Wages, salaries, and benefits make up a large proportion of costs for most businesses. One way to control these costs is to control how much overtime employees work. In California, nonexempt (i.e. hourly) employees are entitled to one and half times their regular rate of pay when they work more than eight hours in a workday or 40 hours in a workweek. They’re also entitled to time and a half for the first eight hours on the seventh day of work in a workweek. Any work in excess of 12 hours in one workday, or eight hours on the seventh workday in a workweek must be paid at twice the employee’s regular rate of pay.

Some businesses address excessive overtime by telling their workers that they need management approval to work overtime. If they work overtime without approval, however, you still need to pay them for that work. You can counsel them, or even take corrective action for their failure to follow instructions. But you still need to pay them. Employees who aren’t paid for all of their time can claim overtime violations, minimum wage violations (for time they weren’t compensated for), waiting time penalties (up to 30 days pay if they weren’t paid everything they were owed at termination), PAGA penalties, attorneys’ fees, and more. California has no shortage of exorbitant penalties for seemingly minor violations.

Copyright: ximagination / 123RF Stock Photo
Copyright: ximagination / 123RF Stock Photo

Similar problems arise if employees who are forbidden to work overtime feel pressured to work “off the clock.” Take the example of a new nurse who needs to finish charting on his patients before he leaves for the day, but who’s also prohibited from working overtime. If he clocks out to finish his work and the employer knows about it, or reasonably should know about it, the employer needs to pay him for that time. Again, it can counsel him or take corrective action for not following the rules, but it can’t withhold his pay.

Managers working to reduce overtime need to make clear to their workers that they may not work off the clock. And if the managers learn of employees doing so, they need to ensure that they are paid for that time. Controlling overtime is an effective way of controlling costs, but only if you do it right. Do it wrong and you risk losing any possible savings and then some defending wage and hour claims.

Have you ever seen one of those workplace training videos and thought “I could do that?”  Well I did that!

I am excited to be featured in a training video to assist workplace supervisors in recognizing and responding to common legal issues that arise in the day-to-day management of workers.  The video was developed and produced by Kantola Productions and is titled “Employment Laws: What Supervisors Need To Know.”

The video focuses on the decision-making process and provides helpful strategies for ensuring compliance with national workplace laws and regulations, covering topics such as:

  • Accommodation requests
  • Safety concerns
  • Social media and related privacy expectations
  • Wage and hour compliance challenges

The DVD retails for $289 and is available to Fox Rothschild clients and their contacts at a 20% discount.  Please enter Fox20 in the “catalog code” box when filling out the online purchase form.

Take a look at a clip from the video below.  Enjoy!

Preview:

Copyright: Poofy / 123RF Stock Photo
Copyright: Poofy / 123RF Stock Photo

The California Supreme Court has once again deviated from what many view as clear precedent of the U.S. Supreme Court concerning the enforcement of arbitration agreements. Last week, the California court decided McGill v. Citibank, N.A., holding that state “public policy” precludes the enforcement of arbitration agreements where a class sues for “public injunctive relief” under Business and Professions Code § 17200, California’s much abused “unfair competition” statute. This decision comes on the heels of Iskanian v. CLS, in which the California court held that a class waiver in an arbitration agreement was unenforceable to prevent a representative action under the Private Attorneys General Act, again citing “public policy.” The McGill and Iskanian decisions are at odds with recent SCOTUS opinions such as ATT Mobility v. Concepcion, and American Express Co. v. Italian Colors. In the Italian Colors case, the high court specifically rejected state “public policy” as any kind of exception to the sweeping preemption of the Federal Arbitration Act (“FAA”).

California has been in a running dog fight with the FAA since 1987. In that year, SCOTUS decided Perry v. Thomas, in which Justice Thurgood Marshal upheld the FAA under the Commerce and Supremacy clauses, and slapped down California’s attempt to undermine arbitration agreements. Thirty years later, California courts remain determined to block arbitration under PAGA and Section 17200 in the face of otherwise enforceable arbitration agreements.

Also, with today’s swearing in of Neil Gorsuch, SCOTUS returned to its full complement of nine justices. Look for the high court to grant review of California and Ninth Circuit cases that follow McGill and Iskanian in the next couple of years with an eye toward overturning those decisions. In the meantime, companies should continue to include waivers of class and representative actions in their arbitration agreements with consumers and employees, noting that the waivers are enforceable to the extent permitted by applicable law.

I just returned from the Cornell HR in Hospitality Conference in Las Vegas with my partner Carolyn Richmond.  I participated in the Executive Summit and shared ideas with some of the most innovative minds in the hospitality industry.  Here is my annual top ten list of take-aways:

1.               While no one knows what will happen under the Trump Administration, some common assumptions include:  Less active Department of Labor and NLRB (especially as to non-union work forces ); EEOC likely to apply current law to egregious situations, but not expand it
2.               That said, states like California will pick up the slack, so California employers should not expect any decrease in claims or lawsuits
3.               One of labor’s biggest concerns about the Trump Administration is the shift in courts; there are 117 vacant federal court vacancies, which means a lot of conservative judges could be appointed and rule in a more business-friendly way
4.               A less powerful NLRB may mean more corporate campaigns, and with that may come more RICO lawsuits to challenge them
5.               How hotels treat their Sales Managers (whether exempt or non-exempt) is still all over the map, although the trend is certainly towards classifying lower level sales and catering managers as non-exempt
6.               Employees are focused on more than just compensation and benefits; renewed focus on culture, recognition and development
7.               Benchmarking is only part of the equation, because if you pay the median, you can’t differentiate from others and get the best candidates
8.               Acknowledging that many millennials move on after a few years, many recruiting efforts now focus on alumni re-recruiting, which changes the off-boarding process and the attitudes towards employees who leave
9.               Automation is a hot topic in hospitality, but companies need to balance guest experience with efficiency; Human Resources should embrace technology to free up time to focus on people, not mundane tasks
10.            Anticipate trend to de-regulate tip pooling so that more employees can participate without such archaic restrictions on back of the house and time spent touching tables

I am heading to Las Vegas for the annual Cornell HR in Hospitality Conference, from March 27-29th.  I am particularly excited for the session on Hospitality Included – One Year In, featuring my partner, Carolyn Richmond, who Co-Chairs our Hospitality Practice Group and practices in New York. Carolyn is also presenting on two wage-and-hour issues: The “Unconference”: FLSA Legal Think Tank and The New Wage and Hour Regulations.

Cornell HR in Hospitality Conference

I will be participating in the 8th Annual Cornell University Executive Summit on Wednesday, where I get to debate the most topical HR issues facing hospitality today with other employment law attorneys and top executives. Stay tuned for my annual top ten lessons learned from the Conference.

I hope to see you there!

 

Yes, I am still obsessed about all things Uber these days.  That said, I have been ruminating over one development last week that just didn’t sit right with me.

On the one hand, I know firsthand how that bro-centric culture can be devastating.  Just a few years ago I knew a young woman working in tech.  She had just spent two years in a management training program and earned a coveted placement in her first choice department working for a very well-regarded young manager.  One late night at work he confessed that he was totally attracted to her, and very distracted by it.  He then began to text her very personal messages.  She was horrified.  Didn’t know what to do.  Wondered if she had done something wrong.  I advised her to talk to HR and to document that discussion to protect herself from retaliation.  HR was empathetic and asked her what she wanted to do.  She wanted to stay in the role (moving just after she just got the job would have been impossible to explain).  But the creepy unwanted attention had to stop.  Presumably the manager was counseled, and she stayed.  But then he essentially froze her out.  Only talked to the men on the team.  She felt like an outcast, and shortly thereafter, quit for a better job.

Let’s also be clear, if even 10% of what the former employees at Uber are saying is true, then Uber has quite a problem.  The more recent account was particularly upsetting.

All of that said, being a lawyer trains you to see both sides to every story.  I have often seen employees take one situation that has a kernel of truth, and spin it wildly into a much more elaborate story than it actually was.  I have seen careers (typically of men) ruined by allegations.

That brings me back to Uber.  News reports last week stated that a senior executive was asked by the CEO to resign when it was uncovered that he had left his former employer amid harassment allegations.  He apparently had not told Uber when hired, and now, given the investigation and the press, it was better for Uber that he resign.  What’s wrong with this picture?

Employee termination
Copyright: ljupco / 123RF Stock Photo

For me (and not knowing anything other than the news reports), it just didn’t sit right.  An allegation is just that.  Just like being arrested does not mean the person committed a crime.  Nothing has been proven.  And there was no report of anything this executive did wrong at Uber, just what he may have done wrong at a prior employer.  Nor was there any report of any misrepresentations he made to get hired.  Remember, an applicant is not required to disclose allegations against him to future employers.

So here’s a tip for you:  Ask your applicants if they were ever terminated or asked to resign in lieu of termination.  Or better yet, put that question on your employment application.  Any later discovered misrepresentation to that direct question would certainly be a problem.  But if that question wasn’t asked, is it right for someone to be forced out?

Scapegoating is a quick answer to a much deeper problem.  I don’t want us to assume all men in tech are bad eggs or label them all as harassers.  Let’s have some due process for all people accused of policy violations.  As I explained here, due process starts with an unbiased investigation.  And then, if after a fair investigation, someone is found to have used poor judgment or violated a policy, then that person should be let go.  A witch hunt is not the answer.

Copyright: maxxyustas / 123RF Stock Photo
Copyright: maxxyustas / 123RF Stock Photo

It starts with an e-mail from upper management asking for employee data or payroll records. Wanting to demonstrate that he’s diligent and responsive, a well-meaning HR or payroll person promptly sends off the requested information. Unfortunately, despite appearances, the e-mail is not from upper management. It’s from a crook trying to run a “phishing” or “spear phishing” scam. So the employee eager to show himself as diligent and responsive ends up looking gullible and a liability to the organization. That’s probably not the impression he was trying to make.

My partner (and our firm’s Chief Privacy Officer) Mark McCreary and our colleague Kevin P. Dermody have written this very informative Alert on the topic. It explains the problem in more detail, gives examples of scams, and discusses what employers can do to protect themselves. If you want to follow the topic more closely, you can also subscribe to our Privacy Compliance & Data Security blog.

Hundreds of employers of all sizes have been victimized by these scams. Don’t let your company be next.

Investigating a harassment complaint is not rocket science, yet as the recent news from Uber illustrates, there are many ways for employers to mess it up.

Investigation and technology
Copyright: imagecatalogue / 123RF Stock Photo

The first step is to gather sufficient details to understand the scope of the issue.  Former Uber employee Susan Fowler’s viral blog post certainly did that, and the CEO, Travis Kalanick, apparently got an earful at his all-hands meeting last week.

Once the gravity of the issue is known, the next step is to devise an investigation plan, and figure out who should conduct the investigation.  Sometimes it makes sense to use the company’s internal HR department.  Yet, when higher levels of management are involved, or there is an alleged systemic problem, the HR department is not the best choice.  In fact, they may be part of the problem.

Sometimes it makes sense to go to a trusted outside advisor or law firm, especially when that advisor knows the company, its culture, and the management team.  There is less ramp up time to understand the players at issue, as well as the company’s dynamics and policies.  This seems to have been Uber’s approach in appointing Eric Holder and his law firm to investigate last week, along with oversight by board member, Ariana Huffington, and the new internal Head of HR.

But alas, that is a problem too.  The investigator must be perceived as unbiased and independent.  The investigator must be someone employees trust and are not afraid to talk to.  Retaliation is a real concern for employees.  If the investigator or his firm is seen as too close to management, then employees may not speak fully and honestly, thereby undermining the investigative process.  This very issue seems to be what two of Uber’s investors were concerned about when they wrote that they were “disappointed” that Uber “chose a group of insiders to conduct the probe.”  While some oversight by a designated board member, and the current head of HR often makes sense, in this case, it is viewed by some (including the two investors) as “an example of Uber’s continued unwillingness to be open, transparent, and direct.”

In fairness to Holder and his law firm, they may very well be independent.  But appearances matter, and for the past week, the optics for Uber are not looking good, and the persistent fallout has not abated.

The lesson here is when a complaint comes in, it is critical to assess the issue and carefully plan the investigation.  Decisions about who should conduct it, and who the investigator will report to and work with at the company during the investigation as it evolves and expands, are just as important as taking prompt action.  A mistake at this early juncture can taint the whole process.

Hopefully for Uber, that will not be the case.  As the investors’ letter states, this “will be defining for the company, so the stakes are high to get it right.”  Time will tell.  To be continued …

I remember back in 2004 when AB 1825 passed, requiring all California businesses with over 50 employees to train all managers and supervisors on harassment prevention.  It was one of the first significant employment laws signed by Arnold Schwarzenegger when he became California governor (and yes, that is ironic given the allegations against him).

Uncomfortable employee
Copyright: bbtreesubmission / 123RF Stock Photo

For the past 13 years, I have been conducting harassment prevention training for clients.  I have probably done that training 150 times.  And each year when I update my materials, there are always plenty of new and juicy stories from my cases, and the news, to refer to.

I always start each training by asking – why are we doing this?  Is it still needed?  Well, apparently, it is.  Especially in the tech industry.  Have you been following the stories last week about Uber?  Can it be that such stuff still happens in work places in California?

For those of you who haven’t been following, here are the highlights.

  • The issues started on February 19th when Susan Fowler wrote a very compelling blog post detailing her experiences as a female engineer at Uber.
  • Her account is very troubling from an HR standpoint, including overt sexual overtures from management, and reports to HR that were incredibly mishandled.
  • Fowler contends that Human Resources essentially sided with management, protected the serial harasser, and lied to her and others about it; in legal terms that is called ratifying bad behavior.
  • By February 21st, Uber had retained former US Attorney Eric Holder to lead an independent review into Fowler’s claims.
  • Board member Arianna Huffington and the company’s Head of HR were also tapped to assist.
  • Then on February 22nd, the New York Times wrote an article titled “Inside Uber’s Aggressive, Unrestrained Workplace Culture.”  Indeed, that article brought to my mind images of the excesses portrayed by Leonard DiCaprio in The Wolf of Wall Street before the stock crash.
  • Then on February 23rd, Uber’s CEO met with over 100 of the company’s female engineers (the “Lady Eng Group“), who told him that the company has a “systemic problem” with sexism.

Wow.  How can this be?  13 years after AB 1825?  Haven’t businesses learned that harassment costs money?  Public embarrassment?  How much money does a company have to lose to take such claims seriously?  How many good (and typically female) employees need to exit?

After defending such claims for employers for over 20 years now, I know that not all harassment allegations are true, and that there are two sides to every story.  I also know that sometimes well-meaning Human Resources professionals are thwarted by management.  But I also know that company culture starts at the top, and if management doesn’t live the stated company values, the employees don’t either.  And if management endorses an aggressive bro-centric abusive environment, then its employees will too.

Or as one of my favorite hospitality clients likes to say “fish rots from the head.”

Fingers crossed for Uber that they get it right, and fix whatever issues are festering and detracting from their mission.  Or in the reported words of Ariana Huffington, stop hiring “brilliant jerks.”

A December 2016 publication from the EEOC titled “Depression, PTSD, & Other Mental Health Conditions in the Workplace: Your Legal Rights” doesn’t exactly break new ground. It does, however, highlight issues that arise repeatedly in disability discrimination cases and, therefore, bear repeating. Here are the key takeaways:

  1. The definition of what constitutes a disability is broader than many realize. The guidance tells employees: “You can get a reasonable accommodation for any mental health condition that would, if left untreated, ‘substantially limit’ your ability to concentrate, interact with others, communicate, eat, sleep, care for yourself, regulate your thoughts or emotions, or do any other ‘major life activity.'” That’s the EEOC’s standard. California’s is even broader.

    Copyright: arquiplay77 / 123RF Stock Photo
    Copyright: arquiplay77 / 123RF Stock Photo
  2. As the guidance warns, employers deciding whether someone can perform the essential functions of a position or whether they pose a significant risk to others may not rely on “myths or stereotypes.” Instead, employers must base those decisions on objective evidence.
  3. Employers trying to gather objective evidence face conflicting obligations. On one hand, they need to understand the employee’s limitations so that they can make an informed decision on offering an accommodation. On the other, they are limited in terms of what they can ask by the employee’s privacy rights. The guidance cautions employees that they may need to disclose information concerning a mental condition when seeking a reasonable accommodation. A publication issued contemporaneously, “The Mental Health Provider’s Role in a Client’s Request for a Reasonable Accommodation at Work,” informs healthcare providers that they also may need to make certain disclosures, provided that they have their patients’ written authorization. In light of these conflicting obligations, employers should focus on the employee’s specific limitations, rather than their underlying cause or diagnosis. Employers also need to ensure that any medical information they do receive is kept confidential.
  4. The way to gather objective evidence on an employee’s limitations and possible accommodations is through the interactive process. Employers need to engage their workers in a frank discussion of the essential functions of the position, whether the employee can perform those essential functions, and what accommodations may be available. I discuss what the interactive process requires in more detail here.
  5. Flexibility is key. The employer must be open to different accommodations that may enable the employee to perform the essential functions of the job. (Here’s a list of possible accommodations.) If a particular accommodation turns out to be ineffective, the employer must consider alternatives. If no accommodation will enable the employee to perform the essential functions of the position, the employer must consider moving the employee to other available positions or placing the employee on an unpaid leave. Considering the employee for other open positions requires more than telling them to apply for whatever interests them. In California, it requires giving the employee “preferential consideration.”
  6. Employers only need to offer a leave of absence if it will help the employee get to a point where he or she can return to work in some capacity. Also, employers don’t have to grant indefinite leaves.
  7. An employer doesn’t have to hire or keep people in jobs they can’t perform.” That encouraging statement comes straight from the EEOC’s guidance. It also cautions employees that “an employer does not have to excuse poor job performance, even if it was caused by a medical condition or the side effects of medication.”

This remains one of the more complicated areas of employment law. Employers that don’t understand the extent of their obligations expose themselves to costly litigation and government investigations.