Employment Litigation

Subscribe to Employment Litigation
22666974_S

 A disabled employee asks her employer for an accommodation. After engaging in the interactive process, it becomes clear that the accommodation requested is going to be challenging. At what point can the employer say “no” to an accommodation request because it creates an undue hardship?

If the accommodation is cost prohibitive, that can be enough to show undue hardship. But the question of undue hardship is not limited to financial burden. In other words, just because a company can monetarily afford to provide the accommodation requested, it is not necessarily required to do so.

Accommodations that are “unduly extensive, substantial, or disruptive” can create an undue hardship regardless of monetary cost. See US E.E.O.C. v. Placer ARC, 114 F. Supp. 3d 1048, 1058 (E.D. Cal. 2015). Maybe a requested accommodation would not financially break the company, but it would affect essential operational flexibility. That can be enough to show undue hardship. See Barth v. Gelb, 2 F.3d 1180 (D.C. Cir. 1993).

Of course, the law expects employers to accept certain costs, inefficiencies, and burdens to keep disabled employees working. Whether hardship is undue will depend on the employer’s size and resources.

Finally, remember that if no reasonable accommodation exists, and/or if the accommodation creates an undue hardship, the employer should consider reassigning the disabled employee to another vacant position. But that’s a blog post for another day.

Plaintiffs’ attorneys in California love making claims based on technical violations related to paystubs.  An employee will go see a lawyer complaining about wrongful termination or harassment or discrimination and the lawyer will say, “Let me see your paystub.”  Labor Code Section 226 lists at least 9 items that an employer must include on employees’ paystubs.  Even omitting one item (e.g., pay period dates on a “final” paycheck) can expose employers to extensive liability depending on the nature of the oversight, the number of affected employees, and how often the improper paystubs were issued.  Under the Private Attorneys General Act (“PAGA”) a single employee can bring a lawsuit on behalf of all affected employees, also known as “aggrieved employees,” regardless of whether those employees want to be included, and without having to go through the rigorous requirements of class certification.  [We told you about this in a 2009 California employment law newsletter,]

Up close of wage statementEmployees (or rather, the class action attorneys that bring these cases) do not have to prove that anybody was injured by the omission on the paystub because the code section provides an automatic penalty per paycheck in place of requiring employees to prove actual damages (which are typically non-existent).  Because employers have virtually no defense to these paystub cases, they are generally referred to as “gotcha” claims.

Recently a California Court of Appeal handed PAGA attorneys a “gotcha” of their own.  In Khan v. Dunn-Edwards Corporation, the appellate court upheld summary judgment dismissing Plaintiff Khan’s PAGA claims because he failed to comply with required administrative procedures.  Though Plaintiff’s regular paychecks appeared to be in order, his final paycheck failed to list the start date of the pay period.  On the basis of that single oversight on a single check, Khan and his attorneys filed their lawsuit seeking to recover penalties on behalf of a group of employees who may have received a similar final paycheck.  Khan’s notice and exhaustion letter to California’s Labor and Workforce Development Agency, however, was peppered with references to violations of his rights, and nowhere referenced any other employee other than himself.  The Court was not impressed.  It held that Khan’s use of the word “my” instead of “we,” or any other language indicating that he was seeking to claim penalties on behalf of anyone but himself, constituted a failure to give proper notice to the individuals involved, and a failure to comply with administrative requirements.  Thus, the Court upheld summary judgment in favor of the employer, and dismissed Khan’s PAGA claim.

If you are in the unfortunate position of having to defend yourself (or a client) against a PAGA action, make sure you take a very close look at the employee’s letter to the Labor Workforce and Development Agency to make sure the employee has followed every technical requirement of the law in giving notice to the employer and the Agency.  You might find a technical shortcoming in the letter on which to defend your client.  Or better yet, make sure that your employees’ paystubs contain the required information in advance.

Employees generally love Alternative Workweek Schedules. They prefer, for example, working four 10-hour days to working five eight-hour days. They work the same number of hours but they get an additional day off and less time commuting. The advantage to employers is that they can give employees the schedule they prefer without incurring additional overtime liability. But before California employers can implement an Alternative Workweek Schedule (or AWS), they need to jump through all sorts of hoops, including having secret ballot elections where two thirds of the affected employees approve the arrangement. All this is spelled out in Section 3 of the Wage Orders. Get it wrong and you risk employees coming back down the road and asking for years’ worth of unpaid overtime.

Once an employer in California adopts an AWS, different rules apply to (for example) sending employees home early, transferring them to different work units and locations, and changing their schedules. The following Q&A addresses many of these issues.

1.   What happens if an employee scheduled to work 12 hours as part of an AWS is asked to work a 12-hours shift on a different day?

Because they are not subject to an AWS that covers that day, all hours they work on that day would be considered overtime. The employee would get 1.5 times his regular rate of pay for the first 8 hours and double his regular rate of pay for the last 4 hours.

2.   What happens if an employee scheduled to work 10 hours as part of an AWS is sent home after 9 hours?

If you require the employee to work fewer hours in a day than they’re normally scheduled to work, you lose the advantage of the AWS. So in this case, you pay overtime (time and a half) after 8 hours on that day.

3.   What happens if an employee scheduled to work 10 hours as part of an AWS is sent home 10 or fewer minutes before their shift ends?

Pay them according to the AWS, but don’t make a habit of this.

4.   What happens if an employee scheduled to work 10 hours as part of an AWS is sent home between 10 and 30 minutes early?

Don’t do that. Keep them around until the shift ends. It’s cheaper to pay them to do nothing than to unnecessarily incur an hour and a half or more of overtime.

5.   What happens if an employee scheduled to work 10 hours asks to leave after 9 hours?

If the employee volunteers to work fewer hours than they’re scheduled as part of an AWS, there is no overtime liability. But have the employee put their request to leave early in writing (even e-mail) to avoid disputes later as to whether it was voluntary.

6.   What happens if an employee scheduled to work 10 hours as part of an AWS is required to work 12 hours on that day?

The additional 2 hours would be paid at time and a half. Any hours beyond 12 would be at double their normal hourly rate.

7.   What happens if an employee who is subject to an AWS is asked to work his normal shift, but at a different location that does not have an AWS?

This work would not be subject to the AWS and would be subject to normal overtime rules.

8.   What happens if an employee who is subject to an AWS volunteers to work his normal shift, but at a different location that does not have an AWS?

Same as paragraph 7.

9.   What happens if an employee who is not subject to an AWS is asked to work on a day she is normally scheduled, but at a different location that has an AWS?

This work would not be subject to the AWS and would be subject to normal overtime rules, unless (1) the employee is told that the different location has an AWS; and (2) the employee works at the different location for one or more full workweeks (as defined under the AWS). If both conditions are met, the employee’s overtime can be calculated the same as other employees who are subject to the AWS for each full workweek the employee works at that location. To avoid disputes later on, have the employee document that she was informed of the AWS.

For example, assume that (1) an employee is assigned from Monday, January 1st through Thursday, January 18th to a location with an AWS; (2) the employee is told in advance about the AWS; and (3) the location’s workweek under the AWS begins Monday at 12:01 a.m. The employee would be paid according to the AWS from Monday, January 1st through Sunday, January 14th and paid normal overtime (e.g. time and a half for 8-12 hours) for time worked between January 15th and 18th (since that is not a full workweek).

As another example, if the situation was the same as in the last paragraph, except the employee learned on January 2nd that the new location had an AWS, the employee would be paid according to the AWS from Monday, January 8th through Sunday, January 14th and paid normal overtime the rest of the time.

10. What happens if an employee who is not subject to an AWS volunteers to work on a day she is normally scheduled, but at a different location that has an AWS?

Same as paragraph 9.

11. What happens if an employee who is subject to an AWS works only at a location that is subject to a different AWS?

The employee would be treated the same as in paragraph 9. In other words, the employee would be paid according to the AWS at the location he was assigned to for each full workweek he worked there, as long as he knew about that AWS in advance.

12. What happens if an employee who is subject to an AWS works in the same workweek at his normal location and at a location that is also subject to an AWS?

The time the employee works at his normally assigned location would be paid according to the AWS at that location. The time he works at the second location would be treated as overtime (time and a half for the first eight hours in a workday, as long as the employee hasn’t yet exceeded 40 hours for the workweek and double time after eight hour in a workday or for all hours beyond 40 in a workweek). If the two locations have different workweeks, use the workweek at the location to which the employee is normally assigned.

13. If an employee is repeatedly asked to deviate from the approved AWS, can the employer lose the benefits of the AWS?

Yes, if the deviations are more than “occasional.”  As a general rule, an alternative workweek must be “regularly scheduled.”

Takeaway: How typical of California law! Employers offering a schedule that employees prefer have to negotiate a maze of complex requirements and face serious exposure for even an accidental misstep. California employers wishing to implement an Alternative Workweek Schedule should get guidance from qualified counsel in doing so. Those with one in place should ensure that their managers understand the consequences of deviating.

Illustration of a fox with sunglassesWe often blog about how different California employment laws are when compared to the rest of the US.  Whether it is the minimum wage, mandatory harassment prevention training requirements, or that funky law called PAGA, find out how to comply with laws in what we fondly refer to as the United Republic of California with this handy guide to Doing Business in California.

Many thanks to Sahara Pynes for her assistance in updating this informative guide.  Check it out on the Fox Rothschild website.

The California state flag

It’s time once again for the annual roundup of new California employment laws. Since we’ve discussed many of these laws when they were enacted, I’m including links to those earlier discussions.

  • Stop asking about salary history – AB 168 bars employers from asking job applicants about their previous salary. The legislation’s goal is to narrow the gender gap by preventing employers from basing offers on prior salary and thus, presumably, perpetuating historical discrimination. This will also remove the perceived gap in negotiating power between an employers and employees who must disclose their prior salary. Employers should ensure that their job applications don’t seek prohibited information and that those interviewing applicants know not to ask these questions.
  • More employers must offer parenting leave – SB 63, officially titled the Parental Leave Act, requires employers with between 20 and 49 employees to offer parenting leave that mirrors the Family Medical Leave Act. The new Act allows employees who work for a covered employer to take 12-weeks of unpaid, job-protected leave if they have worked a minimum of 1,250 hours in the 12-months prior to taking leave.  Employees can take leave only for the purpose of bonding with a newborn child, adopted child or foster child within a year of the birth or placement. Covered employers will also need to maintain health coverage under the same terms as an active employee. The Act also prohibits discrimination and retaliation against an employee for taking parental leave.The Parental Leave Act does not require employers to pay any portion of the leave but requires that employees be able to use accrued sick and vacation time. Employees can apply to have a portion of the parental leave paid for through the state’s Paid Family Leave program.  As we’ve previously explained, San Francisco requires some employers to pay a remaining portion of parental leave.
  • Expanded harassment training – California requires at least biannual harassment training for supervisors in companies with 50 or more employees. Having given a dozen sessions of the  training in the last month, I can assure you that there’s no shortage of material to talk about. But as of January 1, 2018, SB 396 requires that the training include information on gender identity, gender expression, and sexual orientation. If your handbook doesn’t specifically prohibit discrimination and harassment on those bases, you’re overdue for a revision.
  • Ban the box – Following the leads of San Francisco and Los Angeles, AB 1008 prohibits employers with five or more employees from:
    • Asking on employment applications about criminal convictions;
    • Asking applicants about criminal convictions before making a conditional offer of employment;
    • When conducting background checks on applicants, considering, distributing, or disseminating information about prior arrests not leading to conviction, participation in diversion programs, or convictions that have been sealed, dismissed, expunged, or otherwise nullified.

Employers who wish to rely on criminal conviction information to withdraw a conditional job offer must notify the applicant of their preliminary decision, give them a copy of the report (if any), explain the applicants right to respond, give them at least five business days to do so, and then wait five more business days to decide when an applicant contests the decision. There are exceptions for employers who operate health facilities hiring employees who will have regular access to patients or drugs.

  • Minimum wage increases – On January 1, 2018, the California state minimum wage goes up to $11.00 per hour for businesses with 26 or more employees and $10.50 per hour for smaller companies. The inimitable Sahara Pynes discusses which cities are raising their minimum wages here.

Takeaway: The burdens of employing people in California continue to increase. As a result, it becomes increasingly important for employers to be proactive in determining before they get sued where they’re vulnerable. In terms of time, expense, stress, disruption, and damage to a company’s reputation, an audit of HR practices is way cheaper than a lawsuit.

Takeaway 2: Happy 2018!

Governor Brown is in that final flurry of signing and rejecting bills sent to him at the end of the legislative session. Two of those bills that we have been following involved pay equity issues. The Governor approved one, and vetoed the other.

The Governor signed into law AB 168, which bars employers from asking job applicants about their previous salary. The stated goal of the legislation is to narrow the gender gap by preventing employers from basing offers on prior salary and thus, presumably, perpetuating historical discrimination. This will also remove the perceived gap in negotiating power between an employer and an employee who must disclose her (or his) prior salary.

The Governor used the veto pen on AB 1209 that would have required large employers (500 or more employees) to report “gender wage differentials” to the Secretary of State for publication. The legislation seemed to presume that a comparison of “mean wages” and “median wages” between men and women would result in a “differential.” This legislation would have been a powerful weapon in the hands of plaintiffs’ lawyers who are bringing cases under the California Fair Pay Act where employers bear the burden of proving that a “differential” is not the result of gender discrimination. The Governor expressed this very concern, explaining that ambiguities in the bill “could be exploited to encourage more litigation than pay equity.”

We will continue tracking and reporting on new legislation.

In 2009, a tragic accident occurred at a manufacturing plant in Orange County when a water heater exploded and killed two employees. The incident was duly investigated by Cal OSHA, and criminal charges were eventually brought against two individuals. Then the Orange County District Attorney decided to seek huge civil penalties against the employer under California’s Unfair Competition Law (“UCL”). The trial judge was prepared to allow the case to go forward, but the Court of Appeal issued a writ of mandate dismissing the case on the grounds that  federal OSHA law preempted, and did not allow an exception for, claims under the state UCL. The District Attorney appealed.

The California Supreme Court will now decide whether workplace safety issues can properly be characterized and challenged as “unfair competition”,  and, in any event, whether federal law preempts and prohibits state prosecutors’ attempts to extract monetary fines outside of the traditional OSHA enforcement mechanism. The case will be argued on November 7, 2017 in Sacramento. Fox Rothschild LLP is representing the employer.

 

The California Legislature has completed its work for this session, and three bills concerning employment issues survived the process and have been sent to Governor Brown for his consideration and possible signature. All three of these prospective laws have been labeled “job killers” by the California Chamber of Commerce which is lobbying heavily against the bills. Opposing the Chamber on these issues are the state’s unions and the organized plaintiffs’ bar.

AB 1209 would require employers to report wage payments by gender. Such reporting would fuel the fires of lawsuits under the state’s recent Fair Pay Act under which a “pay gap” is presumed to be a result of illegal discrimination.

SB 33 would outlaw arbitration clauses in certain consumer agreements. This legislation is another example of the hostility of the California courts and legislature to arbitration agreements, including in the employment context. This new bill seems contrary to binding U.S. Supreme Court precedent, and would likely not survive a judicial challenge.

SB 63 would extend employee parental leave protections to employers with 20 or more workers. Currently the law applies only to employers with 50 or more workers. This law would obviously be a burden on smaller employers.

We can expect many of the bills that did not pass the legislature this year – such as required predictive scheduling for retailers and restaurants (SB 878), and universal health care — to reappear in the next session. This ever-vigilant blog, of course, will keep you posted.

All of this news about hurricanes and the tragic images of people losing their homes (and everything in them), takes me back to advice my father gave me years ago, which was:  You need insurance for things you can’t afford to replace.

The same is true for businesses.  They need insurance for losses they can’t afford to sustain.  Yet, employers often don’t spend enough time thinking about insurance, until of course they need it, and are disappointed with the scope of protections provided.

I often see this with clients with regard to EPLI (Employment Practices Liability Insurance).  Some employers think they have it, but get sued by a former employee and find out they don’t have coverage.  But even those who have EPLI are not strategic enough about the scope of coverage they need.  Which brings me to my list of considerations:

  • Deductibles: How much of a deductible can you afford?  And what incentive does that provide in litigation? EPLI deductibles often range between $25,000 and $250,000.  A $25,000 deductible means that the business can afford a lot of litigation (if it wants to make a point of fighting to deter other claims).  A $150,000 or higher deductible may just cover larger losses, and motivate early settlements to save on the deductible.  A $75,000 deductible can be a reasonable middle ground (to either encourage settlements or litigate).  That said, I have had more than one mediator suggest that a client just pay the $75,000 deductible to settle because they will pay that much anyway if litigation proceeds.
  • Choice of Counsel: Many EPLI policies require certain law firms be used.  Others suggest that firms can be waived in.  Whether an off-panel firm to can waive in will depend on the insurance carrier.  Many times I have seen clients unable to get a desired firm approved.
  • Attorney Rates: Just about all carriers limit the rates that attorneys can charge.  But some also limit the rates that the client can pay.  Years ago it was typical for an employer to pay its law firm one rate, and then get partial reimbursement from the carrier for the approved (lower rate).  But now, many carriers prohibit that practice.
  • Is Wage/Hour Covered?: Typically wage-and-hour coverage is excluded unless a separate rider is purchased.  And that separate rider is very much like earthquake insurance in California with a relatively high cost, high deductible, and limited coverage.  Many wage-and-hour riders have a $100,000 or higher deductible (that only covers defense costs and not damages).  And often defense costs are capped at some amount after the deductible as well.  For example, a policy may only cover $100,000 in defense costs after a $100,000 deductible; so the only real coverage is on the second $100,000 in attorneys’ fees.
The time to think about these issues, and negotiate them (to the extent you can), is before you purchase or renew the policy, not after.  And while it isn’t fun to think about insurance, remember what my father said, it is important for those losses you simply can’t afford.

Guest post by Charlie Nelson Keever:

Brace yourself.  Plaintiffs can now use representative PAGA actions as the basis for a statewide “fishing expedition” to discover alleged employer misconduct.

"Hello, I am suing you" nametag
Copyright: iqoncept / 123RF Stock Photo

Now, I’m a baby lawyer (or, more aptly, an almost baby lawyer) – I’m a Summer Associate trying to figure out what this means so I can tell you all about it. And while my brilliant and talented supervising attorney (Hey, Nancy Yaffe!) assures me that I’ve understood this correctly, this does not smell right to me.

First of all, there’s this thing called PAGA (The Private Attorneys General Act), that allows one employee to initiate a civil action against an employer on behalf of other allegedly aggrieved employees for Labor Code violations. Employees like representative PAGA actions because they don’t need to meet the rigorous requirements of traditional class actions. So basically, one employee having a problem at work – say, they’re not getting appropriate meal breaks – can use this super convenient tool to sue their employer. Not only that, they get to act the hero and say they’re suing on behalf of other “aggrieved” employees, even if they don’t know if anyone else is having the same problem. These lawsuits bring up a lot of questions like “Who is an ‘aggrieved employee’?” and “How much discovery should be allowed?” Conflicts over these issues make PAGA lawsuits particularly burdensome and expensive for defendant-employers to manage.

Last week, the CA Supreme Court answered one of those questions. In Williams v. Superior Court, Plaintiff-employee Michael Williams filed a representative PAGA action against Defendant-retailer Marshalls alleging that the company failed to provide him and other employees with proper meal and rest breaks, and that it failed to provide timely wage payments and accurate wage statements. To bolster his claims, Williams served interrogatories requesting contact information from 16,500 current and former non-exempt Marshalls’ employees throughout California – not just at the location where he worked. Marshalls objected on the grounds of relevance, scope, burden, and employee privacy. They essentially argued that Williams had no reason to believe that his issues at work were company-wide. So the trial court limited production of contact information to employees at the store where Williams worked.  The Court of Appeal agreed.

But the California Supreme Court disagreed, and found that nothing more than a mere allegation of a state-wide policy issue is necessary to compel preliminary discovery. So essentially, if one disgruntled employee says they have a problem, they’re entitled to contact information for employees all over the state to figure out if anyone else is having the same problem. While the Court held that this wasn’t an invasion of employee privacy, I’m willing to bet that a lot of employees would disagree. The Court also opposed the lower courts’ conclusions that discovery seeking statewide contact information was unduly burdensome to the defendant employer.

So What Can Employers Do?

While this might sound like all bad news for employers, the Court did shed some light on how employers might protect themselves and their employees by limiting the scope of discovery if they are unlucky enough to get sued in a PAGA action.

  • First, the Court noted that there might be “special reason[s] to limit or postpone” a PAGA plaintiff’s access to contact information (though the Court didn’t specify what those reasons might be). It will be up to employers to set forth specific facts that demonstrate undue burden and/or particular privacy concerns.
  • Second, the Court suggested that an employer might seek a protective order that would condition discovery on, for example, a confidentiality requirement or prohibition against using the information for purposes outside the confines of a specific lawsuit.
  • Finally, the Court indicated that an employer attempting to subvert such broad discovery might file a motion to “establish the sequence and timing of discovery,” although the mere availability of this measure may do more harm than good, as it tends to undermine the argument that the discovery is unduly burdensome.

Here’s my takeaway: even with these potential interventions, the best protection for employers is compliance with the Labor Code, and fixing any issues as soon as the PAGA notice is served. Now would be a good time for employers to review previous posts related to the PAGA from our blog.

Charlie Nelson Keever is a summer associate, based in the firm’s Los Angeles office.