Generally, when an employee quits or is fired, the employer must immediately pay all earned and accrued compensation, including wages, commissions, vacation pay and productivity-based bonuses. However, an employer need not pay amounts that have not yet been earned, such as commissions or bonuses where the employee has not satisfied the conditions necessary to earn the commission or bonus.

Schachter v. Citigroup, Inc.
In a recent case, an employer offered a voluntary stock purchase plan to its employees as an incentive for the employees to work efficiently and stay with the company. Under the plan, employees could designate a percentage of their salary to be used to purchase company stock. If the employee remained with the company for two years following purchase of the stock, title to the shares vested in the employee. On the other hand, if the employee quit or was fired for cause before the end of the two-year period, the employee forfeited the shares and the wages used to purchase the shares. If the employee was fired without cause, the employee still forfeited the stock but received, without interest, a cash payment equal to the amount the employee had invested in the stock.

The plaintiff was an employee who signed up for the stock purchase plan but voluntarily quit less than two years after he purchased the stock, thereby forfeiting all his stock and the wages he used to purchase the stock. He sued his employer in a class action lawsuit, alleging the employer failed to pay earned wages. The employee argued that, since he had used earned wages to buy the stock and since he forfeited those wages when he quit less than two years later, he had not really been paid the wages at all.

The California Supreme Court rejected that argument, explaining that eligibility to receive incentive based compensation is determined by the specific terms of the plan. Because incentive based compensation rewards future, as opposed to past, conduct, it is not “earned (and the employer has no obligation to pay) until the conditions set forth in the plan have been met. Since the employees in the class action did not continue their employment for the full two years after they voluntarily purchased stock through the company incentive plan, they never met the conditions set forth in the plan and they forfeited the stock and the wages used to purchase the stock.

Lessons for Employers
Incentive based compensation is not earned unless and until the terms of the incentive plan have been satisfied. Accordingly, it is very important that the terms of your incentive-based plans be clear as to any conditions that must be met to earn the compensation. Regardless of the terms of your plan, however, you cannot fire an employee without cause simply to prevent the employee from earning the incentive based compensation. An incentive based plan constitutes a contract and all parties have an obligation of good faith and fair dealing.

By Samson R. Elsbernd

Obligations of “Employers” under the FLSA Under the federal Fair Labor Standards Act (FLSA), employers must pay a minimum wage to their employees. Employers who violate this requirement may be held liable not only for the unpaid wages, but also for an equal amount of liquidated damages. In a recent federal case, former employees of a bankrupt company sued the company’s managers for unpaid wages. The court decided that the managers could be sued for unpaid wages even though the company had filed for bankruptcy. Boucher v. Shaw (2009) 2009 DJDAR 11827.

The Facts of Boucher v. Shaw

Nevada employees were fired, and alleged they were still owed wages. The employees sued three managers: the Chairman and CEO of the company, who owned 70 percent of the company; the manager responsible for handling labor and employment matters, who owned 30 percent of the company; and the CFO, who did not have an ownership interest in the company. The plaintiffs brought suit under the FLSA. The court noted that the definition of “employer” under the FLSA is to be given an expansive interpretation in order to effectuate the FLSA’s broad remedial purposes. Thus, where an individual exercises control over the nature and structure of the employment relationship or economic control over the relationship, that individual is an employer within the meaning of the FLSA and is subject to liability. The court concluded that, because each of the individual defendants was alleged to have had control of the plaintiffs, their employment and their place of employment, the case could proceed against them. It is important to note that the court did not find that the individual managers were liable for the unpaid wages; only that the case against them could proceed. It would ultimately be up to the trier of fact, after hearing all the evidence, to determine whether the individual managers were employers and, thus, liable for the wages of the employees.

The Company’s Bankruptcy does not Bar the Employee’s Claims

The managers argued that their duty to pay unpaid wages ended when their company entered Chapter 7 liquidation. Normally, the debtor in bankruptcy proceedings has an automatic stay, which means that any actions filed after the bankruptcy may not proceed. The court in Boucher noted that the automatic stay only protects the debtor, his property and his estate. There, the company was the debtor, not the individual managers. Accordingly, the company’s automatic stay did not affect the mangers’ liability. As a result, neither the managers nor their property were protected by the company’s bankruptcy proceedings, and the managers faced personal liability for unpaid employee wages.

Why Federal Court?

As most California employers know, California employees typically bring employment cases in state, rather than federal, court. In general, California law is much more employee friendly than federal law. Manager liability for unpaid wages, however, is one of the very few instances where federal law is actually more favorable to employees than state law. The California Supreme Court has determined that officers, managers, and directors cannot be held personally liable for a corporation’s failure to pay its employees under California law. Reynolds v. Bement (2005) 36 Cal. 4th 1075, 1076.

Lessons from Boucher

Boucher is a reminder that employers must comply with both state and federal wage and hour laws. Whichever law provides greater protection for the employee will be applied. Until now, lawsuits brought under the FLSA have been extremely rare in California. Expect to see a rise in lawsuits brought under the FLSA as more companies declare bankruptcy and more employees seek their unpaid wages from upper managers.

You could be subject to the jurisdiction of the U.S. Department of Labor Office of Federal Contract Compliance Program (OFCCP) without knowing it. In a recent case, three hospitals were held liable for noncompliance with OFCCP regulations even though they were not government contractors and were not parties to any subcontract that referenced a federal contract.

In OFCCP v. UPMC Braddock, three hospitals had contracts with the University of Pittsburgh Medical Center Health Plan (Health Plan) to provide services to government employees covered by the Health Plan. The Health Plan in turn had contracted with the Federal Office of Personnel Management (OPM) to provide medical services to federal employees. The contract between the hospitals and the Health Plan did not contain any language notifying the hospitals that they were subcontractors subject to OFCCP jurisdiction. Moreover, the Health Plan contract with the OPM specifically excluded the member hospitals from its definition of “subcontractor.” The OFCCP sent letters to the hospitals requesting copies of their affirmative action plans and other documents demonstrating that they were in compliance with various federal regulations prohibiting discrimination. The hospitals refused to cooperate, arguing that they were not federal contractors or subcontractors. The OFCCP disagreed and filed an administrative complaint against the hospitals.

The Department of Labor found that the hospitals were federal subcontractors subject to OFCCP jurisdiction even though the hospitals did not agree to become federal subcontractors and even though they had no notice of the terms of the contract between the Health Plan and the OPM. The Department of Labor determined that the equal employment opportunity and affirmative action obligations imposed by the OFCCP were incorporated into the hospitals’ contracts by operation of law. The rationale behind the decision was that, because the hospitals had assumed part of the Health Plan’s obligations under the Health Plan’s contract with the government (i.e., the provision of health care services to government employees), the hospitals were subcontractors bound by the OFCCP regulations. The Department of Labor also rejected the argument that the hospitals’ contracts with the Health Plan specifically excluded them from the definition of “subcontractor,” finding that the parties could not contractually invalidate the equal opportunity provisions of federal laws.

What This Means For You.
Health care providers with 50 or more employees that provide medical care worth $50,000 or more to federal employees may be subject to OFCCP jurisdiction. Failure to comply with OFCCP requirements can result in serious consequences, including exclusion from all federal contracting and subcontracting for three years or more. Entities that are in violation of the OFCCP requirements can also be prohibited from participating in Medicare and Medicaid programs. To avoid these unwanted consequences, you should take some simple steps. First, review your contracts to determine if you are providing health care services worth more than $50,000 to federal employees. If so, consult with legal counsel to determine your potential responsibilities under the federal government’s EEO and affirmative action programs. Finally, if you receive a compliance review letter, consult with legal counsel before refusing to cooperate.

In these tough economic times, many employers are looking for ways to save money and streamline their business operations. One way employers are accomplishing this goal is by implementing furlough days for some employees. However, this raises some legal concerns regarding the impact of a furlough day for exempt employees. This question has been considered on both the state and federal levels, and the consensus is that a prospective, temporary reduction in the work schedule of exempt employees, coupled with a reduction in their salaries, is permissible under California and Federal law as an effort to reduce or limit the need for layoffs in difficult economic times.

Who is an Exempt Employee?
To qualify as exempt, an employee must meet both the salary basis test and the duties test. To satisfy the salary basis test, an employee must earn a monthly salary equivalent to no less than two (2) times the state minimum wage for full-time employment (i.e., 40 hours per week). The duties test requires the employee to be engaged in the capacity of an executive, administrative or professional employee and to regularly exercise discretion and independent judgment.

Furlough of Exempt Employees 
The Division of Labor Standards Enforcement (DLSE) recently issued an Opinion Letter which laid out the conditions under which an employer could reduce the work schedules and salaries of exempt employees in order to avoid layoffs. Specifically, the DLSE concluded that an employer may reduce the number of its exempt employees’ scheduled work days and make a corresponding reduction in the employees’ salaries if the employer has experienced a significant economic downturn, the reduction is anticipated to be temporary and the employer intends to restore the employees’ work schedules and full salaries as soon as economic conditions permit. The DLSE pointed out that exempt employees whose work week and salary are reduced must still be paid at least two times the minimum wage so that they meet the salary basis test. Each employee must also continue to satisfy the duties test. The DLSE cautioned that the temporary reduction in hours and pay should be a one-time event. The DLSE noted that its opinion letter was in conformity with federal law, which also allows a prospective reduction of exempt employees’ hours so long as such reductions do not occur with such frequency that the employees’ status as salaried employees is a sham.

The DLSE’s new opinion is in notable contrast to a prior opinion issued by the DLSE, which concluded that an employer could not reduce the salary of an exempt employee during a period in which the company operated a shortened work week due to economic conditions. The DLSE stated that its prior opinion letter predated important federal cases and that it could no longer be considered persuasive.

Take Away 
Given the DLSE’s recent opinion letter, a California employer is not prohibited from implementing a one-time, temporary reduced workweek with a corresponding reduction of the salaries of exempt employees so long as the employees still meet the salary basis test by earning a monthly salary of at least twice the state minimum wage for full time employment. Such a reduction should only be made due to economic necessity and the employees’ hours and salaries should return to their pre-reduction status when the economic crisis has passed.

By Latika Sharma and Stacy Hunter

Most employers are aware that discrimination lawsuits are risky and expensive. A recent case, Lopez v. Bimbo Bakeries, serves as a reminder of just how expensive those cases can be, particularly if the terminated employee can garner a jury’s sympathy.

Recipe for Disaster
Lopez, a single mother of two, worked at Bimbo as a route sales representative. She transported baked goods on 15-pound trays that were stacked on wheeled racks in her truck. The design of the truck and the racks allowed her to load and unload the trays without forcing her to climb in and out of the truck. Lopez became pregnant and was diagnosed with diabetes. Lopez’s perinatal nurse provided her with a certification describing her work restrictions, which included occasionally lifting items ranging from 11 to 20 pounds, taking 15 to 20 minute breaks every two hours, and refraining from climbing. If modified work was not available, Lopez would be unable to work for the duration of her pregnancy. Lopez gave her certification to Laura Thompson-McCann, Bimbo’s HR Manager. Without consulting anyone else, Thompson-McCann told Lopez to go home immediately because Lopez was unable to perform her job duties as required. Thompson-McCann then determined that Bimbo did not have any available positions that could accommodate Lopez’s restrictions, despite Bimbo’s interim work program for employees with industrial injuries. Thompson-McCann refused to allow Lopez to return to her former position or any other Bimbo position, even though Lopez’s nurse assured her that Lopez could perform her job duties. Lopez filed for unemployment and Thompson-McCann responded by sending a letter to Lopez demanding that she confirm her resignation within 48 hours. When Lopez did not respond, Thompson-McCann determined that Lopez had resigned. Lopez sued, claiming gender and pregnancy discrimination. Following a jury trial, Lopez was awarded $340,700 in compensatory damages, $2 million in punitive damages, and over $1 million in attorneys’ fees.

Why Punitive Damages?
A corporate employer may be liable for punitive damages if a managing agent of the corporation acts with fraud, oppression or malice. A managing agent is defined as an employee who exercises substantial independent authority and judgment over decisions that ultimately determine corporate policy. Punitive damages were awarded to Lopez because the jury found that Thompson-McCann was a managing agent and that her actions were fraudulent and oppressive. The jury determined that Thompson-McCain violated the law when she terminated Lopez because of her pregnancy, and that she then attempted to conceal that wrongful act by claiming that Lopez had resigned. If the jury determines that an employer is liable for punitive damages, the amount of punitive damages must then be determined. The amount of punitive damages is based on the reprehensibility of the employer’s conduct and is designed to punish the employer for its wrongful acts. Because Bimbo’s assets were valued at $826 million and its actions were highly reprehensible, the jury determined that $2 million in punitive damages was appropriate.

Why Attorney’s Fees?
In most employment cases, the trial court will award attorneys’ fees to a prevailing plaintiff. Attorneys’ fees are awarded to ensure that the employee is not forced to bear the financial burden of litigation in order to vindicate her statutory rights. In determining the appropriate amount of attorneys’ fees to award, the Court will consider the number of hours spent by the attorney multiplied by a reasonable hourly rate. The court may then multiply that amount by a factor designed to reward the attorney for the risk incurred in taking a case in which he will receive nothing if he loses.

What This Means For You
To avoid falling into the same trap as Bimbo, you should ensure that your managing agents understand their legal obligations. When the managing agent is a human resources professional, she must understand the complex interplay between the ADA, FMLA and California’s FEHA and PDL. Here, Thompson-McCann made one mistake after another. She failed to engage in the interactive process, failed to determine whether the employee could perform her duties with a reasonable accommodation, failed to determine whether an alternative interim position was available even though company policy allowed for it, and failed to determine whether an extended leave of absence would be an appropriate accommodation. Any one of these failures would have resulted in liability for the employer. Together, they cost the employer a lot of dough.

By Anthony R. Eaton and Sarah Scott

Passed last year and signed into law by President Bush, the Genetic Information Nondiscrimination Act (GINA) will go into effect this November. Title I of GINA prohibits health insurance companies from discriminating against individuals based on their genetic information, and Title II prohibits such discrimination in the workplace. “Genetic information” is defined as an individual’s genetic tests or tests of his or her family members, as well as the medical history of an individual’s family with respect to any diseases or disorders.
Congress passed the Act in response to what it called the “current explosion in the science of genetics.” The hope is that the new law will foster medical research in the burgeoning field by offering protection to potential genetic testing participants who might otherwise be wary of disclosure of their medical records. The new protections may also allow for early detection of medical problems, and reduce the likelihood that at-risk individuals will contract or develop certain medical conditions.

Employer Obligations
Title II pertains to employers and has four prohibitions. First, employers may not engage in employment discrimination based on genetic information – i.e., employers may not terminate, refuse to hire, or otherwise “discriminate against any employee with respect to the compensation, terms, conditions, or privileges of employment” based on the employee’s genetic information. Furthermore, employers cannot use such information to “limit, segregate, or classify the employees… in any way that would deprive or tend to deprive any employee of employment opportunities or otherwise adversely affect the status of the employee.” Second, employers cannot retaliate against an employee who vocally supports the provisions of GINA or who participates in any investigation or proceeding under the Act. Third, employers cannot disclose any employee’s genetic information to any third party except under very narrow circumstances, such as to comply with certification provisions of family and medical leave laws. Finally, employers may not collect employees’ genetic information, with some exceptions (e.g., if the employer acquired the information inadvertently). If an exception does apply, employers must be careful to keep all such records strictly confidential. It is important to keep in mind that GINA is intended only as a floor of protection – state laws that provide for equal or greater protection are presumably still valid. The Act applies to all employers who have 15 or more employees, and will be enforced by the EEOC. Employees who successfully bring suit under GINA may recover attorney fees, as well as compensatory and punitive damages, if they can prove intentional (rather than negligent) discrimination – though these are subject to dollar caps depending on the size of the employer.

California Law
California’s FEHA already prohibits employers from discriminating on the basis of genetic information, and state law goes even further than GINA to prohibit testing for the presence of a genetic characteristic. Since California laws on genetic nondiscrimination were already among the most protective in the country, GINA will likely have a minimal effect on employers in this state. However, it has yet to be determined how courts will treat any disparities between state and federal law in this area, so employers would be wise to ensure compliance with GINA as well as with existing state law.

By Jason Cinq-Mars and Angie Palmerin
Employment attorneys were quite busy in 2008. According to the Equal Employment Opportunity Commission (EEOC), a total of 95,402 discrimination charges were filed by workers against their employers in 2008, as compared to 82,792 in 2007. That is a 15% increase. According to the new report, age discrimination complaints increased 29% from 2007, followed by retaliation complaints up 23% and sex discrimination complaints up 14%. The EEOC also saw an increase in complaints based on national origin discrimination, up 13% from 2007, race discrimination, up 11%, and disability discrimination, up 10%. With the economy in turmoil and a continuing rise in unemployment, it should be no surprise that employment litigation has dramatically increased.

The Odds
With the number of discrimination filings on the rise, employers must be aware of the risks they face if an employment case is filed against them. Statistics show that if an employer is sued by an employee in federal court, there is a 61% chance that the employer will lose. This number increases to 66% if the suit is filed in state court, where most employment discrimination cases are filed. The chances of an employer losing jumps to 65% if disability discrimination is alleged and to 70% if the suit alleges sex discrimination.

The Bottom Line
If an employer takes an employment case to trial and loses, the verdict can be quite large. Statistics show that in 2008, the average verdict in a federal employment suit was around $627,447. This number was higher in state court, where the average verdict was approximately $852,838. This number increases to approximately $948,018 for state discrimination cases, while state age discrimination verdicts top the list at an average of $1,967,923. There is a 27% chance of a verdict of $500,000 or more and a 45% chance of a verdict of $250,000 or more. In light of this dramatic increase in employment litigation and the high costs associated with lawsuits, the wise employer will be sure to provide effective management training on harassment and discrimination, hire competent human resources professionals and consult counsel before making high risk termination decisions.

By Samson R. Elsbernd and Kelli M. Kennaday, Esq.

Discrimination in the workplace has been prohibited since at least 1964.  In addition to prohibiting discrimination, the Civil Rights Act of 1964 also prohibits retaliation against employees who “oppose” unlawful employment practices.  Over the years, there has been surprisingly little guidance from the courts on what constitutes “opposition” to discrimination or harassment sufficient to trigger those protections.  It has generally been understood that someone who complains that they are the victim of discrimination or harassment is protected by the anti-retaliation provisions of those laws.  On January 26, 2009, however, a unanimous United States Supreme Court extended the protections of those laws to employees who report discrimination or harassment of others during an employer’s internal investigation.

Employees who disclose unlawful employment practices when asked may not be retaliated against by their employer.
In Crawford v. Metropolitan Government of Nashville and Davidson County, Tennessee, the local government investigated rumors of sexual harassment made against its employee relations director.  A supervisor asked Ms. Crawford if she had seen “inappropriate behavior” by the employee relations director and Ms. Crawford shared several instances of such behavior.  Ultimately, the employer did not take action against the employee relations director.  However, it fired three employees who had disclosed inappropriate conduct when asked about it during the investigation, including Ms. Crawford.  The employer claimed Ms. Crawford was fired for embezzlement; Ms. Crawford claimed she was fired in retaliation for reporting the sexual harassment.  The lower courts did not allow Ms. Crawford’s case to proceed, finding that she did not “oppose” an unlawful employment practice because she had not made an actual complaint about it.  Rather, she had simply disclosed what she had seen when asked.  The Supreme Court reversed, finding that the anti-retaliation provisions of Title VII protect not only employees who make an initial complaint or report of unlawful employment practices, but also employees who have “taken no action at all […] beyond disclosing it” when asked.

The Supreme Court stated that any other outcome would result in a “freakish” rule that protected employees who reported discrimination on their own, but not those who reported it after they were asked about it by a supervisor.  Such a rule would discourage employees from cooperating with employers during internal investigations.  The Court rejected the argument that its rule would discourage employers from conducting internal investigations.  Under the Court’s previous decisions, employers have a defense to harassment and discrimination claims when no tangible employment action is taken if the employer “exercised reasonable care to prevent and correct promptly” any discriminatory conduct and “the plaintiff employee unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer or to avoid harm otherwise.” Thus, the Court concluded, employers always have good reason to conduct an investigation into allegations of unlawful employment practices in the workplace.

How broad is the Supreme Court’s Interpretation of “Opposition” to Unlawful Employment Practices?
The language of the Supreme Court’s opinion in Crawford suggests that courts will interpret the term “opposition” within the anti-retaliation laws very broadly.  The Supreme Court noted that when employees share their belief that the employer has committed harassment or discrimination, the employee has “virtually always” opposed an unlawful employment practice.  The exceptions, noted the court, will be the “eccentric cases.”  Even more troublingly, the Court specifically stated that it was not deciding whether “opposition” includes silent opposition to unlawful employment practices. An example of  “silent opposition” would be when an employee disapproves of an unlawful employment practice but never shares that disapproval with her employer.  While stating that it was not deciding the issue, the Court suggested that “opposition” might include silent opposition.  In giving an example of what does not constitute opposition, the Court referenced an employee who thinks a supervisor’s racist joke is hilarious.  The Court found that such an employee would not be covered by the anti-retaliation laws because that employee did not oppose an unlawful employment practice.

Lessons from Crawford
As always, if you are considering terminating an employee, it is important to review the employee’s history to determine whether he falls within a protected classification.  An employee who has participated in a workplace investigation now should be included in the category of a protected class.  The termination of an employee in a protected classification is a high risk termination and you should make sure that the reason for the termination decision is absolutely unrelated to the protected activity, is well documented and, if possible, was not made or influenced by the employee who was the subject of the investigation.

In this tough economic climate, many employers are being forced to consider rather unpleasant ways to reduce costs.  Some of those methods include laying off non-critical employees, furloughs (requiring employees to take unpaid periodic time off) or RIFs (mass layoffs).  While all of these strategies have obvious downfalls, including decreased morale, increased unemployment compensation premiums and possible litigation, employers also need to be aware of the various legal requirements that apply when these tools are used.  Making matters even more confusing, the new economic stimulus plan has placed increased burdens on employers when employees are terminated.  If you are considering a layoff, furlough or RIF, do not forget these important rules.

FINAL PAY RULES
If you let an employee go as part of a layoff or RIF, you must provide their final pay on their last day of work.  The final paycheck must include all earned unpaid wages and benefits, including accrued time off.  Commissions and bonuses must also be paid on the employee’s final day if the employer is capable of calculating the amount of the commission or bonus on that day.  If the employer is not able to calculate the amount of the commission or bonus (for example, if the employer has not yet received payment on the sale), then the employer must pay the commission or bonus as soon as it is able to make that calculation. If you fail to provide a terminated employee with her final pay on the last day of work, the employee is entitled to a waiting time penalty for each day the final paycheck is late, for up to thirty days.  Final pay rules do not apply to furloughs unless the furlough spans more than one pay period.

FURLOUGHS AND REDUCED HOUR SCHEDULES
Many employers are choosing to furlough employees for short periods in order to save money now, while retaining employees for the anticipated recovery.  If you are considering furloughing employees, be aware of potential issues with respect to exempt employees.

You may furlough non-exempt employee by asking them to take off one or more days per pay period without pay.  In that case, you simply don’t pay the employee for the time the employee does not work.  For exempt employees, however, the situation is much more complicated.  You are required to pay an exempt employee an entire week’s salary for each week in which the employee performs any work.  Thus, you may not ask an exempt employee to take off a Friday and pay that employee 4/5 of his salary without jeopardizing the employee’s exempt status.  However, you can furlough an exempt employee without pay for an entire workweek.

You may also reduce the normal schedule of a non-exempt employee to save costs.  In that situation, you would change the non-exempt employee’s normal work schedule to a reduced hour schedule (i.e. thirty-two hours per week versus forty hours per week). Again, the exempt employee would only be paid for the hours worked.  For exempt employees, however, you may not reduce the employee’s weekly salary based on a reduction in the amount of time worked during the week.  Accordingly, you may not use a reduced hour schedule for exempt employees in order to reduce their pay.

If you decide to furlough employees or impose a reduced hour schedule, you must also decide whether to allow affected employees to use their accrued time off. That decision is up to you.  For exempt employees, however, you can require the use of accrued time off in order to satisfy the requirement that an exempt employee be paid for a full week in which they perform any work.  In this example, you could require an exempt employee to take every other Friday off and to use accrued PTO to be paid for that day.  While this will not result in any immediate cost savings, it will get the PTO off your books.  Of course, if the exempt employees does not have enough accrued PTO to cover that day, you must still pay the employee for the full week.

RIFS, WARN ACT NOTICES AND SEVERANCE AGREEMENTS
If you are doing a large scale RIF (defined as an unemployment loss at a single site of employment for fifty or more employees during any thirty day period), you are required to provide WARN Act Notices to all affected employees and to the EDD, the Local Workforce Investment Board and the chief elected official of each city or county government within which the RIF occurs.  You must provide these notices sixty days prior to the RIF date.  A failure to meet these requirements can result in liability to the affected employees for the difference between sixty days and the amount of notice actually provided.  Penalties may also be assessed.

If you offer your RIF’d employees a severance package as part of their termination, there are also additional requirements for obtaining a valid release from those employees.  Employees included in a RIF must be provided with forty-five days in which to consider a release agreement.  The employees must also be informed in writing as to any class, unit or group of individuals covered by the program pursuant to which the release agreement is being offered, any eligibility factors for the program, any time limits for applying for it and the job titles and ages of all individuals eligible or selected for the program within the portion of the employer’s organization from which eligible employees were chosen, as well as the ages of all individuals in the same unit who were not eligible or selected for the program.  Release agreements that do not comply with these requirements are invalid as to age discrimination claims.
NEW COBRA RESPONSIBILITIES

The recent economic stimulus bill imposes additional COBRA requirements on employers when an employee is terminated, whether as part of a RIF or an individual termination. When you terminate an employee, you must now provide them with a notification that they are eligible for subsidized COBRA benefits.  As an employer, you may be responsible for paying the subsidy to the provider but may seek reimbursement by deducting the subsidy from your payroll taxes.

In addition to notifying employees who are currently being terminated of their COBRA subsidy rights, employers must also notify employees who involuntarily lost their jobs as far back as September 1, 2008 of their right to subsidized COBRA benefits, even if those employees did not initially sign up for COBRA.  Those employees now have a second chance to sign up for subsidized COBRA benefits.

If you are contemplating a layoff, furlough or RIF, make sure you understand your obligations under the various state and federal laws that apply.  Otherwise, your attempt to save money may actually cost you money.

And By: Samson R. Elsbernd
401(k) retirement savings plans and similar defined contribution plans generally shift retirement plan risks from employers to employees. However, a recent Supreme Court Case decided this past February, LaRue v. DeWolff, Boberg & Associates, could make 401(k) defined contribution plans riskier for employers.

Defined Benefit Plans v. Defined Contribution Plans
Employers generally offer employees one of two types of retirement plans: defined benefit plans or defined contribution plans. Defined benefit plans provide a set retirement income, which is usually related to the number of years worked and employee compensation. On the other hand, defined contribution plans, also called individual account plans, provide payment according to the individual employee’s retirement account, which depends upon the amounts contributed and the performance of that account. 401(k) retirement savings plans are popular defined contribution plans.

Previously, the Supreme Court, in Massachusetts Mutual Life Insurance Company v. Russell, ruled that an employee could not sue the fiduciary of her plan (her employer) under ERISA (Employee Retirement Income Security Act of 1974) for breach of fiduciary duty concerning a defined benefit retirement plan. However, the Supreme Court recently allowed an employee to sue his employer under ERISA for fiduciary breach concerning his defined contribution plan.

Employees Can Sue Their Employers Regarding Their 401(K) Plans

In LaRue v. DeWolff, Boberg & Associates, the United States Supreme Court clarified that ERISA authorizes individuals to sue and recover for fiduciary breaches that impair the value of the retirement plan assets in the employee’s individual account. LaRue, the employee, sued his employer regarding his 401(k) retirement plan. His plan provided procedures and requirements that enabled individual plan participants to direct the investment of their contributions. LaRue alleged that he directed his employer to make investment changes in his individual account that the employer did not make. Consequently, he claimed his individual retirement account suffered a loss of $150,000 in interest (the Court record did not state whether the loss of interest was a decline or an increase in the value of the assets in the plan). LaRue argued that his employer should cover the loss, and the Supreme Court said LaRue could sue for this fiduciary breach under ERISA. The Court allowed the lawsuit to continue because fiduciary employer misconduct could reduce the benefits available under the retirement plan in the defined contribution system, whereas administrator misconduct in a defined benefit plan will not affect the retirement benefits unless the misconduct causes a risk of default for the entire plan.

LaRue Might Not Be Able To Recover
LaRue might not be able to recover from his employer even though the Supreme Court allowed him to sue. The case will now go back to the trial court, where LaRue has to prove 1) the fiduciary (employer) had breached its obligations, and 2) the breach had a detrimental effect on LaRue’s plan. The Supreme Court merely said employees could sue their employers for fiduciary breaches related to their 401(k) plans. The Court did not consider whether LaRue correctly followed the procedures and regulations of his plan, whether LaRue must exhaust all other remedies provided for in his plan before suing for the fiduciary breach, or whether LaRue started his lawsuit and asserted his rights early enough to get relief from a court. Lessons From LaRue Employers choose defined contribution plans because of their advantages over defined benefit plans, including less regulation and fewer administrative costs. Additionally, defined contribution plans give employees more control over their retirement, especially in an increasingly mobile job market. Perhaps more important to employers, defined contribution plans shift several risks of defined benefit plans from employers to employees, including the dangers of employees outliving the accumulated assets (longevity risk) in the plan and accumulating insufficient assets (investment risk).

The landscape has now changed again and some risk has been shifted to employers who offer defined contribution plans. Now that employees can sue their employers for mismanaging their 401(k) retirement plan accounts, these retirement plans are riskier than defined benefit plans with respect to lawsuits for fiduciary breaches. For example, employers may be susceptible to lawsuits by disgruntled employees whose retirement plans did not grow as large as the employee had hoped. To better defend themselves against this risk, employers should make sure they understand their fiduciary obligations under ERISA and consider having a qualified investment advisor under contract to perform some or all of those obligations. In addition, documentation will be critical in the event of a lawsuit, so employers should keep notes and records of all activity and discussions regarding changes in their employees’ plans. Though these suggestions will not prevent an ERISA, they will help defend against such a claim if one is made.

Wilke, Fleury, Hoffelt, Gould & Birney, LLP Labor & Employment Newsletter, August 2008, Volume 11, Issue 3

2008 was a relatively active year in terms of important legislative changes for California employers.  The following is a synopsis of the more notable changes that were enacted or modified for 2009.

California Law
Text-Based Communication While Driving Prohibited
Effective January 1, 2009, text-based communication while driving is prohibited.  Employers should update existing policies.

Temporary Employees Must Be Paid Weekly
Labor Code section 201.3 requires that temporary employees be paid on a weekly, rather than on bi-weekly, basis.  With certain exclusions, Section 201.3 defines a “temporary services employer” as “an employing unit that contracts with clients or customers to supply workers to perform services for clients or customers” and who negotiates with its clients and customers on such matters as time and place where the services will be provided, type of work, working conditions, and quality and price of the services.  The “temporary services employer” also determines the assignments of workers, retains the authority to assign a worker to another client or customer when the worker is deemed unacceptable to the client or customer, assigns workers to perform services for clients or customers, sets the rate of pay for workers, pays workers from its own account, and retains the right to hire and fire the workers.

The following new rules apply to temporary service employers:

•    With certain exceptions, temporary workers must be paid weekly with the wages for the current week’s work due on the payday of the following week.

•    If a temporary employee is assigned to work “day to day” from a pool of workers, the employee’s wages must be paid at the end of each day.

•    Strike replacements must be paid at the end of each workday.

•    Unless otherwise stated, temporary services employees who are fired or quit must be paid pursuant to Labor Code §§ 201 and 202.

Overtime Exemption For Physicians Paid On An Hourly Basis
A licensed physician or surgeon who is primarily engaged in performing duties for which licensure is required is exempt from overtime if he/she is paid at least the minimum hourly rate set annually by the state.  Effective January 1, 2009, the minimum hourly rate is $69.13. This exemption does not apply to employees in medical internships or resident programs, physician employees covered by collective bargaining agreements or veterinarians.

Monthly or Annual Salaries for Exempt Computer Professionals
California Labor Code § 515.5 has been amended to allow an employer to pay a computer professional who is exempt from overtime a monthly or annual salary.  The salary required for the exemption is $79,050 annually or $6,587.50 monthly.

Earned Income Tax Credit
You must provide notification to all employees that they maybe eligible for the federal earned income tax credit (EITC) within one week before or after, or at the same time, you provide a Form W-2 or a Form 1099 to any employee.

Federal Law
Department Of Homeland Security: Supplemental Final “No-Match Letter” Rule
On October 23, 2008, the Department of Homeland Security (“DHS”) issued its supplemental final rule for employers who receive a “no-match” letter from the Social Security Administration or a Notice of Suspect Documents letter from the DHS.  The final rule will become effective upon the lifting of an injunction put in place during a legal challenge to the original 2007 version.  This will likely take place in early 2009.

The supplemental final rule requires employers to:

•    Verify within 30 days that the mismatch was not the result of a record-keeping error on the employer’s part.  If it is, then correct and communicate the corrected information to the SSA.

•    If the mismatch cannot be resolved as a record keeping error, then the employer must notify the employee within 5 business days and request that the employee confirm the accuracy of the employment records within 90 days of receiving the no-match letter.

•    At the end of the 90 day period, if the mismatch has not been resolved the employer will have 3 days to complete a new I-9 form with the employee.  The questionable Social Security Number may not be used when completing this new form.

The supplemental final rule provides a safe harbor to employers that follow its procedures.  If an employer does nothing to resolve the mismatch or does not act in good faith, then the employer may be liable for employing an unauthorized worker, leading to civil or criminal penalties.

Amendments To The ADA
The ADA Amendments Act of 2008 (“ADAAA”) goes into effect on January 1, 2009.  The effect of the ADAAA on California employers is minimal, as California employers were already required to comply with the Fair Employment and Housing Act which is even more favorable to employees than the ADAAA.  However, employers in should still be aware of the ADAAA and its potential effect on their out-of-state operations.

The ADAAA expands the definition of disability, in several ways, including:

•    Requiring the courts to determine whether an impairment substantially limits a major life activity without taking into account mitigating measures such as hearing aids, prosthetics or insulin.

•    Expanding the definition of “major life activities” to include caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing lifting, bending, speaking, breathing, learning, reading concentrating, thinking, communicating, working and the operation of a major bodily function, such as the immune system, normal cell growth and digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine and reproductive functions.

•    Removing the “substantially limits” requirement, meaning that individuals are not required to establish that their impairment limits or is perceived to limit a major life activity to be “regarded as being disabled.”  However, reasonable accommodations need not be provided to an individual who is only “regarded as” having an impairment.

•    Providing that an impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active.

Revised Form I-9 for Employers
The U.S. Citizenship and Immigration Services has revised the list of documents that will be acceptable for Form I-9, Employment Eligibility Verification.  The new rule does the following:

•    Requires that all documents presented during the verification process be unexpired;

•    Eliminates List A identity and employment authorization documentation Forms I-688, I-688A (Temporary Resident Card and outdated Employment Authorization Cards);

•    Adds foreign passports containing certain machine-readable immigrant visas to List A; and

•    Adds to List A valid passports for citizens of the Federated States of Micronesia (FSM) and the Republic of the Marshall Islands (RMI), along with Form I-94 or Form I-94A.

The revised Form I-9 is available at www.uscis.gov.  Paper copies of the Form I-9 can be ordered by calling 1-800-870-3676.  Employers are required to use the revised form for all new hires.

Family and Medical Leave Act
The Department of Labor has made changes to the Family and Medical Leave Act that will take effect on January 16, 2009:

Military Family Leave
•    Employees who are family members of covered service members may take up to 26 work weeks of leave in a single 12-month period to care for a covered service member with a serious illness or injury incurred in the line of duty while on active duty.
•    Families of National Guard and Reserve personnel on active duty may take 12 weeks of FMLA job-protected leave to manage their affairs based on “any qualifying exigency,” including short notice deployment, military events and related activities, childcare and school activities, financial and legal arrangements, counseling, rest and recuperation, post deployment activities, and additional activities where the employer and employee agree to the leave.

Employee Eligibility
•    Twelve months of employment need not be consecutive for purpose of determining whether an employee has been employed by an employer for at least 12 months.  An employer need not count a break-in-service of seven years or more, with two exceptions:

1.    An employee’s fulfillment of his/her military obligations; and

2.    A period of approved absences or unpaid leave, such as for education or child-rearing purposes, where a written agreement or collective bargaining agreement exists concerning the employer’s intent to rehire the employee.

•    Time spent fulfilling an employee’s military service obligations now count toward the employee’s 1,250 hour and 12-month requirements for compliance with the Uniformed Services Employment and Reemployment Rights Act.

•    An employee who is not eligible for FMLA protection at the beginning of his/her leave may begin FMLA once he/she has met the eligibility requirements.

Light Duty

•    Light duty does not count against an employee’s FMLA entitlement.  The employee’s right to restoration is suspended during the period of time the employee performs light duty or until the end of the applicable 12-month FMLA leave year.

Waiver of Rights

•    An employee may voluntarily settle or release FMLA claims without approval from a court or the DOL.

Serious Health Condition

•    An employee who is incapacitated for more than three consecutive full calendar days must show that he/she is receiving continuing treatment from a health care provider in order to satisfy the definition of “serious health condition.”  The employee must visit a health care provider two times within 30 days of the first day of incapacity unless extenuating circumstances exist.  The employee must also see a health care provider within seven days of the first day of incapacity and, for a chronic serious health condition, must visit a health care provider at least twice a year.

Perfect Attendance Award

•    An employer may deny “perfect attendance” awards to an employee who does not have a perfect attendance because of FMLA leave as long as the employer treats an employee taking a non-FMLA leave in the same manner.

Employer Notice Requirements
•    An employer is required to provide employees with a general notice about the FMLA, a notice of eligibility and of rights and responsibilities, and a designation notice.

Employee Notice

•    An employee must follow an employer’s normal and customary call-in procedures for FMLA notification, absent unusual circumstances.

Substitution of Paid Leave
•    An employee electing to use any type of paid leave concurrently with FMLA leave must follow the same terms and conditions of the employer’s policy that apply to other employees for the use of such leave.

Computing FMLA Leave During a Holiday Week

•    Whether an employee is charged FMLA leave for a holiday depends on whether the employee needs to take FMLA leave for a full or partial work week.  An employee taking a full week of FMLA leave during a week containing a holiday will have the holiday counted against his/her FMLA allotment.  An employee taking less than a full week of FMLA leave during a week containing a holiday will not have the holiday counted against his/her FMLA allotment unless the employee was otherwise scheduled and expected to work the holiday.

Medical Certification
•    The Health Insurance Portability and Accountability Act applies to communications between an employer and an employee’s health care provider.  The employer’s representative may contact the health care provider, but that representative must be a health care provider, a human resources professional, a leave administrator, or a management official and cannot be the employee’s direct supervisor.  Further, an employer may not ask the health care provider for information beyond what is required by the certification form.

•    An employer may request a medical certification for each leave year for medical conditions that last longer than one year.

The new regulations and the DOL’s commentary are available at http://www.dol.gov/esa/whd/fmla/finalrule.htm.

New W-4 Form (Employee’s Withholding Allowance Certificate)
The Internal Revenue Service has provided a new 2009 Federal W-4 Form.  An employer is required to use the new W-4 Form for all employees.  An employee who previously provided a W-4 Form claiming exemption from federal income tax withholding must file a new 2009 W-4 Form by February 16, 2009 in order to continue the exemption.  If the employee does not give an employer a new W-4 Form, an employer should withhold as if the employee is single, with zero withholding allowances.

In the recent U.S. Supreme Court case of Sprint/United Management Co. v. Mendelsohn, the Court left the door open for plaintiffs in employment cases to introduce damaging evidence that other employees were also harassed or discriminated against. In Sprint, 51 year-old employee Ellen Mendelsohn brought an age-discrimination suit against the company after she was laid off in an ongoing company-wide reduction in force. Mendelsohn wanted to introduce testimony of other former Sprint employees who claimed that their supervisors had discriminated against them too because of their age (“me too” evidence). None of these other witnesses worked in the same department with Mendelsohn, none of them ever worked under any of Mendelsohn’s supervisors and none of them had ever brought a lawsuit alleging age discrimination. Rather than ruling that “me too” evidence either is or is not admissible, the Court held that there is no bright line rule either permitting or excluding such evidence, but that such evidence must be assessed on a case-bycase basis. In other words, each court will be allowed to determine whether such evidence will or will not be allowed in a particular case and the parties will have little or no indication of which way the court will rule before the case actually goes to trial.

How “Me Too” Evidence Impacts Employers
What this means for employers is that “me too” evidence may be admissible against the company in a harassment or discrimination suit. Thus, a plaintiff in a discrimination case may attempt to assemble a large group of disgruntled employees to come to trial and testify that they were also discriminated against, making it much easier for the plaintiff to prove his/her own case by inference. And, since the admissibility of “me too” evidence will be determined on a case-by-case basis, it may be harder for employers to get cases dismissed at an early stage.

How Employers Can Protect Themselves
The prudent employer will try to avoid harassment/discrimination claims in the first place by establishing strong anti-harassment/discrimination policies, providing appropriate supervisor training on those policies and taking every report of harassment/discrimination seriously. In the event a disgruntled employee testifies that he/she was the subject of harassment or discrimination, the employer may be able to diffuse such testimony by demonstrating that the employee never complained while they were employed or that the company took immediate and effective action upon receiving a complaint.

With the declining economy, bankruptcy filings are on the rise. You need to be prepared in case one of your employees files a bankruptcy. There are two types of bankruptcy cases that are commonly filed by individuals. An employee may file a Chapter 7 bankruptcy and attempt to discharge (wipe out) his or her debts. If an employee’s income is too high or an employee has assets that need protection (or for a variety of other reasons), an employee may file a Chapter 13 bankruptcy and establish a repayment plan for his or her debts over 5 years. When an employee files bankruptcy (either Chapter 7 or Chapter 13), an automatic stay is created which prohibits creditors from pursing any actions against the employee to collect a debt or pursue a claim. Typically, unless your employee owes you money for some reason (possibly an advance on income), you will not receive notice of the bankruptcy from the bankruptcy court. However, your employee may choose to tell you that he or she has filed bankruptcy. You will likely be notified if there is an ongoing wage garnishment, because a wage garnishment or levy must stop as a result of the protection of the automatic stay. Once you receive notice of an employee’s bankruptcy, you should immediately stop withholding wages pursuant to a garnishment order until further notice.

Your employee may need to take some time off of work in order to meet with his or her bankruptcy attorney. In addition, after the filing of a bankruptcy, your employee will need to attend a hearing known as a 341 meeting of creditors. The employee will be examined by a bankruptcy trustee concerning his or her assets, liabilities, income and expenses. These hearings can be continued multiple times by the bankruptcy trustee. Your employee has no control over the date and time that these hearings are set. In addition, your employee has little ability to reschedule these hearings. When your employee needs to take time off work to attend these hearings, you should consult your policies concerning employee absences. For example, if you offer PTO (“paid time off”) or time off for personal days, your employee may use this time to attend the bankruptcy hearings. You cannot discriminate against or terminate an employee because he or she filed for bankruptcy. (You also are prohibited from discriminating against job applicants simply because they have filed for bankruptcy protection in the past.) If you have an employment contract with an employee who has filed for bankruptcy and you want to terminate the contract while the bankruptcy case is open, you should consult a bankruptcy attorney because you would need to obtain the court’s permission to get relief from the automatic stay before you terminate the contract.

Be mindful of your employee’s right to privacy. Although bankruptcy petitions are public documents, financial information concerning your employee (such as garnishments) should be kept private between you and the employee. Also, financial records, such as garnishment information, should be maintained separately from personnel records and only accessed on a need to know basis.

If you have a claim against an employee or former employee who files bankruptcy, you may be able to file a complaint to ensure that the debt isn’t discharged through the bankruptcy depending on the type of claim. For example, if you have a claim against an employee for misappropriation of trade secrets or embezzlement, those debts may be nondischargeable. However, you have to file a complaint within 60 days after the meeting of creditors. If you have this situation arise, consult a bankruptcy attorney immediately.

Several high-profile class action lawsuits have been settled recently, with employers agreeing to pay millions to employees for missed meal and rest breaks. In the lawsuits, employees claimed that their employers did not allow them to take meal and rest breaks or to take them in a timely fashion. Generally, these types of class action lawsuits seek compensation for all affected employees for a four year period preceding the date the lawsuit is filed. In order to avoid a similar fate, it is important that you understand and consistently apply the rules regarding meal and rest breaks.

Rest Periods
In California, non-exempt employees must be given a 10 minute rest period for every four hours of work. The rest period is to be taken in the middle of each four hour work period as far as is practical. A rest period need not be provided for employees whose total daily hours of work are less than 3.5 hours. The 10 minute rest periods are considered time worked and must be paid. The employee may not be required to perform any work during a rest period. The rest periods may not be waived. If the employer fails to provide the rest period, the employer must pay the employee one additional hour of pay at the employee’s regular rate for each work day that a rest period is not provided. Although an employee is not required to take his/her rest period, the employer must “authorize and permit” the rest period. Failing to take into the account the need for rest periods when scheduling and assigning tasks may be deemed a failure to permit the rest period.

Meal Periods
Non-exempt employees who work more than five hours per day must be provided with a meal period of not less than 30 minutes. The meal period must begin before the end of the fifth hour of work. If the employee works more than five hours per day, but less than six hours per day, the meal period can be waived by mutual consent. If the employee works more than 10 hours in a given day, a second meal period of not less than 30 minutes must be given. If the hours worked are more than 10 hours per day, but less than 12 hours, the second meal period can be waived by mutual consent only if the first meal period was not waived. If the employer fails to provide the meal period, the employer must pay the employee an additional hour of pay at the employee’s regular rate. However, in contrast to rest breaks, employers have an affirmative obligation to ensure that meal periods are taken as required and to keep proper records with respect to each employee. Accordingly, it is important that you require your employees to sign in and out for their meal breaks.

The meal period may be unpaid unless the employee is not relieved of all duties. An on-duty (paid) meal period may be permitted only when the nature of the work prevents the employee from being relieved of all duty and when there is a written agreement between the employer and the employee for an on-duty meal period. If the employer requires the employee to remain at the work site or facility during the meal period, the meal period must also be paid.

What You Can Do To Protect Yourself
Given the magnitude of the risk associated with claims for missed meal and rest periods, many employers are now proactively addressing this issue. There are several things you might want to consider doing to protect against claims for missed meal and rest periods. First, you should include provisions in your Employee Handbook regarding meal and rest periods, informing your employees in writing that such breaks must be taken. Second, you may want to include a stand alone acknowledgement form, similar to your at-will acknowledgement form, in which employees certify that they have read and understand the company’s meal and rest period policies and that they agree to abide by those policies and take all required meal and rest periods. Finally, you may wish to include a statement on your employees’ time sheets, which the employee signs, certifying that they have worked all hours indicated and that they have taken all required meal and rest breaks for each day worked. While none of these methods guarantees you will not face a missed meal or rest period claim, they will provide you with the best defense possible should such a claim arise.

As most of you know, California’s Fair Employment and Housing Act (“FEHA”) prohibits discrimination and harassment on the basis of sex, race, religion, color, national origin, ancestry, disability, medical condition, marital status, age, pregnancy, and sexual orientation. FEHA also prohibits retaliating against an employee for opposing or complaining about discrimination or harassment.

For the past decade, both the California Legislature and the California Courts have grappled with the issue of whether individual supervisors or co-workers can be held personally liable for discrimination, harassment or retaliation. Ten years ago, the California Supreme Court held that individuals may not be held personally liable for discrimination, and that liability for discrimination instead lies only with the employer. For example, assume that Company X is found to have terminated an employee because of her race. Company X can be held liable for discrimination. The supervisor who made the termination decision, however, cannot be held liable.

In contrast, FEHA specifically provides that individual supervisors and co-workers can be held liable for harassment. So assume that Supervisor Y, who works for Company X, is found to have sexually harassed an employee. In this case, Company X and Supervisor Y can both be held liable for harassment.

What about retaliation? For the past five to ten years, most courts that have considered the issue have held that individuals can be held liable for retaliation. On March 3, 2008, however, the California Supreme Court held that individuals cannot be held personally liable for at least some forms of retaliation. Here’s an example of what this means. Assume an employee of Company X complains to the HR Department that he believes he was passed over for a promotion because of his sexual orientation. The HR Department discusses the issue with the employee’s supervisor, who is angry to learn of the employee’s complaint. One month later, the supervisor fires the employee for performance issues. If the employee can prove that the performance issues were pretextual, and that he was actually fired because of his discrimination complaint, Company X may be liable for retaliation. The supervisor, however, may not be held personally liable.

What if the employee in the above example had instead complained to the HR Department that he was being harassed based on his sexual orientation? Would the result be different? Maybe. That’s because the California Supreme Court stated in a footnote that it was expressing no opinion on whether an individual who is personally liable for harassment would also be personally liable for retaliating against someone who reports that same harassment. Whether or not personal liability exists in this situation is thus a question that will have to be answered by another court or by the California Legislature.

Note that there are 7 Justices on the California Supreme Court, and 3 of them dissented. The dissenting Justices ended by opining that the California Legislature should clarify FEHA to specify precisely whether individuals can be liable for retaliation, and, if so, under what circumstances. It remains to be seen whether the Legislature will take that advice.

While this new decision is a boon to individual supervisors, it does nothing to change an employer’s liability for retaliation. Employers thus need to remain vigilant about promulgating and enforcing policies against discrimination, harassment, and retaliation.