California
In addition to the bills discussed in last month's newsletter, the California legislature is also considering the following recently-introduced employment bills:
Paid Sick Leave Bill Reintroduced (AB 400)
This bill would provide that an employee who works seven or more days in a calendar year in California is entitled to paid sick days, to accrue at the rate of no less than one hour for every 30 hours worked. Employees would be entitled to use this paid sick leave beginning on the 90th calendar day of employment. Employers would be prohibited from discriminating or retaliating against employees who request paid sick leave, and would also be required to satisfy certain new posting and recordkeeping requirements, including identifying paid sick leave accruals in itemized wage statements.
Similar versions of this bill have passed the legislature multiple times but were vetoed by then-Governor Schwarzenegger.
Bill Prohibiting CFRA-Related Interference Introduced (AB 592)
California's Family Rights Act (CFRA) and Pregnancy Disability Leave (PDL) prohibit employers from refusing to grant leave to an eligible employee for certain statutorily enumerated reasons (e.g., to care for a family member with a serious health condition under CFRA, to take leave on account of pregnancy under PDL, etc.). This bill would amend CFRA and the PDL to make it an unlawful employment practice for an employer to interfere with, or restrain the exercise or attempted exercise of any right provided to an employee under these provisions.
This bill would essentially codify in CFRA and the PDL the Family Medical Leave Act's (FMLA) prohibition on employer "interference" with FMLA leave rights [See e.g., 29 U.S.C. § 2615(a)(1) ("it is unlawful for any employer to interfere with, restrain, or deny the exercise of or the attempt to exercise" substantive rights guaranteed by the FMLA.)
Paid Family Leave Expansion Proposed (AB 804)
Currently, the family temporary disability insurance program provides up to six weeks of wage replacement benefits to workers who take time off to care for a seriously ill child, spouse, parent, or domestic partner, or to bond with a minor child within one year of birth or adoption. This bill would expand the scope of the family temporary disability program to include time off to care for a seriously ill grandparent, grandchild, sibling, or parent-in-law, as defined.
Gender Identity and Expression Protections Proposed for FEHA (AB 887)
The Fair Employment and Housing Act (FEHA) presently prohibits discrimination or harassment against individuals because of "sex," which is defined to include gender, and though its incorporation of Penal Code section 422.56, gender identity and behavior. This bill would amend FEHA to specifically identify "gender, gender identify and gender expression" as characteristics protected under FEHA. It would also require employers to allow an employee to appear or dress consistently with the employee's gender expression (along with gender identity presently required). "Gender expression" would be defined as "a person's gender-related appearance and behavior whether or not stereotypically associated with the person's assigned sex at birth."
Talent Agency Discrimination Protections Amended (AB 1364)
Labor Code section 1700.47 presently prohibits talent agencies from discriminating against an artist because of the artist's race, color, creed, sex, national origin or handicap. This bill would expand the list of criteria based upon which a talent agency may not discriminate to be fully consistent with those identified in the Fair Employment and Housing Act (e.g., adding ancestry, marital status, age, sexual orientation and changing "handicap" to mean physical disability, mental disability and medical condition).
Bill Would Require Commission Contracts to be in Writing (AB 1396)
This bill would amend Labor Code section 2751 and require that by January 1, 2013, all employers entering into employment contracts for services to be performed in California and contemplating payment in commissions to put the contract in writing and identify the method by which commissions will be computed and paid. Employers failing to comply with these requirements would be liable to employees for triple damages. This amendment is intended to address a judicial decision which had effectively invalidated a prior version of Labor Code section 2751 because it imposed these requirements only on out-of-state employers. This amendment would apply these requirements to all employers entering into employment contracts involving commission payments for services performed in California.
New Rules Proposed for Employee Inspection Rights of Personnel Records (AB 1399)
Labor Code section 1198.5 presently authorizes employees to inspect the personnel records an employer maintains relating to the employee's performance or any grievance regarding the employee. This bill would amend this section and require an employer to maintain personnel records for four years post-termination of employment, and provide current and former employees, or their representative, the right to inspect personnel records within 21 days of a request. The employee would also be entitled to obtain copies of these records at a charge not to exceed the actual cost of reproduction. Employers failing to comply with these inspection and copying requirements would be subject to a $750 penalty payable to the employee or the Labor Commissioner, and employees would also be permitted to pursue civil action.
Federal
The new congress is also considering a number of employment-related bills, including the following:
Repeal of 1099 Reporting Requirement Expected Shortly (H.R. 4)
One of the more controversial aspects of last year's Health Care Reform was a requirement that employers complete 1099 Forms for all payments in excess of $600. This bill, as well as a similar Senate bill, would repeal this reporting requirement, and it is widely anticipated that some version of this bill will become law shortly.
Bill to Mandate Use of E-Verify (H.R. 800)
Known as the Jobs Recovery by Ensuring a Legal American Workforce Act of 2011, this bill would make the E-Verify program for assessing employee work eligibility permanent and mandatory. Presently, employer usage of E-Verify is generally voluntary.
National Right-to-Work Act Introduced (S. 504)
This bill would amend the National Labor Relations Act and codify a national right to be free from compulsory membership in a labor union. Another recently-introduced bill (H.R. 972) would make it an unfair labor practice for an employer to bargain collectively with a labor organization selected other than by secret ballot elections. These bills have almost no chance of passing or being enacted into law, but their introduction and the events in Wisconsin, Ohio and other states signal that Labor issues will continue to be prominent even though the Employee Free Choice Act also seems unlikely to be enacted.
AGENCY
Federal
EEOC Issues Long-Awaited ADAAA Regulations
On March 24, the Equal Employment Opportunity Commission (the Commission) issued its long-awaited final regulations under the ADA Amendments Act (ADAAA), which expanded the scope of ADA coverage and was signed by President Obama in September 2008. The final regulations are effective on May 24, 2011.
The regulations implement the ADAAA including Congress's mandate that the definition of disability be construed broadly. In enacting the ADAAA, Congress made it easier for an individual seeking protection under the ADA to establish that he or she has a disability within the meaning of the statute. Some of the more interesting aspects of the regulations are summarized below.
Major Life Activities: The concept of major life activities has been expanded to include "the operation of a major bodily function, including but not limited to, functions of the immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine, and reproductive functions." For instance, the Commission stated that "kidney disease affects bladder function; cancer affects normal cell growth; diabetes affects functions of the endocrine system . . . ." Thus whether or not a person may be limited in normal bodily functions now needs to be considered when analyzing disability.
Vague Standard for "Substantially Limits": To be covered by the ADA an individual must show he/she has an impairment that "substantially limits" a major life activity. Previously, case law such as the U.S. Supreme Court's decision in Toyota v. Williams required plaintiff to show a significant restriction in order to meet the "substantially limiting" threshold. This standard was rejected by the ADAAA and the Commission fails to provide a new standard or define what "substantially limits" means. The Commission does provide examples of conditions that are and are not substantially limiting, but it is still expected that this issue will be litigated and sorted out by the courts, although. It also took the position that the ability of an individual to perform a major life activity should be "compared to most people in the general population."
Moreover, in considering whether a person is substantially limited in a particular life activity the Commission said employers should only consider the activities the individual cannot perform, not those that the individual is able to perform.
Duration of the Impairment: Short term conditions are not covered by the ADA, but the ADAAA regulations seem to undercut that principle as they suggest that impairments that are of shorter duration may also be covered if they are sufficiently severe. This is especially troubling for employers looking for defined standards to guide them in administering and following the ADAAA.
Mitigating Measures: The ADAAA provides that an individual's condition should be analyzed "without regard to mitigating measures such as medication, most assistive technology or behavioral modifications." Thus, mitigating measures are not relevant to the determination of whether a person has a disability. However, they remain relevant to determinations of whether or not someone is "qualified" for a position (i.e., is a person qualified for this position if he refuses to wear a hearing aid?) or poses a direct threat to safety. In addition, mitigating measures may be relevant to an analysis of accommodation issues.
Whether a Particular Condition is A Disability: Where the Commission had previously indicated certain conditions would "consistently" meet the definition of disability (such as deafness, blindness, cerebral palsy, HIV/AIDs, etc.) the Final Regulations now state that the enumerated conditions will "virtually" always meet the definition of disability, but leaves open that an individualized analysis may indicate that one of the enumerated conditions is so mild for a particular individual so as not to render that person disabled. The regulations state that "it should be easily concluded" that certain impairments are disabilities including deafness, blindness, intellectual disability, partially or completely missing limbs or mobility impairments requiring the use of a wheelchair, autism, cancer, cerebral palsy, diabetes, epilepsy, HIV infection, multiple sclerosis, muscular dystrophy, major depressive disorder, bipolar disorder, post-traumatic stress disorder, obsessive compulsive disorder and schizophrenia.
New Definition of "Regarded As" Disabled: The ADAAA changes the definition of "regarded as" disabled. Previously, an individual had to show that he/she was regarded as having a substantially limiting impairment, but the ADAAA merely requires that to be "regarded as disabled" that an individual show he/she "has been subjected to an action prohibited under this Act because of an actual or perceived physical or mental impairment whether or not the impairment limits or is perceived to limit a major life activity." Impairments that are "transitory and minor" are excluded from this definition. "Transitory" means "actual or expected duration of 6 months or less." The Regulations indicate that the condition must be both transitory and minor to be excluded. Because of this expanded definition we expect to see more "regarded as" claims and more litigation over the scope of such claims. Importantly, the employer is not required to provide a "reasonable accommodation" to a person who is only covered by the "regarded as" category. (California law does require such accommodation.)
Although the definition of "regarded as" disabled has been expanded, the Regulations indicate that if an employer provides assistance that such assistance cannot be used as the basis of a "regarded as" claim. Although providing an accommodation might indicate an employer believes an individual has an impairment, it will not – in and of itself – demonstrate that the employer regarded the individual as having a disability. Similarly if an employer asks an employee who is having difficulty performing a job duty because of an impairment if the individual needs an accommodation, this will note equate to "regarding" the individual as disabled. Similarly, providing someone with a workers' compensation form or FMLA paperwork will not equate to "regarding" that person as disabled.
Symptoms of an Impairment: The Commission has deferred issuing regulations on actions taken because of either an impairment's symptoms or use of mitigating measures. Disability rights advocates argued that symptoms of impairment are part and parcel of the impairment itself and suggested an employer could evade liability under "regarded as" by asserting that the employment action was taken because of the symptom of the impairment or medication taken because of the impairment. For instance, if an air traffic controller fell asleep at work, the employer may wish to terminate for sleeping on the job. However, disability rights advocates argue the employee is protected if the sleeping was the symptom of an impairment or because of medication taken to treat an impairment. Due to the complexity of this issue, the Commission felt it could not be given appropriate comprehensive treatment in these regulations. We would expect the Commission to issue separate regulations addressing this particular issue.
The full text of the Final Regulations under the ADAAA, including the preamble and an appendix which contains numerous examples, can be found at:http://www.federalregister.gov/articles/2011/03/25/2011-6056/regulations-to-implement-the-equal-employment-provisions-of-the-americans-with-disabilities-act-as
DOL Considering Rule to Require Employers to Provide Independent Contractor Analysis to Employees and the DOL
In its recently-published regulatory agenda, the Department of Labor (DOL) announced it is considering rules that would require employers to provide additional information to employees about wage and hour issues. Specifically, covered employers would be required to notify employees of their rights under the Fair Labor Standards Act (FLSA) and provide information regarding hours worked and wage computations. Employers seeking to exclude workers from the FLSA's coverage (i.e., independent contractors) would be required to perform a classification analysis, to disclose that analysis to the worker and to retain that analysis to give it to Wage and Hour Division enforcement personnel who might request it. The DOL's Fact Sheet concerning this proposed rule is available atwww.dol.gov/regulations/factsheets/whd-fs-flsa-recordkeeping.htm.
JUDICIAL
California
FEHA Statute of Limitations Flows from Date Right-To-Sue Letter is Issued, Not Date Received
FEHA requires an employee to file an administrative charge with and obtain a right-to-sue notice from the Department of Fair Employment and Housing (DFEH) before filing a civil suit, and Government Code section 12965 states an employee must bring suit "within one year from the date of that notice." In this case, the DFEH issued an immediate right-to-sue notice on December 24, 2004, but the employee did not file civil suit until December 30, 2005. The employer argued the civil suit was untimely because filed more than one-year from the date of the right-to-sue letter, while the employee argued the one-year period commenced upon his receipt of the notice.
The California court of appeal agreed with the employer that the civil suit was time-barred, holding that the one-year statute of limitations is triggered by the date on the right-to-sue notice, not the date the employee receives it. The appellate court observed the statutory language unambiguously stated the limitations period flowed from "the date of that notice," and this date would provide a bright-line rule for statute of limitations purposes. The court also observed that any slight delay in receipt due to mail or other issues would not prejudice the employee given the one-year period in which to file post-notice. (Hall v. Goodwill Industries of Southern Cal. (2011) 193 Cal.App.4th 718.)
(NOTE: given the different statutory language and the much shorter limitations period to file suit (90 days post-right-to-sue) under Title VII, federal courts often track the federal limitations period from the date a federal right-to-sue letter is received, rather than issued.)
Employer May Not Artificially Designate Workweek to Avoid Seventh Day Overtime Premium
Plaintiffs worked consecutive fourteen day "hitches" on the employer's ships providing emergency clean up of oil spills and other environmentally hazardous discharges, during which they worked twelve hour shifts followed by four hours of "off duty" time and eight hours of sleep time. Plaintiffs were required to carry a cell phone or pager and remain within 30-45 minutes of the ship during the "off duty" hours and were required to sleep on the ship. Plaintiff sued for unpaid overtime wages and unfair business practices based on the employer's failure to pay them for two seventh day premiums per hitch, and failure to pay them for either the "off duty" time or sleep time.
Although plaintiffs worked a 14-day schedule beginning at noon on Tuesdays and ending at noon two Tuesdays later, the employer calculated overtime on the premise that the workweek began at 12:00 a.m. on Monday and ended at 11:50 p.m. the following Sunday. The employer argued the plaintiffs worked six days in the first workweek, seven days in the second workweek and two days in a third workweek and thus were owed only one seventh day premium for that work period. The court of appeal held that the employer could not subvert the overtime requirements set forth in Labor Code section 510 by designating an artificial workweek that did not correspond to the hours actually worked.
Although the court acknowledged that plaintiffs were able to engage in many recreational activities during the four hours of "off duty" time – including run errands and go to the gym – the court considered the requirement that plaintiffs be able to return to the ship within 45 minutes if called, coupled with the requirement that the plaintiffs return to the ship to sleep meant the plaintiffs remained at all times under the substantial control of the employer and thus had to be compensated for these hours. As such, the plaintiffs were 24-hour employees. As such, pursuant to Monzon v. Schaefer Ambulance Serv., Inc., 224 Cal.App.3d 16 (1990), a maximum of eight hours a 24-hour employee spends sleeping at the employer's premises may be excluded from compensation by prior agreement. The court found such an agreement to exist between the plaintiffs and employer in this case. (Seymore v. Metson Marine, Inc. (2011) 193 Cal.App.4th 64.)
Federal
Oral Complaints Suffice under FLSA's Retaliation Provision
The Fair Labor Standards Act (FLSA) sets forth employment rules concerning minimum wages, maximum hours and overtime pay. The FLSA's retaliation provision prohibits discrimination against an employee who has "filed any complaint" or caused to be instituted any proceedings under the FLSA. The federal courts had issued conflicting decisions concerning whether the phrase "filed any complaint" included oral as well as written complaints within the retaliation provision's protections. The United States Supreme Court concluded that the FLSA's retaliation provision included both oral and written complaints.
The Court first determined that the FLSA's statutory language was inconclusive since other federal statutes and judges had interpreted the term "filed" to include oral complaints. Accordingly, the Court cited several functional considerations weighed in favor of a broader interpretation, including not denying the FLSA's retaliation protections to poorer or less educated workers who might not be able to complain in writing. The Court also noted that limiting complaints to writing would preclude the Government from using hotlines, interviews and other oral methods to receive a complaint. The Court also looked to observed various federal agencies, including the Department of Labor and the Equal Employment Opportunity Commission, have interpreted the words "filed any complaint" to apply to oral complaints.
The Court agreed with the employer that the FLSA requires fair notice to the employer, and noted that phrase "filed any complaint" requires some degree of formality such that the employer would or should understand that a complaint had been made. The Court stated that to constitute a "filed" complaint, the oral complaint must be sufficiently clear and detailed for a reasonable employer to understand it, in light of both its content and context, as an assertion of rights protected by the FLSA and a call for its protections. The Court remanded the matter for the lower court to determine whether this employee's comments that he felt the employer's time clock placement was unlawful and that he was thinking about filing a lawsuit satisfied this reasonable notice standard for oral complaints. (Kasten v. Saint-Gobain Performance Plastics Corp. (2011) __ U.S.__, 2011 U.S.LEXIS 2417.)
Ninth Circuit Outlines Burden of Proof for FMLA Interference Claim
A former employee sued for FMLA "interference" after the employer refused to reinstate her after her leave for chemical sensitivity exposure, on the grounds it could not guarantee her workplace safety despite her doctor's release. After a jury verdict in the employer's favor, the employee appealed claiming the court had improperly instructed the jury that she had the burden of providing the employer "without reasonable cause" failed to reinstate her from FMLA leave. In a case of first impression in the ninth circuit, the court agreed with the employee and held that on an FMLA interference claim, the employer bears the burden of demonstrating a legitimate reason for not reinstating the employee.
The court first noted that the FMLA recognizes two theories of recovery for FMLA violations: (1) when an employer discharges or otherwise discriminates against an employee for exercising FMLA rights (the so-called "retaliation/discrimination" theory); and (2) when an employer interferes with, restrains or denies the exercise of or attempt to exercise the FMLA's substantive rights, including by not reinstating the employee after leave (the so-called "interference" theory). In this case, the court noted an employee who is denied reinstatement and subsequently pursues an FMLA interference claim is not required to demonstrate the employer intended to act unlawfully (i.e., "without reasonable cause" as this lower court had instructed). Rather, because reinstatement is the linchpin of the interference/entitlement theory, the employee need only demonstrate (1) he was eligible for FMLA leave; (2) the employer was covered by the FMLA; (3) he was entitled to leave under the FMLA; (4) he provided sufficient notice of his intent to take leave; and (5) his employer denied him FMLA benefits to which he was entitled (in this case, reinstatement after FMLA leave ended).
The court noted the employee's reinstatement rights are not absolute and that an employer may successfully defend against an "interference" claim by satisfying one of the FMLA's statutory exceptions to reinstatement. Notably, however, the court concluded the employer bears the burden of proving it had a legitimate reason for denying reinstatement (i.e., that the employee could not perform essential job functions, etc.), rather than the employee having to prove the employer acted unreasonably in not providing reinstatement. The court also concluded the trial court's instructional error was not harmless since it effectively required the employee to prove an otherwise unnecessary element on her FMLA interference claim. (Sanders v. City of Newport (2011) __ F.3d ___, 2011 U.S.App.LEXIS 5263.)
"One Strike" Rule Permanently Banning Employees for Failed Drug Test Does Not Violate the ADA or FEHA
An applicant filed suit under the ADA and the FEHA challenging the shipping lines "one-strike" rule which permanently eliminated from consideration any job applicant who tests positive for drug or alcohol use during the pre-employment screening process. (This applicant had been disqualified from further consideration due to a positive drug test seven years earlier during a prior application to this same employer, after which the employee had successfully completed drug rehabilitation.) The applicant claimed this "one strike rule" violated the ADA and the FEHA by discriminating against him on the basis of his protected status as a rehabilitated drug addict. (See 42 U.S.C. § 12114(b)(1) [expressly protecting from employment discrimination any person who has "been rehabilitated successfully and is no longer engaging in [illegal drug use]."])
The ninth circuit concluded this permanent ban was harsh, but did not violate the ADA's protections for rehabilitated drug users. The circuit court first held the prohibition was not facially discriminatory since it eliminated all candidates who test positive for drug use, not only former drug addicts. The court also rejected the employee's claim the rule was intended to preclude rehabilitated drug users, noting that the rule was adopted as a response to several serious accidents attributable to a culture that accepted the use of alcohol and drugs in the workplace. The court also rejected the employee's disparate impact claim since the employee had not presented evidence this policy necessarily screens out recovering drug addicts disproportionately as compared to the number of qualified recovered drug addicts in the relevant labor market. (Lopez v. Pacific Maritime Assn. (2011) __ F.3d ___, 2011 U.S.App.LEXIS 3923.)