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Who is a Supervisor? A Lead Employee may be a Supervisor for Purposes of a Sexual Harassment Claim

In our August 2007 Labor and Employment Newsletter, we cautioned employers that the scope of liability for a supervisor’s actions, particularly in a sexual harassment case, are incredibly broad. In a recent California case, the Court held that the definition of “supervisor” can include a lead employee for purposes of determining liability in a sexual harassment case. The Court emphasized that the determination will rest on the employee’s actual responsibilities, not his or her job title. In Almanza v. Wal-Mart Stores, Inc, the plaintiff worked as an unloader. Her responsibilities were to unload merchandise from delivery trucks. She worked in a crew of six to eight employees, one of whom was the lead unloader. The lead unloader’s responsibilities included unloading trucks, ensuring that other unloaders removed and stacked freight quickly and efficiently, asking unloaders to find empty pallets for incoming merchandise, and occasionally instructing other unloaders to stock the sales floor. Plaintiff claimed that the lead unloader sexually harassed her and that Wal-Mart was strictly liable for the harassment because the lead unloader was a supervisor under FEHA.

Who Is A Supervisor As Defined By FEHA?
Under FEHA, a “supervisor” is “any individual having the authority, in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or the responsibility to direct them, or to adjust their grievances, or effectively to recommend that action, if, in connection with the foregoing, the exercise of that authority is not of a merely routing or clerical nature, but requires the use of independent judgment.”

Although the lead unloader in the Wal-Mart case was compensated on an hourly basis and had no authority to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, Plaintiff introduced evidence showing that the lead unloader authorized breaks, scheduled overtime work, and often contributed to performance appraisals. Plaintiff also pointed out that the lead unloader was unofficially permitted to authorize sick leave, late arrivals, vacation requests, and prepare performance appraisals. In rebuttal, Wal-Mart argued that the lead unloader acted only on the orders of another supervisor and that his opinions were afforded little or no weight. The Court determined that there was enough evidence of the lead unloader’s authority that a jury should decide whether he was a supervisor under FEHA and permitted Plaintiff to proceed with her sexual harassment claim.

Why Is The Classification Of Supervisor Important?
FEHA imposes two standards of employer liability for sexual harassment. These two standards turn on whether the employee engaging in sexual harassment is considered a supervisor or not. If the employee is a supervisor as defined under FEHA, the employer is held strictly liable for the supervisor’s actions. This means that an employer would be held responsible for the harassment even if the employer had no knowledge of the harassment. If the employee is not considered a supervisor under FEHA, the employee bringing a harassment claim must show that the employer knew or should have known of the conduct and failed to take immediate and appropriate corrective action in order to hold the employer liable for the harassment.

How Does This Case Impact Employers?
Knowing who qualifies as a supervisor under FEHA is essential in order to comply with California’s employment laws. For example, in California, all employers are required to provide two hours of sexual harassment training to all supervisors upon hire and every two years thereafter. If a current employee is promoted to a supervisory position, an employer has six months from the date of promotion to provide this training. No such requirement exists for non-supervisory employees. As the Wal-Mart case makes clear, relying on job titles alone to determine which of your employees are supervisors is a dangerous practice. Instead, you should consider the actual authority your employees are allowed to exercise. If they direct the day-to-day activities of others, they are likely supervisors within the meaning of FEHA.

Training Reminder
We would like to take this opportunity to remind you to schedule training sessions for your supervisors because a new training year is approaching. For those supervisors who last received training in 2006, two more hours of training are required in 2008. Also, do not forget to train your new supervisors within six months of promotion or hire. If you are unsure about who needs to be trained, how to enroll in a training session, or if you have any other questions regarding sexual harassment training, please feel free to contact us at 916-441-2430 or

Employees with Mental Health Disorders: Proceed with Caution

Most employers know that an employee cannot be terminated because of a disability, unless the disabled employee is unable to perform the essential functions of the job with or without reasonable accommodation and without creating a direct threat to the health and safety of other employees. However, a recent court decision has added a new wrinkle which seems counterintuitive to this school of thought. Employers now must exercise even greater caution in addressing the termination of employees with mental health disorders.

Employer Liable For Dismissing Employee With Bipolar Disorder
After a contracts clerk at a dialysis provider suffered an emotional breakdown at work, she was diagnosed with bipolar disorder and informed her employer of that fact. Over the next year, the employee struggled with her disorder insofar as she was irritable and had difficulty changing medications to address the disorder. Because the disorder began to interfere with her work, her supervisors presented her with a written performance improvement plan. In response, the employee angrily thrust the plan, along with several expletives, back at her supervisors. Upon returning to her cubicle, she began throwing and kicking things, an event causing other employees to express concern. Thereafter, she was terminated.

In a lawsuit the employee filed against her former employer for disability discrimination, a federal jury returned a verdict in favor of the employer. However, the appellate court overturned the jury verdict, holding that the employee’s conduct was a part of her disability, and, as such, she could not be terminated for any conduct resulting from her bipolar disorder.

Standard Of Conduct
The most significant aspect of this case is that conduct which would otherwise subject an employee to discipline can now be considered a part of an employee’s disability and, thus, protected. Additionally, the new decision may invite misuse and allow a non-disabled employee to claim that unprofessional conduct or poor job performance is the result of a mental heath disorder when faced with termination. With a multitude of mental health disorders acknowledged by medical science, it can be very difficult for employers, who are not clinical psychologists, to discern what conduct and behavior is consistent with a particular disorder.

Nonetheless, employers can help themselves avoid a situation similar to that addressed in this case by expressly including a professional standard of conduct as an essential job function in every employee’s job description. A written policy requiring professional conduct at all times can create a baseline from which to reasonably accommodate employees with mental health disorders. Moreover, the inability of an employee with a mental health disorder to maintain a professional level of conduct with reasonable accommodation could serve as a legitimate basis for dismissal. While such a policy is not an absolute remedy, it will at least give an employer a defense should an employee with a mental health disorder be disciplined or terminated.

Employee Safety
To complicate matters even further, the employer in this case did not argue that the employee’s conduct was a direct threat to the health and safety of other employees in the workplace. Since the direct threat question was not presented, the question as to whether threatening behavior, even if caused by a disability, is grounds for termination was not answered, leaving employers in a no-win situation. While “zero tolerance” policies against workplace violence are considered the norm, the court’s decision may force employers to soften these policies and evaluate all potentially violent conduct on a case-by-case basis. At the same time, allowing a potentially violent employee to remain on the job could be a violation of federal and state workplace safety laws and may expose employers to liability. Even worse, if an employee with a mental disorder does injure a co-worker, it is hard to imagine anything more detrimental to the morale of the workforce.

Hopefully, the courts and legislatures will clarify the confusion created by the new decision. Until then, employers should consult an attorney if they have concerns about the conduct of an employee who may have a mental health disorder. Furthermore, caution should be exercised when contemplating the termination or discipline of an employee with a suspected mental health disorder.

Supreme Court Allows Employees to Seek Compensation for Missed Meal and Rest Breaks for Three Year Period

As you probably know, California law requires employers to provide meal and rest periods to employees. For each work day in which a meal or rest period is not provided, the employer is required to pay one additional hour of pay at the employee’s regular hourly rate. While not terribly burdensome in isolation, the cost to employers for missed meal and rest periods can skyrocket if a class action lawsuit is brought on behalf of a significant number of employees who claim they were denied meal and rest periods over a long period of time.

Employer Requirements For Providing Meal And Rest Periods
Until recently, the law was unclear as to whether these payments were considered wages or penalties. The distinction is important because, if considered penalties, employees may only seek compensation for one year of missed meal and rest periods. If considered wages, employees may seek compensation for three years. The California Supreme Court recently ruled that such payments are considered wages, thus allowing employees to seek compensation for three years of lost meal and rest periods.

Pursuant to Division of Labor Standards Enforcement (DLSE) regulations, employees are entitled to an unpaid 30-minute, duty-free meal period after working for five hours, and a paid 10-minute rest period for each four hours of work. Furthermore, it is the responsibility of employers to actively ensure that employees are taking their required meal and rest periods, and are not working through them. Based on the potential liability regarding meal and rest periods, employers must not only actively ensure breaks are taken, but should keep accurate time records for all employees. In fact, employers are required to keep all time records, including records of meal periods, for a minimum of three years.

Payments For Missed Meals And Rest Periods Are Considered Wages And Subject To A Three Year Statute Of Limitations
In Murphy v. Kenneth Cole Productions Inc., the plaintiff was a store manager in a Kenneth Cole Productions retail clothing store. Murphy’s primary responsibilities were to make sales, receive or transfer products, process markdowns, and clean. Often, Murphy would eat lunch while continuing to work. Murphy regularly worked nine to ten hour days in which he was only able to take an uninterrupted, duty-free meal period once every two weeks. Murphy resigned after approximately two years of work. Subsequently, he filed a wage claim with the California Labor Commissioner for unpaid overtime and waiting time penalties, claiming that he was improperly classified as an exempt employee.

The Labor Commissioner issued a decision in Murphy’s favor. Murphy then asserted additional claims for lost meal and rest periods. The trial court ruled that the payments for meal and rest periods were wages and thus applied the three-year statute of limitations. The Court of Appeal reversed the decision, reasoning that the payments were penalties and thus subject to the one year statute of limitations. However, the California Supreme Court agreed with the trial court that payments for lost meal and rest periods were considered wages with a corresponding three-year period to bring such claims. The Court reasoned that the statute’s plain language, administrative and legislative history, and the purpose of the remedy all pointed to the conclusion that the additional hour of pay constituted a wage and not a penalty.

The Court compared payments for lost meal and rest periods to payments for overtime, and suggested that such payments have a dual-purpose remedy. The primary purpose of payments for missed meal and rest periods is to compensate employees. The secondary purpose is to serve as an incentive for employers to comply with labor standards. Since the main purpose of such payments is to compensate employees, the money should be defined as wages and is thus subject to the three year statute of limitations. Moreover, the Court explained that because employers are required to keep all time records for a minimum of three years, employers should have the appropriate evidence to defend against missed meal and rest period claims.

What This Means For You
The best defense against potential missed meal and rest period lawsuits is to proactively ensure that employees take the appropriate meal and rest breaks. Additionally, it is essential that employers keep detailed time records for their employees, including meals taken, for a minimum of three years. These preventative measures may discourage employees from filing such lawsuits altogether and, at the least, will allow you to defend yourself if such a lawsuit occurs.

A Short Course on Labor Commissioner Hearings

Those of you familiar with this publication know that most of our articles deal with substantive issues in the area of employment law. In this article, we depart from that motif in order to provide a brief primer on a type of administrative proceeding that many of you may eventually have to face—cases before the California Labor Commissioner. Because these cases are relatively informal (and often involve low dollar amounts), it is not unusual to see both employees and employers handling the matters without the assistance of counsel. Given that, knowledge of the basics is desirable.

Who Is The Labor Commissioner?
The California Division of Labor Standards Enforcement (DLSE) is the state agency responsible for enforcing statutes, regulations, and orders pertaining to employee wages, hours, and working conditions. The DLSE is also the default organization for enforcement of all California labor laws when such enforcement is not explicitly delegated to another agency or entity. The DLSE’s executive officer is known as the Labor Commissioner. Upon receipt of a claim by an employee or representative thereof, the Labor Commissioner must (through DLSE employees and agents) investigate and take appropriate action against the employer. Such claims are often for items such as failure to pay overtime, failure to timely pay wages on termination, or failure to provide required benefits. However, given the breadth of DLSE responsibility, the range of issues brought before the commissioner is vast.

In conducting necessary investigations into employee claims, the commissioner has unlimited access to all workplaces within California, and any person who fails to cooperate in allowing such access or furnishing required information is guilty of a misdemeanor. The commissioner also possesses court-enforced subpoena power as to both documents and witnesses. Therefore, the Labor Commissioner and his agents may literally be thought of as the “employment police.”

How Do Proceedings Before The Labor Commissioner Work?
As stated, the Labor Commissioner has authority to investigate employee complaints and, depending on the issues raised via a complaint, may provide for a hearing. Actions involving wage recovery claims usually proceed through the hearing process.

After an employee files a complaint, the Labor Commissioner must—within 30 days—notify both the employee and employer regarding whether any further action will be taken. The commissioner can do one of three things. First, he can decide that the employee’s claim is facially meritless, and take no action. In such a case, no employer action is required, and the commissioner will transmit a letter to the parties indicating that the investigation has been completed. Second, and at the opposite end of the spectrum, the commissioner can himself pursue a civil action against the employer.

The third option is for the Labor Commissioner to hold an administrative hearing on the matter. If the commissioner chooses this option, he will notify the parties of the time and place of the hearing. Generally, the hearing must be held within 90 days of the commissioner’s notification. While the hearing may be postponed or continued if the commissioner finds the interests of justice warrant additional time, employers should in many cases think carefully before proposing or agreeing to a postponement. As noted above, many employee claims involve allegedly unpaid wages; in assessing back pay on a successful claim, the commissioner must calculate the amount of such pay from the time the claim is filed, not the date of the hearing. Thus, so long as an employer is prepared to substantively defend an employee’s claim, sooner is better. It should also be noted that an initial conference between the parties and the Deputy Labor Commissioner often takes place several weeks before the evidentiary hearing. At that meeting, the parties generally present their positions in an attempt to settle the matter. If no settlement is reached at or after that meeting, the evidentiary hearing will go forward.

The hearing itself is relatively informal. It is generally conducted in a conference room, not a courtroom, and is held before the Deputy Labor Commissioner, not a judge. Each party may call witnesses and present evidence. Hearings lasting more than a few hours are rare. Following the hearing, the Labor Commissioner will issue a written decision on the matter. A copy of that decision must be filed with the DLSE and served on the parties within 15 days after the conclusion of the hearing. As with a normal civil case, the commissioner’s decision can award the employee all, some, or none of the sought-after relief. This can include penalties and will include interest where back pay is awarded. The decision must include a statement of reasons supporting the result.

What Happens After The Labor Commissioner’s Decision Is Issued?
The Labor Commissioner’s decision must apprise the parties of their right to appeal the decision. If no appeal is taken, the commissioner’s decision becomes final. If either party wishes to appeal, they must do so within 10 days of the commissioner’s service of the decision. The appeal does not get submitted to another level of Labor Commissioner/DLSE review; instead, the matter is heard “de novo” in the appropriate California superior court. De novo review means that the matter is independently addressed by the superior court, and no deference is given to the Labor Commissioner’s ruling. If the employer appeals the commissioner’s award to an employee, it must post an undertaking in the full amount of the award. In the course of an appeal, the Labor Commissioner is permitted to represent employees who are unable to pay for an attorney.

If the losing party’s appeal is unsuccessful, the court may award the other party the attorneys’ fees and costs it incurred in defending the appeal. In cases where an employer appeals a decision and has the Labor Commissioner’s award reduced, the court may nonetheless give attorneys’ fees and costs to the employee so long as the court’s judgment does not completely negate the commissioner’s award. Indeed, for purposes of fees and costs on appeal, the governing statute (Labor Code section 98.2) goes so far as to say that an employee “is successful if the court awards an amount greater than zero.”

Proceedings before the Labor Commissioner are sufficiently common that employers should take care to educate themselves as to the fundamentals. The above discussion gives you some sense of what you may expect should you find yourself on the business end of an employee’s claim. For additional information on Labor Commissioner proceedings, you may visit the DLSE’s website at

The Appropriate Time: Understanding Your Final Pay Obligations and the Waiting Time Penalty

The California Labor Code specifies that an employer who terminates an employee must immediately pay all of the employee’s unpaid, earned wages. If an employee quits giving 72 hours notice, the employee is entitled to receive a final paycheck on the last day of employment. On the other hand, if the employee fails to give 72 hours notice, the employer has 72 hours from the quitting date to remit final wages to the employee.

The Waiting Time Penalty Provision
To ensure that employers comply with the laws governing the payment of wages when an employment relationship ends, the legislature enacted Labor Code Section 203, which provides for a “Waiting Time Penalty.” Under this provision, a penalty is levied against the employer if it willfully fails to pay wages due to the employee at the conclusion of the employment relationship. For each day that overdue final wages remain unpaid, a waiting time penalty equal to the employee’s daily rate of pay may be assessed against the employer up to a maximum of 30 days.

Based upon the wording of the statute, you may think that waiting time penalties would only apply when an employer willfully withholds wages owed to an employee. That is not the case. The waiting time penalty applies in almost all cases where final pay is not tendered on a timely basis whether by design, neglect or even impossibility. The following hypotheticals may help you avoid or limit liability for final pay violations.

Hypothetical # 1: An employee gives 72 hours notice to end the employment relationship. Employer fails to give employee a final check on employee’s last day, but has the check ready two days later. On that day, employer informs former employee that he can come in and pick up the check, and the former employee agrees to pick up the check. Subsequently, the former employee fails to pick up the check for ten additional days.

Is the employee entitled to a waiting time penalty and, if so, in what amount?

The employee would be entitled to a waiting time penalty in the amount of two days wages. Here, employee gave sufficient notice of termination. Thus, the employer had a duty to pay all final wages at the time of termination. The employer failed to do so, and the penalty is applied for two days. The penalty does not extend for an additional ten days because the employer informed the employee that the check was ready. This is referred to as “Tender of Payment” and stops the waiting time penalty from accruing.

Hypothetical # 2: An employee quits her job without giving sufficient notice. On her last day, she confirms her mailing address with her employer and requests that the wages be mailed to her. Six days later, employee receives her final wage check in the mail. The envelope was postmarked two days after the employee’s final day of employment.

Is the employee entitled to a waiting time penalty and, if so, in what amount?

Employee would not be entitled to a waiting time penalty under these facts. Here, employee did not give 72 hours notice of termination. Thus, the employer was obligated to pay all of employee’s wages not later than 72 hours after the date she quit. Employer satisfied the obligation by mailing employee’s check to her, at her request, two days after her final day.

Hypothetical # 3: Same facts as hypothetical # 2, but the employee does not request that the wages be mailed to her.

In this scenario, how does the employer remit the employee’s final payment?

If the employee does not request that the wages be mailed to her, the employee must return to her former employer’s place of business 72 hours after quitting and demand the wages that are due. The waiting time penalty does not accrue unless this demand is made.

Hypothetical # 4: Employee gives 72 hours notice of terminating employment. On employee’s last day of work, he asks employer for his check. Employer responds that the check is not available and the employee must wait until the end of the payroll period when the payroll service prepares the checks. Two weeks after employee’s last day, he receives his check in the mail.

Is employee entitled to a waiting time penalty and, if so, in what amount?

The employee would be entitled to a waiting time penalty in the amount of 14 days wages. Under the Labor Code, when an employee gives sufficient prior notice of his intention to quit, the employee is entitled to his wages on his last day. Here, since the employee quit, gave sufficient notice, and did not receive his payment for two weeks, he is entitled to a waiting time penalty in the amount of 14 days wages.

Hypothetical # 5: Same facts as hypothetical #4, but employer is currently unable to forward employee’s final wages due to financial difficulty.

Is this a valid defense to the waiting time penalty?

No, inability to pay is not a defense to the waiting time penalty. The following scenarios also do not justify delaying final pay. Our payroll department is out-of-state and cannot get us the check in time. The employee has an outstanding debt or company property; we are not going to pay wages until employee pays us or returns the property.

Question & Answer
Question: When computing the amount of the penalty, do you count only the days an employee might have worked during the period for which the penalty accrues, or do you also include non-workdays?

Answer: All non-workdays are included. When computing the penalty you count all of the calendar days between the date payment was due and the date payment is tendered, including weekends, non-workdays, and holidays.

Question: Is overtime included in calculating the daily rate of pay for purposes of computing the waiting time penalty?

Answer: “Regularly scheduled” overtime is included in calculating the daily rate of pay for purposes of computing the waiting time penalty. Occasional or infrequent overtime is not included.

Question: Does the failure to reimburse business expenses within the statutory timeframe trigger the waiting time penalty?

Answer: No, reimbursement for business expenses is not included in the statutory definition of wages, and therefore will not trigger section 203.

Question: Does the failure to pay earned, accrued and unused vacation time trigger the waiting time penalty?

Answer: Yes. Under California law, earned vacation time is considered wages, and therefore the employer must pay the employee at his or her final rate of pay for all such earned, accrued, and unused vacation time.

To minimize the risk of claims for waiting time penalties, employers should carefully review their payment practices in connection with the cessation of an employee’s employment.

2007 Legislative Update

The employment related legislation in 2006 was relatively sparse. Nonetheless, employers need to be aware of recent legislation that either creates new laws or modifies existing laws. The following is a synopsis of the more notable laws that were enacted or modified in 2006.

California Law

AB 1835 – Minimum Wage Increase
On September 12, 2006, Governor Schwarzenegger signed into law AB 1835, which increases the state minimum wage to $7.50 per hour effective January 1, 2007, and to $8.00 per hour effective January 1, 2008. This law also requires the Department of Industrial Relations to upwardly adjust the permissible meal and lodging credits by the same percentage as the increases in the minimum wage and to amend and republish the Industrial Welfare Commission’s wage orders. Additionally, this law requires employers to post written notice of the new rates in their facilities. Aside from the direct changes made in AB 1835, the increase in the minimum wage will impact other wage rates and overtime exemptions under state law, including the following:

  •  Employees subject to the executive, administrative, and professional overtime exemptions must be paid, at a minimum, an annual salary of $31,200 ($2,600 per month) in 2007 and $33,800 ($2,773.33 per month) in 2008 in order to preserve their exempt status.
  • Exempt employees covered by collective bargaining agreements must be paid, at a minimum, $9.25 per hour in 2007 and $10.40 per hour in 2008 in order to preserve their exempt status.
  • Employees paid on commission who are exempt must be paid more than $11.25 per hour in 2007, and more than $12.00 per hour in 2008, in order to preserve their exempt status.
  • Employees who work split shifts must be paid a total wage equal to at least the minimum wage plus $7.50 in 2007, and at least the minimum wage plus $8.00 in 2008.

SB 1441 – Discrimination
This bill adds sexual orientation to the list of protected classifications under an existing law that prohibits discrimination based on race, national origin, ethnic group identification, religion, age, sex, color, or disability against any person in any program or activity that is conducted, operated, or administered by the state or by any state agency or that is funded directly by or receives any financial assistance from the state. The terms “sex” and “sexual orientation” are defined as set forth in the California Fair Employment and Housing Act. Additionally, the definition of discrimination is expanded to include a perception that a person has any of the enumerated characteristics or that the person is associated with a person who has or is perceived to have any of those characteristics.

AB 2440 – Child Support/Wage Deductions
This bill imposes liability on any person or business entity that knowingly assists someone who has an unpaid child-support obligation to escape, evade, or avoid current payment of those obligations. Prohibited actions include the following: a) hiring or employing a person obligated to pay child support without timely reporting to the Employment Development Department’s New Employment Registry; b) retaining an independent contractor who is obligated to pay child support and failing to timely file a report of that engagement with the Employment Development Department; and c) paying wages or other forms of compensation that are not reported to the Employment Development Department. The penalty for violating this law is three times the value of the assistance that is owed, up to the total amount of the entire child-support obligation owed.

AB 2095 – Sexual Harassment Training
This bill modifies existing law requiring employers to provide mandated sexual harassment training to supervisors by limiting the required training to supervisors physically located in California.

AB 1553 – Arbitration
This bill provides that, if an agreement requires arbitration of a controversy to be demanded or initiated within a set time period, the commencement of a civil action within the specified time period tolls the applicable time limitations in the arbitration agreement from the date the civil action is commenced until 30 days after a final determination by the court that the party is required to arbitrate the controversy, or 30 days after the final termination of the civil action that was commenced and that initiated the tolling, whichever date occurs first.

AB 2068 – Workers’ Compensation

This bill expands an employee’s right to be treated by his or her personal physician for an on-the-job injury. Specifically, this law provides that a “personal physician” who may be pre-designated as the primary treating physician for workers’ compensation purposes includes a corporation, partnership, or association of licensed doctors of medicine or osteopathy.

SB 1613 — Cellular Phone Use While Driving
Effective July 1, 2008, it will be illegal to drive a motor vehicle while using a wireless telephone unless the phone is equipped to allow hands-free listening and talking and is used in that manner while driving. The penalty for violating this law will be $20 for the first offense and $50 for each offense thereafter. This law does not apply to a person who is using a cellular telephone to contact a law enforcement agency or other public-safety agency for emergency purposes or to an emergency service professional operating an authorized emergency vehicle.

San Francisco — Paid Sick Leave Ordinance
Effective February 5, 2007, all employees who are employed within the city limits of the City of San Francisco must be provided with paid sick leave. Such sick leave must accrue at the rate of one hour for every 30 hours worked. Employers may adopt an accrual cap of 72 hours, at which level further accrual stops. The ordinance does not specify that the accrual cap may be prorated for part-time employees. The accrued leave must carry over from year-to-year. However, no pay out of accrued but unused sick leave is required upon termination of employment. For new hires starting after February 5, 2007, a 90-day waiting period is allowed before paid sick leave begins to accrue.

Employees may use their accrued sick leave for their own illness or to care for a spouse (or registered domestic partner), child, parent, grandparent or other specifically “designated person” if they do not have a spouse or registered domestic partner. Note that this ordinance is more generous than California law, in that it permits all of the accrued sick leave to be used for caring for other individuals, whereas California law only allows one-half of the employee’s annual accrual to be used for such purposes. If an employer has a policy combining sick leave and vacation as paid time off (PTO) and the policy provides at least the amount of sick leave required under the ordinance, no further leave is required.

Federal Law
Preservation of Electronically Stored Information

As of December 1, 2006, various amendments to the Federal Rules of Civil Procedure took effect with regard to electronic discovery. For the first time, the Federal Rules of Civil Procedure recognize electronically stored information (“ESI”) as a distinct category of discovery. At this point in time, the scope of producible electronic discovery under the amendments is not clearly defined. However, it is likely that the scope of producible electronic discovery will be very broad, including not only items such as employee emails, but other ESI created or received by the company’s electronic information system.

The new amendments require companies to maintain and produce ESI the same way that hard copy documents are maintained and produced. However, given the nature of technology and the fact that many electronic information systems automatically overwrite or discard files after some time period, the new amendments provide for a “safe harbor.” Under the new amendments, there is limited protection against sanctions for a party’s failure to provide ESI in discovery if the information has been lost as a result of the routine operation of a electronic information system, as long as that operation was in good faith. Given this requirement, it is unlikely that the safe harbor will apply if a company allows relevant ESI to be discarded when someone knew or should have known that the ESI would automatically be discarded by the company’s electronic information system. Such action is likely to be viewed as “virtual shredding” and beyond the protection of the safe harbor.

Recent Decisions Highlight Employer’s Disability Burden

Several recent state and federal employment law cases have reemphasized the burden imposed on employers when dealing with disabled employees or applicants, as well as those employees or applicants who are merely “regarded as” disabled. The first case involved an ADA class action suit against UPS on behalf of deaf employees who were denied the opportunity to work as drivers. The second case involved a FEHA claim brought against Lockheed Martin for failure to accommodate an employee who was not “actually disabled”; Lockheed simply thought the employee was disabled. Both of these cases illustrate the extreme care that employers must take to avoid liability when presented with an employee or applicant whom the employer believes is disabled.

In the recent litigation involving UPS, a group of deaf employees brought a class action suit in Federal court alleging that deaf workers were prohibited from competing for driving jobs. UPS required all would-be drivers to pass a hearing test issued by the U.S. Department of Transportation (DOT). UPS imposed this requirement on all drivers despite the fact that the DOT requires the test only for people driving vehicles that weigh more than 10,000 pounds. The deaf workers contended that because UPS has many vehicles that weigh less than 10,000 pounds, the company’s overbroad use of the hearing test constituted a violation of the Americans with Disabilities Act.

UPS argued that, in the face of uncertainty regarding whether deaf drivers are more dangerous than drivers who can hear, it should be given the benefit of the doubt. The court disagreed with UPS, stating that employers only get the benefit of the doubt in cases of uncertainty if they offer persuasive proof that a stricter driving requirement is consistent with business necessity. In coming to its decision, the court ruled that UPS could no longer use the DOT standard to exclude deaf employees from driving vehicles weighing less than 10,000 pounds and ordered that the company assess each applicant individually. Damages have not yet been determined in the case.

In another recent case brought in California state court, an employee of Lockheed Martin Corporation alleged that Lockheed discriminated against him by terminating his employment rather than accommodating his physical limitations. This case differs from most disability discrimination cases in that the employee was not actually disabled; Lockheed simply thought he was.

In late 2000, the Plaintiff injured his lower back while working as a metal fitter. After filing a workers’ compensation claim, the plaintiff participated in a vocational rehabilitation program so that he would be able to take work assignments other than as a metal fitter. Lockheed retrained the plaintiff as a plastic parts fabricator but it was ultimately decided that there was no accommodation that could be made for the plaintiff’s inability to sit or stand for more than three hours a day. The plaintiff filed suit, alleging disability discrimination and failure to accommodate in violation of the Fair Employment and Housing Act. In court, the plaintiff maintained that his standing and sitting restriction could be accommodated by simply providing an additional break or two or allowing him to occasionally sit on a stool.

The Court first found that the plaintiff did not have an actual disability. That, however, did not end the inquiry. The court went on to find that, even though the plaintiff was not actually disabled, the employer must explore reasonable accommodations for, and engage in an interactive dialogue with, applicants or employees whom it regards as disabled. If the employer would have engaged in an interactive dialogue, it would have uncovered the fact that the plaintiff’s restriction could have been accommodated. As a policy matter, the court found that if an employer thinks an employee is disabled, it should not be let off the hook for discriminatory behavior based on the fact that it is mistaken in its assumption. What can a California employer do to avoid the situations in which UPS and Lockheed found themselves? The answer can be found in the interactive process described in the Lockheed decision. When faced with an employee whom the employer knows or believes is disabled, the employer should engage the employee in an interactive process or dialogue. At comparatively low cost, much good can be achieved and liability possibly avoided.

During this process, the employer must leave its preconceived notions behind. Stereotypes and generalities are exactly what the ADA and FEHA aim to eliminate. Thus, an employer shouldn’t rely on its experience with others having the same impairment. The interactive process should focus on the employee’s specific limitations and their effect on his or her ability to perform. The employer should make a clear effort to assist and communicate with the employee in good faith. And finally, if there is going to be a failure of the interactive process (and a resulting suit), the employer should leave no doubt that the fault is with the employee. By properly implementing the interactive process, an employer can provide itself a strong defense to potential liability.