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:

Deductible:  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.

36174445 – great abstract illustration of various sporting athletes around a globe in silhouette.

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. 

Many people want to be liked. Problems arise, however, when a supervisor’s desire to be liked prevents them from pointing out deficiencies in an employee’s work. Pointing out deficiencies is a way for supervisors to help their workers understand what they need to do to succeed. It’s a way of giving employees a chance to make the adjustments necessary to meet the employer’s expectations. You don’t want to exaggerate faults or get overly personal, obviously. But supervisors are paid to help their workers perform at their highest level and they can’t do that without letting people know where they can improve.

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Unfortunately, candid, thoughtful performance evaluations aren’t as common as they should be. That is why, as I’ve explained before, employment defense lawyers often cringe when they see favorable performance reviews of an employee who was terminated for poor performance. For more advice on performance reviews, read this post on 8 Tips for Writing Performance Reviews Your Lawyer Won’t Hate.

Even coldhearted lawyers understand this desire to be liked. We mock it as a sign of weakness, but we understand it. So if you’re a supervisor and you want to be liked by your workers, get there by being someone who will give them straightforward, honest feedback about what they need to do better.

On September 27, 2017, at noon, I will be presenting a webinar entitled “2017 Update: Accommodating Employees With Disabilities.” The program is intended for human resource professionals and anyone else who fields requests for accommodation for their employer. I will explain what constitutes a disability, the extent of employers’ duties to engage employees in the interactive process to explore possible accommodations, and steps employers can take to meet their legal requirements and minimize their exposure to discrimination claims. The program will be an hour long with an additional 15-minute Q&A session.

Regular readers of this blog have heard me say many times that the disability discrimination laws require more than treating everyone equally. The obligation to reasonably accommodate means that some employees will get advantages that others don’t. Employers are expected to bear the expense and inefficiencies that this entails. Those that don’t understand the extent of that obligation expose themselves to costly litigation and government investigations. On September 27th I will provide concrete, real-world advice gleaned from decades of advising employers and defending disability discrimination claims. Don’t miss it!

 

The news is full of stories of employers taking action, or allegedly not taking sufficient action, for employee off duty conduct.  The issues are vast and varied, ranging from communicating views about coworkers’ intellectual capabilities, to using drugs with prostitutes in hotel rooms, to being “outed” for participating in a controversial and violent rally.

What is interesting from an employment law perspective, is whether and when a private sector employer can take action against an employee for off duty conduct.  My partner wrote a blog post on the issue that focused on federal law and related First Amendment protections.  But as is so often the case, California employers need to also comply with state laws that provide an extra layer of protection to employees.

In fact, California limits how much a private sector employer can do to regulate lawful off duty conduct occurring during nonworking hours off premises, including exercising free speech rights and engaging in political activity.  Other states, including New York and Colorado, do so as well.

When faced with facts about an employee’s off duty conduct, I typically recommend a four step analysis.

  1. First, was the alleged conduct unlawful?  Sometimes the answer is clear, such as shooting up illegal drugs.  But for the worker attending a rally, that analysis is a bit more complicated and likely fact dependent.
  2. Second, was the alleged conduct a violation of any company policy?  An employer can always enforce its various policies, including harassment prevention, conflict-of-interest, equal employment opportunity, prohibitions on illegal drug use, etc.
  3. Third, is the policy being enforced consistently?  Inconsistent application of a legitimate policy can be considered discriminatory.
  4. And finally, does the company have a bigger picture goal to take a particular stand?  Often it makes strategic sense for public relations, customer relations, and sometimes even employee relations purposes for a company to take a particular position on an employee’s off duty conduct, even if it results in some legal risk.  Such calculated risks are part of everyday business decisions.

So, if an employee attends a political rally that is offensive to the employer’s views, a termination for that alone (without an associated policy violation) would be problematic.  Or if an employee communicates with coworkers about a belief about one sex’s genetic lack of ability to be effective at work, and that employee has no supervisory authority, then a termination could run afoul of applicable law (not to mention get the attention of the NLRB as protected concerted activity).  Or if an executive takes drugs in a hotel room all night long, but comes to work and performs fine, then addressing that conduct could be problematic.  The particular facts of each situation matter.

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The reality is that the steps a private sector employer can (and should) take are actually more nuanced than what the normal knee-jerk reaction would suggest.  And one could certainly argue that is the way it should be.  Should an employer really police what its employees do after hours?  Does it matter if it doesn’t impact their job?  Where is the line where such conduct does impact the job (or the employer’s brand)?  The answer may be clear when the conduct is blatantly illegal or an unambiguous policy violation, but short of that, the line can be very blurry indeed.

So many times an employer gets in trouble for following logic instead of the law.  Quite often what is logical just isn’t legal, and that can be tricky for many managers and HR professionals.  It trips them up.  That’s why one of my favorite topics to speak about is Employment Law Bloopers and Lessons Learned.

If you are interested in this topic, and like to learn employment law from stories (instead of detailed powerpoints with dense legal citations), then you have two chances to come hear me speak.  First, on August 28th at the California HR Conference in Long Beach, and second on August 29th at the FIRMA (Foodservice Industry Risk Management Association) Conference in Fullerton.

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One of the bloopers I will be talking about is “Ignoring Warning Signs from Top Performers.”  Those who read my blog posts know this is an issue close to my heart.  And it is all over the news regardless of industry, from tech, to media, to entertainment, to universities and more.  Other bloopers involve skipping steps when dealing with the interactive process and reasonable accommodation, retaliation, and the mistakes people make with emails and social media (like those texts we see in litigation from managers to employees sent in the wee hours of the morning on issues unrelated to work … you get the idea).

Come be entertained on August 28th or 29th and learn a few things too!

Koko the Gorilla, who turned 36 last month, has quite a following. Much of that has to do with the fact that she purportedly has a vocabulary of over 1000 words that she communicates through sign language. If this were a blog about linguistics, primate behavior, or how the Planet of the Apes movies are a cautionary tale about future inter-species conflict, we’d delve into that further. But it’s not. So let’s talk about another thing Koko is famous for.

Koko is the only western lowland gorilla to be accused of sexual harassment. In 2005, two women working for the Gorilla Foundation in Woodside, CA (southwest of Redwood City) sued claiming that the president of the Foundation pressured them to expose their breasts to Koko. According to the lawsuit, which settled for undisclosed terms:

“On at least two incidents in mid-to-late June 2004, Patterson intensely pressured Keller to expose herself to Koko while they were working outside where other employees could potentially view Keller’s naked body. … On one such occasion, Patterson said, ‘Koko, you see my nipples all the time. You are probably bored with my nipples. You need to see new nipples. I will turn my back so Kendra can show you her nipples.'”

Both women further allege that they declined to “indulge Koko’s nipple fetish.” If this were a blog about gorilla’s sexual predilections, we’d delve into that deeper. But it most assuredly, is not. It’s about California Employment Law. We make that pretty clear at the top of the page. So what does any of this have to do with California employment law?

For employers, preventing harassment requires more than just controlling their employees. Companies can also be liable for harassment of their employees by third parties if the company fails to take prompt and effective measures to address the harassment. Employers can’t necessarily control the behavior of customers, clients, vendors, contractors, and everyone else their employees interact with in their work. But if you’re an employer, you should take these steps:

  1. California regulations require that a company’s sexual harassment policy prohibit harassment by co-workers, supervisors, managers, and third parties with whom the employee comes into contact. So ensure that your harassment policy contains that language.
  2. Ensure that your harassment policy directs employees whom to complain to if they are subjected to harassing behavior by third parties.
  3. Train your supervisors to notify human resources immediately if these issues come to their attention.
  4. If issues of third-party harassment arise, make sure that the company conducts a prompt and thorough investigation.
  5. If the facts developed in the investigation warrant, take prompt remedial action that is reasonable to prevent the situation from recurring.
12506543 – western lowland gorilla portrait (gorilla gorilla gorilla) captive. national zoo. washington dc, usa.

This last step can be complicated. You can’t necessarily counsel or discipline third parties the way you can with employees. In extreme cases, companies have even had to fire clients who refuse to treat the companies’ workers appropriately. Fortunately, that’s just in extreme cases — where the clients insist on behaving like gorillas.

 

 

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.

Every year, the ABA Journal invites nominations for its Blawg 100 list, a compilation of staff and reader “favorites” within the legal blogosphere. The rigorous selection process for the 2017 list has begun, with the magazine calling for recommendations from “Blawg Amici” – regular readers who wish to support and spread the word about their favorite legal blogs.

Here’s a sampling of posts from the past year:

If you have enjoyed and valued our updates during the past year and believe the California Employment Law blog deserves a spot in the top 100, we invite you to take a few moments to nominate us. We’re happy to say that our audience numbers have increased significantly over the past year, to around 20,000 visitors/month, and we’re hoping that each visitor has left with new and valuable information on the California employment landscape. The online nomination process is very quick – it shouldn’t take more than a minute or so.

Blawg Amici nominations will be accepted until 11:59 p.m. CT on July 30, 2017. Thank you in advance for your support!

Guest blog post by Mikella Wickham:

They say location is everything in business.  How about classification of workers?

In certain industries, workers have a unique combination of specified skills and

Fit people working out
Copyright: wavebreakmediamicro / 123RF Stock Photo.

relative freedom to do their job.  As a result, small businesses are stuck between a rock and a hard place when deciding whether their workers are employees or independent contractors.  Of the many small businesses that want to pay their workers fairly and legally, it is becoming harder to do so without going out of business altogether.

Take fitness companies, for example.

Fitness instructors are not the average employees.  They may have input on their schedules (because they only want to work mornings or weekends).  They may work at several different studios, or work more than one job.  Often they teach in their own style, and even impact how many customers attend the classes.  Very often customers are loyal to a studio based on their rapport with a particular instructor.  Does the fitness company pay that person as an employee or as an independent contractor?

Let’s say the employer pays the instructor as an employee, on an hourly basis.  That worker becomes much more expensive for the business because she is covered by workers’ compensation insurance, gets paid sick leave, is paid at least the minimum wage (which keeps going up), and gets overtime, meal breaks and paid rest breaks.  Given all of that, how does the employer incentivize the instructor to bring more customers in the door to offset the additional costs incurred?

Alternatively, if a company pays a fitness instructor as an independent contractor (as many do), but still controls aspects of what the instructor does (such as what she wears, the music she plays, or the moves she teaches), it risks a misclassification claim.  Defending such lawsuits can mean death to a small business.

With no law designating a “dependent contractor” middle ground category, businesses are left to choose from a pick-your-poison set of options.

Standing next to larger brand name fitness companies, smaller fitness companies who can afford to pay employees well, or eat losses at smaller studios for the larger corporate good, can find themselves disadvantaged in a David and Goliath battle to simply have a place in the market.

As we have suggested, perhaps the law will carve out an exception for businesses in this category.  The future will tell.  In the meantime, small businesses have a tough decision to make: pay up now, or, perhaps, pay more later.


Mikella P. Wickham is a summer associate, based in the firm’s Los Angeles office.

A year ago, I wrote about a report from an EEOC Task Force on risk factors for workplace harassment. Well the Select Task Force on the Study of Harassment in the Workplace continues studying away and has issued some new materials. They consist of:

Takeaway No. 1: It’s a point I’ve been making for years and will keep making. If your company gets sued for harassment, the case will be less about what the harasser did than about what the company did to prevent and respond to the situation. As the law gets more exacting on what it expects from employers, it’s critical to have qualified legal counsel guide you through this process.

Takeaway No. 2: There is such a thing as researchers who evaluate organizations’ holistic workplace harassment prevention efforts!