelves installed at precise dimensions, the court wrote. “FedEx’s detailed appearance requirements clearly constitute control over its drivers.”

Further, “FedEx can and does control the times its drivers can work,” by structuring their workloads and giving the company the power to adjust schedules, as well as mandating that drivers cannot leave their terminals until all packages are loaded and vehicles must be left at terminals overnight to get packages loaded in the morning. “The combined effect of these requirements is substantially to define and constrain the hours that FedEx’s drivers can work,” the panel said.

The court acknowledged that FedEx does not control every detail of the drivers’ work, “[b]ut the right-to-control test does not require absolute control. FedEx’s lack of control over some parts of its drivers’ jobs does not counteract the extensive control it does have the right to exercise.”

As for FedEx’s contention that it only controlled results and not the manner in which the drivers achieved the necessary results, the panel disagreed. “[N]o reasonable jury could find that the ‘result’ sought by FedEx includes ‘every exquisite detail’ of the delivery driver’s fashion choices and grooming,” the court wrote. “And no reasonable jury could find that the ‘results’ FedEx seeks include having all of its vehicles containing shelves built to exactly the same specifications.”

Analysis of other factors under both states’ interpretation of the right to control test (as well as the economic realities test in Oregon) were subsumed by the “powerful evidence” of FedEx’s control over drivers, the court said, adding that neither state has adopted the new “entrepreneurial opportunities” test advanced by FedEx.

Reversing summary judgment for FedEx, the court remanded both cases to enter summary judgment for the drivers.

To read the opinion in Slayman v. FedEx, click here.

To read the opinion in Alexander v. FedEx, click here.

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Will the Seventh Circuit’s Decision Be the Final Word on Same-Sex Marriage?

Why it matters: Courts across the country have struggled with the issue of same-sex marriage in a variety of contexts and cases. But a recent decision from the Seventh U.S. Circuit Court of Appeals authored by noted jurist Judge Richard Posner may have flipped the script and left states with little ground on which to defend their prohibition of same-sex marriage. Focusing less on the constitutional debate, Judge Posner instead found the decision a “straightforward” one “about the welfare of American children.” Flatly rejecting the arguments proffered by Indiana and Wisconsin that states need to channel procreative, heterosexual sex into marriage, the three-judge panel unanimously found the states’ laws discriminatory. “The challenged laws discriminate against a minority defined by an immutable characteristic, and the only rationale that the states put forth with any conviction – that same-sex couples and their children don’t need marriage because same-sex couples can’t produce children, intended or unintended – is so full of holes that it cannot be taken seriously,” Judge Posner wrote. With the ruling, the seventh Circuit joined two other federal appellate panels in striking down bans on same-sex marriage, following the Fourth and Tenth Circuits, as well as last year’s U.S. Supreme Court decision in U.S. v. Windsor.

Detailed Discussion

The states of Indiana and Wisconsin both prohibited same-sex marriage within their borders and refused to recognize same-sex marriages legally performed in other jurisdictions. A federal district court sided with plaintiffs who challenged the laws, and the seventh Circuit upheld the ruling on appeal.

The harm in being denied the right to marry is considerable, the panel noted. “Marriage confers respectability on a sexual relationship; to exclude a couple from marriage is thus to deny it a coveted status,” the court wrote. “Because homosexuality is not a voluntary condition and homosexuals are among the most stigmatized, misunderstood, and discriminated-against minorities in the history of the world, the disparagement of their sexual orientation, implicit in the denial of marriage rights to same-sex couples, is a source of continuing pain to the homosexual community.”

Tangible benefits – the marital testimonial privilege, survivor benefits, the right to adopt children jointly, and the right to file state tax returns jointly, for example – are also significant, the court recognized.

Judge Posner focused on the states’ assertion that banning same-sex marriage was justified by the states’ interest in channeling procreative sex into marriage.

Tackling Indiana first, Judge Posner wrote that if the state truly intended to only encourage procreative sex in marriage, it would not allow infertile persons to marry, or have marriage licenses expire when a spouse became infertile because of age or disease. Instead, the state actually carves out an exception allowing first cousins aged 65 or older to marry – essentially creating a category of infertile marriage.

“Indiana has thus invented an insidious form of discrimination: favoring first cousins, providing they are not of the same sex, over homosexuals,” the court said, calling Indiana’s argument “impossible to take seriously.”

“Indiana’s government thinks that straight couples tend to be sexually irresponsible, producing unwanted children by the carload, and so must be pressured (in the form of governmental encouragement of marriage through a combination of sticks and carrots) to marry, but that gay couples, unable as they are to produce children wanted or unwanted, are model parents – model citizens really, so have no need for marriage,” Judge Posner wrote.

Further, the state’s argument ignored adoption, “an extraordinary oversight,” the panel said, adding that if “marriage is better for children who are being brought up by their biological parents, it must be better for children who are being brought up by their adoptive parents.”

Turning to Wisconsin’s constitutional amendment limiting marriage to one woman and one man, the court reached a similar conclusion, further tossing aside the state’s reliance on tradition. “Tradition per se has no positive or negative significance,” Judge Posner wrote. “If no social benefit is conferred by a tradition and it is written into law and it discriminates against a number of people and does them harm beyond just offending them, it is not just a harmless anachronism: it is a violation of the equal protection clause.”

While many heterosexuals may disapprove of same-sex marriage, “there is no way they are going to be hurt by it in a way that the law would take cognizance of,” the court noted. On the other hand, a refusal to recognize same-sex marriage harms not only homosexuals seeking to marry but children as well, “by telling them they don’t have two parents, like other children.”

“[M]ore than unsupported conjecture that same-sex marriage will harm heterosexual marriage or children or any other valid and important interest of a state is necessary to justify discrimination on the basis of sexual orientation,” the panel concluded. “As we have been at pains to explain, the grounds advanced by Indiana and Wisconsin for their discriminatory policies are not only conjectural; they are totally implausible.”

To read the opinion in Baskin v. Bogan, click here.

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