Political news is a hot topic. People are discussing the presidential election, the war in Iraq and gay marriage everywhere, including in the workplace. Every employee has his/her own outlook on politics and many employees want to share their opinions. However, while one employee may have good intentions in discussing his/her political views, another employee may not perceive it that way. A political discussion can quickly evolve into a political debate, leading to tense relationships in the workplace. If co-workers are unable to work together or if employees become distracted by intense political discussions, they will have less time to pay attention to work. For employers, this can translate into lost productivity, loss of employees or even a harassment lawsuit.
You cannot fire an employee because of his/her political views. California law prohibits employers from interfering with an employee’s outside political activities or from imposing political viewpoints on employees. However, you can take some steps to ensure a productive and cooperative work environment. Banning all political discussions is not recommended. However, you may and should take action if political discussions result in disruption or complaints. The approach you decide to take will depend on your policies and the work culture. Here are some simple steps that you as an employer can take in dealing with political discussions at work:
Restrict use of the company e-mail system and bulletin boards to work-related items.
Remind employees to treat everyone with respect and to maintain professionalism.
Do not force your views on your employees.
Have an open door policy and/or complaint procedure.
Be fair to all employees regardless of your own personal political views.
Address performance issues if they arise, but focus on the work issue, not the political issue.
These simple steps may help you avoid conflicts among employees due to their political views and prevent claims before they arise.
The California Family Rights Act (“CFRA”) applies to companies with 50 or more employees and allows an employee to take up to 12 weeks of unpaid “family care and medical leave” if the employee has worked for the company for more than a year and has a minimum of 1,250 hours of service during the previous year. Grounds for leave under the CFRA include child-related needs (e.g., birth and adoption), the serious illness of a family member or, as relevant here, when an employee’s serious health condition “makes the employee unable to perform the functions of the position of that employee.” During an employee’s medical leave under the CFRA, the employer must continue to provide the employee with health benefits and, when the employee returns to work, he or she must be given the same seniority as before the leave.
Based on the language of the CFRA alone, it seems logical to presume that an employee who can work for another employer doing the same job that he or she does for you is not “unable to perform the functions of the position of that employee.” Well, the California Supreme Court weighed in and rejected that presumption.
Antonia Lonicki v. Sutter Health Central
Antonia Lonicki worked at a hospital owned by Sutter Health Central as a certified technician in the hospital’s sterile processing department. Ms. Lonicki claimed she suffered from stress due to the fact that the hospital was a Level II trauma center and other work-related difficulties. After her shift was changed one day and her request for vacation was denied, Ms. Lonicki left work and claimed that she was too upset to return. At the request of her supervisor, Ms. Lonicki obtained a note from a nurse practitioner for a one-month leave of absence for “medical reasons.” Over the next month, Ms. Lonicki saw several other healthcare professionals with regard to her medical complaints, including a physician chosen by Sutter. The opinions of these healthcare professionals differed with respect to whether Ms. Lonicki could return to work for Sutter without restrictions. Despite Sutter’s numerous requests that Ms. Lonicki return to work, Ms. Lonicki did not do so. Sutter discharged Ms. Lonicki for failure to appear for work.
During the time that Ms. Lonicki was on medical leave from Sutter, she was working part-time at another hospital (Kaiser) where her duties and tasks were nearly identical to those she performed at Sutter. At her deposition, Ms. Lonicki testified that her duties at Kaiser were “about the same,” but that it was “a lot slower” at Kaiser because Kaiser was not a Level II trauma center.
In defending against Ms. Lonicki’s lawsuit charging that Sutter violated the CFRA, Sutter argued that Ms. Lonicki did not qualify for CFRA medical leave because her part-time job with Kaiser demonstrated that she did not have a “serious health condition” that made her “unable to perform the functions” of her full-time job at Sutter. The Court did not accept this argument. While the Court found that Ms. Lonicki’s ability to work part-time for Kaiser doing tasks virtually identical to those she claimed she was unable to perform for Sutter was strong evidence she was capable of doing her full-time job at Sutter, that fact alone was not dispositive. The court reasoned that a serious health condition that prevents an employee from doing the tasks of an assigned position does not necessarily indicate that the employee is incapable of doing a similar job for another employer. The court illustrated its point with the following example: A position in the emergency room of a hospital that regularly treats a high volume of critical injuries may be far more stressful than similar work in the emergency room of hospital that sees relatively few critical injuries.
What Can Employers Take From the Court’s Decision?
The California Supreme Court’s decision establishes that an employee’s ability to perform similar duties for another employer does not conclusively prove that the employee may be denied CFRA medical leave. Instead, the inquiry as to whether an employee is unable to perform the functions of his or her position for purposes of the CFRA must focus on the specific job assigned to the employee and not simply the general job functions. Thus, any policy or practice of automatically denying or terminating CFRA medical leave based on the fact that an employee is performing similar tasks for another employer is likely to lead to trouble. The Court’s decision makes it clear that there is no safe harbor. Rather, employers must carefully review and consider all of the relevant facts in determining if an employee is truly “unable to perform the functions of the position of that employee” for purposes of determining if CFRA medical leave must be given.
As most of you probably know, California law requires an employer to reimburse its employees for all necessary expenses incurred in discharging their duties. For example, if you require an employee to use her own car to perform her job, you must reimburse the employee for automobile expenses. Examples of other reimbursable expenses could include travel expenses, business cards, office equipment, certain employer-mandated training, or amounts spent on marketing efforts.
The California Supreme Court has recently decided that an employer may satisfy its expense reimbursement requirement by paying its employees increased compensation in the form of increased base salary or commission rates, or both. At issue in the case was the proper way to reimburse employees who are required to drive their own automobiles as part of their job duties. All sides agreed that California law requires employers to fully reimburse its employees for automobile expenses actually and necessarily incurred in performing their job duties. The issue raised by the case was what methods an employer may use for providing such reimbursement. The court found that there are three methods an employer may use to calculate the amount of reimbursement required. Although this case was limited to reimbursement for automobile expenses, it would apply to other expenses employees incur in performing their job duties.
The first reimbursement method is the actual expense method, which requires the employer to calculate the expenses that an employee actually and necessarily incurs. The actual expenses of using an automobile, for example, include gas, maintenance, repairs, insurance, registration, and depreciation. The actual expense method is the most accurate method, but it is also the most burdensome because it requires detailed recordkeeping by the employee of amounts spent in each of these categories, along with information needed to apportion those expenses between business and personal use. Moreover, because an employer is only required to reimburse an employee for necessary business expenses, the actual expense method requires an employer to consider the reasonableness of an employee’s choices. For example, an employee’s choice of automobile will significantly affect the expenses associated with using it, because it’s more expensive to drive a Lincoln Navigator than a Toyota Corolla. When calculating actual costs, the employer would need to decide which portion of these costs were necessary (and thus reimbursable), and which merely reflected employee preference for a more expensive car. Because this method can be so burdensome, most employers do not use it for reimbursement of automobile expenses. However, it is commonly, and easily, used for reimbursement of other expenses (such as air fare, meals, etc.).
The second method of calculating reimbursement for work-required use of an employee’s own automobile is the mileage reimbursement method. Under this method, the employee keeps track of the number of miles driven to perform her job duties, and the employer multiplies the miles driven by a predetermined amount that approximates the per-mile cost of owning and operating an automobile. Although not required to do so, many employers use what is known as the IRS mileage rate, which is a rate set by the IRS for federal income tax purposes. This rate is based on national average expenses for fuel, maintenance, repair, depreciation and insurance. Because the mileage reimbursement method necessarily results in an approximation of actual expenses, an employee will always be permitted to show that the reimbursement amount paid is less than the actual expenses the employee necessarily incurred for work-required automobile use. If the employee can make such a showing, the employer must make up the difference.
The third, and final, method of calculating automobile reimbursement expenses is the lump-sum payment method. Under this method, the employee need not submit any information to the employer about miles driven or actual expenses incurred. Instead, the employer merely pays the employee a fixed amount (either through higher wages or commissions) for automobile expense reimbursement. This fixed amount should be based on the employer’s understanding of the employee’s job duties, including the number of miles the employee typically drives to perform those duties. In fixing this amount, the employer must be sure that it is sufficient to provide full reimbursement for actual expenses. If it is not, the employee will be permitted to challenge the amount of the lump-sum payment as insufficient.
It is important to note that there are numerous laws governing the payment of wages that do not apply to expense reimbursement. For example, there are tax consequences for both the employer and the employee associated with classifying payments to employees as wages, rather than expenses. The amount payable as wages is also subject to minimum wage laws. Finally, California Labor Code section 226 requires employers to provide its employees with itemized wage statements containing a host of information. In order to make it easier to show compliance with these various wage laws, an employer who chooses to use the lump sum payment method would be well advised to pay the lump sum separately from its employees’ regular wages. Alternatively, if an employer chooses to combine the wage and lump sum payments into one check, the employer should separately identify the amount of the combined payment that represents wages, and the amount that represents reimbursement for expenses.
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 newsletter@wilkefleury.com.
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.
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.
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.”
Conclusion
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 www.dir.ca.gov/dlse/dlse.html.
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.
Conclusion
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.
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.
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.
Do you know just what your harassment training programs should include? All employers should review their training programs now in order to ensure compliance with new guidelines issued by the California Fair Employment and Housing Commission (FEHC). The FEHC is the agency charged with enforcement of the harassment training law. (See http://www.fehc.ca.gov/pub/harassment training.asp)
Who Must Comply?
Pursuant to California Government Code Section 12950.1, employers with 50 or more employees or contractors are required to provide all supervisory employees with at least two hours of classroom or other effective interactive training and education regarding the prevention of sexual harassment. The 50 employee requirement “means employing or engaging fifty or more employees or contractors for each working day in any twenty consecutive weeks” in the present calendar year. The law does not require that the 50 employees work at the same location or all work or reside in California.
What Are The Specific Training Objectives?
The guidelines set forth content objectives for training both “to assist California employers in changing or modifying workplace behaviors that create or contribute to ‘sexual harassment’” as defined by federal and California law, and “to develop, foster and encourage a set of values in supervisory employees” who undergo such training “that will assist them in preventing and effectively responding to incidents of sexual harassment.” In addition to laying out the general content objectives for mandated harassment training, the guidelines also address “e-learning” and “webinar” training, which may prove to be convenient alternatives to the traditional classroom training.
What Is “E-Learning” And “Webinar” Training, And What Are The Additional Requirements For Each?
The guidelines define “e-learning” as “individualized, interactive, computer-based training whose content is written, developed and approved by an instructional designer(s), qualified trainer(s) or subject matter expert(s).” “Webinar” is defined as “an internet-based seminar created and taught by a qualified trainer and transmitted over the internet or intranet in real time.” Employers may also opt for “other effective interactive training and education,” which may include the use of “audio, video or computer technology in conjunction with classroom, webinar and/or e-learning training.”
In the event that the employer opts for an e-learning alternative to classroom training, the Commission requires that employers provide supervisors with trainers or educators who will make themselves available “within a reasonable period of time” to answer any questions the supervisor may have relating to the training. Furthermore, if a webinar format is utilized the Commission requires that employers obtain records demonstrating that a learner “attended the entire training and actively participated in the training’s interactive content, discussion questions, hypothetical scenarios, quizzes or tests, and activities.” Finally, employers must comply with the minimum two hour harassment training requirement. That requirement may be fulfilled by two classroom hours, two webinar training hours, or “in the case of an e-learning program, a program that takes the supervisor no less than two hours to complete.”
Who Is Fit To A Be A “Qualified Trainer”?
The guidelines define a “qualified trainer” as an individual who has “legal education coupled with practical experience, or substantial practical experience in harassment, discrimination and retaliation” that can “effectively lead in-person or webinars.” The trainer must be qualified to train on a number of issues related to harassment as outlined by the FEHC guidelines.
How Do You Track Training?
Employers are required to provide training once every two years and have the option of using “individual” or “training year” tracking. Under the “individual” tracking system, an employer simply tracks “its training requirement for each supervisory employee, measured two years from the date of completion of the last training of the individual supervisor.”
Alternatively, an employer may use the “training year” tracking method and thereby “designate a ‘training year’ in which it trains its supervisory employees.” The employer will then retrain the supervisory employees no later than the next “training year,” two years later. In the case of newly hired or promoted supervisors who receive training within six months of assuming their supervisory positions, but in a different training year, “the employer may include them in the next group training year, even if it occurs sooner than two years.” Furthermore, a supervisor who has received anti-harassment training in compliance with the statute within the prior two years from either a current, prior or alternate joint employer “need only be given, be required to read and acknowledge receipt of, the employer’s antiharassment policy within six months of assuming” the new supervisory position or “within six months of employer’s eligibility.” The current employer, however, will have the burden of establishing the legal compliance with this section of the previous training. The employer may then place new supervisors on the two year track schedule.
What Records Should Be Kept And For How Long?
The Commission requires that employers keep documentation of harassment training in order to track compliance. The records should include “the name of the supervisory employee trained, the date of training, the type of training, and the name of the training provider.” The documentation records should be kept for a minimum of two years. What Should You Do To Ensure That Your Training Is In Compliance With The Law? Given the gravity and ramifications of sexual harassment claims, employers should consider taking some time to evaluate and strengthen their harassment training programs to meet the legal specifications. The following steps may help you in this process.
Know whether or not you are subject to the training statute. You may safely assume that you are subject to the training statute if you have 50 or more full time, part time, or temporary employees or contractors and at least one of them lives or works in California.
Train all supervisors who “directly” supervise California employees. If you are not sure whether the supervision is “direct” or otherwise, assume it is direct and train them.
Maintain a fixed training schedule that is easily enforceable. Group your supervisors by “training year” and set fixed training schedules to facilitate your training requirement.
Evaluate your training programs regularly. Look for any changes in applicable California and federal law.
Protect yourself from harassment claims by going beyond the minimum training required. Consider:
(a) expanding harassment training to include topics that are recommended but not required under the law;
(b) training your supervisory employees even if your company is not subject to Section 12950.1; and
(c) providing more than the minimum two hour training.
Over the last few years, California courts have been flooded with wrongful discharge lawsuits. We noted in an earlier article that California appellate courts have expanded the situations in which employees may bring claims against their employers, particularly in retaliation lawsuits. Recent cases further exemplify the growing trend to liberalize wrongful discharge lawsuits. Because the California Supreme Court has declined to review these cases, it is not immediately clear what long term impact these decisions will have on at-will employment principles. What is clear is that employers should take steps to understand current regulations and case law to avoid a wrongful discharge lawsuit.
Public Policy In A Wrongful Discharge Suit
An employee may bring a wrongful discharge suit against the employer if the employee can demonstrate that the discharge violated fundamental and substantial public policy. The California Supreme Court has held that a wrongful termination action based on violation of public policy must be grounded on some constitutional, statutory, or regulatory basis. In the past, courts interpreted that requirement to mean the violation must inure to the public interest—simply put, such violations were required to affect the public at large and not just private individuals.
It is unclear if this remains true given a recent case that resulted in a favorable outcome to an employee based on his individual claim of unsafe working conditions. In that case, a maintenance mechanic was terminated after refusing to clean up a containment area. While the containment area did not violate any safety standards, the area did store corrosive materials that could have been fatal if not handled correctly. The employee argued that the clean up of that area was not part of his job description, he was not trained in such tasks, and he believed the assignment was unsafe. He premised his belief that the area was unsafe on one past incident where another employee was injured from touching the chemicals.
The employee was discharged following his refusal to perform the assigned task. After his termination, the employee sued, claiming that the termination violated public policy. After the lower court proceedings resulted in an appeal, the appellate court ruled in favor of the employee, noting that the employee had a reasonable “good faith” belief that the assignment was unsafe.
What Is Good Faith?
Traditionally, the phrase “good faith” is understood to denote an act that is honest in purpose, free from intent to defraud, and generally speaking, faithful to one’s duty or obligation. This definition is generally broad and often left for the jury to decide.
The appellate court’s approach to the definition of good faith in this case was even more relaxed and gives employers cause to be worried. The appellate court’s decision, read broadly, means that an employee need not show that the actual work that he is complaining about is unsafe, just that he, in good faith, believes that it is unsafe. While the employee’s belief must also be reasonable, the employee can simply point to past unsafe conditions and complaints to demonstrate that he has a reasonable fear that the current condition is unsafe.
Although the California Supreme Court has refused to review this case, past decisions seem to support the appellate court’s ruling. In 1991, the California Supreme Court stated that an employee need not prove an actual violation of law in order to establish wrongful termination. The fact that he reasonably believed that the activity was illegal sufficed to demonstrate that he was wrongfully terminated. That decision implied that no actual harm or violation must exist, only that the employee in good faith believed that it did at the time.
How Does This Affect Employers?
Naturally, this liberal construction of good faith will contribute to the already growing number of lawsuits. As a result, employers should be prepared to update current termination policies in order to prevent a claim. Here are a few simple steps an employer should take in order to avoid litigation.
Make sure employment handbooks discuss anti-retaliation policies. Talk about these policies with employees (particularly supervisors/managers), make clear that the company does not tolerate retaliation, and stress that any perceived retaliation should be immediately reported. If an employee refuses to work, ask the employee why he is refusing to perform. Document these discussions. If the refusal is based on the employee’s concern that it would violate a law, regulation, or pose health concerns, seek legal advice before terminating the employee. Keep complaints confidential and investigations discreet. This minimizes unnecessary third party involvement and makes it easier for employers to show that no one involved in the decision leading to the termination had a retaliatory motive.
Monitoring employee activity, both on and off the job, has never been more relevant than it is in today’s increasingly wired and cost conscious world. Ten years ago, who could have imagined that disgruntled employees could let their feelings be known to literally millions of people from their P.C. at home? Who would have imagined that happy employees could waste countless hours on the job keeping track of their favorite sporting event from their cubicle, or having real-time conversations on their computer with a friend on the other side of the country? With the proliferation of the Internet and the advent of personal websites, web logs, e-mail, and ESPN.com, all of these drags on productivity have become a reality.
Unfortunately, the law has always been slow to keep up with modern advances, and the Internet and all of its progeny are no exception. All we can do is apply the law that we have to the world in which we find ourselves.
In California, an employee has a constitutionally protected right to privacy that can be enforced against a private employer. To maintain a cause of action for an invasion of the constitutional right to privacy, the plaintiff must satisfy several threshold elements. These elements are:
1) that there is a legally protected privacy interest;
2) that the employee enjoys a reasonable expectation of privacy; and
3) that the conduct of the employer constitutes a serious invasion of privacy. An employer may defend against an invasion of privacy claim by defeating any of these elements.
An employer’s written policy, acknowledged by the employee, may defeat the employee’s reasonable expectation of privacy. In fact, in a recent California case, the court found that employers can diminish an individual employee’s expectation of privacy by clearly stating in their policy that electronic communications are to be used solely for company business and that the company reserves the right to monitor or access all employee Internet or e-mail usage. This finding has broad implications that can be applied to a variety of modern monitoring scenarios.
Email Monitoring
Because the California Constitution protects employee privacy as to electronic monitoring only when employees have a “reasonable expectation of privacy,” a well crafted policy clarifying that the employer reserves the right to monitor electronic and other communications at work serves to diminish any employee privacy expectation with regard to the use of company computers, telephones, and e-mail. Such a policy, when disseminated, will preserve your right to reasonably monitor these communications, particularly e-mail on the company system.
Given that such privacy policies greatly reduce potential liability and may soon be legislated in California anyway, it makes good business sense to draft and distribute a policy now rather than later.
Internet Use
Employers can prohibit personal Internet use on a company computer. In fact, one California court has held that an employer can terminate an employee for accessing pornographic websites from home on a company computer when the employer had an appropriate electronic monitoring policy in place. In that case, the company had provided the personal computer to the employee and had a very clear policy in place preserving its right to monitor the use of company provided computers as necessary.
Employers should use care not to exceed the bounds of their rights in accessing Internet websites that employees have visited or created. Although an employer’s activities may not be an invasion of the employee’s privacy, the conduct may constitute an intrusion into protected activities, concerted action, political activities or off-duty conduct.
Web Logs
A relatively new phenomenon is “blogging.” Blogs, short for web logs, are online logs or journals in which employees (or anyone else with a computer) voice their opinions about anything they wish…including their employers. What can an employer do if an employee is disparaging the employer online?
If an employee is disseminating trade secrets, defamatory comments or is “blogging” on company time or computers, then an employer can probably safely terminate the employee. An employer may also be able to terminate an at-will employee who is bad-mouthing, ridiculing or generally denigrating the company, a boss or, worst of all, the employer’s product. However, the operative word is “may.” Taking adverse action against even at-will employees for blogging on their own time, especially when those blogs are not defamatory or do not implicate trade secrets, may raise issues involving discrimination, retaliation, and political and free speech. In many cases, your reaction to a blog entry could end up costing you much more than the original blog post ever would have. Aside from these issues, monitoring employee’s blogs also gets into the thorny area of controlling what the employee does on his or her own time.
Regulating Off-Duty Choices
While the Internet and employee monitoring are hot issues in employment law right now, offduty conduct by employees has also been making the news. Recently, some companies have begun experimenting with rules regarding their employees’ conduct away from work, particularly when that conduct impacts the employer’s health care premiums. Employees have countered by claiming that off-duty conduct is not an appropriate subject for scrutiny or control by an employer.
When an employer wants to regulate off-duty conduct it must primarily be done through contract and it must be based on a legitimate business need. For example, some employers have started programs designed to improve employee health. The most widespread of these new programs are those which attempt to prohibit smoking. Generally, these programs have been voluntary and based on incentives to quit. However, a new case in Michigan has garnered a great deal of attention because it is not a voluntary program and the employer tested its employees to ensure compliance. This program has been challenged by several employees and the employer will be forced to defend the policy in court. Regardless of the outcome of the Michigan case, California statutorily protects legal off-duty conduct by employees and healthy lifestyle policies may violate these statutory protections.
At this point there have been no California cases testing whether healthy lifestyle policies violate employee privacy rights and it is worth asking if your company wants to be the first to test those uncertain waters. It should be noted that, if such policies are not carefully considered and drafted, they could end up implicating issues other than privacy, such as the ADA (i.e., policies targeting disabilities) or age discrimination (i.e., policies targeting medical conditions such as cholesterol-levels or high blood pressure).
As you probably know, the Consolidated Omnibus Budget Reconciliation Act, commonly known as COBRA, allows employees to elect to continue health coverage under an employer-sponsored health plan for a certain period of time following the termination of employment or other qualifying event. Once an employee elects continuation coverage, the employee is responsible for paying the premiums required to keep the coverage in effect. Generally, the insurer provides the required notice explaining continuation coverage rights to the employee after a qualifying event. The employee then has 60 days to elect coverage.
In a new federal court case out of Michigan, however, the employer was found liable to an employee for damages suffered due to a failure to provide the proper COBRA notification, even though the employer had contracted with a third-party administrator to provide the notification. In Linden v. Harding Tube Corp., the court explained that ERISA imposes a responsibility upon a plan sponsor to provide appropriate notification regarding COBRA coverage rights. A plan sponsor is defined as the employer in the case of an employee benefit plan established or maintained by a single employer. The court went on to explain that there could be no dispute that the regulations with respect to COBRA notification had been violated because neither the employer nor the company with whom it had contracted to provide COBRA notifications had notified the insurance carrier that there should be continuation coverage or paid the premium necessary to activate the coverage. As the plan sponsor, the employer is initially liable for those violations. The court left it up to the jury to decide whether the employer could recover from the third-party with whom it had contracted for the damages it had to pay its ex-employee.
The lesson to be taken from this case is that if there is a failure to communicate COBRA continuation rights to an employee following a qualifying event, the employer will ultimately be responsible for that failure if the employer is also the plan sponsor. If you contract with a third-party to provide COBRA notification rights, you should make sure that copies of the appropriate notices following a qualifying event are sent to you so that you can ensure the notifications have been made in a timely fashion. If they are not, you could be held responsible for any medical costs incurred by your ex-employee during any time that he was uninsured because of your failure to provide the appropriate notification.
As you have probably heard, identity theft across the nation is growing at an alarming rate, particularly in the workplace. With this upsurge, victims are increasingly looking to recover damages from the companies from which their information was stolen.
What Is Identity Theft?
Identity theft occurs when someone uses the personal information (usually a social security number, name, date of birth, or credit card number) of another fraudulently and without permission. The thief typically uses this information to obtain money, goods, or services, but identity theft is also used to obtain identification cards and other government-issued documents.
Identity Theft – A Growing Problem
According to FBI statistics, identity theft is our nation’s fastest growing crime. In 2004, the Federal Trade Commission, which operates a nationwide identity theft hotline, announced that for the fourth straight year identity theft topped the list of consumer complaints. In 2004 alone, the FTC reported that there were almost 44,000 victims of identity theft in California. With 122 victims per 100,000 people, California ranked third in the nation behind only Nevada and Arizona.
The Legislative Response
Legislative response to the rise in identity theft has occurred on the national and state levels. In 1998, Congress passed a law making it a federal crime to use another’s identity to carry out an activity that violates federal law or that is a felony under state law. Similarly, California law now makes it a felony to use the personal identifying information of another for any unlawful purpose without the authorization of that person. A California statute also requires businesses and government agencies to notify consumers if hackers gain entry to computers that contain unencrypted personal information such as credit cards, social security numbers, and driver’s license numbers. That same statute allows any person injured by a violation of the law to file a civil suit against the company or agency.
Expansion Of Identity Theft Into The Workplace
Initially, stealing mail and wallets was the primary form of identity theft, but recently criminals have expanded to hacking into computers and copying company databases to obtain private information. Two examples illustrate the expansion of identity theft into the workplace. First, in San Diego, a dishonest employee obtained access to a storage room where past payroll information was filed. The employee obtained Social Security numbers from 100 current and former employees and used them to obtain credit in their names. Second, a Nigerian crime ring was employed temporarily at a very large corporation. One of the Nigerian employees downloaded an employee list containing social security numbers, then used the numbers to obtain credit and make fraudulent purchases. The employees did not know about the concerted thievery until they shared stories with their co-workers and learned that many of them had been victimized.
Identity Theft & The Employer – New Grounds For Recovery
Employees and their lawyers are considering potential grounds for recovery of when their personal information is misappropriated from work. Case law is relatively undeveloped, but two theories have materialized as potential grounds for recovery. The first theory is based on invasion of privacy. A short time ago, 204 employees of a Minnesota trucking company filed a class action lawsuit against their employer after their social security numbers were faxed to 16 terminal managers. They claimed that this was an invasion of privacy because the company released personal, confidential information without their permission. The Minnesota Court of Appeals agreed, and overturned a trial court order dismissing the claim. The trucking company sought review of the ruling, and the Minnesota Supreme Court overruled the Court of Appeals, finding that the employer’s dissemination of social security numbers to terminal managers did not constitute publication under the definition of invasion of privacy. Although the anti-employer decision was overturned, the case demonstrates a legitimate possibility that an employer’s failure to guard against disclosure of employees’ confidential information could lead to invasion of privacy lawsuits. The second theory is based on negligence principles. Recently, a Michigan appellate court upheld a $275,000 jury verdict awarded to several 911 operators who were victims of identity theft. The plaintiffs filed a negligence action against their union after discovering that the person behind their identity theft was the daughter of the union treasurer. The union treasurer took private company records out of the office, and her daughter somehow obtained the information and misused it. In upholding the verdict, the court found that the union owed a duty of care to its members, and that identity theft was a foreseeable consequence of a breach of that duty. Although limiting its holding to the facts, the decision signals a wakeup call to employers—take proper steps to ensure confidentiality of your employee’s private information, or be liable for the consequences.
How To Protect Yourself – A Self Survey
For tips on how to avoid or limit liability in the event that identity theft strikes the workplace, check the Identity Theft Resource Center website, accessible at www.idtheftcenter.org.
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